EXHIBIT 4.5
AMENDED AND RESTATED EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AMENDED AND RESTATED EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
is entered into as of May 11, 2001 , by and among NORTEL NETWORKS CORPORATION, a
Canadian corporation ("Purchaser"), ALTEON WEBSYSTEMS, INC., a Delaware
corporation and a wholly owned subsidiary of Purchaser ("Alteon"), CANDLESTICK
NETWORKS, INC., a Delaware corporation ("Seller") and each stockholder
identified in SCHEDULE 1 (the "Founders"). Capitalized terms used in this
Amended and Restated Exchange Agreement and Plan of Reorganization ("this
Agreement") and not otherwise defined shall have the meanings given to them on
EXHIBIT A. Purchaser, Alteon, Seller and each of the Founders are referred to
herein individually as a "Party," and collectively as the "Parties."
RECITALS
A. The Founders, other stockholders and optionholders of Seller (the
"Stockholders") own all of the outstanding capital stock and options of Seller,
other than the Alteon Stock, which is owned by Alteon. For the purpose of this
Agreement, the Stockholders include all holders of any capital stock of Seller,
other than the Alteon Stock, and all holders of any option, convertible debt
securities or other right to purchase any shares of capital stock of Seller as
of the Effective Date (as defined below). A listing of the Stockholders and
their respective holdings of Seller as of the date hereof is set forth in Part
2.3(d) of the Disclosure Schedule.
B. On September 6, 2000, the Seller and Alteon entered into an exchange
agreement (the "Exchange Agreement") largely providing for the matters
contemplated in this Agreement.
C. On October 5, 2000, pursuant to the Agreement and Plan of Merger and
Reorganization (the "Alteon Agreement") between Alteon, Darius Corp. and the
Purchaser dated July 28, 2000, the Purchaser acquired all of the issued and
outstanding capital of Alteon (the "Alteon Acquisition") and, consequently,
became the successor and assign of Alteon in accordance with Section 10.12 of
the Exchange Agreement.
D. Certain of the underlying commercial assumptions considered by the
Seller and Alteon in the Exchange Agreement and the other Alteon Transactional
Agreements have changed or no longer apply. The Parties have agreed to amend and
restate the Exchange Agreement by this Agreement in order to provide for certain
amendments, deletions, revisions, clarifications and restatements of the matters
previously contemplated by the Seller and Alteon in the Alteon Transactional
Agreements.
E. The parties desire that this Agreement and the Transactional
Agreements entered into in connection herewith shall amend and supersede all of
the Alteon Transactional Agreements and upon consummation of the Merger, each
party will release the other parties of any continuing responsibility under the
Alteon Transactional Agreements; provided, however, that if the transactions
contemplated hereby are not consummated and this Agreement is terminated, the
parties shall preserve any remedies and claims they may have under the Alteon
Transactional Agreements, but without any liability for failure to perform
thereunder from and after April 12, 2001;
F. It is a condition to Purchaser's obligations under this Agreement
that (i) each Founder execute and deliver to Purchaser a
Stockholder/Non-Competition Agreement in the form of EXHIBIT B (the
"Non-Competition Agreement"), attached hereto; (ii) each Stockholder who is an
employee
1.
immediately prior to the Closing Date (other than the Founders) enter into an
Employee Stockholder Agreement in the form attached hereto as EXHIBIT C (the
"Employee Stockholder Agreement"); and (iii) each holder of Seller Common Stock
(as defined in Section 1.3) immediately prior to the Closing Date (each an
"Escrow Stockholder") enter into an Escrow Agreement, in the form attached
hereto as EXHIBIT D (the "Escrow Agreement").
AGREEMENT
References made herein to covenants and agreements of the Purchaser are
deemed to include those of Alteon, as applicable. Purchaser, Alteon, Seller and
each of the Founders, intending to be legally bound, agree as follows:
1. DESCRIPTION OF TRANSACTION
1.1 MERGER. Upon and subject to the terms and conditions of this
Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), the Seller shall merge with and into Alteon (the "Merger") at the
Effective Time. From and after the Effective Time, the separate corporate
existence of Seller shall cease, and Alteon shall continue as the surviving
corporation in the Merger (the "Surviving Corporation"). The "Effective Time"
shall be the later of: (a) the time at which Alteon files a certificate of
merger or other appropriate documents prepared and executed in accordance with
the relevant provisions of the DGCL in substantially the form attached hereto as
EXHIBIT E (the "Certificate of Merger") with the Secretary of State of the State
of Delaware or (b) at such other time as is provided in the Certificate of
Merger.
1.2 INTENTIONALLY OMITTED.
1.3 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in the DGCL. Without limiting the generality of the foregoing, in the event of
consummation of the Merger (i) pursuant to Section 1.8, each share of common
stock of Seller, par value $0.001 per share ("Seller Common Stock") shall be
automatically exchanged for common shares of Purchaser ("Purchaser Common
Stock") and (ii) pursuant to Section 1.9, each Seller Option (as defined in
Section 1.9) shall be assumed by Purchaser.
1.4 ADDITIONAL ACTIONS. The Surviving Corporation may, at any time
after the Effective Time, take any action, including executing and delivering
any document, in the name and on behalf of either the Seller or Alteon,
reasonably necessary in order to consummate the Merger.
1.5 EXCHANGE RATIO. The purchase price per share payable by Purchaser
for the Seller Common Stock and the ratio to be used in Section 1.9(b) to
calculate the number of Assumed Options shall be based on an exchange ratio that
is equal to the quotient of (i) 2,987,655.1 divided by (ii) the Fully-Diluted
Capitalization of Seller on the Closing Date (the "Exchange Ratio") rounded to
the fifth decimal point. "Fully-Diluted Capitalization" means the sum of (1) the
issued and outstanding shares of Seller Common Stock (excluding the Alteon
Stock); and (2) the number of shares of Seller Common Stock issuable upon the
exercise of all options, warrants, preferred stock or any rights for the
issuance of any other type of security (excluding the Alteon Stock) of Seller,
whether or not any of the foregoing is disclosed on the Disclosure Schedule.
1.6 CLOSING.
(A) The closing of the Merger (the "Closing") shall take place at
the offices of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ (or at such other place
2.
Purchaser and the Seller may jointly designate) on the second Business Day
following satisfaction or waiver of the conditions set forth in Sections 6 and 7
(the "Closing Date").
(B) At the Closing:
(I) Seller shall deliver to Purchaser and Alteon the various
documents and instruments referred to in Section 6;
(II) Purchaser shall deliver to Seller the various documents and
instruments referred to in Section 7;
(III) The Seller shall execute and deliver to Purchaser a
certificate (the "Closing Certificate") setting forth that (A) each of the
representations and warranties made by Seller in this Agreement was accurate in
all respects as of the date of this Agreement, (B) each of the representations
and warranties made by Seller in this Agreement is accurate in all respects as
of the Closing Date as if made on the Closing Date, (C) each of the covenants
and obligations that Seller is required to have complied with or performed
pursuant to this Agreement at or prior to the Closing has been duly complied
with and (D) each of the conditions set forth in Sections 6.2(b), 6.5 and 6.6
has been satisfied in all respects;
(IV) Alteon shall file the Certificate of Merger with the
Secretary of State of the State of Delaware;
(V) Purchaser, the Escrow Agent, the Agent and all the Escrow
Stockholders (other than Stockholders which have perfected dissenter's rights
pursuant to Section 262 of the DGCL or under Chapter 13 of the CCC, as
applicable) shall have executed and delivered the Escrow Agreement or otherwise
become bound thereby to the reasonable satisfaction of Purchaser; and
(VI) Purchaser shall deposit certificates representing the Escrow
Shares with the Escrow Agent in accordance with Section 1.10.
1.7 INTENTIONALLY OMITTED.
1.8 CONVERSION OF SHARES.
(A) Subject to Section 1.11(g), at the Closing Date, by virtue of
the Merger and without any action on the part of any Person, each share of
Seller Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive a number of fully paid and
nonassessable shares of Purchaser Common Stock equal to the Exchange Ratio. The
Alteon Stock shall not be converted and, as set forth in Section 1.11(g), no
fractional shares shall be issued.
(B) Each Stockholder shall be entitled to receive, at such time as
the Stockholder delivers the certificates representing his, her or its shares of
Seller Common Stock ("Seller Stock Certificate") in accordance with Section
1.11, certificates representing shares of Purchaser Common Stock issuable to the
Stockholder in the Merger pursuant to Section 1.8(a) ("New Certificates"), less
the Escrow Shares deposited into escrow pursuant to Section 1.10 and less any
Unvested Shares which shall be retained by Purchaser as set forth in Section
1.8(c).
(C) If any Seller Common Stock immediately prior to the Merger is
unvested or subject to a repurchase option, risk of forfeiture or other
condition ("Restricted Seller Stock") under any applicable restricted stock
purchase agreement, option exercise notice, or other agreement with Seller (the
3.
"Repurchase Agreements"), then Purchaser Common Stock issued in exchange for
such Restricted Seller Stock will also be unvested and/or subject to the same
vesting schedule, repurchase option, risk of forfeiture or other condition
(except as otherwise modified pursuant to the Transactional Agreements) and, as
of the Closing Date, Seller is hereby deemed to have assigned and transferred to
Purchaser all such rights under the Repurchase Agreements, and the certificates
representing such shares of Purchaser Common Stock may accordingly be marked
with appropriate legends (the "Unvested Shares"). Such Unvested Shares shall be
held by Purchaser until such shares are no longer subject to repurchase,
forfeiture or other condition under any Repurchase Agreement. On a monthly basis
on or before the fifteenth (15th) day following the end of each such thirty day
period (the first such thirty day period to commence on the Closing Date),
Purchaser shall use commercially reasonable efforts to instruct its transfer
agent to deliver to each Stockholder a stock certificate representing the whole
number of shares of Purchaser Common Stock issued to such Stockholder that are
no longer Unvested Shares pursuant to the terms of such Stockholder's Repurchase
Agreement.
(D) Each share of Seller Common Stock, if any, held in Seller's
treasury and each share of the Seller's capital stock held by Alteon, including
the Alteon Stock, immediately prior to the Effective Time, shall be deemed not
to be outstanding and automatically shall be canceled and retired at the
Effective Time without payment of any consideration therefor.
(E) At the Effective Time, the Surviving Corporation shall issue to
Purchaser one or more newly issued, fully-paid and non-assessable shares of
preferred stock of the Surviving Corporation, having a value equal to that of
the shares of Purchaser Common Stock being issued by Purchaser pursuant to this
Section 1.8.
(F) Each of the Stockholders agrees to waive any right or
entitlement to the acceleration or other change in the vesting provisions or
other terms of any stock plan, stock purchase, stock option or other agreements
or understandings, including, without limitation, the Alteon Transactional
Agreements, between the Seller and such Stockholder of any Seller Common Stock
owned by such Stockholder. Any rights of the Stockholders with respect to
acceleration of vesting shall be as set forth in the Non-Competition Agreement
or Employee Stockholder Agreement, as applicable.
(G) Each share of Alteon capital stock outstanding prior to the
Merger shall not be converted or disposed of by Purchaser in connection with the
Merger and shall remain outstanding as a share of the Surviving Corporation.
1.9 EMPLOYEE STOCK OPTIONS.
(A) At the Closing Date, each stock option then outstanding under
Candlestick Networks, Inc. 2000 Stock Option Plan (the "Option Plan"), whether
vested or unvested (each a "Seller Option"), shall be assumed by Purchaser
("Assumed Option") in accordance with the terms of this Agreement and the terms
(as in effect as of the Effective Date) of the Option Plan and the stock option
agreement by which such Seller Option is evidenced. All rights with respect to
Seller Common Stock under outstanding Seller Options shall thereupon be
converted into rights with respect to Purchaser Common Stock. Effective as of
the Effective Time, no new options may be granted under the Option Plan.
(B) Accordingly, from and after the Closing Date (i) each Assumed
Option may be exercised solely for shares of Purchaser Common Stock, (ii) the
number of shares of Purchaser Common Stock subject to each Assumed Option shall
be equal to the number of shares of Seller Common Stock that were subject to
such Assumed Option immediately prior to the Closing Date multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Purchaser
Common Stock, (iii)
4.
the per share exercise price for Purchaser Common Stock issuable upon exercise
of each Assumed Option shall be determined by dividing the exercise price per
share of Purchaser Common Stock subject to such Assumed Option, as in effect
immediately prior to the Closing Date, by the Exchange Ratio, and rounding the
resulting exercise price up to the nearest whole cent, (iv) each Assumed Option
qualified as an "incentive stock option" (as defined in Section 422 of the Code)
("ISO") immediately prior to the Closing Date shall remain an ISO except as
otherwise required by law, and (v) except as otherwise provided in the
Non-Competition Agreement and the Employee Stockholder Agreement, as applicable,
all restrictions and vesting provisions on the exercise of each Assumed Option,
including the term, exercisability, vesting schedule and other provisions of
such Seller Option shall continue in full force and effect; provided, however,
that each Assumed Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, reverse stock
split, stock dividend, recapitalization or other similar transaction effected by
Purchaser after the Closing Date.
(C) Seller and Purchaser shall take all action that may be necessary
(under the Option Plan and otherwise) to effectuate the provisions of this
Section 1.9. Within 20 Business Days following the Closing Date, Purchaser will
send to each holder of an Assumed Option a written notice setting forth (i) the
number of shares of Purchaser Common Stock subject to such Assumed Option and
(ii) the exercise price per share of Purchaser Common Stock issuable upon
exercise of such Assumed Option, and (iii) an explanation and calculation of the
number of shares of Purchaser Common Stock subject to the Assumed Option.
(D) From and after the Effective Time, except as otherwise set forth
in this Section 1.9, Purchaser and the Surviving Corporation shall comply with
the terms of the Option Plan pursuant to which the Options were granted;
provided that the board of directors of Purchaser or an authorized committee
thereof shall succeed to the authorities and responsibilities of the Seller
board of directors or any committee thereof under the Option Plan, and may take
all necessary and appropriate action (including amending the Option Plan and
making adjustments as provided thereunder) to effect the assumption and
conversion of the Options by Purchaser. The adjustments provided in this Section
1.9 with respect to any ISO shall be effected in a manner consistent with
Section 424(a) of the Code.
(E) Pursuant to Section 5.3, Purchaser shall file, within 60
Business Days of the Closing Date, with the SEC, a registration statement on
Form S-8 registering the shares of Purchaser Common Stock issuable upon exercise
of the Assumed Options pursuant to this Section 1.9.
5.
1.10 ESCROW. On the Closing Date, Purchaser will deposit in escrow with
the Escrow Agent, on behalf of and in the name of the Stockholders, certificates
representing fifteen (15%) percent of the number of whole shares of Purchaser
Common Stock, comprised of 15% of the Unvested Shares and 15% of the
unrestricted shares of Purchaser Common Stock, that such Stockholders have the
right to receive pursuant to the provisions of Section 1.8 (the "Escrow
Shares"). Two-thirds of the Escrow Shares so deposited shall be retained by the
Escrow Agent, pursuant to the Escrow Agreement, to secure the Stockholders'
indemnification and certain other obligations to Purchaser, for a period of 1
year after the Closing Date and shall be available to Purchaser to satisfy
claims in accordance with Section 9; provided, however that if an
indemnification claim is pending at the expiration of such 1 year period, the
Escrow Agent shall retain a number of Escrow Shares required to satisfy such
claim(s) until resolution of such claim(s). The remaining one-third of the
Escrow Shares so deposited shall be retained by the Escrow Agent, pursuant to
the Escrow Agreement, to secure the Stockholders' indemnification obligations
pursuant to Section 9.2(a)(vi) for a total of four (4) years after the Closing
Date and shall be available to Purchaser in accordance with Section 9; provided,
however that if an indemnification claim is pending at the expiration of such 4
year period, the Escrow Agent shall retain a number of Escrow Shares required to
satisfy such claim(s) until resolution of such claim(s). Where a Stockholder
includes in its deposit of Escrow Shares, Unvested Shares together with other
shares of Purchaser Common Stock that are not restricted, the shares deposited
that are not restricted shall be used to satisfy claims made pursuant to Section
9, if any, before Unvested Shares are so used. Escrow Shares that are Unvested
Shares shall vest on the same vesting schedule as Unvested Shares held outside
of escrow. At such time as any Stockholder is entitled to a release of Escrow
Shares from escrow any such release by the Escrow Agent shall be in accordance
with the terms of the Escrow Agreement.
1.11 EXCHANGE OF CERTIFICATES.
(A) As promptly as practicable after the Closing Date, but in any
case no later than 15 days thereafter, Purchaser shall send or cause the
Transfer Agent to send or cause to be sent to each former holder of record of
Seller Common Stock immediately prior to the Closing Date transmittal materials
for use in exchanging such Stockholder's Seller Stock Certificates for the
consideration set forth in this Article 1; provided, that, the obligations of
Purchaser and the Transfer Agent to distribute transmittal materials to any such
Stockholder are subject to the Seller having provided Purchaser, prior to
Closing, with an accurate name and address for such Stockholder. Purchaser, with
consent of the Seller, may satisfy this requirement by delivery to the Surviving
Corporation of such transmittal materials. Purchaser shall cause the New
Certificates representing Purchaser Common Stock into which each Stockholder's
Seller Common Stock are converted at the Closing Date, or any check in respect
of dividend distributions which such person shall be entitled to receive
pursuant to this Section 1.11, to be delivered to such Stockholder, promptly
upon delivery to the Transfer Agent of Seller Stock Certificates representing
such Seller Common Stock (or pursuant to Section 1.11(b), a surety bond or other
indemnity reasonably satisfactory to Purchaser and the Transfer Agent, if any
such certificates are lost, stolen or destroyed) owned by such Stockholder and
properly completed transmittal materials in respect thereof.
(B) From and after the Closing Date, each Stockholder shall have the
right to surrender or cause Seller to surrender such Stockholder's Seller Stock
Certificate(s) to Purchaser and receive in exchange therefor a New Certificate
representing the number of whole shares of Purchaser Common Stock (other than
the Escrow Shares and Unvested Shares) into which the Seller Common Stock
evidenced by each of the Seller Stock Certificates so surrendered shall have
been converted pursuant to the provisions of Section 1.8 and the payment of any
dividend distributions which such person shall be
entitled to receive pursuant to this Section 1.11. The surrender of Seller Stock
Certificates shall be accompanied by duly completed and executed documentation
in such form as may be reasonably requested by Purchaser. Purchaser may
condition the issuance of Purchaser Common Stock in exchange for Unvested Shares
upon the execution in blank by the Stockholder of one or more assignments
separate
6.
from Certificate representing the Unvested Shares, which may be used solely to
effect the transfer of such shares in the event Purchaser duly exercises its
repurchase rights with respect to such Unvested Shares. Until surrendered, each
outstanding Seller Stock Certificate shall be deemed for all corporate purposes
to evidence ownership of the number of whole shares of Purchaser Common Stock
into which the Seller Common Stock has been converted based on the Exchange
Ratio and the payment of any dividend distributions which such person shall be
entitled to receive pursuant to this Section 1.11. From and after the Closing
Date, the Stockholders shall cease to have any rights in respect of such Seller
Common Stock, and their rights as stockholders shall be solely in respect of the
Purchaser Common Stock into which such Seller Common Stock have been converted.
From and after the Closing Date, there shall be no further registration of
transfers on the records of the Seller of Seller Common Stock outstanding
immediately prior to the Closing Date.
(C) If any shares of Purchaser Common Stock are to be issued in the
name of a person other than the person in whose name the Seller Stock
Certificate(s) surrendered in exchange therefor is registered, it shall be a
condition to the issuance of such shares that (i) the Seller Common Stock so
surrendered shall be transferable and shall be properly assigned, endorsed or
accompanied by appropriate stock powers, (ii) such transfer shall otherwise be
proper and (iii) the person requesting such transfer shall pay Purchaser any
transfer or other taxes payable by reason of the foregoing or establish to the
satisfaction of Purchaser that such taxes have been paid or are not required to
be paid. Notwithstanding the foregoing, neither Purchaser nor the Seller shall
be liable to a Stockholder for shares of Purchaser Common Stock that are
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(D) If any Seller Stock Certificate shall have been lost, stolen or
destroyed, Purchaser may, in its discretion and as a condition precedent to the
issuance of any certificate representing Purchaser Common Stock, require the
owner of such lost, stolen or destroyed Seller Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Purchaser may
reasonably direct) as indemnity against any claim that may be made against
Purchaser or Seller with respect to such Seller Stock Certificate.
(E) Following the Closing Date, but not more often than once
following each 30 day period of continuous service of such Stockholder with
Purchaser (commencing on the Closing Date), on or before the fifteenth (15th)
day following the end of each such thirty day period, Purchaser shall use
commercially reasonable efforts to instruct its transfer agent to deliver to
such Stockholder a stock certificate representing the whole number of Purchaser
Common Stock issued to such Stockholder that are no longer Unvested Shares
pursuant to the terms of such Stockholder's Repurchase Agreement.
(F) No dividends or other distributions declared or made with
respect to Purchaser Common Stock with a record date after the Closing Date
shall be paid to the holder of any unsurrendered Seller Stock Certificate with
respect to the shares of Purchaser Common Stock represented thereby, until such
holder surrenders such Seller Stock Certificate in accordance with this Section
1.11 (at which time such holder shall be entitled to receive all such dividends
and distributions).
(G) No fractional shares of Purchaser Common Stock shall be issued
in connection with the Merger, and no certificates for any such fractional
shares shall be issued. The number of shares issuable to any holder of Seller
capital stock, shall be rounded down to the nearest whole share (after
aggregating all fractional shares of Purchaser Common Stock issuable to such
holder).
(H) Neither Purchaser nor Alteon shall be liable to any holder or
former holder of capital stock of Seller for any shares of Purchaser Common
Stock (or dividends or distributions with
7.
respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property, escheat or similar law.
1.12 INTENTIONALLY OMITTED.
1.13 TAX TREATMENT.
(A) For federal income tax purposes, the Parties intend that the
Merger qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Code and will use reasonable Best Efforts to have it so qualify.
(B) The Seller, on the one hand, and Purchaser and Alteon, on the
other hand, shall execute and deliver to legal counsel to Purchaser
certificates, with a copy to the other party hereto, at such time or times as
reasonably requested by such legal counsel in connection with its delivery of
legal opinions with respect to the transactions contemplated hereby. Prior to
the Effective Time, none of the Seller, Purchaser or Alteon shall take or cause
to be taken any action that would cause to be untrue (or fail to take or cause
not to be taken any action that would cause to be untrue) any of the
representations in such certificates.
(C) Purchaser, Alteon and the Seller shall each use its best efforts
to cause the Merger to qualify, and shall not take any actions prior to the
Closing Date that could prevent the Merger from qualifying, as a tax-free
reorganization under Section 368(a) of the Code. Purchaser and Alteon covenant
and agree not to (i) take any action (or to cause the Surviving Corporation or
any Affiliate of Purchaser or Alteon to take any action), and (ii) fail to take
any action (or to cause the Surviving Corporation or any Affiliates of Purchaser
or Alteon to fail to take any action), which if taken or not taken after the
Closing Date, as the case may be (excluding in each case any action or failure
to take any action that is contemplated by this Agreement), reasonably could be
anticipated to cause the transactions contemplated by this Agreement to fail to
qualify as a tax-free reorganization under the provisions of Section 368(a) of
the Code.
1.14 DIRECTORS AND OFFICERS. The directors and officers of Alteon at
the Effective Time shall be the initial directors and officers of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until such director's or
officer's successor is duly elected or appointed and qualified.
1.15 ARTICLES OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation of Alteon in effect at the Effective Time shall continue to be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with Applicable Law. The Bylaws of Alteon in effect at the Effective
Time shall continue to be the Bylaws of the Surviving Corporation until amended
in accordance with Applicable Law.
1.16 DISSENTERS' RIGHTS. Holders of shares of Seller Common Stock shall
be entitled to appraisal rights only to the extent required by the provisions of
Section 262 of the DGCL and (if the Seller is subject to Section 2115 of the
California Corporations Code (the "CCC")) such rights as may be granted to such
holder under Chapter 13 of the CCC, and only to the extent any person asserting
appraisal rights complies with the provisions of the DGCL (or the CCC, if
applicable). Neither the Seller nor the Surviving Corporation shall, except with
the prior written consent of Purchaser, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for payment. If any
holder of Seller Common Stock asserting appraisal rights shall fail to perfect
or shall have effectively withdrawn or lost the right to dissent, the Seller
Common Stock held by such person shall thereupon be treated as though
8.
such Seller Common Stock had been converted into the Purchaser Common Stock
pursuant to Section 1.8.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants, to and for the benefit of the
Indemnitees, except as set forth on the Disclosure Schedule, as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(A) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all necessary
power and authority:
(I) to conduct its business in the manner in which its business
is currently being conducted and in the manner in which its business is proposed
to be conducted;
(II) to own and use its assets in the manner in which its assets
are currently owned and used and in the manner in which its assets are proposed
to be owned and used; and
(III) to perform its obligations under all Seller Contracts.
(B) Seller has never conducted any business under or otherwise used,
for any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name, other than the name "Candlestick Networks, Inc."
(C) Seller is not required to be qualified, authorized, registered
or licensed to do business as a foreign corporation in any jurisdiction other
than California. Seller is in good standing as a foreign corporation in
California.
(D) Part 2.1(d) of the Disclosure Schedule accurately sets forth (i)
the names of the members of Seller's board of directors and (ii) the names and
titles of Seller's officers.
(E) Neither Seller nor any of its stockholders has ever approved, or
commenced any Proceeding or made any election contemplating, the dissolution or
liquidation of Seller or the winding up or cessation of Seller's business or
affairs.
(F) Seller has no subsidiaries, and Seller has never owned,
beneficially or otherwise, any shares or other securities of, or any direct or
indirect interest of any nature in, any Entity.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS.
(A) Seller has delivered to Purchaser accurate and complete copies
of:
(I) Seller's certificate of incorporation and bylaws (or similar
governing documents), including all amendments thereto;
(II) the stock records of Seller; and
(III) the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the stockholders of Seller, the board of directors of Seller and
all committees of the board of directors of Seller.
9.
There have been no meetings or other proceedings of the stockholders of Seller,
the board of directors of Seller or any committee of the board of directors of
Seller that are not fully reflected in such minutes or other records.
(B) There has not been any violation of any of the provisions of
Seller's certificate of incorporation or bylaws (or similar governing documents)
or of any resolution adopted by the Stockholders, Seller's board of directors or
any committee of Seller's board of directors, and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) constitute or result directly or indirectly in such a violation.
2.3 CAPITALIZATION, ETC.
(A) The authorized capital stock of Seller consists of:
(I) eleven million (11,000,000) shares of Seller Common Stock,
(A) five million three hundred forty-eight thousand seven hundred twenty-one
(5,348,721) shares of which are issued and outstanding (including 526,500 shares
of Seller Common Stock issued upon early exercise of outstanding Options under
the Option Plan), with all such Seller Common Stock issued pursuant to a form of
Repurchase Agreement (including any amendments thereto) that has been provided
to Purchaser; (B) five million one hundred seventy-seven thousand seven hundred
seventy-nine (5,177,779) shares of which are reserved for issuance under the
Option Plan, of which options to purchase 5,003,335 shares have been granted
(including 526,500 shares of Restricted Seller Stock (included above) that have
been issued upon early exercise of outstanding Options under the Option Plan)
and 174,444 shares remain available for future grant; and (C) one million
(1,000,000) shares of which are reserved for issuance in connection with the
conversion of the Alteon Stock; and
(II) one million (1,000,000) shares of convertible preferred
stock, representing the Alteon Stock, having a par value of $0.001 per share, of
which all such shares are issued and outstanding; and
(III) no shares of Seller's capital stock are held in the
treasury of Seller.
(B) To the best of Seller's Knowledge, the Stockholders have, and
Purchaser will acquire at the Closing, good and valid title to all of the shares
of capital stock or other securities of the Seller held by the Stockholders free
and clear of any Encumbrances.
(C) All of the shares of capital stock or other securities of the
Seller held by the Stockholders (i) have been duly authorized and validly
issued, (ii) are fully paid and non-assessable and (iii) have been issued in
full compliance with all applicable securities laws and other applicable Legal
Requirements. All shares of Seller Common Stock that may be issued upon exercise
of Options and warrants have been duly authorized and will be, upon issuance in
accordance with the terms of the Options and warrants, validly issued, fully
paid and non-assessable and except as set forth in Part 2.3(c) of the Disclosure
Schedule, free of all preemptive rights.
(D) Part 2.3(d) of the Disclosure Schedule sets forth, as of the
date hereof, a complete and accurate list of: (i) all Stockholders, indicating
the number of shares of Seller Common Stock or preferred stock held by each
Stockholder and the vesting schedule for any shares subject to repurchase by
Seller; (ii) all holders of options, including the number of shares of Seller
Common Stock subject to each option, the exercise price, the vesting schedule
and any other material terms thereof; (iii) all holders of warrants to purchase
capital stock of the Company, (iv) all stock or equity-related plans of the
Seller,
10.
including the Option Plan; and (v) all related loans, promissory notes and other
evidence of indebtedness of any Stockholder to the Seller.
(E) Except as set forth in this Agreement or disclosed in Part
2.3(e) of the Disclosure Schedule, there is not any:
(I) outstanding shares of capital stock or other voting
securities of Seller;
(II) outstanding subscription, option, call, warrant, phantom
stock or right (whether or not currently exercisable) to acquire any shares of
the capital stock or other securities of Seller;
(III) outstanding security, instrument or obligation that is or
may become convertible into or exchangeable for any shares of the capital stock
or other securities of Seller;
(IV) Contract under which Seller is or may become obligated to
sell or otherwise issue any shares of its capital stock or any other securities;
(V) condition or circumstance that may directly or indirectly
give rise to or provide a basis for the assertion of a claim by any Person to
the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of Seller;
(VI) outstanding rights or obligations of the Seller to
repurchase, redeem or otherwise acquire any Seller securities; or
(VII) stockholder agreements, voting trusts or others agreements
or understandings to which the Seller is party or by which it is bound relating
to the voting or registration of any capital stock of the Seller.
(F) Except as set forth in Part 2.3(f) of the Disclosure Schedule,
no stock plan, stock purchase, stock option or other agreement or understanding
between Seller and any holder of any equity securities or rights to purchase
equity securities provides for acceleration or other changes in the vesting
provisions or other terms of such agreement or understanding as the result of
(i) any Acquisition, merger, consolidated sale of stock or assets, change in
control or any other transaction(s) by Seller, including, without limitation,
the Merger or the transactions contemplated by the Alteon Agreement; or (ii)
termination of employment or change in employment duties, responsibilities, job
location or job title (collectively, "Vesting Acceleration").
(G) Except as set forth in Part 2.3(g) of the Disclosure Schedule,
all options granted to employees as ISOs within the meaning of the Code were (i)
granted with an exercise price equal to not less than the fair market value of
the Seller Common Stock on the date of grant and (ii) all ISOs granted to
persons owning more than ten percent of the total combined voting power of the
capital stock of the Seller were granted at an exercise price equal to not less
than one hundred and ten percent of the fair market value of the Seller Common
Stock on the date of grant.
(H) Each of the Stockholders set forth in Part 2.3(h) of the
Disclosure Schedule has timely filed an election pursuant to Section 83(b) of
the Code in connection with the early exercise of such Seller Options in
exchange for Seller Common Stock. Part 2.3(h) of the Disclosure Schedule sets
forth the number of shares of Seller Common Stock for which such an 83(b)
election was made by each Stockholder, as well as the date each such election
was made.
11.
2.4 FINANCIAL STATEMENTS. The Seller's unaudited financial statements
referred to in Section 4.8 (the "Seller Financial Statements") shall, when
provided to Purchaser at the Closing Date, present fairly the financial position
of Seller as of the respective dates thereof and shall have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered (except that any unaudited financial statements contained in the Seller
Financial Statements shall not contain footnotes and are subject to normal and
recurring year-end audit adjustments, which, to the best Knowledge of Seller,
will not, individually or in the aggregate, be material in magnitude).
2.5 TITLE TO ASSETS.
(A) Seller owns, and has good, valid and marketable title to, all
assets purported to be owned by it. Except as set forth in Part 2.5 of the
Disclosure Schedule, all of such assets are owned by Seller free and clear of
any Encumbrances.
(B) Part 2.5 of the Disclosure Schedule identifies all assets that
are being leased, rented, loaned, bailed or licensed to Seller.
2.6 EQUIPMENT. All material items of equipment and other tangible
assets owned by or leased to Seller are adequate for the uses to which they are
being put, are in good condition and repair (ordinary wear and tear excepted)
and are adequate for the conduct of Seller's business in the manner in which
such business is currently being conducted.
2.7 REAL PROPERTY. Seller does not own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 2.7 of the Disclosure Schedule.
2.8 PROPRIETARY ASSETS.
(A) Part 2.8 of the Disclosure Schedule sets forth, with respect to
each Proprietary Asset owned by Seller ("Seller Proprietary Asset") and
registered with any Governmental Body or for which an application has been filed
with any Governmental Body: (i) a brief description of such Proprietary Asset
and (ii) the names of the jurisdictions covered by the applicable registration
or application. Part 2.8 of the Disclosure Schedule identifies and provides a
brief description of all other material unregistered copyrights, trademarks,
service marks and other material intellectual property rights owned by Seller.
Part 2.8 of the Disclosure Schedule identifies and provides a brief description
of each Proprietary Asset licensed to Seller by any Person, and identifies the
license agreement under which such Proprietary Asset is being licensed to
Seller. Seller has good, valid and marketable title to all Seller Proprietary
Assets identified in Part 2.8 of the Disclosure Schedule, free and clear of all
liens and other Encumbrances, and has a valid right to use all Proprietary
Assets identified in Part 2.8 of the Disclosure Schedule. Seller is not
obligated to make any payment to any Person for the use of any Seller
Proprietary Asset. Seller has not developed jointly with any other Person any
Seller Proprietary Asset with respect to which such other Person has any rights.
(B) Seller has used its Best Efforts to employ measures and
precautions necessary to protect and maintain the confidentiality and secrecy of
all Seller Proprietary Assets. Seller has not (other than to employees)
disclosed or delivered to any Person, or permitted the disclosure or delivery to
any Person of any Seller Proprietary Asset, including, without limitation: (i)
the source code, or any portion or aspect of the source code, of any Seller
Proprietary Asset or (ii) the object code, or any portion or aspect of the
object code, of any Seller Proprietary Asset.
12.
(C) No Seller Proprietary Asset currently infringes or conflicts
with any Proprietary Asset owned or used by any other Person. Seller is not
infringing, misappropriating or making any unlawful use of, and Seller has not
at any time infringed, misappropriated or made any unlawful use of, or received
any notice or other communication (in writing or otherwise) of any actual,
alleged, possible or potential infringement, misappropriation or unlawful use
of, any Proprietary Asset owned or used by any other Person. To the best
Knowledge of Seller, no other Person is infringing, misappropriating or making
any unlawful use of, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Seller Proprietary Asset.
(D) (i) Each Seller Proprietary Asset conforms in all material
respects with any specification or documentation with respect thereto; and (ii)
Seller has not received any notice or other communication (in writing or, to the
Knowledge of Seller, otherwise) of any claim by any customer or other Person
alleging that any Seller Proprietary Asset does not conform in all material
respects with any such specification or documentation, and, to the best
Knowledge of Seller, there is no basis for any such claim.
(E) Except as set forth in Part 2.8 of the Disclosure Schedule, the
Seller Proprietary Assets constitute all the Proprietary Assets necessary to
enable Seller to conduct its business in the manner in which such business is
being conducted as of the date of this Agreement. (i) Seller has not licensed
any Seller Proprietary Asset to any Person on an exclusive basis and (ii) Seller
has not entered into any covenant not to compete or Contract limiting its
ability to exploit fully any of its Proprietary Assets or to transact business
in any market or geographical area or with any Person.
(F) All current and former employees have executed and delivered to
Seller an agreement (containing no exceptions to or exclusions from the scope of
its coverage other than as permitted by the Employee Stockholder Agreement) that
is substantially identical to the form of the Candlestick Networks, Inc.
Information and Inventions Agreement between Seller and each employee previously
made available to Purchaser that contains provisions relating to such employee's
nonuse and nondisclosure of confidential information and assignment of
inventions ("Employment Agreement").
2.9 CONTRACTS.
(A) Part 2.9 of the Disclosure Schedule identifies each Seller
Contract, except for any Excluded Contract. Seller has delivered to Purchaser
accurate and complete copies of all Seller Contracts identified in Part 2.9 of
the Disclosure Schedule, including all amendments thereto.
(B) Each Seller Contract is valid and in full force and effect, and
is enforceable by Seller in accordance with its terms.
(C) Except as set forth in Part 2.9 of the Disclosure Schedule:
(I) no Person has violated or breached, or declared or committed
any default under, any Seller Contract, except for immaterial violations,
breaches or defaults which do not in the aggregate result in a Material Adverse
Effect;
(II) no event has occurred, and no circumstance or condition
exists, that might (with or without notice or lapse of time) (A) result in a
material violation or breach of any of the provisions of any Seller Contract,
(B) give any Person the right to declare a material default or exercise any
remedy under any Seller Contract, (C) give any Person the right to accelerate
the maturity or performance of any material portion of any Seller Contract, or
(D) give any Person the right to cancel, terminate or materially modify any
Seller Contract;
13.
(III) Seller has not received any notice or other communication
(in writing or otherwise) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Seller Contract; and
(IV) Seller has not waived any of its rights under any Seller
Contract.
(D) Except as set forth in Part 2.9 of the Disclosure Schedule:
(I) Seller has never guaranteed or otherwise agreed to cause,
insure or become liable for, and Seller has never pledged any of its assets to
secure, the performance or payment of any obligation or other Liability of any
other Person; and
(II) Seller has never been a party to or bound by (A) any joint
venture agreement, partnership agreement, profit-sharing agreement, cost-sharing
agreement, loss-sharing agreement or similar Contract or (B) any Contract that
creates or grants to any Person, or provides for the creation or grant of, any
stock appreciation right, phantom stock right or similar right or interest.
(E) The performance of the Seller Contracts will not result in any
violation of or failure to comply with any Legal Requirement.
(F) No Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to Seller under any Seller Contract or any other term or
provision of any Seller Contract.
(G) The Contracts identified in Part 2.9 of the Disclosure Schedule
and the Excluded Contracts collectively constitute all of the Contracts
necessary to enable Seller to conduct its business in the manner in which its
business is currently being conducted and in the manner in which its business is
proposed to be conducted.
2.10 LIABILITIES. Seller has no Liabilities, except for: (i) current
liabilities identified as such in Part 2.10 of the Disclosure Schedule or the
Seller Financial Statements, and (ii) Seller's obligations under the Contracts
listed in Part 2.9 of the Disclosure Schedule and under Excluded Contracts, to
the extent that the existence of such obligations is ascertainable solely by
reference to such Contracts, and (iii) current liabilities incurred in the
Ordinary Course of Business which (x) have not been, either individually or in
the aggregate, materially adverse and (y) in the aggregate are less than
$10,000.
2.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in Part
2.11 of the Disclosure Schedule or as would not have a Material Adverse Effect:
(i) Seller is in full compliance with each Legal Requirement that is applicable
to it or to the conduct of its business or the ownership or use of any of its
assets, (ii) Seller has at all times been in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct of its business or
the ownership or use of any of its assets and (iii) no event has occurred, and
no condition or circumstance exists, that might (with or without notice or lapse
of time) constitute or result directly or indirectly in a violation by Seller
of, or a failure on the part of Seller to comply with, any Legal Requirement.
2.12 GOVERNMENTAL AUTHORIZATIONS. Part 2.12 of the Disclosure Schedule
identifies each material Governmental Authorization held by Seller, and Seller
has made available to Purchaser accurate and complete copies of all Governmental
Authorizations identified in Part 2.12 of the Disclosure Schedule. To the best
Knowledge of Seller, the Governmental Authorizations identified in Part 2.12 of
the Disclosure Schedule are valid and in full force and effect, and collectively
constitute all Governmental Authorizations necessary to enable Seller to conduct
its business in the manner in which its business is currently being conducted
where failure to obtain such Government Authorization would have a Material
14.
Adverse Effect. Seller is, and at all times since inception has been, in
substantial compliance with the terms and requirements of the respective
Governmental Authorizations identified in Part 2.12 of the Disclosure Schedule.
Since inception, Seller has not received any notice or other communication (in
writing) from any Governmental Body regarding (i) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization or (ii) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.13 TAX MATTERS.
(A) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by Seller (whether pursuant to any Tax Return
or otherwise) to the extent that the same is due has been duly paid in full and
on a timely basis, except as would not have a Material Adverse Effect. Any Tax
required to have been withheld or collected by Seller has been duly withheld and
collected; and (to the extent required) each such Tax has been paid to the
appropriate Governmental Body, except as would not have a Material Adverse
Effect.
(B) All Tax Returns required to be filed by or on behalf of Seller
with any Governmental Body with respect to any taxable period ending on or
before the Closing Date ("Seller Returns") (i) have been or will be filed when
due and (ii) have been, or will be when filed, accurately and completely
prepared in material compliance with all applicable Legal Requirements, except
as would not have a Material Adverse Effect.
(C) Except as set forth in Part 2.13 of the Disclosure Schedule, no
claim or other Proceeding is pending or has been threatened against or with
respect to Seller in respect of any Tax. There are no unsatisfied Liabilities
for Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by Seller. Seller has never entered into or become
bound by any agreement or consent pursuant to Section 341(f) of the Code. Seller
has never been, and Seller will not be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(D) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of Seller that, individually or collectively, could give
rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code. Seller is not,
and has never been, a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract.
2.14 EMPLOYEE AND LABOR MATTERS.
(A) Seller is not a party to or bound by, and has never been a party
to or bound by, any employment agreement or any union contract, collective
bargaining agreement or similar Contract.
(B) The employment of each employee is terminable by Seller at will
without payment of severance or any other type of cash or equity compensation or
any other obligation by Seller, except as otherwise vested as of the Termination
Date. Seller has delivered to Purchaser accurate and complete copies of any
employee manuals and handbooks, disclosure materials, policy statements and
other materials relating to the employment of current and former employees.
15.
(C) To the best Knowledge of Seller: (i) no employee intends to
terminate his employment with Seller and no employee has any employment related
claim, dispute or controversy with respect to such employee's employment by
Seller, (ii) no employee has received an offer to join a business that may be
competitive with Seller's business and (iii) no employee is a party to or is
bound by (A) any non-competition agreement or non-solicitation agreement or (B)
any confidentiality agreement or other Contract (with any Person) that may have
a Material Adverse Effect on (1) the performance by such employee of any of his
duties or responsibilities as an employee or (2) Seller's business or
operations, including development of the Product.
(D) Part 2.14 of the Disclosure Schedule contains a list of the
salary grades of all salaried employees, and the number of employees in each
such grade, as of the date of this Agreement, and correctly reflects, in all
material respects, any other compensation payable to them (including
compensation payable pursuant to bonus, deferred compensation or commission
arrangements) and their positions. Seller is in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters, and, except as set forth in
Part 2.9(a) of the Disclosure Schedule, no such Contract violates any previous
agreement to which any employee was a party prior to such employee's employment
by Seller.
(E) To the Knowledge of Seller, no employee is obligated under any
Contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with his duties to Seller or that
would conflict with Seller's business as presently proposed to be conducted,
including as set forth in the Transactional Agreements. Each former and current
employee, officer and consultant of Seller has executed an Employment Agreement
in the form previously provided to Purchaser. To the Knowledge of Seller, it is
not using nor will it be necessary to use any inventions, trade secrets or
proprietary information that any employee made prior to their employment by
Seller, except for inventions, trade secrets or proprietary information that
have been licensed to Seller and which are disclosed in the Disclosure Schedule.
(F) Neither the execution nor delivery of this Agreement or the
Transactional Agreements, nor the carrying on of Seller's business by the
employees, nor the conduct of Seller's business as presently proposed, including
as set forth in the Transactional Agreements, will, to Seller's Knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any employee is now obligated which will have a Material Adverse Effect on
Seller.
2.15 BENEFIT PLANS; ERISA.
(A) Part 2.15 of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by Seller for the
benefit of any employee, except for Plans which would not require Seller to make
payments or provide benefits having a value in excess of $10,000 in the
aggregate.
(B) Seller does not maintain, sponsor or contribute to, and, to the
best of the Knowledge of Seller, has not at any time in the past maintained,
sponsored or contributed to, any employee pension benefit plan (as defined in
Section 3(2) of ERISA, whether or not excluded from
16.
coverage under specific Titles of ERISA) for the benefit of current or former
employees (a "Pension Plan").
(C) Seller maintains, sponsors or contributes to only those employee
welfare benefit plans (as defined in Section 3(1) of ERISA, whether or not
excluded from coverage under specific Titles of ERISA) for the benefit of
employees or former employees which are described in Part 2.15 of the Disclosure
Schedule (the "Welfare Plans"), none of which is a multiemployer plan (within
the meaning of Section 3(37) of ERISA).
(D) With respect to each Plan, Seller has made available to
Purchaser:
(I) an accurate and complete copy of such Plan (including all
amendments thereto);
(II) an accurate and complete copy of the most recent summary
plan description, together with each modification, if required under ERISA, with
respect to such Plan, and all material employee communications relating to such
Plan;
(III) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies
the most recent financial statements thereof; and
(IV) accurate and complete copies of all Contracts relating to
such Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and recordkeeping agreements.
(E) Seller is not required to be and, to the best of the Knowledge
of Seller, has never been required to be, treated as a single employer with any
other Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or
(o) of the Code. Seller has never been a member of an "affiliated service group"
within the meaning of Section 414(m) of the Code. To the best Knowledge of
Seller, Seller has never made a complete or partial withdrawal from a
multiemployer plan, as such term is defined in Section 3(37) of ERISA, resulting
in "withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(F) Seller does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law) in a
manner that would affect any employee.
(G) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former employee after
any such employee's termination of service (other than (i) benefit coverage
mandated by applicable law, including coverage provided pursuant to Section
4980B of the Code, (ii) deferred compensation benefits accrued as liabilities on
the unaudited interim balance sheet, and (iii) benefits the full cost of which
are borne by current or former employees (or the employees' beneficiaries)).
(H) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
17.
(I) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
without limitation ERISA and the Code.
(J) Neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will result in any payment (including any bonus,
golden parachute or severance payment) to any current or former employee or
director of Seller (whether or not under any Plan), or materially increase the
benefits payable under any Plan, or result in any acceleration of the time of
payment or vesting of any such benefits.
2.16 ENVIRONMENTAL MATTERS. Seller is in compliance in all material
respects with all applicable Environmental Laws (as defined below), which
compliance includes the possession by Seller of all permits and other
Governmental Authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Seller has not received any
notice or other communication (in writing or otherwise), whether from a
Governmental Body, citizens group, employee or otherwise, that alleges that
Seller is not in compliance with any Environmental Law. To the best of the
Knowledge of Seller, no current or prior owner of any property leased or
controlled by Seller has received any notice or other communication (in writing
or otherwise), whether from a Government Body, citizens group, employee or
otherwise, that alleges that such current or prior owner or Seller is not in
compliance with any Environmental Law. All Governmental Authorizations currently
held by Seller pursuant to Environmental Laws are identified in Part 2.16 of the
Disclosure Schedule. (For purposes of this Section 2.16: (i) "Environmental Law"
means any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulation relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern (as defined below), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern and (ii)
"Materials of Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other substance that is now regulated by any Environmental Law or that is
otherwise a danger to health, reproduction or the environment.)
2.17 INSURANCE. Part 2.17 of the Disclosure Schedule identifies all
insurance policies owned or maintained by Seller and identifies any material
claims made thereunder, and Seller has made available to Purchaser accurate and
complete copies of the insurance policies identified on Part 2.17 of the
Disclosure Schedule. To the best Knowledge of Seller, each of the insurance
policies identified in Part 2.17 of the Disclosure Schedule is in full force and
effect. Since inception, Seller has not received any notice or other
communication (in writing) regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any claim under any insurance policy or (c) material adjustment in the amount
of the premiums payable with respect to any insurance policy.
2.18 RELATED PARTY TRANSACTIONS. Except for Permitted Transactions or
as set forth in Part 2.18 of the Disclosure Schedule:
(A) no Related Party has, and no Related Party has at any time had,
any direct or indirect interest of any nature in any asset used in or otherwise
relating to the business of Seller;
(B) no Related Party is, or has at any time been, indebted to
Seller;
(C) no Related Party has entered into, or has had any direct or
indirect financial interest in, any Contract, transaction or business dealing of
any nature involving Seller;
18.
(D) no Related Party is competing, or has at any time competed,
directly or indirectly, with Seller in any market served by Seller;
(E) no Related Party has any claim or right against Seller; and
(F) no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) directly or indirectly give
rise to or serve as a basis for any claim or right in favor of any Related Party
against Seller.
2.19 CERTAIN PAYMENTS, ETC. To its Knowledge, neither Seller nor any
officer, employee, agent or other Person associated with or acting for or on
behalf of Seller, has at any time, directly or indirectly:
(A) used any corporate funds (i) to make any unlawful political
contribution or gift or for any other unlawful purpose relating to any political
activity, (ii) to make any unlawful payment to any governmental official or
employee or (iii) to establish or maintain any unlawful or unrecorded fund or
account of any nature;
(B) made any false or fictitious entry, or failed to make any entry
that should have been made, in any of the books of account or other records of
Seller;
(C) made any payoff, influence payment, bribe, rebate, kickback or
unlawful payment to any Person;
(D) performed any favor or given any gift which was not deductible
for federal income tax purposes;
(E) made any payment (whether or not lawful) to any Person, or
provided (whether lawfully or unlawfully) any favor or anything of value
(whether in the form of property or services, or in any other form) to any
Person, for the purpose of obtaining or paying for (i) favorable treatment in
securing business or (ii) any other special concession; or
(F) agreed, committed, offered or attempted to take any of the
actions described in clauses (a) through (e) above.
2.20 PROCEEDINGS; ORDERS.
(A) Except as set forth in Part 2.20 of the Disclosure Schedule,
there is no pending Proceeding, and to the Knowledge of Seller no Person has
threatened to commence any Proceeding:
(I) that involves Seller or that otherwise relates to or might
affect Seller's business or any of the assets owned or used by Seller (whether
or not Seller is named as a party thereto); or
(II) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
Except as set forth in Part 2.20 of the Disclosure Schedule, to Seller's
Knowledge, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that might directly or indirectly give rise to or serve as
a basis for the commencement of any such Proceeding.
19.
(B) Except as set forth in Part 2.20 of the Disclosure Schedule, no
Proceeding has ever been commenced by or against Seller; and no Proceeding
otherwise involving or relating to Seller has been pending or to the Knowledge
of Seller threatened at any time.
(C) Seller has delivered to Purchaser accurate and complete copies
of all pleadings, correspondence and other written materials to which Seller has
access that relate to the Proceedings identified in Part 2.20 of the Disclosure
Schedule.
(D) There is no Order to which Seller, or any of the assets owned or
used by Seller, is subject; and none of the Stockholders is subject to any Order
that relates to Seller's business or to any of the assets owned or used by
Seller.
(E) To the best Knowledge of Seller, no officer or employee is
subject to any Order that prohibits such officer or employee from engaging in or
continuing any conduct, activity or practice relating to Seller's business as
currently being conducted or intended to be conducted.
(F) There is no proposed Order that, if issued or otherwise put into
effect, (i) may have an adverse effect on Seller's business, condition, assets,
liabilities, operations, financial performance, net income or prospects (or on
any aspect or portion thereof) or on the ability of Seller or any of the
Stockholders to comply with or perform any covenant or obligation under any of
the Transactional Agreements, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
(G) There is no Proceeding pending, and to the Knowledge of Seller,
no Person has threatened to commence any Proceeding, that may have a Material
Adverse Effect on the ability of any Stockholder to comply with or perform any
of such Stockholder's covenants or obligations under any of the Transactional
Agreements. No event has occurred, and no claim, dispute or other condition or
circumstance exists, that might directly or indirectly give rise to or serve as
a basis for the commencement of any such Proceeding.
2.21 AUTHORITY; BINDING NATURE OF AGREEMENTS. Seller has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under this Agreement; and the execution, delivery and performance by
Seller of this Agreement has been duly authorized by all necessary action on the
part of Seller and its Stockholders, board of directors and officers. This
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
2.22 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.22 of
the Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions contemplated therein, will directly or indirectly (with or without
notice or lapse of time):
(A) contravene, conflict with or result in a violation of (i) any of
the provisions of Seller's certificate of incorporation or bylaws (or similar
governing documents) or (ii) any resolution adopted by Seller's stockholders,
Seller's board of directors or any committee of Seller's board of directors;
(B) contravene, conflict with or result in a material violation of,
or give any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Seller or any of the Stockholders, or any of
the assets owned or used by Seller, is subject;
20.
(C) cause Seller, Purchaser or any affiliate of Purchaser to become
subject to, or to become liable for the payment of, any Tax (other than Taxes
due upon sale by the Stockholders of the Purchaser Common Stock);
(D) cause any of the assets owned or used by Seller to be reassessed
or revalued by any taxing authority or other Governmental Body;
(E) contravene, conflict with or result in a material violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Seller or any of its employees or that otherwise
relates to Seller's business or to any of the assets owned or used by Seller;
(F) contravene, conflict with or result in a material violation or
breach of, or result in a default under, any provision of any Seller Contract;
(G) give any Person the right to (i) declare a material default or
exercise any remedy under any Seller Contract, (ii) accelerate the maturity or
performance of any Seller Contract or (iii) cancel, terminate or modify any
Seller Contract;
(H) contravene, conflict with or result in a material violation or
breach of or a material default under any provision of, or give any Person the
right to declare a default under, any Contract to which any of the Stockholders
is a party or by which any of the Stockholders is bound; or
(I) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by Seller.
Except as set forth in Part 2.22 of the Disclosure Schedule, neither
Seller nor any of the Stockholders was, is or will be required to make any
filing with or give any notice to, or to obtain any Consent from, any Person in
connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.
2.23 NO BROKERS. Seller has not agreed or become obligated to pay, or
taken any action that might result in any Person claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with any of the Transactions.
2.24 TAX TREATMENT. Neither the Seller nor any of its Affiliates has
taken or agreed to take action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
2.25 FULL DISCLOSURE.
(A) None of the Transactional Agreements contains or will contain
any untrue statement of a material fact; and none of the Transactional
Agreements omits or will omit to state any material fact necessary to make any
of the representations, warranties or other statements or information contained
therein not misleading.
(B) All of the information set forth in the Disclosure Schedule, and
all other information regarding Seller and its business, condition, assets,
liabilities, operations, financial performance, net income and prospects that
has been furnished to Purchaser or any of its Representatives by or on behalf of
Seller or any of Seller's Representatives, is accurate and complete in all
material
21.
respects; provided, however, that neither Seller nor any Stockholder makes any
warranty that any financial projections will be achieved.
(C) Seller has provided Purchaser and Purchaser's Representatives
with full and complete access to all records and other documents and data of
Seller as requested by Purchaser.
2.A. REPRESENTATIONS AND WARRANTIES OF FOUNDERS. Each of the Founders
hereby represents and warrants, severally and not jointly, to and for the
benefit of the Indemnitees, as follows:
(A) Power and Capacity; Authorization. The Founder has the necessary
power and authority to execute and deliver this Agreement and the other
Transactional Agreements to which he is a party, to perform his obligations
hereunder and thereunder and to consummate the transactions contemplated hereby.
No other acts or proceedings on the part of the Founder are necessary to
authorize this Agreement or the other Transactional Agreements or the
consummation of the transactions contemplated hereby. This Agreement has been
executed and delivered by the Founder and constitutes a legal and binding
agreement enforceable against the Founder in accordance with its terms (subject,
as to the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights, and, with
respect to the remedy of specific performance, equitable doctrines applicable
thereto).
(B) No Conflicts. The execution, delivery and performance of this
Agreement and the other Transactional Agreements by the Founder will not (a)
result in a violation of any law, rule, ordinance, regulation, order, judgment
or decree by which the Founder is bound or (b) conflict with or result in a
material breach of or default under any mortgage, lien, lease, license, permit,
agreement, contract or instrument to which the Founder is a party or by which
the Founder is bound, which conflict, breach or default would have a Material
Adverse Effect on the ability of the Founder to perform his obligations under
this Agreement or the other Transactional Agreements.
(C) Ownership of Stock. The Founder is the lawful owner, of record
and beneficially, of the number of outstanding securities of the Company set
forth in Part 2.3(d) of the Disclosure Schedule, free and clear of all liens,
encumbrances, restrictions and claims of every kind. Such securities are the
only shares of the capital stock of Seller held, directly or indirectly, by the
Founder and the Founder does not own any options, warrants, convertible debt
securities or other rights to purchase shares of Seller Common Stock or any
other securities of Seller. The Founder has the right to vote all of the shares
at any meeting of the stockholders of Seller or by written consent in lieu of
any such meeting. The Founder has not appointed or granted any proxy or entered
into any agreement, contract, commitment or understanding with respect to any of
the shares that is now in force.
(D) Proceedings. There is no Proceeding by or before any
Governmental Body pending or, to the Knowledge of the Founder, threatened
against the Founder that challenges or would challenge the execution and
delivery of the Transactional Agreements or of any other agreement, document or
instrument referred to or contemplated by the Transactional Agreements to which
the Founder is or is to become a party or the taking of any of the actions
required to be taken by the Founder under the Transactional Agreements or under
any other agreement, document or instrument referred to in or contemplated by
the Transactional Agreements to which the Founder is or is to become a party. To
the Knowledge of Founder, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that might directly or indirectly give rise to
or serve as a basis for the commencement of any Proceeding.
(E) The Founder has never, at any time, (i) made a general
assignment for the benefit of creditors, (ii) filed, or had filed against him,
any bankruptcy petition or similar filing, (iii) suffered the
22.
attachment or other judicial seizure of all or a substantial portion of his
assets, (iv) admitted in writing his inability to pay his debts as they become
due or (v) taken or been the subject of any action that may have a Material
Adverse Effect on the Founder's ability to comply with or perform any of such
Founder's covenants or obligations under any of the Transactional Agreements.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ALTEON
Purchaser and Alteon each represent and warrant, to and for the benefit
of the Founders, as follows:
3.1 ACQUISITION OF SHARES. Purchaser is not acquiring the capital stock
of Seller with the current intention of making a public distribution thereof.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
(A) Each of the Purchaser and Alteon has the absolute and
unrestricted right, power and authority to enter into and perform its
obligations under this Agreement;
(B) the execution, delivery and performance of this Agreement by
each of the Purchaser and Alteon were each duly authorized by all necessary
action on the part of Purchaser and Alteon, respectively, and their respective
boards of directors; and
(C) this Agreement constitutes the legal, valid and binding
obligations of Purchaser and Alteon, enforceable against Purchaser and Alteon in
accordance with its terms.
3.3 BROKERS. Neither Purchaser nor Alteon has agreed or become
obligated to pay, and neither one has taken any action that might result in any
Person claiming to be entitled to receive, any brokerage commission, finder's
fee or similar commission or fee in connection with any of the Transactions.
3.4 VALID ISSUANCE. Subject to Section 1.11(d), Purchaser Common Stock
to be issued in the Merger will, when issued in accordance with the provisions
of this Agreement, be validly issued, fully paid and nonassessable.
3.5 DUE ORGANIZATION.
(A) Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of Canada and has all necessary power and
authority to conduct its business in the manner in which its business is
currently being conducted and to own and use its assets in the manner in which
its assets are currently owned and used and to perform its obligations under any
contract.
(B) Alteon is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all necessary
power and authority to conduct its business in the manner in which its business
is currently being conducted and to own and use its assets in the manner in
which its assets are currently owned and used and to perform its obligations
under any contract. Neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby will
conflict with or result in a breach of the Certificate of Incorporation or
Bylaws of Alteon.
3.6 SEC DOCUMENTS. As of the time Purchaser filed each report or
registration statement, on a form other than Form S-8 (a "Purchaser Filing"),
with the SEC (or, if amended or superseded by a
23.
filing prior to the Effective Date, then on the date of such filing): (i) each
Purchaser Filing complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act (as the case may be) and
(ii) no Purchaser Filing contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except any inaccuracy that would not have
a Material Adverse Effect on Purchaser.
3.7 TAX TREATMENT. None of Purchaser, Alteon or any Affiliate of
Purchaser or Alteon has taken or agreed to take action that would prevent the
Merger from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code.
4. PRE-CLOSING COVENANTS OF SELLER AND FOUNDERS
4.1 ACCESS AND INVESTIGATION. Seller shall ensure that, at all times
during the Pre-Closing Period:
(A) Seller and its Representatives provide Purchaser and its
Representatives with free and complete access, upon reasonable request during
normal business hours, to Seller's Representatives, personnel and assets and to
all existing books, records, Tax Returns, work papers, all personnel files of
current employees and such financial and operating data and other documents and
information with respect to the business and properties of the Seller as
Purchaser may from time to time reasonably request;
(B) Seller and its Representatives provide Purchaser and its
Representatives with such copies of existing books, records, Tax Returns, work
papers and other documents and information relating to Seller as Purchaser may
reasonably request in good faith; and
(C) Seller and its Representatives compile and provide Purchaser and
its Representatives with such additional financial, operating and other data and
information regarding Seller as Purchaser may reasonably request in good faith.
4.2 OPERATION OF BUSINESS. Unless Seller obtains the prior written
consent of Purchaser (which consent shall not be unreasonably withheld), during
the Pre-Closing Period:
(A) Seller shall conduct its business and operations in the ordinary
course and in substantially the same manner as such business and operations have
been conducted prior to the date of this Agreement;
(B) Seller shall use reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and maintain its relations and good will with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with Seller;
(C) Seller shall keep in full force all insurance policies
identified in Part 2.17 of the Disclosure Schedule in effect as of the date of
this Agreement;
(D) Seller shall cause its officers to report regularly (but in no
event less frequently than monthly) to Purchaser concerning the status of
Seller's business;
(E) Seller shall not declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares of capital stock, and
shall not repurchase, redeem or otherwise
24.
reacquire any shares of capital stock or other securities, other than
repurchases of Common Stock at cost from terminated employees or other service
providers;
(F) Except as otherwise disclosed in Part 2.3(d) of the Disclosure
Schedule, Seller shall not sell, issue, commit to issue or authorize the
issuance of (a) any capital stock or other security, (b) any option or right to
acquire any capital stock or other security or (c) any instrument convertible
into or exchangeable for any capital stock or other security (except that
Seller, with Purchasers prior written permission, shall be permitted (i) to
grant Seller Options to new employees hired after the date hereof, and (ii) to
issue Seller Common Stock to employees, upon the exercise of outstanding Seller
Options); provided, that no Seller Option or agreement with any holder of Seller
Common Stock shall contain any Vesting Acceleration except as agreed to by
Purchaser;
(G) Seller shall not amend or waive any of its rights under, or
permit the acceleration of vesting under, (i) any provision of its Plans or (ii)
any provision of any agreement evidencing any outstanding Seller Option;
provided, that no Seller Option or agreement with any holder of Seller Common
Stock may contain any Vesting Acceleration except as agreed to by Purchaser, and
any Seller Option or purchase agreement for Seller Common Stock will be in a
form, including the vesting schedule, approved by Purchaser.
(H) Neither Seller nor any of the Stockholders shall amend or permit
the adoption of any amendment to Seller's certificate of incorporation or bylaws
(or similar governing documents), or effect or permit Seller to become a party
to any Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction ;
(I) Seller shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(J) Other than within the Ordinary Course of Business, Seller shall
not (i) acquire, lease or license any right or other asset from any other
Person, (ii) sell or otherwise dispose of, or lease or license, any right or
other asset to any other Person, or (iii) waive or relinquish any right, except
for assets acquired, leased, licensed or disposed of by Seller pursuant to
Contracts that are not material Contracts;
(K) Other than the Permitted Transactions, Seller shall not (i) lend
money to any Person (except that Seller may make routine travel advances to
employees in the Ordinary Course of Business) or (ii) incur or guarantee any
indebtedness for borrowed money;
(L) Seller shall not change any of its methods of accounting or
accounting practices in any material respect;
(M) Seller shall not file any Tax Return or make any Tax election;
(N) Seller shall not settle any material Proceeding in which it is a
defendant in excess of $50,000 in the aggregate.
(O) Seller shall not provide any holder of its equity securities or
rights to purchase its equity securities with Vesting Acceleration (as defined
in Part 2.3(f)) unless approved by Purchaser;
(P) Seller shall not make any capital expenditure in excess of
$15,000 individually, or $50,000 in the aggregate;
25.
(Q) Seller shall not enter into, or permit any of the assets owned
or used by it to become bound by, any Contract that is or would constitute a
material Contract, or (ii) amend or prematurely terminate, or waive any material
right or remedy under, any such material Contract of Seller;
(R) Seller shall not (x) establish, adopt or amend any Employee
Benefit Plan, (y) pay any bonus or make any profit-sharing payment, cash
incentive payment or similar payment to, or increase the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees or (z) hire any new
employee whose aggregate annual compensation is expected to exceed the salary
grade, as set forth in Part 2.14(d), by 20%, other than the Permitted
Transactions;
(S) Seller shall not have outstanding or incur any direct or
contingent liabilities or lease obligations or become liable for the liabilities
of others, other than Permitted Indebtedness;
(T) Seller shall not create, assume or allow any mortgage, lien
(including judicial liens), deed of trust, charge, pledge, security interest or
other encumbrance (collectively, "Liens") on property Seller now or later owns;
(U) Seller shall not agree or commit to take any of the actions
described in clauses (e) through (t) above.
4.3 FILINGS AND CONSENTS. Seller shall ensure that:
(A) each filing or notice required to be made or given (pursuant to
any applicable Legal Requirement, Order or Contract, or otherwise) by Seller or
any of the Stockholders in connection with the execution and delivery of any of
the Transactional Agreements or in connection with the consummation or
performance of any of the Transactions (including each of the filings and
notices identified in Part 2.22 of the Disclosure Schedule and any filings
required under the HSR Act) is made or given within the time periods legally
required after the date of this Agreement;
(B) each Consent required to be obtained (pursuant to any applicable
Legal Requirement, Order or Contract, or otherwise) by Seller or any of the
Stockholders in connection with the execution and delivery of any of the
Transactional Agreements or in connection with the consummation or performance
of any of the Transactions (including each of the Consents identified in Part
2.22 of the Disclosure Schedule) is obtained as soon as possible after the date
of this Agreement and remains in full force and effect through the Closing Date;
(C) Seller promptly delivers to Purchaser a copy of each filing
made, each notice given and each Consent obtained by Seller or any Stockholder
during the Pre-Closing Period; and
(D) during the Pre-Closing Period, Seller and its Representatives
cooperate with Purchaser and with Purchaser's Representatives, and prepare and
make available such documents and take such other actions as Purchaser may
reasonably request in good faith, in connection with any filing, notice or
Consent that Purchaser is required or elects to make, give or obtain.
4.4 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(A) During the Pre-Closing Period, Seller shall promptly notify
Purchaser in writing of:
26.
(I) the discovery by Seller of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes a Breach of any representation or warranty made
by Seller or any of the Founders in this Agreement;
(II) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a material Breach of any representation or warranty made by Seller or
any of the Founders in this Agreement if (A) such representation or warranty had
been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(III) any Breach of any covenant or obligation of Seller or any
of the Founders; and
(IV) any event, condition, fact or circumstance that may make the
timely satisfaction of any of the conditions set forth in Section 6 or Section 7
impossible or unlikely.
(B) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.4(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then Seller and the Founders shall promptly deliver to Purchaser
an update to the Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Disclosure Schedule for the purpose
of (i) determining the accuracy of any of the representations and warranties
made by Seller or any of the Stockholders in this Agreement or at the Closing
except where such update or updates, individually or in the aggregate, would not
have or could not reasonably be expected to have a Material Adverse Effect (ii)
determining whether any of the conditions set forth in Section 6 has been
satisfied or (iii) for the purpose of liability under Section 9.
4.5 PAYMENT OF INDEBTEDNESS BY RELATED PARTIES. Seller shall cause all
indebtedness and other Liabilities of each Related Party to Seller (including
any such indebtedness or other Liability identified in Part 2.10 of the
Disclosure Schedule) to be discharged and paid in full prior to the Closing,
other than indebtedness arising from Permitted Transactions.
4.6 BEST EFFORTS. During the Pre-Closing Period, Seller shall use its
Best Efforts to cause the conditions set forth in Section 6 to be satisfied on a
timely basis.
4.7 CONFIDENTIALITY. Seller and each of the Founders shall ensure that,
during the Pre-Closing Period:
(A) Seller and its Representatives shall keep strictly confidential
the existence and terms of this Agreement;
(B) neither Seller nor any of its Representatives issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature (to any of Seller's suppliers, customers, landlords,
creditors or employees or to any other Person) regarding any of the
Transactions, except to the extent permitted under Section 10.6(a); and
(C) if Seller is required by law to make any disclosure regarding
the Transactions, Seller advises Purchaser, at least 5 Business Days before
making such disclosure, of the nature and content of the intended disclosure.
27.
Notwithstanding the foregoing, the Seller may disclose the existence of
this Agreement but not the terms of this Agreement or the transactions
contemplated hereby with its employees and prospective candidates for
employment.
4.8 UNUDITED FINANCIAL STATEMENTS. Seller and the Founders shall ensure
that the unaudited balance sheet of Seller as of the Closing Date, and the
related unaudited statements of operations and changes in stockholders' equity
and cash flows of Seller for the period from inception through the Closing Date,
together with the notes thereto and the unqualified report and opinion relating
thereto of Seller's independent accountant, are provided to Purchaser.
4.9 STOCKHOLDER APPROVAL. To the extent required, the Seller shall take
all actions necessary in accordance with the DGCL and its Certificate of
Incorporation and Bylaws to duly call, give notice of, convene and hold a
meeting of the stockholders as promptly as practicable following the receipt of
a permit under Section 25121 of the CCC from the California Commissioner of
Corporation (the "California Commissioner") to consider and vote upon the
adoption and approval of this Agreement and the transactions contemplated hereby
or solicit its stockholders' written consent as promptly as practicable to
consider and vote upon or consent to the adoption and approval of this Agreement
and the transactions contemplated hereby. The stockholder vote required for the
adoption and approval of the transactions contemplated by this Agreement shall
be the vote required by the DGCL and the Seller's Certificate of Incorporation
and Bylaws. Seller shall cooperate with Purchaser to prepare an Information
Statement, which will comply in all material respects with Regulation D under
the Securities Act (the "Information Statement"). The Information Statement
shall include the unanimous recommendation of the Seller Board in favor of the
Merger and this Agreement.
4.10 ASSUMED OPTIONS PERMITTED UNDER OPTION PLAN. Seller and the
Founders shall ensure that all holders of any option, convertible debt
securities or other right to purchase any shares of capital stock of Seller
enter into an agreement whereby the same can be assumed by Purchaser pursuant to
Section 1.9. as of the Closing Date.
4.11 EXEMPTION FROM GOLDEN PARACHUTE TREATMENT. The Seller shall take
the necessary steps to qualify for the exemption in Section 280G(b)(5)(A)(ii) of
the Code with respect to any and all payments that might otherwise be
characterized as excess parachute payments under Section 280G of the Code. Such
steps shall include (i) satisfying the requirements set forth in Section
280G(b)(5)(B) of the Code for adequate disclosure to all Stockholders eligible
to vote; (ii) obtaining a Stockholder vote; and (iii) taking all measures to
subject the making of any such payments to the outcome of such Stockholder vote.
4.12 EMPLOYEE STOCKHOLDER AGREEMENTS. The Seller and the Founders shall
use commercially reasonable efforts to cause each of the Stockholders (other
than the Founders) to execute and deliver to Purchaser the Employee Stockholder
Agreement in substantially the form attached hereto as Exhibit C.
4.13 AFFILIATES. The Seller shall obtain from all Affiliates of Seller
listed in Part 4.13 of the Disclosure Schedule and from any person who may be
deemed to have become a Affiliate of Seller, after the date of this Agreement
and on or prior to the Effective Time, an executed letter agreement
substantially in the form of Exhibit I as soon as practicable.
4.14 SELLER COMPENSATION AND BENEFIT PLANS. The Seller will take all
actions necessary to amend, merge, freeze or terminate any and /or all benefit
plans, effective at or immediately prior to the Closing Date, as requested in
writing by Purchaser.
28.
5. PRE-CLOSING COVENANTS OF PURCHASER
5.1 BEST EFFORTS. During the Pre-Closing Period, Purchaser shall use
its Best Efforts to cause the condition set forth in Section 7.2 to be
satisfied.
5.2 CONFIDENTIALITY. Purchaser shall ensure that, during the
Pre-Closing Period:
(A) Purchaser shall keep strictly confidential the existence and
terms of this Agreement;
(B) Neither Purchaser nor any of its Representatives issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature (to any of Purchaser's suppliers, customers, landlords,
creditors or employees or to any other Person) regarding any of the
Transactions, except to the extent permitted under Section 10.6(a); and
(C) if Purchaser is required by law to make any disclosure regarding
the Transactions, Purchaser gives Seller reasonable notice under the
circumstances before making such disclosure, of the nature and content of the
intended disclosure.
5.3 QUALIFICATION OF SHARES ISSUABLE IN THE MERGER.
(A) Promptly after the execution of this Agreement, Purchaser shall
prepare and cause to be filed with the California Commissioner a permit
application under Section 25121 of the CCC, and a related Information Statement,
and shall request a hearing on the fairness of the terms and conditions of the
Merger pursuant to Section 25142 of the CCC (the "Fairness Hearing"). The
parties to this Agreement shall use all commercially reasonable efforts to cause
the California Commissioner to approve the fairness of the terms and conditions
of the Merger at such a hearing; provided, however, that no party shall be
required to modify in any material way any of the terms and conditions in this
Agreement. The Seller shall provide and include in the Information Statement
such information relating to the Seller as may be required pursuant to the rules
of the California Commissioner. The Information Statement shall include the
unanimous recommendation of the board of directors of the Seller in favor of the
Merger. Purchaser shall pay all filing fees in connection with the Fairness
Hearing. Within 30 days after the Closing Date, Purchaser will file a
registration statement on Form S-8, or an amendment to an existing registration
statement on Form S-8, that will include the Assumed Options and shares of
Purchaser Common Stock issuable upon exercise thereof.
(B) In the event the Seller and Purchaser are unable to obtain a
permit following a Fairness Hearing without undue effort or expense, or the
agreement to materially burdensome conditions, then Seller and Purchaser shall
use reasonable efforts to ensure that the issuance of the Purchaser Common Stock
pursuant to the Merger complies with the private placement exemption available
under Regulation D of the Securities Act ("Regulation D"). If the issuance of
Purchaser Common Stock qualifies for such an exemption, the Purchaser shall
prepare a Registration Statement of Form S-3 covering Registrable Securities
pursuant to terms set forth in Section 5.4.
5.4 REGISTRATION STATEMENT. If the Purchaser Common Stock is issued
pursuant to Section 5.3(b):
(A) For purposes of this Agreement, "Registrable Shares" shall mean
the shares of Purchaser Common Stock issued in the Merger, including any and all
shares held in escrow, but excluding shares of Purchaser Common Stock issued in
the Merger that have been sold or otherwise transferred by the Stockholders who
initially received such shares in the Merger (collectively, the
29.
"Holders"); provided, however, that a transfer of shares of Purchaser Common
Stock issued in the Merger without additional consideration or transfers to
members, affiliates, general and limited partners, stockholders or trust
beneficiaries of a Holder shall not be deemed such a sale or transfer for
purposes of this Section 5.4 and such transferees shall be entitled to the same
rights under this Section 5.4 as the initial Holder from which the Registrable
Shares were received and shall be deemed a Holder for the purposes of this
Section 5.4.
(B) As soon as practicable after the Closing Date but no more than
20 Business Days thereafter, Purchaser shall prepare and file with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-3 (or such successor or other appropriate form) under the Securities Act with
respect to the Registrable Shares (the "Registration Statement"). Purchaser
shall use commercially reasonable efforts to cause the Registration Statement to
be declared effective as soon as possible following the Closing Date and to
cause the Registration Statement and all registrations, qualifications and
compliances (including, without limitation, obtaining appropriate qualifications
under applicable state securities or "blue sky" laws and compliance with any
other applicable governmental requirements or regulations) as any selling Holder
may reasonably request and that would permit or facilitate the sale of
Registrable Shares to become effective as soon as practicable thereafter;
provided, however, that Purchaser shall not be required in connection therewith
to qualify to do business or to file a general consent to service of process in
any such state or jurisdiction. Purchaser will provide each selling Holder upon
request with as many copies of the prospectus contained in the Registration
Statement and such other documents as such Holder may reasonably request from
Purchaser.
(C) Effectiveness; Delay and Suspension Right.
(I) Purchaser will use commercially reasonable efforts to
maintain the effectiveness of the Registration Statement and other applicable
registrations, qualifications and compliances until the earlier of (A) such time
as each of the Stockholders may sell all of the Registrable Shares held by him,
her or it without registration pursuant to the Rule 144 under the Securities Act
within a three-month period, (B) such time as all of the Registrable Shares have
been sold by the Holders or (C) one year after the Closing Date (the
"Registration Effective Period"), and from time to time will amend or supplement
the Registration Statement and the prospectus contained therein as and to the
extent necessary to comply with the Securities Act, the Exchange Act and any
applicable state securities statute or regulation, subject to the following
limitations and qualifications.
(II) Following the date the Registration Statement is first
declared effective, the Holders will be permitted, subject to the Suspension
Right (as defined in paragraph (iii) below), to offer and sell Registrable
Shares during the Registration Effective Period in the manner described in the
Registration Statement provided that the Registration Statement remains
effective and has not been suspended.
(III) Notwithstanding any other provision of this Section 5.4,
once the Registration Statement has been declared effective, Purchaser may for
not more than sixty (60) consecutive days and ninety (90) days in the aggregate,
require that all Holders suspend further open market offers and sales of
Registrable Shares whenever, and for so long as, in the reasonable judgment of
Purchaser after consultation with counsel (x) the prospectus included in a
Registration Statement contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading; or (y) non-public material information concerning Purchaser exists,
and the Chief Executive Officer or Chief Financial Officer of Purchaser
reasonably determines that immediate disclosure of such information would be
materially detrimental to Purchaser (a "Suspension Right"). In the event
Purchaser exercises the Suspension Right, such suspension will continue for the
period of time reasonably necessary
30.
for disclosure to occur at a time that is not detrimental to Purchaser and its
stockholders or until such time as the information or event is no longer
material, each as determined in good faith by Purchaser after consultation with
counsel but in no event longer than 60 consecutive days or 90 days in the
aggregate. Purchaser promptly will give the Holders notice of any such
suspension and will use all reasonable efforts to minimize the length of the
suspension.
(D) Expenses. The costs and expenses to be borne by Purchaser for
purposes of this Section 5.4 shall include, without limitation, printing
expenses, legal fees and disbursements of counsel for Purchaser, "blue sky"
expenses, accounting fees and filing fees, but shall not include underwriting
commissions or similar charges, legal fees and disbursements of counsel for the
selling Holders.
5.5 STOCK EXCHANGE LISTINGS. Purchaser shall use all reasonable
commercial efforts to cause the shares of Purchaser Common Stock to be issued in
the Merger to be conditionally approved for listing on the New York Stock
Exchange and the Toronto Stock Exchange, subject to official notice of issuance,
prior to the Effective Time.
6. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
Purchaser's obligation to effect the Merger and to take the other
actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Purchaser, in whole or in part, in accordance
with Section 10.14):
6.1 ACCURACY OF REPRESENTATIONS.
(A) Each of the Specified Representations shall have been accurate
in all respects as of the date of this Agreement, and shall be accurate in all
respects as of the Closing Date as if made at the Closing Date, without giving
effect to any update to the Disclosure Schedule, except where such update or
updates, individually or in the aggregate, would not have or could not
reasonably be expected to have a Material Adverse Effect; provided, however that
any such updates shall not limit Purchaser's right to indemnification under
Section 9.
(B) All of the other representations and warranties made by Seller
and the Founders in this Agreement (considered collectively), and each of such
representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement (except for
such representations and warranties that are qualified by their terms by a
reference to any "Material Adverse Effect" or other materiality qualifications,
or any similar qualifications, contained or incorporated directly or indirectly
in such representations and warranties, which representations and warranties as
so qualified shall be true and correct in all respects), and shall be accurate
in all material respects as of the Closing Date as if made at the Closing Date
(except for such representations and warranties that are qualified by their
terms by a reference to any "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, contained or incorporated
directly or indirectly in such representations and warranties, which
representatives and warranties as so qualified shall be true and correct in all
respects), without giving effect to any update to the Disclosure Schedule except
where such update or updates, individually or in the aggregate, would not have
or could not reasonably be expected to have a Material Adverse Effect; provided,
however that any such updates shall not limit Purchaser's right to
indemnification under Section 9.
31.
6.2 PERFORMANCE OF OBLIGATIONS.
(A) Seller shall have executed and delivered each of the agreements
required to be executed and delivered by Seller pursuant to Section 1.6(b).
(B) Each Stockholder shall have executed and delivered each of the
documents required to be executed and delivered by such Stockholder pursuant to
Section 1.6(b) and each such document, together with each Repurchase Agreement
and Employment Agreement shall be in full force and effect.
(C) All of the other covenants and obligations that Seller and the
Stockholders are required to comply with or to perform at or prior to the
Closing (considered collectively), and each of such covenants and obligations
(considered individually), shall have been duly complied with and performed in
all material respects.
6.3 CONSENTS. Any waiting period applicable to the Merger under the HSR
Act shall have terminated or expired. The Seller shall have received, in writing
and in form and substance reasonably acceptable to Purchaser and Alteon, all
material consents, approvals and waivers with respect to the consummation of the
transactions contemplated by this Agreement, including all necessary consents,
approvals and waivers as required by any other third party or governmental
agency with respect to the consummation of the transactions contemplated by this
Agreement and the Consents identified in Part 2.22 of the Disclosure Schedule,
which shall be in full force and effect; provided, however, that this condition
shall be deemed to have been satisfied despite Seller's failure to deliver all
of the Consents identified in Part 2.22 of the Disclosure Schedule, on or before
the Closing Date, so long as such failure by the Seller to deliver Consents
shall not include any Consent in connection with: (i) Seller Contracts that are
deemed by Purchaser to be necessary for the continued operation of the business
of Seller; (ii) Seller Contracts that Purchaser reasonably estimates would
require expenditure by the Purchaser following the Closing Date in connection
with the Purchaser's replacement of such Contracts of an amount or amounts,
individually or in the aggregate, greater than $50,000 in (x) replacement for
prepaid amounts made by the Seller under the Contracts that are forfeited as a
result of such failure; or (y) in excess of the existing contractual obligations
under such Contracts; or (iii) the Product Licensing Agreement with Lexra, Inc.
6.4 ADDITIONAL DOCUMENTS. Purchaser shall have received the following
documents:
(A) the Escrow Agreement in substantially the form attached as
EXHIBIT D, executed by each of the Escrow Stockholders, the Agent, the Escrow
Agent, and Purchaser; provided, however, that if one, but not more than one,
Escrow Stockholder fails to execute the Escrow Agreement, this condition shall
nonetheless be deemed satisfied, but such Escrow Stockholder shall not receive
any New Certificates representing Purchaser Common Stock issuable in accordance
with Section 1.8, until such time after the Closing that such Escrow Stockholder
delivers an executed copy of the Escrow Agreement and such other documents as
are reasonably required by Purchaser;
(B) the Employee Stockholder Agreement in substantially the form
attached as EXHIBIT C executed by each of the Stockholders (other than the
Founders) employed by Seller immediately prior to Closing Date;
(C) the Non-Competition Agreement in substantially the form attached
as EXHIBIT B executed by each of the Founders;
32.
(D) an opinion letter from Bay Venture Counsel, LLP dated the
Closing Date, in substantially the form of EXHIBIT F;
(E) a release of liability in substantially the form attached as
EXHIBIT G, executed by Purchaser, the Seller and each of the Founders, pursuant
to which the parties shall release each other from any claims or liabilities
associated with the Alteon Transactional Agreements (the "Release");
(F) a certificate executed by the President and Chief Executive
Officer of Seller confirming the total amount of all fees and expenses described
in Section 10.3 incurred by Seller and the Founders in connection with this
Agreement;
(G) the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP to the effect that
(i) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and (ii) each
of Purchaser, Alteon and the Seller will be treated as a corporation that is a
party to the reorganization within the meaning of Section 368(b) of the Code,
and such opinion shall not have been withdrawn or modified in any material
respect. In rendering such opinion, tax counsel may rely on the representations
set forth in the certificates provided pursuant to Section 1.13 and such other
representations as such tax counsel reasonably deems appropriate;
(H) from each Affiliate of the Seller an executed copy of the letter
attached hereto as EXHIBIT I;
(I) each of the employees of the Seller shall have executed and
delivered to Seller the Employment Agreement (containing no exceptions to or
exclusions from the scope of its coverage except as otherwise permitted by the
Employee Stockholder Agreement); and
(J) such other documents as Purchaser may reasonably request and be
satisfied with in good faith for the purpose of (i) evidencing the accuracy of
any representation or warranty made by Seller or any of the Stockholders, (ii)
evidencing the compliance by Seller or any of the Stockholders with, or the
performance by Seller or any of the Stockholders of, any covenant or obligation
set forth in this Agreement, (iii) evidencing the satisfaction of any condition
set forth in this Section 6, (iv) evidencing and supporting the qualification
and grant of each of the Options in compliance with the Option Plan and at fair
market value at the time of grant; or (v) otherwise facilitating the
consummation or performance of any of the Transactions.
6.5 NO PROCEEDINGS. Since the date of this Agreement, there shall not
have been commenced or threatened against Purchaser, or against any Person
affiliated with Purchaser, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Transactions, or
(b) that may have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. No Person
shall have made or threatened any claim asserting that such Person (a) may be
the holder or the beneficial owner of, or may have the right to acquire or to
obtain beneficial ownership of, any capital stock or other securities of Seller
or (b) may be entitled to all or any portion of the Merger consideration.
6.7 NO PROHIBITION. Neither the consummation nor the performance of any
of the Transactions will, directly or indirectly (with or without notice or
lapse of time), contravene or conflict with or result in a violation of, or
cause Purchaser or any Person affiliated with Purchaser to suffer any Material
Adverse Effect under, (a) any applicable Legal Requirement or Order or (b) any
Legal Requirement or Order that has been proposed by or before any Governmental
Body.
33.
6.8 INTENTIONALLY OMITTED.
6.9 STOCKHOLDER VOTE. This Agreement shall have been approved by the
requisite vote of the Stockholders under the Certificate of Incorporation and
Bylaws of Seller and the DGCL.
6.10 REGISTRATION EXEMPTION. The issuance of Purchaser Common Stock
pursuant to the Merger shall be exempt from the registration requirements of the
Securities Act pursuant to one of the exemptions set forth in Section 5.3.
6.11 DISSENTING SHARES.
No Stockholders of the Seller representing, in the aggregate, more than
3% of the aggregate voting power of the capital stock of the Seller shall have
exercised or be eligible to exercise appraisal rights in connection with the
Merger, provided, however, that Purchaser may waive this condition if it
receives the opinion of tax counsel referred to in Section 6.4(g).
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The Seller's obligation to effect the Merger and to take the other
actions required to be taken by the Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived, in whole or in part, in accordance with Section
10.14):
7.1 ACCURACY OF REPRESENTATIONS. All of the representations and
warranties made by Purchaser in this Agreement (considered collectively), shall
have been accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the Closing Date as if made at
the Closing Date.
7.2 PURCHASER'S PERFORMANCE. All of the other covenants and obligations
that Purchaser is required to comply with or to perform pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of such
covenants and obligations (considered individually), shall have been complied
with and performed in all material respects.
7.3 NO INJUNCTION. There shall not be in effect any injunction that
shall have been entered by a court of competent jurisdiction since the date of
this Agreement and that prohibits the consummation of the Merger.
7.4 NO PROCEEDINGS. Since the date of this Agreement, there shall not
have been commenced or threatened against Purchaser, or against any Person
affiliated with Purchaser, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Transactions, or
(b) that may have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
7.5 SELLER SHALL HAVE RECEIVED:
(A) An opinion of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, dated the Closing
Date, in substantially the form of EXHIBIT H;
(B) The Release executed by Seller, the Purchaser and each of the
Founders; and
(C) The opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP to the effect that
(i) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a)
34.
of the Code, and (ii) each of Purchaser, Alteon and the Seller will be treated
as a corporation that is a party to the reorganization within the meaning of
Section 368(b) of the Code, and such opinion shall not have been withdrawn or
modified in any material respect. In rendering such opinion, tax counsel may
rely on the representations set forth in the certificates provided pursuant to
Section 1.13 and such other representations as such tax counsel reasonably deems
appropriate.
7.6 SEC FILINGS. The Purchaser shall have filed all forms, reports and
documents required to be filed by it under the Securities Exchange Act of 1934
on a timely basis, or received a valid extension of such time of filing.
8. TERMINATION
8.1 TERMINATION EVENTS.
This Agreement may be terminated prior to the Closing:
(A) by Purchaser if (i) there is a material Breach of any covenant
or obligation of Seller or any of the Stockholders, or (ii) Purchaser reasonably
determines that the timely satisfaction of any condition set forth in Section 6
has become impossible or impractical (other than as a result of any failure on
the part of Purchaser to comply with or perform its covenants and obligations
under this Agreement);
(B) by the Seller if (i) there is a material Breach of any covenant
or obligation of Purchaser or (ii) the Seller reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible or impractical (other than as a result of any failure on the part of
Seller or any of the Stockholders to comply with or perform any covenant or
obligation set forth in this Agreement);
(C) by Purchaser if the Closing has not taken place on or before
June 30, 2001 (the "Final Date") unless either the HSR waiting period has not
expired or the fairness hearing has not been successfully completed in which
case the Final Date shall be extended for a reasonable period of time to
accommodate completion of the transactions contemplated hereby, but in any event
no later than August 30, 2001 (other than as a result of any failure on the part
of Purchaser to comply with or perform its covenants and obligations under this
Agreement);
(D) by Seller if the Closing has not taken place on or before the
Final Date unless either the HSR waiting period has not expired or the fairness
hearing has not been successfully completed in which case the Final Date shall
be extended for a reasonable period of time to accommodate completion of the
transactions contemplated hereby, but in any event no later than August 30, 2001
(other than as a result of the failure on the part of Seller or any of the
Stockholders to comply with or perform any covenant or obligation set forth in
this Agreement);
(E) by Purchaser if:
(I) Seller or any of its representatives has knowingly given
Purchaser materially false or misleading information or representations in
writing or failed to disclose in writing material information regarding Seller,
including without limitation, the obligations of its employees or prospective
employees to former employers;
35.
(II) Seller files a bankruptcy petition, a bankruptcy petition is
filed against Seller or Seller makes a general assignment for the benefit of
creditors, and such petition or assignment is not removed or terminated within a
period of 45 days after such filing or assignment;
(III) a receiver or similar official is appointed for Seller's
business and such appointment is not terminated within a period of 45 days after
such appointment, or the business is terminated; and
(IV) any judgments or arbitration awards are entered against
Seller, or Seller enters into any settlement agreements with respect to any
litigation or arbitration, in an aggregate amount of [$1,000,000] or more in
excess of any insurance coverage therefor; or
(F) by the mutual consent of Purchaser and Seller.
8.2 TERMINATION PROCEDURES. If Purchaser wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e),
Purchaser shall deliver to Seller a written notice stating that Purchaser is
terminating this Agreement and setting forth a brief description of the basis on
which Purchaser is terminating this Agreement. If Seller wishes to terminate
this Agreement pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(f),
Seller shall deliver to Purchaser a written notice stating that the Seller is
terminating this Agreement and setting forth a brief description of the basis on
which Seller is terminating this Agreement. In the event that the alleged breach
is curable, the alleged breaching party shall have a thirty (30) day period from
the date of delivery of such written notice to cure any such breach.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that:
(A) no party shall be relieved of any obligation or other Liability
arising from any Breach by such party of any provision of this Agreement;
(B) the parties shall, in all events, remain bound by and continue
to be subject to the provisions set forth in Section 10; and
(C) Purchaser, Seller and the Stockholders shall, in all events,
remain bound by and continue to be subject to Sections 4.6, 4.8 and 10.7.
8.4 NONEXCLUSIVITY OF TERMINATION RIGHTS. The termination rights
provided in Section 8.1 shall not be deemed to be exclusive. Accordingly, the
exercise by any party of its right to terminate this Agreement pursuant to
Section 8.1 shall not be deemed to be an election of remedies and shall not be
deemed to prejudice, or to constitute or operate as a waiver of, any other right
or remedy that such party may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(A) The representations, warranties, covenants and obligations of
Seller and the Founders shall survive (without limitation) the Closing and
remain in full force and effect for a period of one (1) year following the
Closing.
36.
(B) The representations, warranties, covenants and obligations of
Seller and the Founders, and the rights and remedies that may be exercised by
the Indemnitees, shall not be limited or otherwise affected by or as a result of
any information furnished to, or any investigation made by or Knowledge of, any
of the Indemnitees or any of their Representatives.
(C) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
Seller and the Founders in this Agreement.
(D) The representations, warranties, covenants and obligations of
Purchaser and Alteon under this Agreement shall expire upon the Closing except
for the Purchaser's obligations under Section 5.3, Section 5.4, Section 5.5, the
escrow obligations and any other obligations that by their terms or nature
survive.
9.2 INDEMNIFICATION BY ESCROW STOCKHOLDERS.
(A) The Escrow Stockholders, severally and not jointly, shall hold
harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages which are
directly or indirectly suffered or incurred by any of the Indemnitees or to
which any of the Indemnitees may otherwise become subject at any time
(regardless of whether or not such Damages relate to any third-party claim) and
which arise directly or indirectly from or as a direct or indirect result of, or
are directly or indirectly connected with:
(I) any Breach of any representation or warranty made by Seller
or any of the Escrow Stockholders in this Agreement (without giving effect to
any update to the Disclosure Schedule or to any "Material Adverse Effect" or
other materiality qualification or similar qualification contained or
incorporated directly or indirectly in such representation) or in the Closing
Certificate or any of the Transactional Agreements;
(II) any Breach of any representation, warranty, statement,
information or provision contained in the Disclosure Schedule or in any other
document delivered or otherwise made available to Purchaser or any of its
Representatives by or on behalf of Seller or any of Seller's Representatives;
(III) any Breach of any covenant or obligation of Seller or any
of the Escrow Stockholders;
(IV) any Liability to which Seller or any of the other
Indemnitees may become subject and that arises directly or indirectly from or
relates directly or indirectly to (A) any product manufactured or sold, or any
service performed, by or on behalf of Seller on or at any time prior to the
Closing Date, (B) the presence of any Hazardous Material at any site owned,
leased, occupied or controlled by Seller on or at any time prior to the Closing
Date, or (C) the generation, manufacture, production, transportation,
importation, use, treatment, refinement, processing, handling, storage,
discharge, release or disposal of any Hazardous Material (whether lawfully or
unlawfully) by or on behalf of Seller on or at any time prior to the Closing
Date;
(V) any matter identified or referred to in Part 2.8 of the
Disclosure Schedule;
37.
(VI) any Liability of Seller arising from a claim for Taxes by
any Governmental Body with respect to any period ending on or before the Closing
Date and any liability of Seller arising from a breach of any representation
under Section 2.13 of this Agreement.;
(VII) any Proceeding relating directly or indirectly to any
Breach, alleged Breach, Liability or matter of the type referred to in clause
(i), (ii), (iii), (iv), (v) or (vi) above (including any Proceeding commenced by
any Indemnitee for the purpose of enforcing any of its rights under this Section
9); or
(VIII) any Liability incurred in connection with the termination
of former employees of the Seller, including, without limitation unpaid
severance obligations to such former employees.
(B) The Escrow Stockholders acknowledge and agree that, if there is
any Breach of any representation, warranty or other provision relating to Seller
or Seller's business, condition, assets, liabilities, operations, financial
performance, net income or prospects (or any aspect or portion thereof), or if
Seller becomes subject to any Liability of the type referred to in clause (iv)
of Section 9.2(a), then Purchaser itself shall be deemed, by virtue of its
ownership of common stock of Seller, to have incurred Damages as a result of
such Breach or Liability. Nothing contained in this Section 9.2(b) shall have
the effect of (i) limiting the circumstances under which Purchaser may otherwise
be deemed to have incurred Damages for purposes of this Agreement, (ii) limiting
the other types of Damages that Purchaser may be deemed to have incurred
(whether in connection with any such Breach or Liability or otherwise) or (iii)
limiting the rights of Seller or any of the other Indemnitees under this Section
9.2.
9.3 THRESHOLD. The Escrow Stockholders shall not be required to make
any indemnification payment pursuant to Section 9.2 for any Breach of any of
their representations and warranties until such time as the total amount of all
Damages (including the Damages arising from such Breach and all other Damages
arising from any other Breaches of any representations or warranties) that have
been directly or indirectly suffered or incurred by any one or more of the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject, exceeds $250,000 in the aggregate (the "Deductible").
At such time as the total amount of such Damages exceeds the Deductible, the
Indemnitees shall be entitled to be indemnified against the portion of such
Damages exceeding the Deductible exclusively from and only up to 15% of the
Purchaser Common Stock issued in the Merger. Notwithstanding the foregoing, any
claims pursuant to Section 9.2(a)(vi) shall not be subject to the Deductible and
shall be subject to a cap of 5% of the Purchaser Common Stock issued in the
Merger.
9.4 RIGHT TO REQUIRE CURE OF BREACH. Without limiting the generality of
anything contained in Section 9.2, if there is any Breach of any representation
or warranty made by Seller or any of the Escrow Stockholders, then the Escrow
Stockholders, severally, shall be obligated to pay such amounts to Seller and
take such other actions as Purchaser may in good faith reasonably request for
the purpose of causing such Breach to be corrected, cured and eliminated in all
respects (at no cost to Seller or Purchaser).
9.5 NO CONTRIBUTION. Each Escrow Stockholder waives, and acknowledges
and agrees that such Escrow Stockholder shall not have and shall not exercise or
assert or attempt to exercise or assert, any right of contribution or right of
indemnity or any other right or remedy against Seller in connection with any
indemnification obligation or any other Liability to which such Escrow
Stockholder may become subject under any of the Transactional Agreements or
otherwise in connection with any of the Transactions.
38.
9.6 LIMITATIONS; EXCLUSIVE REMEDY. The Escrow Stock is the sole and
exclusive remedy of the Indemnitees against any of the Escrow Stockholders with
respect to any matter arising out of or in connection with the Transactional
Agreements; provided, however, that no claim against the Escrow Stockholders for
fraud, or breach of Section 2.3 shall be subject to the limitations of this
paragraph or this Section 9. Any release of the Escrow Stock shall be in
accordance with the terms of the Escrow Agreement. Subject to the rights of the
Indemnitees set forth in Section 9.7, no Stockholder shall be liable or
responsible in any manner whatsoever to the Indemnitees, whether for
indemnification or otherwise, except for indemnity as expressly provided in this
Section 9. The maximum liability of any Escrow Stockholder under the
Transactional Agreements shall be 15% of the Purchaser Common Stock issued to
such Escrow Stockholder in the Merger (the "Maximum Liability").
9.7 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against Seller,
against any other Indemnitee or against any other Person) with respect to which
any of the Escrow Stockholders may become obligated to indemnify, hold harmless,
compensate or reimburse any Indemnitee pursuant to this Section 9, Purchaser
shall have the right, at its election, to designate the Agent to assume the
defense of such claim or Proceeding at the sole expense of the Escrow
Stockholders. If Purchaser so elects to designate the Agent to assume the
defense of any such claim or Proceeding:
(A) the Agent shall proceed to defend such claim or Proceeding in a
diligent manner with counsel satisfactory to Purchaser;
(B) Purchaser shall make available to the Agent any non-privileged
documents and materials in the possession of Purchaser that may be necessary to
the defense of such claim or Proceeding;
(C) the Agent shall keep Purchaser informed of all material
developments and events relating to such claim or Proceeding;
(D) Purchaser shall have the right to participate in the defense of
such claim or Proceeding;
(E) the Agent shall not settle, adjust or compromise such claim or
Proceeding without the prior written consent of Purchaser, not to be
unreasonably withheld (the consent of the Purchaser will not be deemed to be
unreasonably withheld if, upon assuming the perspective of the Purchaser, a
commercially reasonable person would determine that the Purchaser had, after
taking into consideration all known relevant facts and circumstances, valid
business reasons, independent of the source of payment, to not fulfill the
obligation in the amount proposed); and
(F) Purchaser may at any time (notwithstanding the prior designation
of the Agent to assume the defense of such claim or Proceeding) assume the
defense of such claim or Proceeding.
If Purchaser does not elect to designate the Agent to assume the defense of any
such claim or Proceeding (or if, after initially designating the Agent to assume
such defense, Purchaser elects to assume such defense), Purchaser may proceed
with the defense of such claim or Proceeding on its own. If Purchaser so
proceeds with the defense of any such claim or Proceeding on its own:
(I) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Purchaser) shall be borne and paid
exclusively by the Escrow Stockholders;
39.
(II) the Escrow Stockholders shall make available to Purchaser
any documents and materials in the possession or control of any of the Escrow
Stockholders that may be necessary to the defense of such claim or Proceeding;
(III) Purchaser shall keep the Agent informed of all material
developments and events relating to such claim or Proceeding;
(IV) Agent shall have the right to participate in the defense of
such claim or Proceeding with Bay Venture Counsel, LLP as counsel; and
(V) Purchaser shall have the right to settle, adjust or
compromise such claim or Proceeding or to reject any offer of settlement,
adjustment or compromise, only with the consent of the Agent; provided, however,
that the Agent shall not unreasonably withhold such consent.
9.8 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PURCHASER. No
Indemnitee (other than Purchaser or any successor thereto or permitted assignee
thereof) shall be permitted to assert any indemnification claim or exercise any
other remedy under this Agreement unless Purchaser (or any successor thereto or
permitted assignee thereof) shall have consented to the assertion of such
indemnification claim or the exercise of such other remedy.
10. MISCELLANEOUS PROVISIONS
10.1 SEVERAL LIABILITY. Subject to Section 9.5 and Section 9.6:
(A) the Founders severally agree that they shall be severally liable
with Seller for the due and timely compliance with and performance of each of
the covenants and obligations of Seller set forth in this Agreement, up to the
Maximum Liability;
(B) each Founder agrees that such Founder shall be severally liable
with each of the other Escrow Stockholders for the due and timely compliance
with and performance of each of the covenants and obligations of such other
Escrow Stockholders set forth in this Agreement, up to the Maximum Liability;
(C) Seller agrees that, prior to the Closing, Seller shall be
severally liable with each Founder for the due and timely compliance with and
performance of each of the covenants and obligations of such Founder set forth
in this Agreement (including the indemnification obligations of such Founder set
forth in Section 9); and
(D) Pursuant to the Escrow Agreement, the Escrow Stockholders
irrevocably nominated and appointed ▇▇▇▇▇▇ ▇▇▇▇▇▇ as the agent and true and
lawful attorney-in-fact of the Escrow Stockholders (the "Agent"), with full
power of substitution, to act in the name, place and stead of the Escrow
Stockholders as set forth in the Escrow Agreement
10.2 INTENTIONALLY OMITTED.
10.3 FEES AND EXPENSES.
(A) Without limiting the generality of anything contained in Section
10.3(b), Seller shall bear and pay all reasonable fees, costs and expenses
(including all legal and auditors fees and expenses), that have been incurred or
that are in the future incurred by, on behalf of or for the benefit of Seller or
any of the Stockholders in connection with:
40.
(I) the negotiation, preparation and review of any term sheet or
similar document relating to any of the Transactions;
(II) the investigation and review conducted by Purchaser and its
Representatives with respect to Seller's business (and the furnishing of
information to Purchaser and its Representatives in connection with such
investigation and review);
(III) the negotiation, preparation and review of this Agreement
(including the Disclosure Schedule), the other Transactional Agreements and all
certificates, opinions and other instruments and documents delivered or to be
delivered in connection with the Transactions;
(IV) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions, and the
obtaining of any Consent required to be obtained in connection with any of the
Transactions; and
(V) the consummation and performance of the Transactions.
To the extent the Closing occurs, any such fees, costs or expenses shall not
exceed $200,000, unless any such excess is borne by the Founders.
(B) Subject to the provisions of Section 9 (including the
indemnification and other obligations of the Stockholders thereunder) and the
provisions of Section 10.4, Purchaser shall bear and pay all reasonable fees,
costs and expenses (including all legal and auditors fees and expenses payable
to ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and Deloitte & Touche, LLP, respectively, or to
other counsel or auditors to Purchaser) that have been incurred or that are in
the future incurred by or on behalf of Purchaser and Alteon in connection with:
(I) the negotiation, preparation and review of any term sheet or
similar document relating to any of the Transactions;
(II) the investigation and review conducted by Purchaser and its
Representatives with respect to Seller's business;
(III) the negotiation, preparation and review of this Agreement,
the other Transactional Agreements and all certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions; and
(IV) the consummation and performance of the Transactions.
10.4 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought against any Party
hereto, the prevailing Party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing Party may be entitled).
10.5 NOTICES. Any notice or other communication required or permitted
to be delivered to any Party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by a nationally-recognized overnight courier or express
delivery service or by facsimile) to the address or facsimile number set forth
beneath the name of such Party below (or to such other address or facsimile
number as such Party shall have specified in a written notice given to the other
parties hereto). Any such notice or communication shall be deemed to
41.
have been delivered and received (i) in the case of personal delivery, on the
date of such delivery, (ii) in the case of facsimile, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier in circumstances under which such
courier guarantees next Business Day delivery, on the next Business Day after
the date when sent and (iv) in the case of mailing, on the third Business Day
following that on which the piece of mail containing such communication is
posted; provided, that, in each such instance if such notice or communication is
received after 5:00 p.m. local time, it shall constitute delivery the next
Business Day:
if to Seller or any of the Stockholders:
Candlestick Networks, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Bay Venture Counsel, LLP
Lake ▇▇▇▇▇▇▇ Plaza Building
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(which shall not constitute notice)
if to the Agent:
▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Candlestick Networks, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
if to Purchaser or Alteon:
Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Attention: Corporate Secretary
Facsimile: (905) 863--8386
with a copy to:
Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Khush Dadyburjor
and to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
42.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(which shall not constitute notice)
10.6 PUBLICITY. Without limiting the generality of anything contained
in Section 4.8, on and at all times after the Closing Date:
(A) no press release or other publicity concerning any of the
Transactions shall be issued or otherwise disseminated by or on behalf of any of
Seller, Purchaser or the Founders, and the parties shall continue to keep the
existence and terms of this Agreement and the other Transactional Agreements
strictly confidential; provided, however, that if after consultation with its
counsel, Purchaser determines that any law, rule or regulatory requirement
(including any NYSE rule) requires Purchaser to issue, make or otherwise
disseminate a press release, disclosure or other publicity concerning the
possible transactions contemplated by this letter, Purchaser may (without being
deemed to be in breach of this letter) issue, make or otherwise disseminate such
press release, disclosure or other publicity, provided that Purchaser has
provided to Seller reasonable notice and a reasonable opportunity to review the
foregoing prior to such disclosure; and
(B) Seller and each Founder shall keep strictly confidential, and
shall not use or disclose to any other Person, any non-public document or other
information in such Founder's possession that relates directly or indirectly to
the business of Seller, Purchaser or any affiliate of Purchaser.
10.7 NO HIRE. Each Party and its affiliates, if any, agrees during the
term of this Agreement and for a period of 1 year after the Termination Date,
not to directly or indirectly solicit employment of or hire any employee,
officer, director or consultant of the other Party and/or its affiliates.
10.8 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
10.9 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.11 GOVERNING LAW; VENUE.
(A) This Agreement shall be construed in accordance with, and
governed in all respects by California law (without giving effect to principles
of conflicts of laws).
(B) Any Proceeding relating to this Agreement or the enforcement of
any provision of this Agreement may be brought or otherwise commenced in any
state or United States District Court located in the County of Santa Clara,
California. Each Party to this Agreement:
(I) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of Santa
Clara, California (and each appellate court located in the State of California)
in connection with any such Proceeding;
43.
(II) agrees that each state and federal court located in the
County of Santa Clara, California shall be deemed to be a convenient forum; and
(III) agrees not to assert (by way of motion, as a defense or
otherwise), in any such Proceeding commenced in any state or federal court
located in the County of Santa Clara, California that such Party is not subject
personally to the jurisdiction of such court, that such Proceeding has been
brought in an inconvenient forum, that the venue of such Proceeding is improper
or that this Agreement or the subject matter of this Agreement may not be
enforced in or by such court.
(C) Each Founder agrees that, if any Proceeding is commenced against
any Indemnitee by any Person in or before any court or other tribunal anywhere
in the world, then such Indemnitee may proceed against such Founder in such
court or other tribunal with respect to any indemnification claim or other claim
arising directly or indirectly from or relating directly or indirectly to such
Proceeding or any of the matters alleged therein or any of the circumstances
giving rise thereto.
(D) Nothing contained in Section 10.11(b) or 10.11(c) shall be
deemed to limit or otherwise affect the right of any Indemnitee to commence any
Proceeding or otherwise proceed against Seller or any of the Founders in any
other forum or jurisdiction.
(E) The Founders irrevocably constitute and appoint the Agent as
their agent to receive service of process in connection with any Proceeding
relating to this Agreement or the enforcement of any provision of this
Agreement.
(F) The Founders irrevocably waive the right to a jury trial in
connection with any Proceeding relating to this Agreement or the enforcement of
any provision of this Agreement.
10.12 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
binding upon Seller and its successors and assigns (if any), the Founders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any) and Purchaser and its successors and
assigns (if any). This Agreement shall inure to the benefit of Seller, the
Founders, Purchaser, the other Indemnitees (subject to Section 9.8) and the
respective successors and assigns (if any) of the foregoing. Purchaser may
freely assign any or all of its rights under this Agreement (including its
indemnification rights under Section 9), in whole or in part, in connection with
an Acquisition without obtaining the consent or approval of any other Party
hereto or of any other Person. Other than in connection with an Acquisition with
a company listed on the Nasdaq National Market or National Securities Exchange,
Purchaser may not assign any of its rights under this Agreement without the
prior written consent of Seller, which consent shall not be unreasonably
withheld. Seller may not assign any of its rights under this Agreement without
the prior written consent of Purchaser. In the event that any person or entity
(a "Successor") acquires Purchaser by way of a merger, consolidation,
reorganization, recapitalization or similar transaction (a "Sale"), and
Purchaser chooses to assign its rights under this Agreement pursuant to this
Section 10.12, all references herein to Purchaser Common Stock shall be
references to the consideration paid by the Successor in the sale. Each
Stockholder shall be entitled to receive, in exchange for such Stockholder's
Purchaser Common Stock, the consideration such Stockholder would have received
had such Stockholder held shares of Purchaser Common Stock on the date of the
Sale.
10.13 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). Each
of the parties agrees that:
(A) in the event of any Breach or threatened Breach by a party of
any covenant, obligation or other provision set forth in this Agreement, the
other party shall be entitled (in addition to any other remedy that may be
available to it) to (i) a decree or order of specific performance or
44.
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach; and
(B) neither Purchaser nor any other Indemnitee shall be required to
provide any bond or other security in connection with any such decree, order or
injunction or in connection with any related action or Proceeding.
10.14 WAIVER.
(A) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(B) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.15 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of Purchaser and a majority of the Founders.
10.16 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.17 PARTIES IN INTEREST. Except for the provisions of Section 9
hereof, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
10.18 ENTIRE AGREEMENT. The Transactional Agreements set forth the
entire understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
10.19 CONSTRUCTION.
(A) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(B) The Parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting Party shall not
be applied in the construction or interpretation of this Agreement.
45.
(C) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(D) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
10.20 EFFECT ON ALTEON TRANSACTIONAL AGREEMENTS. Prior to the execution
of this Agreement, the parties had certain rights and obligations pursuant to
the Alteon Transactional Agreements. The Seller, Purchaser and the Founders
hereby agree that this Agreement and the related Transactional Agreements shall
amend and supersede the Alteon Transactional Agreements in all respects;
provided, however, that if the transactions contemplated hereby are not
consummated and this Agreement is terminated, the parties shall preserve any
remedies and claims they may have under the Alteon Transactional Agreements, but
without any liability for failure to perform thereunder from and after April 12,
2001.
46.
The Parties hereto have caused this Agreement to be executed and
delivered as of May 11, 2001.
"PURCHASER": NORTEL NETWORKS CORPORATION
By: "▇▇▇▇▇▇▇ ▇. ▇▇▇▇"
---------------------------------------
Name : ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: SVP, Corporate Business Development
---------------------------------------
By: "▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇"
---------------------------------------
Name : ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Title: Assistant Secretary
---------------------------------------
"ALTEON": ALTEON WEBSYSTEMS, INC.
By: "▇▇▇▇ ▇▇▇▇▇▇▇▇"
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Title: CFO, Alteon WebSystems, Inc.
---------------------------------------
Signature Page
Exchange Agreement
The Parties hereto have caused this Agreement to be executed and
delivered as of May 11, 2001.
"SELLER": CANDLESTICK NETWORKS, INC.
By: "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇"
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Title: President & CEO
---------------------------------------
Signature Page
Exchange Agreement
The Parties hereto have caused this Agreement to be executed and
delivered as of May 11, 2001.
FOUNDERS:
"▇▇▇▇▇▇ ▇▇▇▇▇▇"
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▇▇▇▇▇▇ ▇▇▇▇▇▇
"▇▇▇▇▇ ▇▇▇▇▇▇"
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▇▇▇▇▇ ▇▇▇▇▇▇
"▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇"
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
"▇▇▇▇▇▇ Opsansnick"
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▇▇▇▇▇▇ Opsansnick
"▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇"
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Signature Page
Exchange Agreement
EXHIBIT A
CERTAIN DEFINITIONS
"AFFILIATE" means a person that, directly or indirectly, through one or
more intermediaries controls, is controlled by, or is under common control with,
the first-mentioned person.
"AGENT" has the meaning specified in Section 10.1(d) of this Agreement.
"ALTEON TRANSACTIONAL AGREEMENTS" means the Exchange Agreement and each
of the following as defined in the Exchange Agreement;
(A) the Registration Rights Agreement;
(B) the Escrow Agreement;
(C) the Stockholder Agreements;
(D) the Non-Competition Agreements;
(E) the Closing Certificate;
(F) the Memorandum of Understanding;
(G) the Series A Preferred Stock Purchase Agreement;
(H) the Investors' Rights Agreement;
(I) the Co-Sale Agreement;
(J) the Restated Certificate of Incorporation of Seller;
(K) the Budget Plan;
(L) the 2000 Equity Incentive Plan of Seller;
(M) the Chip-Set Deliverables Plan; and
(N) the Statement of Deliverables.
"AVERAGE TRADING PRICE" has the meaning specified in Section 1.5(a)(i)
of this Agreement.
"ALTEON AGREEMENT" has the meaning specified in the Recitals.
"ALTEON STOCK" means the 1,000,000 Series A convertible preferred
shares of Seller stock issued to Alteon on September 6, 2000.
"AGREEMENT" means the Exchange Agreement to which this EXHIBIT A is
attached, as it may be amended from time to time.
"ASSUMED OPTION" has the meaning specified in Section 1.9(a) of this
Agreement.
"BEST EFFORTS" means the efforts that a prudent Person desiring to
achieve a particular result would use in order to ensure that such result is
achieved as expeditiously as possible.
"BREACH" There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been (a)
any inaccuracy in or breach of, or any failure to comply with or perform, such
representation, warranty, covenant, obligation or other provision or (b) any
claim (by any Person) or other circumstance that is inconsistent with such
representation, warranty, covenant, obligation or other provision; and the term
"Breach" shall be deemed to refer to any such inaccuracy, breach, failure, claim
or circumstance.
"BUSINESS DAY" means any day other than a day on which either the New
York Stock Exchange or the Toronto Stock Exchange is closed.
"CALIFORNIA COMMISSIONER" has the meaning specified in Section 4.9 of
this Agreement.
"CCC" has the meaning specified in Section 1.16 of this Agreement.
"CERTIFICATE OF MERGER" has the meaning specified in Section 1.1 of
this Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act.
"CLOSING" has the meaning specified in Section 1.6(a) of this
Agreement.
"CLOSING CERTIFICATE" has the meaning specified in Section 1.6(b)(iii)
of this Agreement.
"CLOSING DATE" has the meaning specified in Section 1.6(a) of this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSENT" means any approval, consent, ratification, permission, waiver
or authorization (including any Governmental Authorization).
"CONTRACT" means any written, oral, implied or other agreement,
contract, understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, benefit plan, commitment,
covenant, assurance or undertaking of any nature.
"DAMAGES" shall include any loss, damage, injury, decline in value,
lost opportunity, Liability, claim, demand, settlement, judgment, award, fine,
penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense of
any nature.
"DEDUCTIBLE" has the meaning specified in Section 9.3 of this
Agreement.
"DISCLOSURE SCHEDULE" means the schedule (dated as of the date of this
Agreement and on the date of any subsequent updates, as applicable) delivered to
Purchaser on behalf of Seller and the Stockholders.
"DGCL" has the meaning specified in Section 1.1 of this Agreement.
"EFFECTIVE TIME" has the meaning specified in Section 1.1 of this
Agreement.
2
"EMPLOYEE STOCKHOLDER AGREEMENT" has the meaning specified in the
Recitals to this Agreement.
"EMPLOYMENT AGREEMENT" has the meaning specified in Section 2.8(f) of
this Agreement.
"ENCUMBRANCE" means any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, equity, trust, equitable interest, claim,
preference, right of possession, lease, tenancy, license, encroachment,
covenant, infringement, interference, Order, proxy, option, right of first
refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
"ENTITY" means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, cooperative, foundation, society, political party,
union, company (including any limited liability company or joint stock company),
firm or other enterprise, association, organization or entity.
"ENVIRONMENTAL LAW" has the meaning specified in Section 2.16 of this
Agreement.
"ESCROW AGREEMENT" has the meaning specified in the Recitals to this
Agreement.
"ESCROW SHARES" has the meaning specified in Section 1.10 of this
Agreement.
"ESCROW STOCKHOLDER" has the meaning specified in the Recitals to this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"EXCHANGE AGREEMENT" has the meaning specified in the Recitals.
"EXCHANGE RATIO" has the meaning specified in Section 1.5 of this
Agreement.
"EXCLUDED CONTRACT" means any Seller Contract (except any Contracts
relating to the Proprietary Assets) that:
(A) Seller has entered into in the Ordinary Course of Business;
(B) has a term of less than 90 days or may be terminated by
Seller (without penalty) within 90 days after the delivery of a termination
notice by Seller; and
(C) does not contemplate or involve the payment of cash or other
consideration in an amount or having a value in excess of $25,000.
"FAIRNESS HEARING" has the meaning specified in Section 5.3(a) of this
Agreement.
"FINAL DATE" has the meaning specified in Section 8.1(c) of this
Agreement.
"GAAP" means generally accepted accounting principles, applied on a
basis consistent with the basis on which the Seller Financial Statements were
prepared.
3
"GOVERNMENTAL AUTHORIZATION" means any (a) permit, license,
certificate, franchise, concession, approval, consent, ratification, permission,
clearance, confirmation, endorsement, waiver, certification, designation,
rating, registration, qualification or authorization that is, has been or may in
the future be issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement or (b)
right under any Contract with any Governmental Body.
"GOVERNMENTAL BODY" means any (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature, (b) federal, state, local, municipal, foreign or
other government, (c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal), (d) multi-national organization or body or (e) individual, Entity or
body exercising, or entitled to exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing authority or power of any
nature.
"HAZARDOUS MATERIAL" shall include: (a) any petroleum, waste oil, crude
oil, asbestos, urea formaldehyde or polychlorinated biphenyl, (b) any waste, gas
or other substance or material that is explosive or radioactive, (c) any
"hazardous substance," "pollutant," "contaminant," "hazardous waste," "regulated
substance," "hazardous chemical" or "toxic chemical" as designated, listed or
defined (whether expressly or by reference) in any statute, regulation or other
Legal Requirement (including CERCLA, any other so-called "superfund" or
"superlien" law, the Resource Conservation Recovery Act, the Federal Water
Pollution Control Act, the Toxic Substances Control Act, the Emergency Planning
and Community Right-to-Know Act and the respective regulations promulgated
thereunder), (d) any other substance or material (regardless of physical form)
or form of energy that is subject to any Legal Requirement which regulates or
establishes standards of conduct in connection with, or which otherwise relates
to, the protection of human health, plant life, animal life, natural resources,
property or the enjoyment of life or property from the presence in the
environment of any solid, liquid, gas, odor, noise or form of energy and (e) any
compound, mixture, solution, product or other substance or material that
contains any substance or material referred to in clause (a), (b), (c) or (d)
above.
"HOLDERS" has the meaning specified in Section 5.4(a) of this
Agreement.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of
1976, as amended.
"INDEMNITEES" means the following Persons: (a) Purchaser (b)
Purchaser's current and future affiliates (including the Surviving Corporation)
(c) the respective Representatives of the Persons referred to in clauses (a) and
(b) above and (d) the respective successors and assigns of the Persons referred
to in clauses (a), (b) and (c) above; provided, however, that (i) Seller shall
not be entitled to exercise any rights as an Indemnitee prior to the Closing and
(ii) the Stockholders shall not be deemed to be "Indemnitees."
"INFORMATION STATEMENT" has the meaning specified in Section 4.9 of
this Agreement.
"ISO" has the meaning specified in Section 1.9(b) of this Agreement.
KNOWLEDGE. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if: (a) such individual is actually aware of
such fact or other matter; or (b) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course of
conducting his or her duties and responsibilities. Seller shall be deemed to
have "Knowledge" of a particular fact or other matter if any founder, officer or
director of Seller has Knowledge of such fact or other matter.
4
"LEGAL REQUIREMENT" means any federal, state, local, municipal, foreign
or other law, statute, legislation, constitution, principle of common law,
resolution, ordinance, code, edict, decree, proclamation, treaty, convention,
rule, regulation, ruling, directive, pronouncement, requirement, specification,
determination, decision, opinion or interpretation that is, has been or may in
the future be issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.
"LIABILITY" means any debt, obligation, duty or liability of any nature
(including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
"LIENS" has the meaning specified in Section 4.2(t) of this Agreement.
"MATERIALS OF ENVIRONMENTAL CONCERN" has the meaning specified in
Section 2.16 of this Agreement.
"MATERIAL ADVERSE EFFECT" A violation or other matter will be deemed to
have a "Material Adverse Effect" on a Party if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement) would have a
material adverse effect on a Party's business, condition (financial or
otherwise), assets, liabilities or operations.
"MAXIMUM LIABILITY" has the meaning specified in Section 9.6 of this
Agreement.
"MERGER" has the meaning specified in Section 1.1 of this Agreement.
"NEW CERTIFICATE" has the meaning specified in Section 1.8(b) of this
Agreement.
"NON-COMPETITION AGREEMENT" has the meaning specified in the Recitals
to this Agreement.
"OPTION PLAN" has the meaning specified in Section 1.9(a) of this
Agreement.
"ORDER" means any (a) order, judgment, injunction, edict, decree,
ruling, pronouncement, determination, decision, opinion, verdict, sentence,
subpoena, writ or award that is, has been or may in the future be issued, made,
entered, rendered or otherwise put into effect by or under the authority of any
court, administrative agency or other Governmental Body or any arbitrator or
arbitration panel or (b) Contract with any Governmental Body that is, has been
or may in the future be entered into in connection with any Proceeding.
"ORDINARY COURSE OF BUSINESS" An action taken by or on behalf of Seller
shall not be deemed to have been taken in the "Ordinary Course of Business"
unless:
(A) such action is recurring in nature, is consistent with Seller's
past practices and is taken in the customary course of Seller's normal
day-to-day operations;
(B) such action is taken in accordance with sound and prudent
business practices;
5
(C) such action is not required to be authorized by Seller's
stockholders, Seller's board of directors or any committee of Seller's board of
directors and does not require any other separate or special authorization of
any nature; and
(D) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other Entities that are
engaged in businesses similar to Seller's business.
"PENSION PLAN" has the meaning specified in Section 2.15(b) of this
Agreement.
"PERMITTED INDEBTEDNESS" shall mean (a) indebtedness of Seller in favor
of Alteon arising under this Agreement, (b) liabilities to trade creditors
incurred in connection with the acquisition of goods, supplies or merchandise on
normal trade credit in the Ordinary Course of Business, (c) obligations under
real estate leases entered into in the Ordinary Course of Business, (d) capital
leases or indebtedness incurred solely to purchase equipment, computers,
software or implement tenant improvements which is secured in accordance with
clause (b) of Section 4.2(j) and is not in excess of the lesser of the purchase
price of such equipment, computers, software or tenant improvements or the fair
market value of such equipment, computers, software or tenant improvements on
the date of acquisition, and (e) extensions, refinancings, modifications,
amendments and restatements of any item described in clauses (b) through (d)
above, provided that the principal amount thereof is not increased or the terms
thereof are not modified, other than in the Ordinary Course of Business.
"PERMITTED TRANSACTIONS" shall mean (i) loans to employees in
connection with their purchase of shares issued under the Option Plan, which
loans shall be due in full in the event of termination of employment, (ii) loans
to employees in the Ordinary Course of Business of not more than $10,000 for any
employee, or $75,000 in the aggregate, or (iii) sign-on bonuses to employees
which are in the form of loans.
"PERSON" means any individual, Entity or Governmental Body.
"PLANS" has the meaning specified in Section 2.15(a) of this Agreement.
"PRE-CLOSING PERIOD" means the period commencing as of the date of this
Agreement and ending on the earlier to occur of (i) the Closing Date or (ii) the
Termination Date.
"PROCEEDING" means any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding and any informal proceeding), prosecution, contest,
hearing, inquiry, inquest, audit, examination or investigation that is, has been
or may in the future be commenced, brought, conducted or heard by or before, or
that otherwise has involved or may involve, any Governmental Body or any
arbitrator or arbitration panel.
"PROPRIETARY ASSET" means any patent, patent application, trademark
(whether registered or unregistered and whether or not relating to a published
work), trademark application, trade name, fictitious business name, service ▇▇▇▇
(whether registered or unregistered), service ▇▇▇▇ application, copyright
(whether registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, franchise, system, computer software,
invention, design, blueprint, proprietary product, technology, proprietary right
or other intellectual property right or intangible asset, including, without
limitation the Specifications.
"PURCHASER COMMON STOCK" has the meaning specified in Section 1.3 of
this Agreement.
6
"PURCHASER FILING" has the meaning specified in Section 3.6 of this
Agreement.
"REGISTRATION STATEMENT" has the meaning specified in Section 5.4(a) of
this Agreement.
"REGISTRATION EFFECTIVE PERIOD" has the meaning specified in Section
5.4(c)(i) of this Agreement.
"REGULATION D" has the meaning specified in Section 5.3(b) of this
Agreement.
"RELATED PARTY" means (a) each of the Stockholders, (b) each
individual who is, or who has at any time been, an officer of Seller, (c) each
member of the family of each of the individuals referred to in clauses (a) and
(b) above and (d) any Entity (other than Seller) in which any one of the
individuals referred to in clauses (a), (b) and (c) above holds (or in which
more than one of such individuals collectively hold), beneficially or otherwise,
a material voting, proprietary or equity interest.
"RELEASE" has the meaning specified in Section 6.4(e) of this
Agreement.
"REPRESENTATIVES" means officers, directors, employees, agents,
attorneys, accountants and advisors. The Stockholders and all other Related
Parties shall be deemed to be "Representatives" of Seller.
"REPURCHASE AGREEMENT" has the meaning specified in Section 1.8(c) of
this Agreement.
"RESTRICTED SELLER STOCK" has the meaning specified in Section 1.8(c)
of this Agreement.
"SALE" has the meaning specified in Section 10.12 of this Agreement.
"SEC" has the meaning specified in Section 5.4(b) of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER COMMON STOCK" has the meaning specified in Section 1.3 of this
Agreement.
"SELLER CONTRACT" means any contract: (a) to which Seller is a party;
(b) by which Seller or any of its assets is or may become bound or under which
Seller has, or may become subject to, any obligation; or (c) under which Seller
has or may acquire any right or interest.
"SELLER FINANCIAL STATEMENTS" has the meaning specified in Section 2.4
of this Agreement.
"SELLER OPTION" has the meaning specified in Section 1.9(a) of this
Agreement.
"SELLER PROPRIETARY ASSETS" has the meaning specified in Section 2.8(a)
of this Agreement.
"SELLER RETURNS" has the meaning specified in Section 2.13(b) of this
Agreement.
"SELLER STOCK CERTIFICATE" has the meaning specified in Section 1.8(b)
of this Agreement.
"SELLER VALUE" has the meaning specified in Section 1.5(a)(ii) of this
Agreement.
"SPECIFIED REPRESENTATIONS" means the representations and warranties
set forth in Sections 2.1, 2.3, and 2.4 of this Agreement.
7
"STOCKHOLDERS" has the meaning specified in the introductory paragraph
of this Agreement.
"SUCCESSOR" has the meaning specified in Section 10.12 of this
Agreement.
"SURVIVING CORPORATION" has the meaning specified in Section 1.1 of
this Agreement.
"SUSPENSION RIGHT" has the meaning specified in Section 5.4(c)(iii) of
this Agreement.
"TAX" means any tax (including any income tax, franchise tax, capital
gains tax, estimated tax, gross receipts tax, value-added tax, surtax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, occupation tax, inventory tax, occupancy tax, withholding tax or
payroll tax), levy, assessment, tariff, impost, imposition, toll, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), that is, has been or may in
the future be (a) imposed, assessed or collected by or under the authority of
any Governmental Body or (b) payable pursuant to any tax-sharing agreement or
similar Contract.
"TAX RETURN" means any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or may
in the future be filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"TRANSACTIONAL AGREEMENTS" means:
(a) this Agreement;
(b) the Escrow Agreement;
(c) the Employee Stockholder Agreements; and
(d) the Non-Competition Agreements;
"TRANSACTIONS" means (a) the execution and delivery of each of the
respective Transactional Agreements and (b) all of the transactions contemplated
by the respective Transactional Agreements, including: (i) the sale of the
outstanding capital stock and options by the Stockholders to Purchaser in
accordance with this Agreement and (ii) the performance by Seller, the
Stockholders and Purchaser of each of his or her respective obligations under
the Transactional Agreements and the exercise by Seller, the Stockholders and
Purchaser of each of their respective rights under the Transactional Agreements.
"TRANSFER AGENT" means Montreal Trust Company of Canada.
"UNVESTED SHARES" has the meaning specified in Section 1.8(c) of this
Agreement.
"VESTING ACCELERATION" has the meaning specified in Section 2.3(f) of
this Agreement.
"WELFARE PLANS" has the meaning specified in Section 2.15(c) of this
Agreement.
8
EXHIBIT B
STOCKHOLDER AND NON-COMPETITION AGREEMENT
THIS STOCKHOLDER AND NON-COMPETITION AGREEMENT is made and entered into
as of _______ __, 2001, by and between NORTEL NETWORKS CORPORATION, a Canadian
corporation ("Purchaser"), ALTEON WEBSYSTEMS, INC., a Delaware corporation (the
"Company"), and ______________ (the "Founder"). Certain capitalized terms used
in this Agreement and not otherwise defined shall have the meanings given to
them in the Amended and Restated Exchange Agreement and Plan of Reorganization,
dated May __, 2001, by and between Purchaser, the Company and Candlestick
Networks, Inc., a Delaware corporation (the "Seller"), attached hereto as
Exhibit A (the "Exchange Agreement"). For the purposes of this Agreement, the
Company includes subsidiaries of the Company and Purchaser includes other
subsidiaries and affiliates of Purchaser. Capitalized terms used but not defined
herein shall have the respective meanings set forth in the Exchange Agreement.
RECITALS
A. Prior to the Effective Time, the Founder is an employee and
stockholder of the Seller. Subject to the terms of the Exchange Agreement, the
Seller has merged with and into the Company (the "Merger") with the Company
continuing as a wholly-owned subsidiary of Purchaser and each Founder's capital
stock and all outstanding options of the Seller will be automatically exchanged
for shares of common stock and options of Purchaser.
B. Immediately following the Exchange, the business of the Seller will
be conducted by Purchaser through the Company. Founder will receive significant
consideration pursuant to the terms of the Merger, consisting principally of
shares of Purchaser common stock ("Purchaser Common Stock") or the right to
acquire shares of Purchaser Common Stock upon exercise of options assumed by
Purchaser pursuant to the terms of the Exchange Agreement (the "Assumed
Options") and, in connection therewith, the Founder has agreed not to compete in
the manner and to the extent herein set forth.
C. Founder purchased shares of Seller Common Stock prior to the Merger
some of which remain subject to repurchase by the Seller and are therefore, upon
consummation of the Merger, Unvested Shares, as such terms are defined in the
Exchange Agreement.
D. Prior to the Effective Date (as defined below), Founder may have
been granted options under the Candlestick Networks, Inc. 2000 Stock Option Plan
pursuant to the terms and conditions of a stock option agreement containing
vesting requirements and other provisions, which Assumed Options have been
assumed by Purchaser pursuant to the terms of the Merger.
E. Founder, the Company and Purchaser wish to confirm the status of the
Unvested Shares, the assignment of the repurchase rights by Seller to Purchaser
and the vesting of any unvested Assumed Options.
F. In order to preserve the value of the business being acquired by
Purchaser, the Exchange Agreement requires, among other things, that Founder
enter into this Agreement and that the effective date of this Agreement (the
"Effective Date") will be the Closing Date (as defined in the Exchange
Agreement).
G. Prior to the Merger, the Founder and the Seller were parties to a
Proprietary Information and Inventions Agreement (the "Prior Agreement")
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contemplated and intending to be legally bound hereby, the parties hereto agree,
that as of the Closing Date, as follows:
1. PRIOR AGREEMENT.
(a) Founder confirms he has executed and delivered to the Seller the
Prior Agreement in the form attached to this Agreement as Exhibit B and agrees
that the Prior Agreement shall continue in full force and effect after the
Merger with respect to Founder's continued employment by and with the Company or
Purchaser, except to the extent that the Prior Agreement is specifically amended
hereby.
(b) After the Merger the term "Company" and Candlestick Networks,
Inc. as used in the Prior Agreement shall include the Company (as defined
herein) and Purchaser.
(c) Section 2(d) and Section 7 of the Prior Agreement are deleted in
their entirety and Section 7 is replaced with Section 3 of this Agreement.
(d) Founder understands and agrees that, on and after the Merger,
the Company and Purchaser shall commence the integration of the Seller's
existing compensation, benefits and other employment plans, policies, programs
and practices ("Employment Programs") with those of Purchaser and that the
Company may make changes in its Employment Programs as it deems appropriate in
its sole discretion, subject to applicable legal requirements, required
Purchaser approvals and the terms of any applicable plans, policies, programs
and practices. Purchaser will use reasonable efforts to ensure that, in the
aggregate, such Employment Programs, excluding equity-based benefits, plans, or
programs, are substantially equivalent to those benefits now being provided to
the Founders, which such benefits have been disclosed to the Purchaser.
(e) In the event there is any inconsistency between this Agreement
and any Prior Agreement, the provisions of this Agreement shall control.
2. FOUNDER ACKNOWLEDGEMENTS. Founder agrees that the covenants provided
for in Sections 1, 2 and 3, including the term of the Restricted Period (as
defined below) and the geographical area encompassed in such covenants, are
necessary and reasonable in order to protect Purchaser and the Company in the
conduct of the Restricted Business (as defined below) and the utilization of its
assets, tangible and intangible, including goodwill, and to preserve and protect
the tangible and intangible assets of the Company, including the Company's
goodwill, and the customers and trade secrets of which Founder has and will have
knowledge, and in consideration for Purchaser entering into and performing under
the Exchange Agreement. The parties agree that the execution, delivery and
performance of this Agreement is in consideration of and a condition to the
consummation of the Merger and the parties do not ascribe and cannot ascribe a
separate consideration or value to the covenants provided in this Agreement. The
Founder recognizes that Purchaser would be irreparably damaged, and its
substantial investment in Seller materially impaired, if the Merger were
consummated and the Founder were to enter into an activity competing with the
Restricted Business (as defined below) in violation of the terms of this
Agreement or if the Founder were to disclose or make unauthorized use of any
confidential information concerning the Restricted Business. Accordingly, the
Founder expressly acknowledges that he is voluntarily entering into this
Agreement and that the terms and conditions of this Agreement are fair and
reasonable to the Founder in all respects.
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3. NON-COMPETITION.
(A) For a period (the "Restricted Period") commencing on the
Effective Date and ending on the later of (i) two (2) years after the Effective
Date or (ii) eighteen (18) months after the termination or cessation of
Founder's employment with the Company or the Purchaser for Cause or Founder's
resignation without Good Reason, the Founder shall not, directly or indirectly,
as an owner, employer, partner, stockholder, joint venturer, agent, creditor,
guarantor, corporate officer, director, employee, consultant, independent
contractor, principal, trustee or licensor, licensee, franchisor, franchisee or
in any other similar capacity whatsoever of or for any person, firm,
partnership, limited liability company, corporation or other or entity (other
than the Company and Purchaser) without the prior written consent of Purchaser,
(i) own, manage, operate, sell, join, engage, control, finance or participate in
the ownership, management, operation, sales, control or financing of, be
involved with the development efforts of, serve as a technical advisor to or
license intellectual property to any business that is substantially similar to,
interferes with or competes with the Restricted Business, or (ii) solicit,
divert or take away or attempt to solicit, divert or take away, the business or
patronage of any of the clients, customers or suppliers of the Company or
Purchaser with respect to the Restricted Business. Notwithstanding the above,
the Founder shall not be deemed to be in contravention of the foregoing if the
Founder participates as a passive investor holding up to 5% of the equity
securities of an entity engaged in the Restricted Business, which securities are
publicly traded.
(B) For purposes of this Agreement, the "Restricted Business" shall
mean the business of Purchaser and Seller and any continuation thereof by
Purchaser and/or the Company consisting of the design and development,
promotion, marketing, licensing or distribution of products, services, or
components that are related to (i) content management within Layer 4 through
Layer 7 processing, and (ii) content distribution.
(C) Founder acknowledges that the Restricted Business is
international in scope and its products and services are designed to be utilized
throughout the United States, Canada, the United Kingdom and India. Accordingly,
the restrictions set forth in this Section 2 shall be effective within all
cities, counties, regional municipalities, provinces, and states, as applicable,
of each of the United States, Canada, the United Kingdom and India.
(D) For greater certainty, the restrictions contained in this
Section 3 shall not apply in the event of termination of the Founder's
employment with the Company or Purchaser without Cause or resignation by the
Founder for Good Reason from the Founder's employment with the Company or
Purchaser.
(E) The non-competition provisions of this Agreement shall be deemed
to consist of a series of separate covenants, one for the Restricted Business
carried on in each region included within the geographic area referred to above.
The parties expressly agree that the character, duration and geographical scope
of such provisions in this Agreement are reasonable in light of the
circumstances as they exist on the date upon which this Agreement has been
executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration or
geographical scope of such provisions is unreasonable in light of the
circumstances as they then exist, then it is the intention and the agreement of
Founder, Purchaser and the Company that such non-competition provisions of this
Agreement shall be construed by the court in such a manner as to impose only
those restrictions on the conduct of Founder which are reasonable in light of
the circumstances as they then exist and as are necessary to assure the Company
and Purchaser of the intended benefits of this Agreement. If, in any judicial
proceeding, a court shall refuse to enforce all of the separate covenants deemed
included herein because, taken together they are more extensive than necessary
to assure the Company and Purchaser of the intended benefit of such
non-competition and non-solicitation provisions,
3
it is expressly understood and agreed between the parties hereto that those of
such covenants which, if eliminated, would permit the remaining separate
covenants to be enforced in such proceeding shall, for the purpose of such
proceeding, be deemed eliminated from the provisions hereof.
4. NON-SOLICITATION.
While Founder is employed by the Company or Purchaser and until two
(2) years after the termination or cessation of such employment for any reason,
Founder will not, directly or indirectly, recruit, canvas or solicit (i) any
employee of the Company or (ii) any employee of Purchaser with whom Founder has
directly or indirectly worked or consulted or been in contact in connection with
his employment by Purchaser within one year prior to such termination, or induce
or attempt to induce any such employee of the Company or Purchaser to terminate
his or her employment with, or otherwise cease his or her relationship with, the
Company or Purchaser, as the case may be.
5. RESTRICTED SHARES AND ASSUMED OPTIONS
(A) Founder agrees and confirms that immediately prior to the
Effective Date (i) he owned the number of shares of the Restricted Seller Stock
set forth on Exhibit C to this Agreement and that such shares were subject to
repurchase by the Company over a period of time, and (ii) the vesting schedule
of the Restricted Seller Stock and unvested Assumed Options set forth on Exhibit
B is correct.
(B) Founder agrees that any restricted stock purchase agreement,
stock option agreement, or option exercise notice and related documents (the
"Restriction Agreements") pursuant to which Founder acquired the Seller
Restricted Stock or was granted Assumed Options shall continue in full force and
effect following the Merger with respect to the Unvested Shares into which the
Restricted Seller Stock have been converted, and with respect to the Purchaser
Common Stock issuable upon exercise of Assumed Options, respectively, except as
amended hereby. Founder further agrees that the shares of Restricted Seller
Stock set forth on Exhibit B remain subject to repurchase in accordance with
terms of the applicable Restriction Agreements, as amended hereby, and Founder
consents to the assignment by the Seller to the Purchaser of the right to
repurchase such shares of Restricted Seller Stock. In the event there is any
inconsistency between this Agreement and any Restriction Agreement, the
provisions of this Agreement shall control.
(C) Founder agrees that: (i) the Unvested Shares which remain
subject to repurchase shall continue to be held by Purchaser until the
repurchase rights lapse; (ii) no more frequently than once every 30 day period
(the first such 30 day period to commence on the Effective Date), Purchaser
shall use commercially reasonable efforts to deliver or cause its transfer agent
to deliver to Founder, Unvested Shares that have vested during such 30 day
period, and (iii) such distributions will take place on a specified day selected
by Purchaser not later than fifteen (15) days following the close of the
applicable 30 day period.
(D) If, during the twelve (12) months following the Effective Date,
the employment of the Founder is terminated without Cause (as defined below) or
as a result of death or Disability or Founder resigns for Good Reason (as
defined below): (i) all Unvested Shares purchased by such Founder prior to
January 31, 2001 shall become fully vested and shall no longer be subject to
repurchase and all unvested Assumed Options granted to Founder prior to January
31, 2001 shall become fully vested; and (ii) all Unvested Shares and Assumed
Options, purchased or granted after January 31, 2001, respectively, shall with
respect to Unvested Shares be subject to repurchase as provided in the
Restriction Agreements and any unvested Assumed Options shall terminate. If the
employment of Founder is terminated during such 12 month period for any other
reason or is terminated thereafter for any reason whatsoever, the
4
Unvested Shares shall be subject to repurchase as provided in the Restriction
Agreements and the remainder of any unvested Assumed Options shall terminate.
For purposes of this Agreement, "CAUSE" shall mean (A) any material
intentional or willful misconduct by the Founder (including, without limitation,
disparagement that adversely affects the reputation of the Company or
Purchaser); (B) conviction of a felony or any other crime involving moral
turpitude, substance abuse (during or affecting the performance of employment
related duties), misappropriation of funds or any other act of dishonesty
related to such Founder's employment by the Company or Purchaser; (C) a material
failure by Founder to perform his or her responsibilities to the Company or
Purchaser, including without limitation, breach of a material provision of this
Agreement, which, if susceptible to being cured, is not cured within fifteen
(15) Business Days from receipt of written notice thereof, or if not reasonably
curable or susceptible to being cured within such period, corrective action
shall have commenced within such fifteen (15) day period and shall have been
completed within a reasonable period, or (D) failure to perform any lawful
reasonably assigned duties after written notice from the Company or Purchaser,
which failure is not cured within fifteen (15) Business Days from receipt of
such written notice or if not reasonably curable within such period, corrective
action shall have commenced within such fifteen (15) day period and shall have
been completed with a reasonable period.
For purposes of this Agreement "GOOD REASON" shall mean resignation
within six months after (A) requiring the Founder to relocate the principal site
of his employment more than 35 miles from the Founder's current location of his
employment in San Jose, California, (B) a reduction in the base salary paid to
Founder by the Company or Purchaser after the Merger from Founder's base salary
in effect on the date hereof; or (C) a change in Founder's functional job area
(e.g., if Founder, employed as an engineer, is moved to a non-engineering role),
unless Founder consents in writing to such relocation, reduction or change;
provided, however, that the occurrences described above shall not constitute
Good Reason if the Company or Purchaser, as applicable, cures such occurrences
within 30 Business Days from receipt of written notice thereof. Notwithstanding
the above, Founder acknowledges that the Merger will result in changes in job
titles and reporting lines, including the number of reports, as a result of the
Company becoming a subsidiary of a large public company, and that Purchaser will
be entitled to change reporting lines, including the number of reports, and job
titles in the future to address business needs, so long as Founder is employed
in the same functional job area in which he was employed prior to the Merger
(e.g., an engineer in the development and custom design of application specific
integrated circuits shall remain an engineer in the development and custom
design of application specific integrated circuits or other related product
areas for a wide range of Purchaser products and applications).
For the purposes of this Agreement, "DISABILITY" shall mean Founder's
inability to perform his duties because of an illness or accidental injury (but
excluding on account of any psychological, emotional or stress-related
disabilities) for a period of 180 calendar days in a 365 calendar day period, as
certified by a physician satisfactory to Founder and the Company or Purchaser,
as applicable. If there is no agreement as to a physician, Founder and the
Company or Purchaser, as applicable, shall each select a physician and those two
physicians shall together select a third physician, whose determination as to
disability shall be binding on all parties.
(E) Founder agrees to waive acceleration of vesting of all Unvested
Shares held by Founder under agreements that provide for acceleration of vesting
upon a change of control of the Company. Founder agrees that the Unvested Shares
will, following the Effective Date, vest according to the Restriction Agreement,
as if no change of control had occurred and acknowledges that the vesting
schedule that will go into effect as of the Effective Date is attached hereto as
Exhibit C. Except as specifically provided herein, all other terms and
conditions of the Unvested Shares and Assumed Options shall be governed by the
Restriction Agreement and the 2000 Stock Option Plan.
5
6. REPRESENTATIONS AND WARRANTIES. The Founder represents and warrants,
to and for the benefit of the Indemnitees, that: (a) he has full power and
capacity to execute and deliver, and to perform all of the Founder's obligations
under, this Agreement; and (b) neither the execution and delivery of this
Agreement nor the performance of this Agreement will result directly or
indirectly in a violation or breach of (i) any agreement or obligation by which
he is or may be bound, or (ii) to Founder's Knowledge, any law, rule or
regulation. The Founder's representations and warranties shall survive the
expiration of the Restricted Period for an unlimited period of time.
7. INDEPENDENCE OF OBLIGATIONS. The covenants of the Founder set forth
in this Agreement shall be construed as independent of any other agreement or
arrangement between the Founder, on the one hand, and Company or Purchaser or
any of their affiliates or subsidiaries, on the other hand, and the existence of
any claim or cause of action by the Founder against Company or Purchaser or any
of their affiliates or subsidiaries shall not constitute a defense to the
enforcement of such covenants against the Founder.
8. REMEDIES. The Founder expressly acknowledges that damages alone will
not be an adequate remedy for any breach by the Founder of any of the covenants
set forth in this Agreement and that Purchaser and the Company, in addition to
any other remedies which they may have, shall be entitled, as a matter of right,
to injunctive relief, including, without limitation, specific performance, in
any court of competent jurisdiction with respect to any actual or threatened
breach by the Founder of any of said covenants. The rights and remedies of
Purchaser and the other Indemnitees under this Agreement are not exclusive of or
limited by any other rights or remedies which they may have, whether at law, in
equity, by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights and
remedies of Purchaser and the other Indemnitees under this Agreement, and the
obligations and liabilities of the Founder under this Agreement, are in addition
to their respective rights, remedies, obligations and liabilities under the law
of unfair competition, under laws relating to misappropriation of trade secrets,
under other laws and common law requirements and under all applicable rules and
regulations. The Founder's obligations under this Agreement are absolute and
nothing in this Agreement shall limit any of the Founder's obligations, or the
rights or remedies of Purchaser or any of the other Indemnitees, under the
Exchange Agreement; and nothing in the Exchange Agreement shall limit any of the
Founder's obligations, or any of the rights or remedies of Purchaser or any of
the other Indemnitees, under this Agreement. No breach on the part of Purchaser
or any other party of any covenant or obligation contained in the Exchange
Agreement or any other agreement or by virtue of any failure to perform or other
breach of any obligation of Purchaser, any other Indemnitee or any other Person
shall limit or otherwise affect any right or remedy of Purchaser or any of the
other Indemnitees under this Agreement.
9. SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10. NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered in the manner and
to the address or facsimile telephone number set forth in Section 10.5 of the
Exchange Agreement (or to such other address or facsimile telephone number as
such party shall have specified in a written notice given to the other parties
hereto).
6
11. COUNTERPARTS; FACSIMILE. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original and all of
which, when taken together, will be deemed to constitute one and the same
agreement. This Agreement may be executed by facsimile, with such facsimile copy
to serve as conclusive evidence of the consent and ratification of the matters
contained herein by the parties hereto.
12. SECTION HEADINGS; CONSTRUCTION. The headings of sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "but not limited
to."
13. SUCCESSORS AND ASSIGNS; ASSIGNMENT. The Company or Purchaser may
assign this Agreement to any other company or entity which acquires (whether by
purchase, merger, consolidation or otherwise) all or substantially all of the
business and/or assets of the Company and/or Purchaser. Purchaser may assign
this Agreement to any of its Affiliates.
14. WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
15. EXCLUSIVE AGREEMENT; MODIFICATION. The Transactional Agreements set
forth the entire understanding of the parties relating to the subject matter
thereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter thereof. This Agreement may
not be amended, modified, altered or supplemented other than by means of a
written instrument duly executed and delivered on behalf of each of the parties
hereto.
16. GOVERNING LAW; VENUE. This Agreement shall be governed by the
internal laws of the State of California, without regard to conflicts of law
principles, as applied to agreements executed and to be performed entirely
within California by residents thereof. Any legal action or other legal
proceeding relating to this Agreement or the enforcement of any provision of
this Agreement may be brought or otherwise commenced in any state or federal
court located in the County of Santa Clara, California. THE FOUNDER IRREVOCABLY
WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING
RELATING TO THIS AGREEMENT OR THE ENFORCEMENT OF ANY PROVISION OF THIS
AGREEMENT.
17. FURTHER ASSURANCES. Each party hereto shall execute and/or cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing the Exchange.
18. ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
7
19. NOT EMPLOYMENT CONTRACT. Founder acknowledges that this Agreement
does not constitute a contract of employment and does not imply that the Company
or Purchaser will continue his or her employment for any period of time. Founder
acknowledges that his or her employment is "at will" and, as such, may be
terminated by the Company, Purchaser or Founder at any time and for any reason.
20. STAY OF TIME. In the event Founder violates the provisions of
Section 2 or Section 3 of this Agreement, the running of the time period of such
provisions so violated shall be automatically suspended on the date of such
violation and shall resume on the date such violation permanently ceases.
8
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto as of the date first above written.
ALTEON WEBSYSTEMS, INC.
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS CORPORATION
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
FOUNDER
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Name:
Address:
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EXHIBIT C
EMPLOYEE STOCKHOLDER AGREEMENT
This Agreement, dated as of _________ __, 2001, is between ALTEON
WEBSYSTEMS, INC., a Delaware corporation (the "Company"), NORTEL NETWORKS
CORPORATION, a Canadian corporation ("Purchaser"), and _______________ (the
"Employee"), an employee of Candlestick Networks, Inc. ("Seller") prior to the
Effective Time and an employee of the Company or Purchaser as of the Effective
Time. For purposes of this Agreement, Purchaser includes Affiliates of
Purchaser. Capitalized terms used but not defined herein shall have the
respective meanings set forth in the Exchange Agreement. Capitalized terms used
but not defined herein shall have the respective meanings set forth in the
Exchange Agreement (as defined below).
RECITALS
WHEREAS, the Company, Purchaser and Seller have entered into an Amended
and Restated Exchange Agreement and Plan of Reorganization, dated as of May __,
2001 attached hereto as Exhibit A (the "Exchange Agreement"), pursuant to which
Seller will be merged with and into the Company and the Company will continue as
a subsidiary of Purchaser (the "Merger");
WHEREAS, prior to the Effective Date (as defined below) of the Merger,
Employee may have been granted options under the Candlestick Networks, Inc. 2000
Option Plan pursuant to the terms and conditions of a stock option agreement
containing vesting requirements and other provisions, which options have been
assumed by Purchaser pursuant to the terms of the Exchange Agreement;
WHEREAS, Employee will receive significant consideration pursuant to
the terms of the Merger, consisting principally of shares of Purchaser common
stock ("Purchaser Common Stock") or the right to acquire shares of Purchaser
Common Stock upon exercise of such options of the Seller assumed by Purchaser
pursuant to the terms of the Exchange Agreement (the "Assumed Options");
WHEREAS, Employee may have purchased shares of Seller Common Stock
prior to the Merger some of which, immediately prior to the Effective Time,
remained subject to repurchase by the Seller and are therefore, upon
consummation of the Merger, Unvested Shares, as such terms are defined in the
Exchange Agreement;
WHEREAS, Employee, the Company and Purchaser wish to confirm the
vesting schedule of the Assumed Options and to confirm the status of any
Unvested Shares and the assignment by the Seller of the repurchase rights to
Purchaser;
WHEREAS, in order to preserve the value of the business being acquired
by Purchaser, the Exchange Agreement requires, among other things, that Employee
enter into this Agreement and that the effective date of this Agreement (the
"Effective Date") will be the Closing Date (as defined in the Exchange
Agreement); and
WHEREAS, prior to the Merger, Employee and the Seller were parties to
a Proprietary Information and Inventions Agreement (the "Prior Agreement").
NOW, THEREFORE, in consideration of the mutual promises and
representations made in this Agreement, the Company, Purchaser and Employee
agree as follows:
AGREEMENT
1. PRIOR AGREEMENT
(a) Employee confirms he or she has executed and delivered to the
Seller the Prior Agreement in the form attached to this Agreement as Exhibit B
and agrees with Purchaser and the Company that the Prior Agreement shall
continue in full force and effect after the Merger with respect to Employee's
employment with and by the Company or Purchaser, except to the extent that the
Prior Agreement is specifically amended hereby.
(b) After the Merger the term "Company" and Candlestick Networks,
Inc. as used in the Prior Agreement shall include the Company (as defined
herein) and Purchaser, as applicable.
(c) Section 2(d) and Section 7 of the Prior Agreement are deleted in
their entirety and Section 7 is replaced with Section 4 of this Agreement.
(d) Employee understands and agrees that, on and after the Merger,
the Company and Purchaser shall commence the integration of the Seller's
existing compensation, benefits and other employment plans, policies, programs
and practices ("Employment Programs") with those of Purchaser and that the
Company may make changes in its Employment Programs as it deems appropriate in
its sole discretion, subject to applicable legal requirements, required
Purchaser approvals and the terms of any applicable plans, policies, programs
and practices. Purchaser will use reasonable efforts to ensure that, in the
aggregate, such Employment Programs, excluding equity-based benefits, plans, or
programs, are substantially equivalent to those benefits now being provided to
the Employee, which such benefits have been disclosed to the Purchaser.
(e) In the event there is any inconsistency between this Agreement
and any Prior Agreement, the provisions of this Agreement shall control.
2. ASSUMED OPTIONS AND UNVESTED SHARES
(a) Employee agrees and confirms that immediately prior to the
Effective Time: (i) he or she owned the number of Assumed Options and/or shares
of Restricted Seller Stock, as set forth on Exhibit C hereto; and (ii) the
vesting schedule for the Assumed Options and any Restricted Seller Stock held by
Employee and currently in effect, prior to the execution of this Agreement, as
set forth on Exhibit C hereto is correct. Employee further agrees and confirms
that the vesting schedule as set forth on Exhibit C will be the continuing
vesting schedule after the Effective Date.
(b) Employee agrees that any restricted stock purchase agreement,
stock option agreement, or option exercise notice (a "Restriction Agreement")
pursuant to which Employee acquired the Restricted Seller Stock or Assumed
Options shall continue in full force and effect following the Merger with
respect to the Unvested Shares into which the Restricted Seller Stock have been
converted, and with respect to the Purchaser Common Stock issuable upon exercise
of Assumed Options, except as amended hereby. Employee further agrees that any
shares of Restricted Seller Stock, as reflected on Exhibit B, remain subject to
repurchase in accordance with terms of the applicable Restriction Agreements, as
amended hereby, and Employee consents to the assignment by Seller to Purchaser
of the right to repurchase such shares. In the event there is any inconsistency
between this Agreement and any Restriction Agreement, the provisions of this
Agreement shall control.
Page 2
(c) Employee agrees that: (i) the Unvested Shares which remain
subject to repurchase shall continue to be held by Purchaser until the
repurchase rights lapse; (ii) no more frequently than once every 30 day period
(the first such 30 day period to commence on the Effective Date), Purchaser
shall use commercially reasonable efforts to deliver or cause its transfer agent
to deliver to Employee, Unvested Shares that have vested during such 30 day
period, and (iii) such distributions will take place on a specified day selected
by Purchaser not later than fifteen (15) days following the close of the
applicable 30 day period.
(d) If, during the twelve (12) months following the Effective Date,
the employment of the Employee is terminated without Cause (as defined below) or
as a result of death or Disability or Employee resigns for Good Reason (as
defined below): (i) all Unvested Shares purchased by such Employee prior to
January 31, 2001 shall become fully vested and shall no longer be subject to
repurchase and all unvested Assumed Options granted to Stockholder prior to
January 31, 2001 shall become fully vested; and (ii) all Unvested Shares and
Assumed Options, purchased or granted after January 31, 2001, shall with respect
to Unvested Shares be subject to repurchase as provided in the Restriction
Agreements and any unvested Assumed Options shall terminate. If the employment
of Employee is terminated during such period for any other reason or is
terminated thereafter for any reason whatsoever, the Unvested Shares shall be
subject to repurchase as provided in the Restriction Agreements and the
remainder of any unvested Assumed Options shall terminate.
For purposes of this Agreement, "CAUSE" shall mean (A) any material
intentional or willful misconduct by the Employee (including, without
limitation, disparagement that adversely affects the reputation of the Company
or Purchaser); (B) conviction of a felony or any other crime involving moral
turpitude, substance abuse (during or affecting the performance of employment
related duties), misappropriation of funds or any other act of dishonesty
related to such Employee's employment by the Company or Purchaser; (C) a
material failure by Employee to perform his or her responsibilities to the
Company or Purchaser, including without limitation, breach of a material
provision of this Agreement, which, if susceptible to being cured, is not cured
within fifteen (15) Business Days from receipt of written notice thereof, or if
not reasonably curable or susceptible to being cured within such period,
corrective action shall have commenced within such fifteen (15) day period and
shall have been completed within a reasonable period, or (D) failure to perform
any lawful reasonably assigned duties after written notice from the Company or
Purchaser, which failure is not cured within fifteen (15) Business Days from
receipt of such written notice or if not reasonably curable within such period,
corrective action shall have commenced within such fifteen (15) day period and
shall have been completed with a reasonable period.
For purposes of this Agreement "GOOD REASON" shall mean resignation
within six months after (A) requiring the Employee to relocate the principal
site of his employment more than 35 miles from the Employee's current location
of his employment in San Jose, California, (B) a reduction in the base salary
paid to Employee by the Company or Purchaser after the Merger from Employee's
base salary in effect on the date hereof; or (C) a change in Employee's
functional job area (e.g., if Employee, employed as an engineer, is moved to a
non-engineering role), unless Employee consents in writing to such relocation,
reduction or change; provided, however, that the occurrences described above
shall not constitute Good Reason if the Company or Purchaser, as applicable,
cures such occurrences within 30 Business Days from receipt of written notice
thereof. Notwithstanding the above, Employee acknowledges that the Merger will
result in changes in job titles and reporting lines as a result of the Seller
being merged with and into the Company which is a subsidiary of a large public
company, and that Purchaser will be entitled to change reporting lines and job
titles in the future to address business needs, so long as Employee is employed
in the same functional job area in which he was employed prior to the Merger
(e.g., an engineer in the development and custom design of application specific
integrated circuits shall remain an engineer in the development and custom
design of application specific integrated circuits or other related product
areas for a wide range of Purchaser products and applications).
Page 3
For the purposes of this Agreement, "DISABILITY" shall mean Employee's
inability to perform his duties because of an illness or accidental injury (but
excluding on account of any psychological, emotional or stress-related
disabilities) for a period of 180 calendar days in a 365 calendar day period, as
certified by a physician satisfactory to Employee and the Company or Purchaser,
as applicable. If there is no agreement as to a physician, Employee and the
Company or Purchaser, as applicable, shall each select a physician and those two
physicians shall together select a third physician, whose determination as to
disability shall be binding on all parties.
3. REPRESENTATIONS AND WARRANTIES
3.1 Power and Capacity; Authorization. Such Employee has all
necessary power, authority and legal capacity to execute and deliver this
Agreement and the other Transactional Agreements to which he or she is a party,
to perform such Employee's obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement and
the other Transactional Agreements to which he or she is a party has been duly
executed and delivered by such Employee and constitutes the legal, valid and
binding agreement of such Employee, enforceable against such Employee in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
3.2 No Conflicts. The execution, delivery and performance of this
Agreement and the other Transactional Agreements to which he or she is a party
by such Employee will not: (i) result in a violation of any law, rule,
ordinance, regulation, order, judgment or decree by which such Employee or any
of its assets is bound; or (ii) conflict with or result in a breach of or
default under any mortgage, lien, lease, license, permit, agreement, contract or
instrument to which such Employee is a party or by which such Employee or any of
its assets is bound.
4. NON-SOLICITATION
While Employee is employed by the Company or Purchaser and until one
(1) year after the termination or cessation of such employment for any reason,
Stockholder will not, directly or indirectly, recruit or solicit (i) any
employee of the Company or (ii) any employee of Purchaser with whom Employee has
directly or indirectly worked or consulted or been in contact in connection with
his or her employment by Purchaser within one year prior to such termination, or
induce or attempt to induce any such employee of the Company or Purchaser to
terminate his or her employment with, or otherwise cease his or her relationship
with, the Company or Purchaser, as the case may be.
5. MISCELLANEOUS
(a) Not Employment Contract. Employee acknowledges that this
Agreement does not constitute a contract of employment and does not imply that
the Company or Purchaser will continue his or her employment for any period of
time. The Employee acknowledges that his or her employment is "at will" and, as
such, may be terminated by the Company, Purchaser or the Employee at any time
and for any reason.
(b) Interpretation. If, in any judicial proceeding, a court refuses
to enforce any of such separate covenants (or any part thereof), then such
unenforceable covenant (or such part) shall be eliminated from this Agreement to
the extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced.
Page 4
(c) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) Waiver of Rights. No delay or omission by the Company or
Purchaser in exercising any right under this Agreement will operate as a waiver
of that or any other right. A waiver or consent given by the Company or
Purchaser on any one occasion is effective only in that instance and will not be
construed as a bar to, or waiver of, any right on any other occasion.
(e) Equitable Remedies. The restrictions contained in this Agreement
are necessary for the protection of the business and goodwill of the Company and
Purchaser and are considered by Employee to be reasonable for such purpose.
Employee agrees that any breach of this Agreement is likely to cause the Company
and Purchaser substantial and irreparable damage and therefore, in the event of
any such breach, Employee agrees that the Company and Purchaser, in addition to
such other remedies which may be available, shall be entitled to specific
performance and other injunctive relief.
(f) Assignability. The Company or Purchaser may assign this
Agreement to any other company or entity which acquires (whether by purchase,
merger, consolidation or otherwise) all or substantially all of the business
and/or assets of the Company and/or Purchaser. Purchaser may assign this
Agreement to any of its affiliates.
(g) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, by telecopy, by
mail (registered or certified mail, postage prepaid, return receipt requested)
or by any nationally-recognized overnight courier service, such as Federal
Express, providing proof of delivery. Any such notice or communication shall be
deemed to have been delivered and received (i) in the case of hand delivery, on
the date of such delivery, (ii) in the case of telecopy, on the date sent if
confirmation of receipt is received, (iii) in the case of a
nationally-recognized overnight courier service, in circumstances under which
such courier guarantees next Business Day delivery, on the next Business Day
after the date when sent and (iv) in the case of mailing, on the third Business
Day following that on which the piece of mail containing such communication is
posted; provided, that, in each such case a delivery received after 5:00 p.m.
local time shall be deemed to be delivered the next Business Day. "Business Day"
means any day other than a day on which either the New York Stock Exchange or
the Toronto Stock Exchange is closed. All communications hereunder shall be
delivered to the respective parties at the following addresses:
If to Employee: The address set forth on the signature
page to this Agreement
If to Nortel Networks or the Company: Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Facsimile: (905) 863--8386
Attention: Corporate Secretary
and
Page 5
Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Khush Dadyburjor
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California. Matters subject to
binding arbitration under the Prior Agreement(s) shall remain subject to such
arbitration. Disputes over matters covered by the Escrow Agreement shall be
governed by the provisions of Exchange Agreement or the Escrow Agreement, as
applicable. Any other action, suit or other legal proceeding that is commenced
to resolve any matter arising under or relating to any provision of this
Agreement shall be commenced only in a court of the State of California (or, if
appropriate, a Federal court located within California), and the Company,
Purchaser and Employee each consents to the jurisdiction of such a court. THE
EMPLOYEE IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY
PROCEEDING RELATING TO THIS AGREEMENT OR ENFORCEMENT OF ANY PROVISION OF THIS
AGREEMENT.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original and all of which,
when taken together, will be deemed to constitute one and the same agreement.
This Agreement may be executed by facsimile, with such facsimile copy to serve
as conclusive evidence of the consent and ratification of the matters contained
herein by the parties hereto.
(j) EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS CAREFULLY READ THIS
AGREEMENT AND THE EXCHANGE AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE
PROVISIONS IN THIS AGREEMENT.
Page 6
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto as of the date first above written.
ALTEON WEBSYSTEMS, INC.
By:
----------------------------------------------
Name:
Title:
NORTEL NETWORKS CORPORATION
By:
----------------------------------------------
Name:
Title:
By:
----------------------------------------------
Name:
Title:
EMPLOYEE
-------------------------------------------------
Name:
Address:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
EXHIBIT D
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made as of ________ __, 2001, by and among: NORTEL
NETWORKS CORPORATION, a Canadian corporation ("Purchaser"), ALTEON WEBSYSTEMS,
INC., a Delaware corporation and a wholly owned subsidiary of Purchaser
("Alteon"), the STOCKHOLDERS SET FORTH ON THE SIGNATURE PAGES HERETO (the
"Stockholders") of CANDLESTICK NETWORKS, INC. ("Seller"), a Delaware
corporation, ▇▇▇▇▇▇ ▇▇▇▇▇▇ as agent to the Stockholders (the "Agent") and [U.S.
BANK TRUST NATIONAL ASSOCIATION], a national banking association (the "Escrow
Agent"). Certain capitalized terms used in this Agreement and not otherwise
defined shall have the meanings given to them in the Amended and Restated
Exchange Agreement and Plan of Reorganization, dated May __, 2001, by and
between Purchaser, Alteon and Seller (as defined therein) attached hereto as
Exhibit A (the "Exchange Agreement").
RECITALS
A. Concurrently with the execution of this Agreement, and as a condition and
inducement to Purchaser's willingness to enter into the Exchange Agreement, each
Stockholder shall enter into with Purchaser and Alteon either an Employee
Stockholder Agreement, in the form of Exhibit B (the "Employee Stockholder
Agreement") or a Stockholder/Non-Competition Agreement in the form of Exhibit C
(the "Non-Competition Agreement", together with the Employee Stockholder
Agreement, the "Stockholder Agreements").
B. The Exchange Agreement and the Stockholder Agreements contemplate the
establishment of an escrow arrangement to secure the indemnification obligations
of the Stockholders hereunder and under the Exchange Agreement.
C. Pursuant to Section 7 hereof , the Stockholders have appointed ▇▇▇▇▇▇ ▇▇▇▇▇▇
to serve as their Agent for, among other things, all matters set forth herein
and in Section 9 of the Exchange Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein and intending to be legally bound, the parties agree
as follows: 1. Escrow and Indemnification.
1.1 ISSUANCE OF AND DELIVERY OF PURCHASER COMMON STOCK; RELEASE OF
SELLER STOCK CERTIFICATES; ESCROW STOCK. In accordance with the terms of the
Exchange Agreement, Purchaser's transfer agent shall deliver to the Escrow
Agent, on behalf and in the name of the Stockholders, one or more certificates
representing 15% of the number of whole shares of Purchaser Common Stock that
each of such Stockholders have the right to receive pursuant to the provisions
of Section 1.8 of the Exchange Agreement (the "Escrow Stock"). The Agent shall
deliver to the Escrow Agent forms of assignment separate from certificate fully
executed by each Stockholder and each bearing a "medallion" signature guarantee.
The Escrow Stock shall constitute an escrow fund (the "Escrow Fund") with
respect to the indemnification obligations of the Stockholders hereunder and
under the Exchange Agreement. The Escrow Stock shall be registered in the names
of the Stockholders in accordance with their ownership interests set forth in
Exhibit D. The Escrow Fund shall be held as a trust fund solely to satisfy each
Stockholder's indemnification obligations hereunder and under the Exchange
Agreement, and it is the intention of Purchaser, Alteon, the Stockholders and
the Agent that the Escrow Fund shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any Stockholder
or of any party hereto. The Escrow Agent agrees to accept delivery of the Escrow
Fund and to hold the
Escrow Fund in an escrow account (the "Escrow Account"), subject to the terms
and conditions of this Agreement and the Exchange Agreement. The Escrow Stock
shall be retained in the Escrow Fund until the Initial Escrow Account Release
Date and the Final Escrow Termination Date, as applicable.
1.2 VOTING OF THE ESCROW STOCK. The record owners of the Escrow Stock
shall be entitled to exercise all voting rights with respect to such Escrow
Stock.
1.3 DIVIDENDS, ETC. Purchaser and each of the Stockholders agree, for
the benefit of Purchaser and the Escrow Agent, that any cash, securities or
other property distributable (whether by way of dividend, stock split or
otherwise) in respect of or in exchange for any Escrow Stock shall not be
distributed to the record owners of the same, but rather shall be distributed by
Purchaser to and held by the Escrow Agent in the Escrow Account. Unless and
until the Escrow Agent receives such cash, securities or other property, it may
assume without inquiry that the Escrow Stock currently being held by it in the
Escrow Account is all that the Escrow Agent is, required to hold. At the time
any Escrow Stock is required to be released from the Escrow Account to any
Person pursuant to this Escrow Agreement or the Exchange Agreement, any cash,
securities or other property previously received by the Escrow Agent in respect
of or in exchange for such Escrow Stock shall be released from the Escrow to
such Person in accordance with such Person's pro-rata interest in the Escrow
Stock.
1.4 TRANSFERABILITY. The interests of the Stockholders in the Escrow
Account and in the Escrow Stock shall not be sold, assigned, pledged,
hypothecated or transferred prior to the distribution of the Escrow Stock in
accordance with the provisions of this Agreement.
1.5 FRACTIONAL SHARES. No fractional shares of Purchaser Common Stock
shall be retained in or released from the Escrow Account pursuant to this
Agreement. In connection with any release of Escrow Stock from the Escrow
Account, Purchaser and the Escrow Agent shall "round down" in order to avoid
retaining any fractional share in the Escrow Account and in order to avoid
releasing any fractional share from the Escrow Account.
1.6 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each Stockholder,
severally and not jointly, represents, warrants and covenants to Purchaser as
follows:
(a) Seller Representations and Warranties; Stockholder Indemnity. Such
Stockholder is aware that the Seller has made certain representations and
warranties in the Exchange Agreement. Such Stockholder agrees that such
Stockholder's portion of the Escrow Fund may be utilized as provided herein to
indemnify and defend the Indemnified Parties, and hold the Indemnitees harmless,
from any claim for indemnification, whether based upon a representation,
warranty or covenant of the Seller set forth in the Exchange Agreement or of the
Stockholder set forth herein or in any of the Transactional Agreements. The
Stockholder agrees that Section 9 of the Exchange Agreement is incorporated
herein by reference. Further, each Stockholder shall indemnify, defend and hold
harmless the Indemnitees from any Damages incurred or suffered as a result of or
arising out of or related to a Stockholder Representation Indemnity Claim or a
Stockholder Fraud Indemnity Claim. "Stockholder Representation Indemnity Claim"
means an indemnity claim based on, arising from, resulting from or relating to
(A) an inaccuracy in a representation by the Stockholder in any Transactional
Agreement, or (B) any Third Party Claim that, if true, would demonstrate an
inaccuracy in a representation of a Stockholder in any Transactional Agreement
or (C) a breach by an Stockholder of any covenant contained in any Transactional
Agreement. "Stockholder Fraud Indemnity Claim" means an indemnity claim based
on, arising from, resulting from or relating to, in whole or in part, fraud
committed personally by one or more Stockholder(s) or as to which one or more
specified Stockholder(s) participated or aided or abetted. The word "fraud"
means fraud as defined in applicable common law provisions.
2
(b) Power and Capacity; Authorization. Such Stockholder has all
necessary power, authority and legal capacity to execute and deliver this
Agreement, to perform such Stockholder's obligations hereunder and to consummate
the transactions contemplated hereby. No corporate, partnership or other acts or
proceedings on the part of such Stockholder are necessary to authorize the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been executed and delivered by such
Stockholder and constitutes the legal, valid and binding agreement of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights, and, with respect to the remedy of specific performance, equitable
doctrines applicable thereto.
(c) No Conflicts. The execution, delivery and performance of this
Agreement by such Stockholder will not: (i) conflict with or result in a breach
of or default under any charter or formation documents or trust instruments of
such Stockholder; (ii) to the knowledge of Stockholder, result in a violation of
any law, rule, ordinance, regulation, order, judgment or decree by which such
Stockholder is bound; or (iii) conflict with or result in a material breach of
or default under any mortgage, lien, lease, license, permit, agreement, contract
or instrument to which such Stockholder is a party or by which such Stockholder
is bound, which conflict, breach or default would impair the ability of such
Stockholder to perform such Stockholder's obligations under this Agreement.
(d) Ownership of Stock. Such Stockholder is immediately prior to the
Effective Time of the Merger, the lawful owner, of record and beneficially, of
the number of outstanding shares of capital stock of the Seller set forth in
Exhibit D, free and clear of all liens, encumbrances, restrictions and claims of
every kind.
(e) Canadian Resident. Such Stockholder is not a resident of Canada.
(f) Investment Representations.
(I) The Stockholder is acquiring Purchaser Common Stock for his
own account for investment purposes only and not with a view to, or for resale
in connection with, any distribution thereof in violation of the Securities Act.
(II) As indicated on the signature page hereto, the Stockholder
is either (i) an "accredited investor" within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act and, by reason of his business
or financial experience, the Stockholder has the capacity to protect his own
interests in connection with the transactions contemplated by this Agreement and
is able to bear the economic risks of an investment in Purchaser Common Stock,
or (ii) the Stockholder has utilized the services of ________________________ as
his Purchaser Representative for purposes of analyzing the business and
financial risks of the Merger.
(III) The Stockholder has been advised that, unless an exemption
from registration under the Securities Act is obtained pursuant to section 5.3
of the Exchange Agreement, the Purchaser Common Stock to be issued in the Merger
is not registered and is deemed "restricted securities" as that term is defined
in Rule 144 promulgated under the Securities Act; that the exemption from
registration under Rule 144 as currently in effect will not be available in any
event for at least one year from the date of issuance, and even then will not be
available unless (i) a public trading market then exists for such Purchaser
Common Stock, (ii) adequate information concerning Purchaser is then available
to the public, and (iii) other terms and conditions of Rule 144 are complied
with; and that any sale of Purchaser Common Stock may be made by such Founder
only in accordance with such terms and conditions.
3
(IV) The Stockholder acknowledges that, unless an exemption from
registration under the Securities Act is obtained pursuant to section 5.3 of the
Exchange Agreement, Purchaser Common Stock will bear a legend in substantially
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER.
(g) RESALE RESTRICTIONS. Such Stockholder has been advised that the
Parent Common Stock to be issued in the Merger may be sold, and agrees to sell
such shares of Parent Common Stock, only in accordance with Rule 145(d)
promulgated under the Securities Act.
2. ADMINISTRATION OF ESCROW ACCOUNT. Except as otherwise provided
herein, the Escrow Agent shall administer the Escrow Account as follows:
2.1 If any Indemnitee has or claims to have incurred or suffered
Damages for which it is or may be entitled to indemnification, compensation or
reimbursement under any of the Transactional Agreements, such Indemnitee may
deliver a claim notice (a "Claim Notice") to the Agent and to the Escrow Agent
in accordance with Section 10 below; provided, that if the Indemnitee's claim is
based on, arising out of or relating to an Stockholder Representation Indemnity
Claim or a Stockholder Fraud Claim, the Indemnitee shall deliver a Claim Notice
to the Agent and each Stockholder against whom the Indemnitee is asserting a
right to indemnification (the "Indemnifying Stockholders"). Each Claim Notice
shall state that such Indemnitee believes in good faith and after investigation
that there is or has been a breach of a representation, warranty or covenant
contained in one of the Agreements or that such Indemnitee is entitled to
indemnification, compensation or reimbursement under the Exchange Agreement and
contain a brief description of the circumstances supporting such Indemnitee's
belief that there is or has been such a breach or that such Indemnitee is so
entitled to indemnification, compensation or reimbursement and shall, to the
extent possible, contain a nonbinding, preliminary estimate of the amount of
Damages such Indemnitee claims to have so incurred or suffered (the "Claimed
Amount").
2.2 Within 30 Business Days ("Business Day" shall mean any day other
than a day on which either the New York Stock Exchange or the Toronto Stock
Exchange is closed) after receipt by the Agent and the Escrow Agent (or, in the
case of a Stockholder Representation Claim or a Stockholder Fraud Claim, receipt
by the Indemnifying Stockholder) of a Claim Notice, the Agent (or in the case of
a Stockholder Representation Claim or a Stockholder Fraud Claim, the
Indemnifying Stockholder(s) representing a majority interest with respect to
such claim) may deliver to the Indemnitee who delivered the Claim Notice and to
the Escrow Agent a written response (the "Response Notice") in which the Agent
(or a majority interest of the Indemnifying Stockholders, as the case may be):
(i) agrees that a whole number of shares of Escrow Stock having a Stipulated
Value (defined below in Section 3) equal to the full Claimed Amount may be
released from the Escrow Account to the Indemnitee, (ii) agrees that a whole
number of shares of Escrow Stock having a Stipulated Value equal to part, but
not all, of the Claimed Amount (the "Agreed Amount") may be released from the
Escrow Account to the Indemnitee or (iii) indicates that no Escrow Stock may be
released from the Escrow Account to the Indemnitee; PROVIDED, HOWEVER, THAT IN
NO EVENT SHALL THE AGENT AGREE TO RELEASE A WHOLE NUMBER OF SHARES OF ESCROW
STOCK WITH AN AGGREGATE VALUE THAT EXCEEDS THE STIPULATED VALUE FOR ANY CLAIMED
AMOUNT OR OTHERWISE. Any part of the Claimed Amount that is not to be released
to the Indemnitee shall be the "Contested Amount." If a Response Notice is not
delivered to the Escrow Agent within such 30 business-day period, then the Agent
(or a majority interest of the Indemnifying Stockholders, as the case may be)
4
shall be deemed to have agreed that a whole number of Escrow Stock having a
Stipulated Value equal to the full Claimed Amount may be released to the
Indemnitee from the Escrow Account up to the whole number of shares of Escrow
Stock equal to the Stipulated Value.
If the Agent (or a majority interest of the Indemnifying Stockholders, as the
case may be) delivers a Response Notice agreeing that a whole number of shares
of Escrow Stock having a Stipulated Value equal to the full Claimed Amount may
be released from the Escrow Account to the Indemnitee, or if the Agent (or a
majority interest of the Indemnifying Stockholders, as the case may be) does not
deliver a Response Notice in accordance with Section 2.2 above, the Escrow Agent
shall promptly following the receipt of the Response Notice (or, if the Agent
has not delivered a Response Notice, promptly following the expiration of the 30
business-day period referred to in Section 2.2 above), deliver to such
Indemnitee such Escrow Stock.
2.3 If the Agent (or a majority interest of the Indemnifying
Stockholders, as the case may be) delivers a Response Notice agreeing that a
whole number of shares of Escrow Stock having a Stipulated Value equal to part,
but not all, of the Claimed Amount may be released from the Escrow Account to
the Indemnitee, the Escrow Agent shall promptly following the receipt of the
Response Notice deliver to such Indemnitee Escrow Stock equal to the Agreed
Amount.
2.4 If the Agent (or a majority interest of the Indemnifying
Stockholders, as the case may be) delivers a Response Notice indicating that
there is a Contested Amount, the Agent and the Indemnitee shall attempt, as soon
as practicable, in good faith to resolve the dispute related to the Contested
Amount. If the Indemnitee and the Agent (or a majority interest of the
Indemnifying Stockholders, as the case may be) shall resolve such dispute, such
resolution shall be binding on all of the Stockholders and a settlement
agreement containing the terms and conditions of such resolution shall be signed
by the Indemnitee and the Agent (or a majority interest of the Indemnifying
Stockholders, as the case may be) and delivered to the Escrow Agent. The Escrow
Agent shall release Escrow Stock from the Escrow Account in connection with any
Contested Amount within 5 Business Days after the delivery to it of a copy of a
settlement agreement executed by the Indemnitee and the Agent setting forth
instructions to the Escrow Agent as to the Stipulated Value of the Escrow Stock,
if any, to be released from the Escrow Account, with respect to such Contested
Amount.
2.5 Any Escrow Stock released from the Escrow Account to an Indemnitee
shall be deemed to reduce the Escrow Stock pro rata with respect to each
Stockholder in accordance with each Stockholder's percentage interest in the
Escrow Fund as set forth in Exhibit D; provided, however, that with respect to a
Stockholder Representation Indemnity Claim or a Stockholder Fraud Indemnity
Claim, each Stockholder shall be responsible for the full amount of such a
indemnity claim based on such Stockholder's representations or fraud perpetrated
by such Stockholder. No Stockholder shall have any responsibility for a
Stockholder Representation Claim arising out of the stockholder representations
or breaches of another Stockholder and no Stockholder shall have any
responsibility for a Stockholder Fraud Indemnity Claim unless such Stockholder
shall have committed, participated in or aided and abetted such fraud. Those
Stockholders who have participated in fraud with regard to a Stockholder Fraud
Indemnity Claim shall be jointly and severally liable for all Damages payable to
the Indemnitees hereunder.
2.6 The timing of the giving of a Claim Notice shall be within the
exclusive prerogative of the Indemnitee. No delay on the part of the Indemnitee
in giving a Claim Notice Pursuant to Section 2 shall relieve the Stockholders of
any liability or obligation under this Agreement, except to the extent that such
delay materially prejudices the Stockholders; provided, however, that to be
effective, a Claim Notice must be filed on or prior to the Initial Escrow
Account Release Date with respect to all claims other than a claim pursuant to
Section 9.2(a)(vi) of the Exchange Agreement and a Claim Notice must be filed on
or prior to the Final Escrow Termination Date with respect a claim pursuant to
Section 9.2(a)(vi) of the Exchange Agreement.
5
3. VALUATION OF ESCROW STOCK; STOCK SPLITS.
3.1 For purposes of this Agreement, the "Stipulated Value" per share of
Escrow Stock shall be equal to the volume weighted average of the closing sales
prices of a share of Purchaser Common Stock as reported on the New York Stock
Exchange as reported by Bloomberg (for trading during regular trading hours, not
extended trading) for the 30 consecutive trading days ending on the 5th trading
day prior to the date any shares of Escrow Stock are to be released from escrow
by the Escrow Agent pursuant to Sections 2.2, 2.3, 2.4, 2.5 or 5 of this
Agreement. Purchaser and Agent shall deliver to the Escrow Agent, prior to any
such release, a jointly-signed certificate that shall set forth the Stipulated
Value, on which certificate the Escrow Agent may rely without inquiry.
3.2 All numbers contained in, and all calculations required to be made
pursuant to, this Agreement shall be adjusted as appropriate to reflect any
stock split, reverse stock split, stock dividend or similar transaction effected
by Purchaser after the date hereof; provided, however, that the Escrow Agent
shall have received notice of such stock split or other action and shall have
received the appropriate number of additional shares of Purchaser Common Stock
or other property pursuant to Section 1.3 above, together with an updated
version of Exhibit D.
4. LIMITATION OF ESCROW AGENT'S LIABILITY.
4.1 The Escrow Agent undertakes to perform such duties as are
specifically set forth in this Agreement only and shall have no duty under any
other agreement or document notwithstanding their being referred to herein or
attached hereto as an exhibit. The Escrow Agent shall not be liable except for
the performance of such duties as are specifically set forth in this Agreement,
and no implied covenants or obligations shall be read into this Agreement
against the Escrow Agent. The Escrow Agent shall incur no liability with respect
to any action taken by it or for any inaction on its part in reliance upon any
notice, direction, instruction, consent, statement or other document believed by
it to be genuine and duly authorized, nor for any other action or inaction
except for its own willful misconduct or negligence. The Escrow Agent may rely
on and use the Stock Powers and shall not be liable in connection therewith. In
all questions arising under this Agreement, the Escrow Agent may rely on the
advice of counsel, and for anything done, omitted or suffered in good faith by
the Escrow Agent based upon such advice the Escrow Agent shall not be liable to
anyone. The Escrow Agent shall not be required to take any action hereunder
involving any expense unless the payment of such expense is made or provided for
in a manner reasonably satisfactory to it. The Escrow Agent shall not be liable
for incidental, consequential or punitive damages.
4.2 The parties hereby agree to severally indemnify the Escrow Agent
for, and hold it harmless against, any loss liability or expense incurred
without negligence or willful misconduct on the part of Escrow Agent, arising
out of or in connection with its carrying out of its duties hereunder. This
right of indemnification shall survive the termination of this Agreement, and
the resignation of the Escrow Agent. The reasonable costs and expenses of
enforcing this right of indemnification shall also be paid by the parties.
5. RELEASE OF ESCROW STOCK. The Escrow Agent is not the stock transfer
agent for the Purchaser Common Stock. Accordingly, if a distribution of a number
of shares of Purchaser Common Stock less than all of the Escrow Stock is to be
made, the Escrow Agent must requisition the appropriate number of shares from
such stock transfer agent, delivering to it the appropriate stock certificates
and related Stock Powers. For the purposes of this Agreement, the Escrow Agent
shall be deemed to have delivered Purchaser Common Stock to the Person entitled
to it when the Escrow Agent has delivered such certificates and Stock Powers to
such stock transfer agent with instructions to deliver it to the appropriate
Person. Distributions of Purchaser Common Stock shall be made to Purchaser or
the Stockholders, as appropriate, at the addresses described in Section 10
below. Whenever a distribution is to be made to the
6
Stockholders, pro rata distributions shall be made to each of them based on the
percentage interests in the Escrow Fund originally as set forth in Exhibit D,
and as adjusted thereafter in accordance with Section 2.5 hereof. Exhibit D may
be updated from time to time upon receipt of written notice from Purchaser and
Agent regarding any adjustment in accordance with Section 2.5. Promptly after
the Initial Escrow Account Release Date, upon receipt of written notice from
Purchaser and Agent (which Purchaser and Agent agree to deliver to Escrow Agent
within ten Business Days after the Initial Escrow Account Release Date and
setting forth the number of Unvested Shares and shares of vested Purchaser
Common Stock then held by each Stockholder in Escrow), the Escrow Agent shall
distribute or cause Purchaser's transfer agent to distribute to each Stockholder
such Stockholder's pro rata portion of the shares of Purchaser Common Stock then
held in escrow based on the percentage interests set forth in such notice;
provided, however, that the Escrow Agent shall retain a number of shares of
Escrow Stock equal to 1/3 of the total number of shares of Escrow Stock
initially deposited into the Escrow Account upon the Closing (the "Tax Indemnity
Shares") and if, prior to the Initial Escrow Account Release Date, any
Indemnitee has given a Claim Notice containing a claim that has not been
resolved prior to the Initial Escrow Account Release Date (other than a claim
pursuant to Section 9.2(a)(vi) of the Exchange Agreement), the Escrow Agent
shall (i) retain an additional number of shares of Escrow Stock having a
Stipulated Value equal to the Claimed Amount of such unresolved Claim Notice in
the Escrow Account until the claim has been resolved ("Pending Claim Shares")
and (ii) release all other shares of vested Escrow Stock being released to each
Stockholder in accordance with such Stockholder's percentage interests in the
Escrow Fund. Any shares of Escrow Stock being released at the Initial Escrow
Account Release Date that are Unvested Shares will be returned to Purchaser and
distributed in accordance with Section 1.8(c) of the Exchange Agreement.
Promptly after the Final Escrow Termination Date, upon receipt of written notice
from Purchaser and Agent (which Purchaser and Agent agree to deliver to Escrow
Agent within ten Business Days after the Final Escrow Termination Date and
setting forth the number of Unvested Shares and shares of vested Purchaser
Common Stock then held by each Stockholder in Escrow), the Escrow Agent shall
distribute or cause Purchaser's transfer agent to distribute to each Stockholder
such Stockholder's pro rata portion of the shares of Purchaser Common Stock
remaining in escrow based on the percentage interests in the Escrow Fund as set
forth in such notice; provided, however, that if, prior to the Final Escrow
Termination Date, any Indemnitee has given a Claim Notice containing a claim
pursuant to Section 9.2(a)(vi) of the Exchange Agreement that has not been
resolved prior to the Final Escrow Termination Date, the Escrow Agent shall (i)
retain a number of shares of Escrow Stock having a Stipulated Value equal to the
Claimed Amount of such unresolved Claim Notice in the Escrow Account until the
claim has been resolved and (ii) release all other shares of vested Escrow Stock
to each Stockholder in accordance with such Stockholder's percentage interests
in the Escrow Fund. Each release of Escrow Shares to the Stockholders shall
include the release of vested shares and Unvested Shares in the same proportion
as vested shares and Unvested Shares are then held in escrow. In connection with
the release of Escrow Shares to satisfy an indemnity claim, vested shares shall
be released to the Indemnitees prior to the release of Unvested Shares.
6. TERMINATION. On the first anniversary of the Closing Date (the
"Initial Escrow Account Release Date") the Escrow Agent shall release to the
Stockholders all of the Escrow Stock then held in the Escrow Account, except (i)
the Tax Indemnity Shares for which this Agreement shall continue in full force
and effect until the Final Escrow Termination Date and (ii) any Pending Claim
Shares for which this Agreement shall continue in full force and effect until
the pending claim has been fully adjudicated or otherwise resolved and the
Pending Claim Shares released in accordance with this Agreement. This Agreement
shall terminate with respect to the Tax Indemnity Shares on the fourth
anniversary of the Closing Date, or earlier, upon release by the Escrow Agent of
the entire Escrow Fund in accordance with this Agreement (the "Final Escrow
Termination Date"); provided, however, that if the Escrow Agent has received
from any Indemnitee a Claim Notice setting forth a claim pursuant to Section
9.2(a)(vi) of the Exchange Agreement that has not been resolved by the Final
Escrow Termination Date, then this
7
Agreement shall continue in full force and effect until the claim has been fully
adjudicated or otherwise resolved and the Tax Indemnity Shares released in
accordance with this Agreement.
7. THE AGENT.
7.1 Upon consummation of the Merger and in consideration of issuance of
the Escrow Stock, each Stockholder shall be deemed to have irrevocably appointed
the Agent as his or her attorney in fact to pay, contest, defend, settle,
compromise or otherwise dispose of any claim made by an Indemnitee in accordance
with this Agreement and the Exchange Agreement. No further documentation shall
be required to evidence such appointment, and such power of attorney shall be
coupled with an interest, thereby confirming such appointment as irrevocable.
▇▇▇▇▇▇ ▇▇▇▇▇▇ in his capacity as the Agent, shall be empowered to act in his
sole discretion with respect to all matters arising under this Agreement.
7.2 The Agent shall deliver a copy of any Claim Notice from any
Indemnitee to each of the Stockholders promptly after receipt thereof. Unless
instructed to the contrary, in a written notice delivered to the Agent within
fifteen (15) days following the date on which the Claim Notice was first
received by the Agent, by Stockholders representing at least a majority of the
Escrow Stock (a "Majority Interest"), the Agent shall be authorized, in the
Agent's sole and absolute discretion, to contest or not to contest the claims
and to initiate such steps as the Agent deems necessary or advisable in
connection therewith. In the event that the Agent elects not to contest the
claims, the Agent shall so inform the Stockholders in writing within twenty (20)
days following the date the Claim Notice was first received by the Agent.
Notwithstanding the foregoing, in the event that Stockholders representing a
Majority Interest instruct the Agent, in a written notice delivered to the Agent
within fifteen (15) days following the date on which the Claim Notice was first
received by the Agent, to contest the claims referred to in the Claim Notice,
the Agent shall do so, subject to Section 7.3 of this Agreement, in such manner
as the Agent deems necessary or advisable to protect the Stockholders' interest.
7.3 Each Stockholder hereby agrees that he or she shall act, in
connection with the matters covered by this Agreement, including without
limitation the defense or settlement of any claims, solely through the Agent.
Each Stockholder expressly acknowledges and agrees that he or she hereby waives
any right or authority to act on his or her own behalf in connection with the
matters covered by this Agreement, except as expressly provided to the contrary
herein. The acts of the Agent pursuant to this Agreement shall be binding upon
each of the Stockholders.
7.4 The Agent shall be entitled to treat as genuine any letter, paper,
facsimile, telex, or other document furnished or caused to be furnished to it by
any party to this Agreement and believed by the Agent to be genuine and to have
been telexed, telegraphed, faxed, or cabled or signed and presented by any party
to this Agreement.
7.5 If the Agent shall die, become disabled or otherwise be unable to
fulfill his, her or its responsibilities hereunder, Stockholders representing a
majority interest shall, within 10 days after such death or disability, appoint
a successor to the Agent and immediately thereafter notify Purchaser of the
identity of such successor. Any such successor shall succeed the Agent as Agent
hereunder. If for any reason there is no Agent at any time, all references
herein to the Agent shall be deemed to refer to the Majority Interest
Stockholders.
7.6 The Agent may: (i) modify, amend or otherwise change this Agreement
or any of the terms or provisions included herein (including modifications,
amendments or changes subsequent to Closing), (ii) take all actions and execute
all documents under this Agreement and the Exchange Agreement reasonably
necessary or desirable to consummate the Exchange and the transactions
contemplated by the Exchange Agreement, and take all actions and execute all
documents which may be necessary or desirable in connection therewith, (iii)
give and receive consents and all notices hereunder,
8
(iv) authorize delivery to Purchaser of Seller Common Stock, cash or other
property from the Escrow Fund, object to such deliveries, agree to, negotiate,
enter into settlements and compromises of this Agreement and the Exchange
Agreement, and take all actions necessary or appropriate in the judgment of the
Agent for the accomplishment of the foregoing and (v) deal with Purchaser
exclusively on all matters relating to the Exchange Agreement. Purchaser and the
Escrow Agent shall be entitled to deal exclusively with the Agent on all matters
set forth in this Section 7 and shall be entitled to rely exclusively (without
further evidence of any kind whatsoever) on any document executed or purported
to be executed on behalf of any Stockholder by the Agent, and on any other
action taken or purported to be taken on behalf of any Stockholder by the Agent,
as fully binding on such Stockholder, without any obligation to notify or make
inquiries with respect to any Stockholder. Unless and until the Escrow Agent
receives a certificate setting forth the name of a successor Agent, the Escrow
Agent may assume without inquiry that no successor Agent has been appointed by
the Stockholders. THE STOCKHOLDERS, AND EACH OF THEM INDIVIDUALLY, AGREE THAT
SERVICE OF PROCESS UPON THE AGENT IN ANY PROCEEDING ARISING UNDER OR PERTAINING
TO THIS AGREEMENT OR THE TRANSACTIONAL AGREEMENTS SHALL BE DEEMED TO BE VALID
SERVICE OF PROCESS UPON EACH OF THE STOCKHOLDERS AND ANY CLAIM BY PURCHASER
AGAINST THE STOCKHOLDERS, OR ANY OF THEM, IN RESPECT TO THIS AGREEMENT OR THE
TRANSACTIONAL AGREEMENTS, MAY BE ASSERTED AGAINST AND SETTLED ON BEHALF OF ANY
OF THEM BY THE AGENT.
7.7 LIABILITY OF THE AGENT; RIGHT OF CONTRIBUTION. Nothing contained
herein shall be deemed to make the Agent liable to the Stockholders because of
service in his capacity as Agent and attorney-in-fact. The Stockholders agree
not to institute any Proceeding against the Agent in connection with the
performance of his duties under the Agreements, including; without limitation,
the negotiation of the terms of the Exchange Agreement. The Agent shall not
incur any liability to the Stockholders for losses, damages, liabilities or
expenses, except for fraud and his own willful misconduct, and shall not receive
any remuneration for acting in such capacity. The Stockholders shall severally
indemnify, protect and hold harmless the Agent against any and all loss,
liability or expense as and when incurred without gross negligence, bad faith,
fraud or willful misconduct on the part of the Agent that arises out of or in
connection with the acceptance or administration of the Agent's duties hereunder
or pursuant to the Exchange Agreement or of any breach by the Stockholders of
this Agreement or the Transactional Agreements. In the event a Proceeding is
instituted against the Agent by a third party, the Agent shall have a right of
contribution against the Stockholders pro rata for any and all loss, liability,
damage or expense.
8. FEES AND EXPENSES. Purchaser shall pay to the Escrow Agent
reasonable compensation for its normal services hereunder in accordance with the
fee schedule attached hereto as EXHIBIT E (which may be subject to change on an
annual basis) and shall reimburse the Escrow Agent hereunder for all reasonable
expenses, disbursements and advances incurred or made by the Escrow Agent in
performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel).
9. RESIGNATION; REMOVAL; SUCCESSOR.
9.1 The Escrow Agent may resign as escrow agent under this Agreement
and thereby become discharged from the obligations hereby created, by notice in
writing given to Purchaser and the Agent not less than 30 days before such
resignation is to take effect.
9.2 The Escrow Agent may be removed at any time by an instrument or
concurrent instruments in writing delivered to the Escrow Agent and signed by
Purchaser and the Agent.
9.3 If at any time hereafter the Escrow Agent shall give notice of its
resignation pursuant to Section 9.1 above, shall be removed pursuant to Section
9.2 above, or shall be dissolved or otherwise
9
become incapable of acting, or the position of the Escrow Agent shall become
vacant for any other reason, Purchaser and the Agent shall promptly appoint a
mutually acceptable successor Escrow Agent. Upon such appointment such successor
shall execute, acknowledge and deliver to its predecessor, and also to Purchaser
and the Agent an instrument in writing accepting such appointment hereunder and
agreeing to be bound by the terms and provisions of this Agreement. Thereupon
such successor Escrow Agent, without any further act, shall become fully vested
with all the rights, immunities, and powers, and shall be subject to all of the
duties and obligations of its predecessor and such predecessor Escrow Agent
shall promptly deliver the funds in the Indemnity Escrow Account to such
successor pursuant to written instructions from Purchaser or the Agent. If a
successor Escrow Agent is not appointed, the Escrow Agent may apply to a court
of competent jurisdiction to appoint one.
9.4 In the event the Escrow Agent is merged or consolidated with any
other entity, and as a result thereof the Escrow Agent ceases to exist as a
separate entity, or the Escrow Agent sells substantially all of its corporate
trust business (including the escrow contemplated by this Agreement) to another
entity, then such surviving entity, without any further act shall become fully
vested with all the rights, immunities, and powers, and shall be subject to all
of the duties and obligations of the Escrow Agent.
9.5 The Escrow Agent bears exclusive risk of loss, theft or damage with
respect to the Escrow Shares in its possession.
10. NOTICES. All notices, consents, waivers and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (i) delivered by hand (with written confirmation of receipt), (ii)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (iii) when received
by the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties); provided, that, in each
such instance if such notice or communication is received after 5:00 p.m. local
time, it shall constitute delivery the next Business Day:
if to Purchaser or Alteon:
Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Attention: Corporate Secretary
Facsimile: (905) 863--8386
with a copy to:
Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Khush Dadyburjor
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
10
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(which shall not constitute notice)
if to the Stockholders:
Candlestick Networks, Inc.
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Agent:
▇▇▇▇▇▇ ▇▇▇▇▇▇, as Agent of the Stockholders
c/o Candlestick Networks, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Bay Venture Counsel, LLP
Lake ▇▇▇▇▇▇▇ Plaza Building
1999 ▇▇▇▇▇▇▇▇ Street, Suite 1:300
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(which shall not constitute notice)
if to the Escrow Agent:
[U.S. Bank Trust National Association
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: _______________
Telephone: (415) ___________
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇]
Any notice to the Escrow Agent shall be effective only upon receipt. If
any notice or document of any kind is required to be delivered to the
Escrow Agent and any other person, the Escrow Agent may assume that
such other person received such notice or document on the date on which
the Escrow Agent received it, but the Escrow Agent need not require
into or confirm such receipt.
11. COUNTERPARTS; FACSIMILE. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original and all of
which, when taken together, will
11
be deemed to constitute one and the same agreement. This Agreement may be
executed by facsimile, with such facsimile copy to serve as conclusive evidence
of the consent and ratification of the matters contained herein by the parties
hereto.
12. SECTION HEADINGS; CONSTRUCTION. The headings of sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation."
13. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be binding
upon the parties and their respective successors and assigns. This Agreement
shall inure to the benefit of the parties and the other Indemnitees and their
respective successors and assigns. Purchaser may freely assign any or all of its
rights under this Agreement, in whole or in part, in connection with an
Acquisition without obtaining the consent or approval of any other party hereto
or of any other Person. Other than in connection with an Acquisition, Purchaser
may not assign any of its rights under this Agreement without the prior written
consent of Agent, which consent shall not be unreasonably withheld.
14. REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative. Each Stockholder agrees that in the
event of any Breach or threatened Breach by a party of any covenant, obligation
or other provision set forth in this Agreement, Purchaser shall be entitled (in
addition to any other remedy that may be available to it) to (i) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision and (ii) an
injunction restraining such Breach or threatened Breach.
15. WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement; and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
16. EXCLUSIVE AGREEMENT; MODIFICATION; SEVERABILITY. The Transactional
Agreements set forth the entire understanding of the parties relating to the
subject matter thereof and supersede all prior agreements and understandings
among or between any of the parties relating to the subject matter thereof. This
Agreement may not be amended, modified, altered or supplemented other than by
means of a written instrument duly executed and delivered on behalf of each of
the parties hereto. In the event of a conflict between this Agreement and the
Exchange Agreement, the terms of the Exchange Agreement shall govern. In the
event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
17. GOVERNING LAW; VENUE. This Agreement shall be governed by the
internal laws of the State of California, without regard to conflicts of law
principles. Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in the County of
Santa Clara, California. Each Stockholder agrees that, if any Proceeding is
commenced against any Indemnitee by any
12
Person in or before any court or other tribunal anywhere in the world, then such
Indemnitee may proceed against such Stockholder in such court or other tribunal
with respect to any indemnification claim or other claim arising directly or
indirectly from or relating directly or indirectly to such Proceeding or any of
the matters alleged therein or any of the circumstances giving rise thereto. THE
STOCKHOLDERS IRREVOCABLY WAIVE THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY
PROCEEDING RELATING TO THIS AGREEMENT OR THE ENFORCEMENT OF ANY PROVISION OF
THIS AGREEMENT.
18. FURTHER ASSURANCES. Each party hereto shall execute and/or cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing the Exchange.
19. ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
20. TAX REPORTING INFORMATION AND CERTIFICATION OF TAX IDENTIFICATION
NUMBERS.
20.1 The parties hereto agree that, for tax reporting purposes, all
interest on or other income, if any, attributable to the Escrow Stock or any
other amount held in escrow by the Escrow Agent pursuant to this Agreement shall
be allocable to the Stockholders in accordance with their percentage interests
in the Escrow Fund set forth in Exhibit D.
20.2 Purchaser and each of the Stockholders agree to provide the Escrow
Agent with certified tax identification numbers for each of them by furnishing
appropriate Forms W-9 (or Forms W-8, in the case of non-U.S. persons) and other
forms and documents that the Escrow Agent may reasonably request (collectively,
"Tax Reporting Documentation") to the Escrow Agent within 30 days after the date
hereof. The parties hereto understand that, if such Tax Reporting Documentation
is not so certified to the Escrow Agent, the Escrow Agent may be required by the
Internal Revenue Code, as it may be amended from time to time, to withhold a
portion of any interest or other income earned on the investment of monies or
other property held by the Escrow Agent pursuant to this Escrow Agreement.
13
The Parties hereto have caused this Agreement to be executed and
delivered as of May __, 2001.
"PURCHASER": NORTEL NETWORKS CORPORATION
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
"ALTEON": ALTEON WEBSYSTEMS, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Signature Page
Escrow Agreement
The Parties hereto have caused this Agreement to be executed and
delivered as of May __, 2001.
STOCKHOLDERS:
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
[▇▇▇▇▇▇ ▇▇▇▇▇]
-----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ Opsansnick
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇
-----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
[ADD ANY OTHER STOCKHOLDERS AS OF THE CLOSING DATE]
16
EXHIBIT E
CERTIFICATE OF MERGER
OF
CANDLESTICK NETWORKS, INC.
(A DELAWARE CORPORATION)
WITH AND INTO
ALTEON WEBSYSTEMS, INC.
(A DELAWARE CORPORATION)
UNDER SECTION 251 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned corporation, Alteon Websystems, Inc., hereby certifies
that:
FIRST: The name and state of incorporation of each of the constituent
corporations is: Candlestick Networks, Inc., a Delaware corporation (the
"Disappearing Corporation"), and Alteon Websystems, Inc., a Delaware corporation
(the "Surviving Corporation").
SECOND: An agreement of merger has been approved, adopted, certified,
executed and acknowledged by the Disappearing Corporation and by the Surviving
Corporation in accordance with the provisions of Section 251 of the General
Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Alteon Websystems, Inc.
FOURTH: Upon the effectiveness of the merger, the Certificate of
Incorporation of the Surviving Corporation immediately prior to the merger shall
continue to be its Certificate of Incorporation.
FIFTH: The officers and directors of the Surviving Corporation
immediately prior to the merger shall be the officers and directors of the
Surviving Corporation after the merger, until changed in accordance with the
Bylaws and applicable law.
SIXTH: The executed agreement of merger is on file at the principal
place of business of the Surviving Corporation at [ADDRESS].
SEVENTH: A copy of the agreement of merger will be furnished by the
Surviving Corporation on request and without cost, to any stockholder of the
Disappearing Corporation or the Surviving Corporation.
IN WITNESS WHEREOF, the undersigned has executed and subscribed to this
Certificate of Merger on behalf of Alteon Websystems, Inc. as its authorized
officer and hereby affirms, under penalties of perjury, that this Certificate of
Merger is the act and deed of such corporation and that the facts stated herein
are true.
DATED: _______ __, 2001
ALTEON WEBSYSTEMS, INC.
By:
---------------------------------------
Name:
Title:
2
EXHIBIT F
FORM OF OPINION OF BAY VENTURE COUNSEL, LLP
Matters to be Covered by Opinion of Legal Counsel to the Seller
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. The Company has the
requisite corporate power and authority to own, lease and operate its properties
and assets and to conduct the business now being conducted by it.
2. The Company is duly qualified to do business as a foreign
corporation in California.
3. The Company has the requisite corporate power and authority to enter
into, execute, deliver and perform its obligations under each of the Transaction
Agreements. The Transaction Agreements have been duly authorized by all
necessary corporate action on the part of the Company, have been duly executed
and delivered by authorized officers of the Company and constitute the legally
valid and binding obligation of the Company, enforceable against the Company in
accordance with each of their respective terms.
4. The authorized capital of the Company will, upon filing of the
Restated Certificate and immediately prior to the Closing, consist as follows:
(a) Preferred Stock. 1,000,000 shares of Preferred Stock (the
"Preferred Stock"), all of which have been designated Series A Preferred Stock,
none of which are issued and outstanding immediately prior to the Closing.
(b) Common Stock. 11,000,000 shares of Common Stock, of which 5,348,721
shares are issued and outstanding immediately prior to the Closing. All issued
and outstanding shares of Common Stock have been duly authorized and validly
issued and, to our knowledge, are fully paid and nonassessable.
(c) Rights to Acquire Stock. Except for (i) the conversion privileges
of the Series A Preferred Stock, (ii) the first offer rights set forth in
Section 4 of the Investor Rights Agreement by and between the Company and
Purchaser dated September 6, 2000, (iii) 5,177,779 shares of Common Stock
reserved by the Company for future issuance to employees, consultants, officers
and directors of the Company, of which 5,003,335 shares are issuable under
outstanding stock options (526,500 of which have been excercised for restricted
stock), and (iv) the Purchaser's right to acquire and the Company's right to
sell all of the Company's outstanding securities described more fully in
pursuant to the Exchange Agreement, there are, to our knowledge, no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock.
5. To our knowledge, there are no material actions, suits, proceedings
or investigations pending against the Company before any court or governmental
agency that (i) questions the validity of the Transaction Agreements or the
right of the Company to enter into the Transaction Agreements or (ii) if
determined adversely, would result, either individually or collectively, in any
material adverse change
1
in the business and financial condition of the Company, or in any material
impairment of the right or ability of the Company to carry on its business as
now conducted.
6. The execution, delivery and performance of the Merger Agreement by
the Company and the consummation by the Company of the transactions contemplated
thereby will (a) comply with the Certificate of Incorporation; (b) not conflict
with or result in any breach of any provision of the Certificate of
Incorporation or bylaws of the Company; (c) not result in a violation or 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, amendment, cancellation or
acceleration or Lien) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company is a party or by which the Company
or any of its properties or assets are bound and which is listed on Exhibit A to
the Officer's Certificate attached hereto as being material to the business of
the Company; and (d) not violate any United States federal or State of
California law, statute, rule or regulation or any provision of the Delaware
General Corporation Law, or any order, writ, injunction or decree known to us,
applicable to the Company or any of its properties or assets.
7. No filing with or notice to and no permit, authorization, consent or
approval of any Governmental Entity is necessary for the execution and delivery
by the Company of the Merger Agreement or the consummation by the Company of the
transactions contemplated thereby, except (a) for such filings, notifications,
permits, authorizations, consent or approvals as have already been made, given
or obtained and (b) for filing of the Certificate of Merger in accordance with
the Delaware General Corporation Law. Upon filing of the Certificate of Merger
with the Delaware Secretary of State, the Merger will be effective in Delaware.
2
EXHIBIT G
FORM OF RELEASE
MUTUAL AND GENERAL RELEASE AGREEMENT
This Mutual and General Release Agreement (the "Release Agreement") is
made and entered into on this __ day of ____, 2001, by and among NORTEL NETWORKS
CORPORATION, a Canadian corporation ("Purchaser"), ALTEON WEBSYSTEMS, INC.., a
Delaware corporation ("Alteon") and each stockholder identified in SCHEDULE 1
(the "Stockholders"), and is based upon the following circumstances:
RECITALS
G. WHEREAS, on ________ ___, 2001 Purchaser, Candlestick Networks,
Inc., a Delaware corporation (the "Seller), Alteon and the Stockholders entered
into an Amended and Restated Exchange Agreement and Plan of Reorganization (the
"Restated Exchange Agreement"), pursuant to which Seller will merge with and
into Alteon (the "Merger") and Alteon will continue as the surviving corporation
and a wholly-owned subsidiary of Purchaser.
H. WHEREAS, pursuant to the terms of the Restated Exchange Agreement,
certain of the parties will enter into the Transactional Agreements, as such
term is defined in the Restated Exchange Agreement.
I. WHEREAS, on September 6, 2000, the Seller and Alteon entered into an
exchange agreement (the "Prior Exchange Agreement") and the other Alteon
Transactional Agreements (as defined in the Restated Exchange Agreement) largely
providing for the matters now contemplated in the Restated Exchange Agreement
and the Transactional Agreements.
J. WHEREAS, on October 5, 2000, pursuant to the Agreement and Plan of
Merger and Reorganization between Alteon, Darius Corp. and the Purchaser dated
July 28, 2000, the Purchaser acquired all of the issued and outstanding capital
of Alteon and, consequently, became the successor and assign of Alteon in
accordance with Section 10.12 of the Exchange Agreement.
K. WHEREAS, the parties desire that the Restated Exchange Agreement and
the Transactional Agreements entered into in connection therewith amend and
supersede the Prior Exchange Agreement and all of the other Alteon Transactional
Agreements and upon consummation of the Merger, each party desires to release
the other parties of any claims, obligations or liability under the Alteon
Transactional Agreements;
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, Purchaser, Seller and the Stockholders, and each of them,
agree as follows:
AGREEMENT
1. Releases.
(a) Release By Stockholders. Effective as of the Effective Time (as
defined in the Restated Exchange Agreement), each of the Stockholders, on behalf
of itself and its officers, directors, employees and shareholders (the
"Stockholder Releasors"), forever releases and discharges Purchaser and Alteon,
and each of their officers, directors, employees, predecessors, successors,
affiliates, parents,
1
subsidiaries, servants, agents, attorneys, accountants, partners, insurers,
intended beneficiaries, heirs, and assigns, and all persons or entities acting
in concert with any of them, of and from any and all claims, demands, damages,
debts, liabilities, contractual obligations, accounts, costs, attorneys' fees,
expenses, liens, actions, causes of action, suits and losses of every kind and
nature whatsoever, whether now known or unknown, suspected or unsuspected, which
any of them now has, owns or holds, or at any time before ever had, owned or
held, or could, shall, or may hereafter have, own or hold, by reason of any and
all acts, omissions, events or facts occurring or existing prior to the date
hereof, including but not limited to the obligations and claims arising under
the Prior Exchange Agreement and the Alteon Transactional Agreements. This
Release, however, does not extend to any rights or remedies which the
Stockholder Releasors have or that arise under either the Restated Exchange
Agreement or the Transactional Agreements or the transactions contemplated
thereby.
(b) Release by Alteon. Effective as of the Effective Time, Alteon,
on behalf of itself and its officers, directors, employees and shareholders (the
"Purchaser Releasors"), forever releases and discharges the Stockholders, and
each of their officers, directors, employees, predecessors, successors,
servants, agents, attorneys, accountants, partners, intended beneficiaries,
heirs, and assigns, and all persons or entities acting in concert with any of
them, of and from any and all claims, demands, damages, debts, liabilities,
contractual obligations, accounts, costs, attorneys' fees, expenses, liens,
actions, causes of action, suits and losses of every kind and nature whatsoever,
whether now known or unknown, suspected or unsuspected, which any of them now
has, owns or holds, or at any time before ever had, owned or held, or could,
shall, or may hereafter have, own or hold, by reason of any and all acts,
omissions, events or facts occurring or existing prior to the date hereof,
including but not limited to the obligations and claims arising under the Prior
Exchange Agreement and the Alteon Transactional Agreements. This Release,
however, does not extend to any rights or remedies which the Purchaser Releasors
have or that arise under either the Restated Exchange Agreement or the
Transactional Agreements or the transactions contemplated thereby.
(c) Waiver of Civil Code Section 1542. It is understood and agreed
that, except as specifically provided herein, this is a full and final mutual
release covering all unknown, undisclosed and unanticipated losses, wrongs,
injuries, debts, claims or damages which may have arisen, or may arise from any
act or omission prior to the date of execution of this Agreement by all parties.
Each party acknowledges that the facts or law may be other than they presently
understand, and assumes unto itself the risk of such unknown or unexpected facts
or law. The parties expressly waive any and all rights or benefits which they
may now have or in the future may have, including under the terms of Section
1542 of the California Civil Code, which provides as follows:
Section 1542. A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
2. No Prior Assignment. Each of the Purchaser, Alteon and the
Stockholders, on behalf of itself and its respective releasors, represents that
it has not heretofore assigned or transferred, or purported to have assigned or
transferred, to any person or entity, any claim or any portion thereof, or any
interest therein, and agrees to indemnify, defend and hold the respective
releasees harmless from and against any and all claims, based on or arising out
of any such assignment or transfer, or purported assignment or transfer of any
claims or any portion thereof or interest therein.
3. No Admission of Liability. Nothing contained herein shall be
construed as an admission of wrongdoing or liability by any party hereto.
2
4. Covenants Not to ▇▇▇. Except with respect to rights specifically
reserved under Sections 1(a), 1(b) and 1(c) hereof, at no time subsequent to the
execution of this Agreement will any party file or maintain, or cause or
knowingly permit the filing or maintenance, in any state, federal or foreign
court, or before any local, state, federal or foreign administrative agency, or
any other tribunal, any charge, claim or action of any kind, nature and
character whatsoever, known or unknown, he may now have, has ever had, or may in
the future have against any of the other parties or their respective Releasees
which is based in whole or in part on any events up to the date of this
Agreement arising out of the negotiation, execution and termination of the Prior
Exchange Agreement or the Alteon Transactional Agreements. Each of the parties
agrees that it will not voluntarily cooperate in any such charge, claim or
action brought against any of the other parties or their respective Releasees.
5. Representation by Counsel. The parties hereto represent that they
were represented by counsel of their own choosing and/or had the opportunity to
be represented by counsel of their choosing in the negotiations for and
preparation of this Agreement, that they have read this Agreement, that they are
fully aware of its contents and of its legal effect, including the effect of
disclosure, and that they freely and voluntarily enter into it.
6. California Law. This Agreement shall in all respects be interpreted,
enforced and governed under the laws of the State of California, excluding
conflicts of law principles.
7. Severability. If any provision of this Agreement is determined to be
invalid or unenforceable all of the other provisions shall remain valid and
enforceable notwithstanding, unless the provision found to be unenforceable,
including but not limited to the Releases set forth herein, is of such material
effect that the Agreement cannot be performed in accordance with the intent of
the parties in the absence thereof.
8. Amendment. This Agreement shall not be altered, amended or modified
except in a writing signed by each of the parties or their legal
representatives.
9. Authority of Signatories. Each of the parties to this Agreement
represents and warrants that they have the sole right and exclusive authority to
execute this Agreement and receive the consideration specified in it. Each of
the undersigned represents and warrants that he, she or it is fully authorized
to signed this Agreement on his, her or its behalf.
10. Counterparts. This Agreement may be executed in multiple
counterparts, and a copy of this Agreement shall have the same force and effect
as the original; provided, however, that the Agreement shall not become binding
upon nay of the Settling Parties unless and until the Agreement is executed by
all of the parties.
11. Effect of Headings. The headings in this Agreement are for
convenience only. They in no way limit, alter or affect the meaning of the
Agreement.
12. Entire Agreement. This Agreement contains the entire understanding
and agreement between the parties with respect to the matters referred to
herein. No other representations, covenants, undertakings or other prior or
contemporaneous agreements, oral or written, respecting such matters, which are
not specifically incorporated herein, shall be deemed in any way to exist or
bind any of the parties. The parties, and each of them, acknowledge that they
have not entered into this Agreement or executed this release in reliance on any
such promise, representation or warranty.
(The rest of this page is intentionally left blank.)
3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"PURCHASER": NORTEL NETWORKS CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
4
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
"ALTEON": ALTEON WEBSYSTEMS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
5
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed to be executed and delivered as of the date first above written.
FOUNDERS
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ Opsansnick
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EXHIBIT H
FORM OF OPINION OF ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Matters to be Covered by Opinion of Legal Counsel to Purchaser and
AcquisitionCo
(i) Purchaser is duly organized, validly existing and in good
standing under the laws of Canada, and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. AcquisitionCo is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
(ii) Each of Purchaser and AcquisitionCo has all necessary
corporate power and authority to execute and deliver the Amended and Restated
Exchange Agreement, to perform its obligations thereunder and to consummate the
transactions contemplated thereby.
(iii) The execution and delivery of the Amended and Restated
Exchange Agreement and the consummation of the transactions contemplated thereby
have been duly and validly authorized by the Boards of Directors of Purchaser
and AcquisitionCo and by Purchaser as the sole stockholder of AcquisitionCo, and
no other corporate proceedings on the part of Purchaser or AcquisitionCo are
necessary to authorize the Amended and Restated Exchange Agreement or to
consummate the transactions contemplated thereby.
(iv) The Amended and Restated Exchange Agreement has been duly
and validly executed and delivered by Purchaser and AcquisitionCo and
constitutes a valid, legal and binding agreement of Purchaser and AcquisitionCo,
enforceable against Purchaser and AcquisitionCo in accordance with its terms,
subject to any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights generally
or to general principles of equity.
(v) No filing with or notice to, and no permit, authorization,
consent or approval of any Governmental Entity is necessary for the execution
and delivery by Purchaser and AcquisitionCo of the Amended and Restated Exchange
Agreement or the consummation by Purchaser or AcquisitionCo of the transactions
contemplated thereby, except for (a) such filings, notices, permits,
authorizations, consents and approvals as have already been made, given or
obtained and (b) the filing of the Certificate of Merger in accordance with the
Delaware General Corporation Law. Upon filing and recordation of the Certificate
of Merger with the Delaware Secretary of State, the Merger will be effective in
Delaware.
(vi) To our knowledge, there are no actions, proceedings or
investigations pending or overtly threatened against Purchaser before any court
or administrative agency that question the validity of the Amended and Restated
Exchange Agreement.
(vii) The Purchaser Common Stock, when issued and delivered in
accordance with the terms of the Amended and Restated Exchange Agreement, will
be duly and validly authorized and issued, fully paid and nonassessable.
The opinions will be subject to customary assumptions and
qualifications.
i
EXHIBIT I
FORM OF AFFILIATE LETTER
_________ __, 2001
Nortel Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Corporate Secretary
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Candlestick Networks, Inc., a Delaware corporation (the
"Company"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Amended and Restated Exchange Agreement and Plan of Reorganization, dated as of
______ __, 2001 (the "Exchange Agreement"), between Nortel Networks Corporation,
a Canadian corporation ("Purchaser"), Alteon Websystems, Inc., a Delaware
corporation and wholly owned subsidiary of Purchaser ("Alteon"), and the
Company, the Company will be merged with and into the Alteon (the "Merger").
Capitalized terms used in this letter without definition shall have the meanings
assigned to them in the Exchange Agreement.
As a result of the Merger, I may receive common shares of Purchaser
(the "Purchaser Shares") in exchange for shares of Common Stock of the Company
owned by me or purchasable upon exercise of stock options held by me.
1. I represent, warrant and covenant to Purchaser that in the event I
receive any Purchaser Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Purchaser Shares in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Exchange Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Purchaser Shares,
to the extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the Purchaser Shares to
me pursuant to the Merger were issued to me pursuant to an exemption from the
registration requirements of the Act in accordance with Section 3(a)(10) of the
Act. However, I have
1
also been advised that, because at the time the Merger is submitted for a vote
of the stockholders of the Company, (a) I may be deemed to be an affiliate of
the Company and (b) the distribution by me of the Purchaser Shares has not been
registered under the Act, I may not sell, transfer or otherwise dispose of the
Purchaser Shares issued to me in the Merger unless:
(i) in the opinion of counsel reasonably satisfactory to
Purchaser, such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act,
(ii) such sale, transfer or other disposition has been
registered under the Act, or
(iii) in the opinion of counsel reasonably acceptable to
Purchaser, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
D. I understand that Purchaser is under no obligation to register
the sale, transfer or other disposition of the Purchaser Shares by me or on my
behalf under the Act or, except as provided in paragraph 2.A below, to take any
other action necessary in order to make compliance with an exemption from such
registration available.
E. I understand that Purchaser will issue stop transfer instructions
to its transfer agent with respect to the shares of Purchaser Shares and that a
restrictive legend will be placed on the certificates delivered to me evidencing
the Purchaser Shares in substantially the following form:
"This certificate and the shares represented hereby have
been issued pursuant to a transaction governed by Rule
145 ("Rule 145") promulgated under the Securities Act of
1933, as amended (the "Securities Act"), and may not be
sold or otherwise disposed of unless registered under
the Securities Act pursuant to a Registration Statement
in effect at the time or unless the proposed sale or
other disposition can be made in compliance with Rule
145 or without registration in reliance on another
exemption therefrom."
F. Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, nor as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
2. By Purchaser's acceptance of this letter, Purchaser hereby agrees
with me as follows:
A. For so long as and to the extent necessary to permit me to sell
the Purchaser Shares pursuant to Rule 145 and, to the extent applicable, Rule
144 under the Act, Purchaser shall use its reasonable best efforts to (i) file,
on a timely basis, all reports and data
2
required to be filed with the Commission by it pursuant to Section 13 of the
Securities the 12 months preceding any proposed sale of the Purchaser Shares by
me under Rule 145. Purchaser has filed all reports required to be filed with the
Commission under Section 13 of the 1934 Act during the preceding 12 months.
B. It is understood and agreed that certificates with the legends
set forth in paragraphs E and F above will be substituted by delivery of
certificates without such legend if:
(i) one year shall have elapsed from the date the
undersigned acquired the Purchaser Shares received in the Merger and
the provisions of Rule 145(d)(2) are then available to the
undersigned,
(ii) two years shall have elapsed from the date the
undersigned acquired the Purchaser Shares received in the Merger and
the provisions of Rule 145(d)(3) are then applicable to the
undersigned or
(iii) Purchaser has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory
to Purchaser, or a "no action" letter obtained by the undersigned
from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to
the undersigned.
Very truly yours,
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Name:
Agreed and accepted this ___day
of _________, 2001, by
NORTEL NETWORKS CORPORATION
By:
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Name:
Title:
3
================================================================================
AMENDED AND RESTATED EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
among:
NORTEL NETWORKS CORPORATION,
a Canadian corporation;
and
ALTEON WEBSYSTEMS, INC., a Delaware corporation
and
CANDLESTICK NETWORKS, INC
a Delaware corporation
and
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▇▇▇▇▇▇ Opsansnick and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Dated as of May 11, 2001
1
TABLE OF CONTENTS
PAGE
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1. DESCRIPTION OF TRANSACTION...............................................2
1.1 Merger..........................................................2
1.2 Intentionally Omitted...........................................2
1.3 Effect of the Exchange..........................................2
1.4 Additional Actions..............................................3
1.5 Exchange Ratio..................................................3
1.6 Closing.........................................................3
1.7 Intentionally Omitted...........................................3
1.8 Conversion of Shares............................................4
1.9 Employee Stock Options..........................................5
1.10 Escrow..........................................................6
1.11 Exchange of Certificates........................................6
1.12 Intentionally Omitted...........................................8
1.13 Tax Treatment...................................................8
1.14 Directors and Officers..........................................8
1.15 Articles of Incorporation and Bylaws............................8
1.16 Dissenters' Rights..............................................8
2. REPRESENTATIONS AND WARRANTIES OF SELLER AND FOUNDERS....................9
2.1 Due Organization; No Subsidiaries; Etc..........................9
2.2 Certificate of Incorporation and Bylaws; Records................9
2.3 Capitalization, Etc............................................10
2.4 Financial Statements...........................................12
2.5 Title to Assets................................................12
2.6 Equipment......................................................12
2.7 Real Property..................................................12
2.8 Proprietary Assets.............................................12
2.9 Contracts......................................................13
2.10 Liabilities....................................................14
2.11 Compliance With Legal Requirements.............................14
2.12 Governmental Authorizations....................................15
2.13 Tax Matters....................................................15
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2.14 Employee and Labor Matters.....................................16
2.15 Benefit Plans; ERISA...........................................17
2.16 Environmental Matters..........................................18
2.17 Insurance......................................................18
2.18 Related Party Transactions.....................................19
2.19 Certain Payments, Etc..........................................19
2.20 Proceedings; Orders............................................20
2.21 Authority; Binding Nature of Agreements........................20
2.22 Non-Contravention; Consents....................................21
2.23 No Brokers.....................................................21
2.24 Tax Treatment..................................................22
2.25 Full Disclosure................................................22
2.A REPRESENTATIONS AND WARRANTIES OF FOUNDERS..............................22
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ALTEON..................23
3.1 Acquisition of Shares..........................................23
3.2 Authority; Binding Nature of Agreement.........................23
3.3 Brokers........................................................23
3.4 Valid Issuance.................................................24
3.5 Due Organization...............................................24
3.6 SEC Documents..................................................24
3.7 Tax Treatment..................................................24
4. PRE-CLOSING COVENANTS OF SELLER AND FOUNDERS............................24
4.1 Access and Investigation.......................................24
4.2 Operation of Business..........................................25
4.3 Filings and Consents...........................................27
4.4 Notification; Updates to Disclosure Schedule...................27
4.5 Payment of Indebtedness by Related Parties.....................28
4.6 Best Efforts...................................................28
4.7 Confidentiality................................................28
4.8 Audited Financial Statements...................................28
4.9 Stockholder Approval...........................................28
4.10 Assumed Options Permitted under Option Plan....................29
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TABLE OF CONTENTS
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4.11 Exemption from Golden Parachute Treatment......................29
4.12 Employee Stockholder Agreements................................29
4.13 Affiliates.....................................................29
4.14 Seller Compensation and Benefit Plans..........................29
5. PRE-CLOSING COVENANTS OF PURCHASER......................................29
5.1 Best Efforts...................................................29
5.2 Confidentiality................................................29
5.3 Qualification of Shares Issuable in Merger.....................30
5.4 Registration Statement.........................................30
5.5 Stock Exchange Listings........................................32
6. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE.................32
6.1 Accuracy of Representations....................................32
6.2 Performance of Obligations.....................................32
6.3 Consents.......................................................33
6.4 Additional Documents...........................................33
6.5 No Proceedings.................................................34
6.6 No Claim Regarding Stock Ownership or Sale Proceeds............34
6.7 No Prohibition.................................................34
6.8 Intentionally Omitted..........................................34
6.9 Stockholder Vote...............................................34
6.10 Registration Exemption.........................................35
6.11. Dissenting Shares..............................................35
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE....................35
7.1 Accuracy of Representations....................................35
7.2 Purchaser's Performance........................................35
7.3 No Injunction..................................................35
7.4 No Proceedings.................................................35
7.5 Seller shall have received:....................................35
7.6 SEC Filings....................................................36
8. TERMINATION.............................................................36
8.1 Termination Events.............................................36
8.2 Termination Procedures.........................................37
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8.3 Effect of Termination..........................................37
8.4 Nonexclusivity of Termination Rights...........................37
9. INDEMNIFICATION, ETC....................................................37
9.1 Survival of Representations and Covenants......................37
9.2 Indemnification by Escrow Stockholders.........................38
9.3 Threshold......................................................39
9.4 Right to Require Cure of Breach................................39
9.5 No Contribution................................................39
9.6 Limitations; Exclusive Remedy..................................40
9.7 Defense of Third Party Claims..................................40
9.8 Exercise of Remedies by Indemnitees Other Than Purchaser.......41
10. MISCELLANEOUS PROVISIONS................................................41
10.1 Several Liability..............................................41
10.2 Intentionally Omitted..........................................41
10.3 Fees and Expenses..............................................41
10.4 Attorneys' Fees................................................42
10.5 Notices........................................................42
10.6 Publicity......................................................44
10.7 No Hire........................................................44
10.8 Time of the Essence............................................44
10.9 Headings.......................................................44
10.10 Counterparts...................................................44
10.11 Governing Law; Venue...........................................44
10.12 Successors and Assigns; Assignment.............................45
10.13 Remedies Cumulative; Specific Performance......................46
10.14 Waiver.........................................................46
10.15 Amendments.....................................................46
10.16 Severability...................................................46
10.17 Parties in Interest............................................47
10.18 Entire Agreement...............................................47
10.19 Construction...................................................47
10.20 Effect on Alteon Transactional Agreements......................47
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EXHIBITS
Exhibit A: Certain Definitions
Exhibit B: Form of Stockholder/Non-Competition Agreement
Exhibits C: Forms of Employee Stockholder Agreement
Exhibit D: Form of Escrow Agreement
Exhibit E: Form of Certificate of Merger
Exhibit F: Form of Opinion of Bay Venture Counsel LLP
Exhibit G: Form of Release
Exhibit H: Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Exhibit I: Form of Affiliate Letter
v.