1
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT dated as of March 1, 1999 (this "Agreement") is
by and among Alcatel, a French corporation ("Parent"), Zeus Acquisition Corp., a
California corporation ("Purchaser"), and Xxxx Xxxxxxx ("Shareholder").
WITNESSETH:
WHEREAS, simultaneously with the execution of this Agreement, Parent,
Purchaser and Xylan Corporation, a California corporation (the "Company"), have
entered into an Agreement and Plan of Merger (as amended from time to time, the
"Merger Agreement"), pursuant to which Purchaser has agreed, among other things,
to commence a cash tender offer (as such tender offer may hereafter be amended
from time to time, the "Offer") to purchase all shares of common stock, $.001
par value, of the Company (the "Company Common Stock");
WHEREAS, as an inducement and a condition to its entering into the Merger
Agreement and incurring the obligations set forth therein, including the Offer
and the Merger, Parent has required that Shareholder enter into this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and agreements contained herein and in the Merger Agreement, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Certain Definitions. Capitalized terms used and not defined herein have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares. Shareholder shall tender or cause the record owner
thereof to tender all shares of Company Common Stock owned of record by
Shareholder ("Owned Shares") into the Offer promptly, and in any event no later
than the tenth business day following the commencement of the Offer pursuant to
Section 1.01 of the Merger Agreement, and Shareholder shall not, and shall cause
the record owner thereof not to, withdraw any Owned Shares so tendered unless
the Offer is terminated or has expired.
3. Voting of Owned Shares; Proxy.
(a) During the period commencing on the date hereof and continuing
until the earlier of (x) the consummation of the Offer and (y) the termination
of this Agreement (such period being referred to as the "Voting Period"), at any
meeting (whether annual or special, and whether or not an adjourned or
postponed) of the Company's shareholders, however called, or in connection with
any written consent of the Company's shareholders, subject to the absence of a
preliminary or permanent injunction or other requirement under applicable law by
any United States federal, state or foreign court barring such action,
Shareholder shall vote (or cause to be voted) all Owned Shares: (i) in favor of
the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval and adoption of the Merger and the terms thereof and each of
the other actions contemplated by the Merger Agreement and this Agreement and
any
1
2
actions required in furtherance thereof and hereof; and (ii) against any action
or agreement that would impede, interfere with, or prevent the Merger, including
any Acquisition Proposal. Shareholder shall not enter into any agreement,
arrangement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions and agreements contained in this
Section 3.
(b) By its execution hereof and in order to secure its obligations
under this Agreement, during the Voting Period, Shareholder irrevocably grants
to, and appoints, Parent and Olivier Houssin and Xxxxxx Xxxxxx-Xxxxxxx, or
either of them, in their respective capacities as employees of Parent, and any
individual who shall hereafter succeed to either of their respective positions
at Parent, and each of them individually, as his true and lawful proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Shareholder to vote the Owned Shares or grant a consent or
approval in respect of the Owned Shares (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
and adoption of the Merger and the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement and any actions required
in furtherance thereof and hereof; and (ii) against any action or agreement that
would impede, interfere with, or prevent the Merger, including any Acquisition
Proposal ("Irrevocable Proxy"). Shareholder hereby represents that any proxies
heretofore given in respect of the Owned Shares are not irrevocable, and that
any such proxies are hereby revoked.
(c) Shareholder understands and acknowledges that Parent is entering
into the Merger Agreement in reliance upon its execution and delivery of this
Irrevocable Proxy. Shareholder hereby affirms that this Irrevocable Proxy is
given in connection with the execution of this Agreement and the Merger
Agreement, and further affirms that this Irrevocable Proxy is coupled with an
interest and is intended to be irrevocable in accordance with the provisions of
Section 705 of the CGCL. Shareholder hereby ratifies and confirms all that this
Irrevocable Proxy may lawfully do or cause to be done by virtue hereof.
(d) In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Company Common Stock or the acquisition of additional
shares of Company Common Stock or other securities or rights of the Company by
the Shareholder, this Agreement and the obligations hereunder shall attach to
any additional shares of Company Common Stock or other securities or rights of
the Company issued to or acquired by the Shareholder.
4. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
5. Waiver of Appraisal Rights. Shareholder hereby waives any rights of
appraisal or rights to dissent from the Merger that he may have.
2
3
6. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the earlier of (a) the date upon which
the Parent shall have purchased and paid for all of the Owned Shares of
Shareholder in accordance with the terms of the Offer and (b) the date on which
the Merger Agreement is terminated.
7. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Shareholder agrees that this Agreement and the respective rights
and obligations of Shareholder hereunder shall attach to all Owned Shares.
(c) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
(d) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party (whether by operation of law or otherwise) without the
prior written consent of the other party; provided, that Parent and Purchaser
may assign all or any of their rights and obligations hereunder to any assignee
of such parties' rights and obligations under the Merger Agreement or to any
other subsidiary of Parent. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
(e) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated, except upon the execution and delivery of a
written agreement executed by each of the parties hereto. The parties may waive
compliance by the other parties hereto with any representation, agreement or
condition otherwise required to be complied with by such other party hereunder,
but any such waiver shall be effective only if in writing executed by the
waiving party.
(f) All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address shall be effective upon receipt)
or sent by electronic transmission, with confirmation received, to the telecopy
number specified below:
3
4
If to Parent or Purchaser:
Xxxxxxx
00, xxx Xx Xxxxxx
00000 Xxxxx
Xxxxxx
Telecopier No.: 00-0-0000-0000
Attention: Xxxxxx Xxxxxx-Xxxxxxx, Esq.
Copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx, Esq.
If to Shareholder:
Xxxx Xxxxxxx
c/o Brentwood Venture Capital
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Copy to:
Tae Xxx Xxxx
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
(g) If any term or other provision of this Agreement shall be held
to be invalid, illegal or unenforceable by any rule of law or public policy,
such clause or provision shall be construed and enforced as if it had been more
narrowly drawn so as not to be invalid or unenforceable, and such invalidity or
unenforceability shall not affect or render invalid or unenforceable any other
provision of this Agreement.
(h) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (a) will waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(b) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement.
4
5
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) Notwithstanding anything herein to the contrary, nothing set
forth herein shall in any way restrict Shareholder in the exercise of his
fiduciary duties as a director of the Company.
(k) This Agreement shall be governed and construed in accordance
with the laws of the State of California without giving effect to the principles
of conflicts of law thereof.
(l) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(m) This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
5
6
IN WITNESS WHEREOF, Parent, Purchaser and Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
ALCATEL
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
Title: Chairman and Chief
Executive Officer
ZEUS ACQUISITION CORP.
By: /s/ Olivier Houssin
----------------------------------
Name: Olivier Houssin
Title: Chairman
Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxx
--------------------------------------
AGREED TO FOR PURPOSES
OF SECTION 12
XYLAN CORPORATION
By: /s/ Xxxxx X. Xxx
-----------------------------------
Name: Xxxxx X. Xxx
Title: President and Chief Executive Officer
6
