Exhibit 2.1
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AMENDED AND RESTATED TRANSFORMATION AGREEMENT
This Amended and Restated Transformation Agreement (this "Agreement") is
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entered into as of June 3, 2000 (the "Effective Date") by and among Cabletron
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Systems, Inc., a Delaware corporation ("CSI"), Aprisma Management Technologies,
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Inc., a Delaware corporation ("Aprisma"), Enterasys Networks, Inc., a Delaware
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corporation ("Enterasys"), GlobalNetwork Technology Services, Inc., a Delaware
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corporation ("GNTS") and Riverstone Networks, Inc., a Delaware corporation
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("Riverstone" and collectively with Aprisma, Enterasys and GNTS, the "Newcos").
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Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in Section 8 hereof.
RECITALS
WHEREAS, CSI currently owns all of the issued and outstanding capital stock
of each Newco;
WHEREAS, it is currently contemplated that (i) Compaq Computer Corporation
will invest $14 million in preferred stock of Aprisma and (ii) Silver Lake
Partners, L.P. and other investors will invest in certain purchase rights and
warrants with respect to the equity securities of the Newcos;
WHEREAS, subject to the approval of the stockholders of CSI, the parties
have each determined that it would be appropriate and desirable, in accordance
with the Contribution Agreements, for CSI to contribute and transfer to each
Newco, and for such Newco, to receive and assume, directly or indirectly,
certain assets and liabilities currently held by CSI and its affiliates and
associated with the Aprisma Business in the case of Aprisma, the GNTS Business
in the case of the GNTS, the Riverstone Business in the case of Riverstone and
the Enterasys Business in the case of Enterasys and to consummate the other
transactions contemplated hereby (the "Transformation");
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WHEREAS, the Board of Directors of CSI has determined that the
Transformation will provide flexibility to better develop and implement other
strategic transactions designed to maximize the long-term competitive and
strategic advantages of CSI's products and services by separating the operations
associated with the Aprisma Business, the Enterasys Business, the GNTS Business
and the Riverstone Business;
WHEREAS, CSI has announced that it currently plans to conduct an initial
public offering ("IPO") for each of the Newcos followed by a distribution (a
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"Distribution") of the remaining shares of one or more of the Newcos to CSI's
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stockholders, although CSI is not obligated to complete any such transactions
and will only implement any such transactions if the Board of Directors of CSI
continues to believe that it is in the best interests of CSI, CSI's stockholders
and the Newcos; and
WHEREAS, the parties intend in this Agreement, including the Exhibits
hereto, to set forth the principal arrangements between them regarding the
Transformation; and
WHEREAS, the parties desire to amend and restate this and certain Ancillary
Agreements as of the Effective Date to correct certain mutual mistakes of the
parties and to clarify their rights and obligations under this Agreement and the
Ancillary Agreements.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
1. DOCUMENTS AND ITEMS TO BE DELIVERED ON THE EFFECTIVE DATE
On the Effective Date, concurrent with the execution and delivery hereof, each
of the parties will duly execute and deliver to each other party which is a
party thereto all of the following items and agreements to which it is a party
(collectively, together with all agreements and documents contemplated by such
agreements, the "Ancillary Agreements"):
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1.1. An Amended and Restated Asset Contribution Agreement between CSI
and Aprisma (the "Aprisma Contribution Agreement") substantially in
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the form of Exhibit A-1;
1.2. An Amended and Restated Asset Contribution Agreement between CSI and
Enterasys (the "Enterasys Contribution Agreement") substantially in
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the form of Exhibit A-2;
1.3. An Amended and Restated Asset Contribution Agreement between CSI
and GNTS (the "GNTS Contribution Agreement") substantially in the
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form of Exhibit A-3;
1.4. An Amended and Restated Asset Contribution Agreement between CSI and
Riverstone (the "Riverstone Contribution Agreement" and collectively
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with the agreements referenced in Sections 1.1 to 1.3 above, the
"Contribution Agreements") substantially in the form of Exhibit A-4;
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1.5. An Intercompany Agreement between Aprisma and Enterasys (the "A-E
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Intercompany Agreement") substantially in the form of Exhibit B-1
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attached hereto;
1.6. An Intercompany Agreement between Aprisma and GNTS (the "A-G
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Intercompany Agreement") substantially in the form of Exhibit B-2
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attached hereto;
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1.7. An Intercompany Agreement between Aprisma and Riverstone (the "A-R
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Intercompany Agreement") substantially in the form of Exhibit B-3
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attached hereto;
1.8. An Intercompany Agreement between Enterasys and GNTS (the "E-G
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Intercompany Agreement") substantially in the form of Exhibit B-4
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attached hereto;
1.9. An Intercompany Agreement between Enterasys and Riverstone (the "E-R
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Intercompany Agreement") substantially in the form of Exhibit B-5
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attached hereto;
1.10. An Intercompany Agreement between GNTS and Riverstone (the "G-R
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Intercompany Agreement") substantially in the form of Exhibit B-6
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attached hereto;
1.11. A Tax Sharing Agreement among CSI and all Newcos (the "Tax Sharing
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Agreement") substantially in the form of Exhibit C; and
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1.12. A Flextronics Assignment and Assumption Agreement (the "Manufactured
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Products Agreement") between CSI and Enterasys substantially in the
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form of Exhibit D hereto.
2. TRANSFORMATION
2.1. Effective Date. The parties acknowledge and agree that the Newcos,
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either as separate entities or through their predecessor divisions of
CSI, will conduct business in accordance with the terms and
conditions hereof and of the Ancillary Agreements from and after the
Effective Date.
2.2. Transformation Date. Subject to the approval of the Transformation
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by the stockholders of CSI and the other conditions set forth in
Section 7 hereof and in the Ancillary Agreements, the effective time
and date of the Transformation and the consummation of the
transactions contemplated hereby and by the Ancillary Agreements
shall be 11:59 p.m., Boston Time, July 29, 2000 or such other date as
may be fixed by CSI (the "Transformation Date"). To the extent that
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any Contribution Agreement provides for the transfer of assets or
liabilities held by a Subsidiary of CSI, the capital stock of which
is to be transferred to a Newco other than that Newco to which such
assets or liabilities are to be transferred, the transfer of such
assets and liabilities shall occur immediately prior to the transfer
of the capital stock of such Subsidiary.
2.3. Closing of Transactions. The closing of the transactions contemplated
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hereby and by the Ancillary Agreements (the "Closing") shall occur on
the Transformation Date at the offices of Ropes & Xxxx, Xxx
Xxxxxxxxxxxxx
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Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, by the execution and delivery of
the instruments of transfer, assumptions of liability, undertakings,
agreements, instruments or other documents to be delivered on the
Transformation Date pursuant to this Agreement and the Ancillary
Agreements.
3. POST-TRANSFORMATION TRANSACTIONS INVOLVING THE NEWCOS
3.1. Discretion of CSI. No Newco shall commence or consummate an IPO
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without the approval of CSI and all terms, including the timing of,
an IPO shall be subject to CSI's approval. CSI shall, in its sole and
absolute discretion, determine whether to consummate a Distribution
with respect to any Newco and the terms and conditions of any such
Distribution. The parties acknowledge that (i) CSI is not obligated
to complete any such IPO or Distribution and will only implement any
such transaction if the Board of Directors of CSI continues to
believe that it is in the best interest of CSI, CSI's stockholders
and the Newcos and (ii) CSI may pursue other strategic alternatives
in lieu of an IPO and/or Distribution with respect to any Newco.
3.2. IRS Ruling. The parties acknowledge that CSI currently plans to seek
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a private letter ruling from the Internal Revenue Service to the
effect that (i) Section 355 of the Code will apply to a Distribution
of Newco stock by CSI to CSI's stockholders; and (ii) no gain or loss
will be recognized by (and no amounts will be included in the income
of) the stockholders of CSI upon their receipt of Newco stock
pursuant to the Distribution.
3.3. Cooperation. If requested by CSI, each Newco shall cooperate with CSI
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in all respects to accomplish an IPO and Distribution with respect to
such Newco and shall, at CSI's direction, promptly take any and all
actions necessary or desirable to effect such IPO or Distribution,
including, without limitation: filing a registration statement with
respect to the IPO under the Securities Act, including any amendments
thereto as may be required; making any filings under the Exchange
Act; entering into an underwriting agreement with respect to the IPO;
preparing an information statement with respect to the Distribution;
filing any documents with the Commission as may be required with
respect to an IPO or Distribution; listing the stock of such Newco on
the Nasdaq National Market or a stock exchange selected by CSI; and
obtaining, and complying with the terms of, any private letter ruling
from the Internal Revenue Service as described in Section 3.2 above.
CSI shall select any underwriter(s), investment banker(s) and
manager(s) in connection with an IPO and Distribution, as well as any
financial printer, solicitation and/or exchange agent and outside
legal counsel for CSI and each Newco in connection with an IPO and a
Distribution.
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4. CERTAIN COVENANTS AND OTHER MATTERS
4.1. Other Agreements.
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4.1.1. Instruments and Agreements. The parties agree to execute or
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cause to be executed by the appropriate parties and deliver,
as appropriate at the Closing, such other agreements,
instruments and other documents as may be necessary or
desirable in order to effect the purposes of this Agreement
and the Ancillary Agreements, including without limitation as
contemplated by this Section 4.1 below.
4.1.2. Retained Third Party Tools. The parties acknowledge that
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pursuant to the terms of the Contribution Agreements, rights
with respect to certain Third Party Tools (as such term is
defined in the Contribution Agreements), including without
limitation those Third Party Tools set forth on Schedule 3.4
to each Contribution Agreement, will be retained by CSI and
not be contributed to any one Newco pursuant to a
Contribution Agreement (the "Retained Third Party Tool
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Rights"). CSI acknowledges that certain of the
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Retained Third Party Tool Rights may be necessary or useful
for the performance of the business of certain Newcos and to
such extent agrees to hold such Retained Third Party Tool
Rights for the use and benefit, insofar as reasonably
possible and not in violation of their terms, of such Newcos
(at the expense of such Newcos) and shall take such other
actions as may be reasonably required in order to place such
Newcos, insofar as reasonably possible and not in violation
of such Retained Third Party Tool Rights, in the same
position as if such Retained Third Party Tool Rights had been
transferred to such Newcos under the relevant Contribution
Agreements. The parties acknowledge and agree that this
Section 4.1.2 is not intended to extend the use of any
Retained Third Party Tool Rights beyond their current and
historical use by CSI and its businesses, but rather to
enable the continued use of such Retained Third Party Tools
consistent with their current and historical use by CSI and
its businesses.
4.1.3. Intentionally Omitted.
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4.1.4. Shared Services Agreements. At the Closing and at the
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direction of CSI, each of the Newcos will enter into a Shared
Services Agreement (collectively the "Shared Services
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Agreements") with respect to certain corporate, human
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resource, information technology, accounting, and other
services that have been provided
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by CSI to the Newcos or their predecessor divisions of CSI
since March 1, 2000, and that will continue to be provided by
CSI to the Newcos on an interim basis, after the
Transformation Date. Each Shared Services Agreement will
provide for service charges for such services. Each Shared
Services Agreement will also permit CSI to engage
subcontractors, including the Newcos, to perform all or any
portion of the services described therein. The applicable
Newco or Newcos will enter into agreements with CSI with
respect to the provision of certain of such services by such
Newco(s). The Shared Services Agreements, subject to certain
limitations, will also allow CSI and the Newcos to adjust
from time to time the nature and level of services to be
provided thereunder.
4.2. Agreement for Exchange of Information.
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4.2.1. General. CSI shall provide to each Newco, and each Newco
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shall provide to CSI at any time before a Distribution with
respect to such Newco, any Information in the possession or
under the control of such party that the requesting party
reasonably needs (i) to comply with reporting, disclosure,
filing or other requirements imposed on the requesting party
(including under applicable securities laws) by a
Governmental Authority having jurisdiction over the
requesting party, (ii) for use in preparing its financial
statements; (iii) for use in any other judicial, regulatory,
administrative or other proceeding or in order to satisfy
audit, accounting, claims, regulatory, litigation or other
similar requirements, (iv) to comply with its obligations
under this Agreement or any Ancillary Agreement or (v) in
connection with its respective ongoing business; provided,
however, that in the event that any party determines that any
such provision of Information could be commercially
detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all
reasonable measures to permit the compliance with such
obligations in a manner that avoids any such harm or
consequence.
4.2.2. Continued Cooperation after a Distribution. After a
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Distribution with respect to a Newco (except in the case of a
legal or other proceeding by one party against another party
which shall be governed by such discovery rules as may be
applicable under Section 4.10 or otherwise), CSI and such
Newco shall use its reasonable commercial efforts to make
available to each other party, upon written request, the
former, current and future directors, officers, employees,
other personnel and agents of such party as witnesses and any
books, records or other documents within its control or which
it otherwise has the ability to make available, to the extent
that any such person (giving consideration
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to business demands of such directors, officers, employees,
other personnel and agents) or books, records or other
documents may reasonably be required in connection with any
legal, administrative or other proceeding in which the
requesting party may from time to time be involved,
regardless of whether such legal, administrative or other
proceeding is a matter with respect to which indemnification
may be sought hereunder. The requesting party shall bear all
costs and expenses in connection therewith except as to those
proceedings as to which the requesting party is entitled to
indemnity from the other party.
4.2.3. Ownership of Information. Any Information owned by a party
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that is provided to a requesting party pursuant to this
Section 4.2 shall be deemed to remain the property of the
providing party. Unless specifically set forth herein or in
the Ancillary Agreements or in an instrument delivered
pursuant hereto or thereto, nothing contained in this
Agreement shall be construed as granting or conferring rights
of license or otherwise in any such Information.
4.2.4. Record Retention. To facilitate the possible exchange
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Information pursuant to this Section 4.2 and other provisions
of this Agreement and the Ancillary Agreements, each party
agrees to use its reasonable commercial efforts to retain all
Information in its respective possession or control that
might be reasonably required by another party.
4.2.5. Limitation of Liability. No party shall have any liability to
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any other party in the event that any Information exchanged
or provided pursuant to this Section 4.2 is found to be
inaccurate. No party shall have any liability to any other
party if any Information is destroyed or lost.
4.3. Auditors and Audits. Each Newco agrees that, for so long as CSI is
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required in accordance with United States generally accepted
accounting principles to consolidate such Newco's results of
operations and financial position (during such period, such Newco
being referred to as an "Included Newco"):
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4.3.1. Selection of Auditors. Such Included Newco shall not select a
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different accounting firm from that used by CSI to serve as
its independent certified public accountants (its "auditors")
for purposes of providing an opinion on its consolidated
financial statements without CSI's prior written consent.
4.3.2. Date of Auditors' Opinion and Quarterly Reviews. The parties
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will cooperate in establishing a timetable for the
preparation of
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audited financial statements and the clearance of quarterly
financial statements. Each Included Newco shall use its best
efforts to enable its auditors to complete their audit such
that they will date their opinion on such Included Newco's
audited annual financial statements on the same date that
CSI's auditors date their opinion on CSI's audited annual
financial statements, and to enable CSI to meet its timetable
for the printing, filing and public dissemination of CSI's
annual financial statements. Each Included Newco shall use
its best efforts to enable its auditors to complete their
quarterly review procedures such that they will provide
clearance on such Included Newco's quarterly financial
statements on the same date that CSI's auditors provide
clearance on CSI's quarterly financial statements.
4.3.3. Annual and Quarterly Financial Statements. Each Included
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Newco shall provide to CSI and the other Included Newcos on a
timely basis all Information it holds that CSI or another
Included Newco, as applicable, reasonably requires to meet
its schedule for the preparation, printing, filing, and
public dissemination of its annual and quarterly financial
statements. CSI shall provide to each Included Newco on a
timely basis all financial Information it holds that such
Included Newco reasonably requires to meet its schedule for
the preparation, printing, filing, and public dissemination
of its annual and quarterly financial statements. CSI and
each Included Newco shall instruct its auditors and financial
personnel to provide such assistance as is required to assist
in the preparation of CSI's or such Included Newco's or
another Included Newco's, as the case may be, annual and
quarterly statements.
4.3.4. Conflict with Third-Party Agreements. Nothing in Sections 4.2
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and 4.3 shall require any party to violate any agreement with
any third party regarding the confidentiality of confidential
and proprietary information relating to that third party or
its business; provided, however, that in the event that a
party is required under Sections 4.2 and 4.3 to disclose any
such Information, it shall use all commercially reasonable
efforts, but without payment of additional amounts and
without other concessions, to seek to obtain such third
party's consent to the disclosure of such information.
4.4. Confidentiality. Each of the parties and its affiliates shall hold as
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confidential and shall not, except with the express prior written
consent of the party which owns such confidential information (in the
case of confidential information existing prior to the Transformation
Date, the ownership of which shall be determined pursuant to the
Contribution Agreements and the other Ancillary Agreements) directly
or indirectly
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disclose, communicate or divulge to any Person, or use for the
benefit of any Person, any information or data with respect to the
conduct or details of the business of any other party hereto held as
confidential information by such party whether obtained pursuant to
Section 4.2 hereof or otherwise, including, without limitation,
methods of operation, customers and customer lists, details of
contracts with customers, consultants, suppliers or employees,
products, proposed products, former products, proposed, pending or
completed acquisitions of any company, division, product line or
other business unit, prices and pricing policies, fees, costs, plans,
designs, technology, inventions, trade secrets, know-how, software,
marketing methods, policies, plans, personnel, or other proprietary
matters (collectively, "Confidential Information"). The restriction
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contained in the preceding sentence shall not apply to any
Confidential Information to the extent that (i) such information is
publicly available, (ii) such information is or hereafter becomes
lawfully obtainable from other sources without breach hereof, (iii)
the disclosure is made to a Governmental Authority where it is
necessary or appropriate to disclose such information to such
Governmental Authority having jurisdiction over the parties, or (iv)
disclosure is otherwise required by any legal requirement; provided,
however that in the cases set forth in clauses (iii) and (iv) above,
the disclosing party shall provide prior notice to the owner of the
Confidential Information and take reasonable steps to assist such
owner in contesting the requirement for the disclosure thereof. The
parties acknowledge that treatment of confidential information
exchanged pursuant to the Intercompany Agreements shall be governed
by the provisions of such agreements and not this Section 4.4.
4.5. Employee Confidentiality Agreements. Any agreement or instrument
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relating to confidentiality, non-disclosure or non-competition
obligations of a former employee of CSI and its affiliates who has
been, or a current employee of CSI who will be, transferred to a
Newco in connection with the Transformation (a "CSI Confidentiality
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Agreement") shall remain in full force and effect according to its
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terms; provided, however, that none of the following acts committed
by former CSI employees within the scope of their employment with a
particular Newco shall constitute a breach of such CSI
Confidentiality Agreements: (i) the use or disclosure of confidential
information of CSI for or on behalf of such Newco, if such disclosure
is consistent with the rights granted to such Newco and restrictions
imposed on such Newco under this Agreement, any Ancillary Agreement
or any other agreement between the parties; (ii) the rendering of any
services, directly or indirectly, to such Newco to the extent such
services are consistent with the rights granted to such Newco and the
restrictions imposed on such Newco under this Agreement, any
Ancillary Agreement or any other agreement between the parties. CSI
hereby retains all of its rights under the CSI Confidentiality
Agreements (except as provided in the immediately preceding
sentence), but hereby transfers
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and assigns to each Newco a portion of its rights under the CSI
Confidentiality Agreements of all former CSI employees employed by
such Newco to the extent required to permit such Newco to enjoin,
restrain, recover damages from or obtain specific performance of the
CSI Confidentiality Agreements or obtain other remedies against any
Newco employee who breaches his or her CSI Confidentiality Agreement.
CSI and the relevant Newco may separately enforce the CSI
Confidentiality Agreements of former CSI employees employed by such
Newco, in the case of such Newco, to the extent necessary to
reasonably protect its interests; provided, however, that such Newco
shall not commence any legal action relating thereto without CSI's
written consent. In addition, each Newco shall use reasonable
commercial efforts to cause each of its employees to execute a new
confidentiality agreement which protects the confidential information
of such Newco (each a "Newco Confidentiality Agreement"). CSI and
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each Newco agree to cooperate as follows: (A) each Newco shall advise
CSI of any violation(s) of the CSI Confidentiality Agreements by
former CSI employees and cooperate with CSI in enforcing the CSI
Confidentiality Agreements; (B) CSI shall use reasonable commercial
efforts to enforce its rights under the CSI Confidentiality
Agreements and (C) each Newco shall use reasonable commercial efforts
to enforce its rights under the Newco Confidentiality Agreements.
4.6. CSI Guidelines, etc. Each Newco acknowledges that until a
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Distribution with respect to such Newco, (i) such Newco will be
subject to general CSI oversight and will follow CSI's corporate
guidelines as from time to time in effect. Without limiting the
foregoing, without prior CSI written approval (which written approval
may be evidenced by (i) the affirmative vote of the chief executive
officer of CSI in connection with a vote of the Board of Directors of
such Newco if he is a member of such Board or (ii) if the chief
executive officer of CSI is not a member of such Board, by the
affirmative vote of all officers of CSI sitting on such Board in
connection with a vote of such Board), no Newco shall:
(i) amend (A) its By-laws, (B) its 2000 Option Plan (including
any increase in the shares available for issuance under
such plan), or (C) any awards issued under its 2000 Option
Plan;
(ii) issue any equity securities or other securities other than
options under its 2000 Option Plan;
(iii) grant any stock options or other rights to purchase any
equity securities or other securities of such Newco in
excess of the options reserved under its 2000 Option Plan;
(iv) grant any rights to serve on its Board of Directors; or
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(v) make any significant changes in its accounting or financial
reporting policies.
4.7. Intercompany Agreements. The parties acknowledge and agree that the
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Newcos, either as separate entities or through their predecessor
divisions of CSI, have conducted business in accordance with the
terms and conditions reflected in the Intercompany Agreements from
March 1, 2000 through the date hereof and shall continue to do so
through the Transformation.
4.8. Rainbow Awards. In the event of a Distribution by CSI of shares of
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stock of a Newco (the "Distributed Newco"), the Distributed Newco
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shall cause there to be issued, to each "eligible individual" (as
hereinafter defined) who at the close of the record date for the
Distribution holds an option to acquire shares of CSI stock that has
been granted in connection with the performance of services other
than an option under CSI's stock purchase program or programs (any
such eligible individual being hereinafter referred to as a
"Recipient" and any such option held by a Recipient at the close
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of the record date for the Distribution being hereinafter referred to
as an "Eligible CSI Option"), an option (the "Rainbow Option") to
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acquire, on the terms hereinafter provided, shares of stock of the
same class as the stock distributed generally in the Distribution
("Newco Stock"). Subject
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to adjustment as referenced below, each Rainbow Option shall be for
the number of shares of Newco Stock that the Recipient would have
been entitled to receive in the Distribution with respect to the
shares of CSI stock subject to the Eligible CSI Option if he or she
had owned such shares of CSI stock outright on the record date of the
Distribution. The per-share exercise price for each Rainbow Option
shall be fixed in such manner as CSI in its sole discretion
determines to be appropriate to reflect the Distribution. CSI, in
connection with the Distribution, shall also reduce the per-share
exercise price of each Eligible CSI Option to such extent, if any, as
it deems appropriate to reflect the Distribution. It is the intention
of the parties that the provisions of this Section 4.8 shall be
administered insofar as is possible to preserve, with respect to the
Rainbow Option and the Eligible CSI Option immediately after the
Distribution, the same aggregate spread between fair market value of
the shares underlying those options and exercise price and the same
ratio of exercise price to the fair market value of the shares
underlying those options as existed with respect to the Eligible CSI
Option immediately before the record date of the Distribution. The
number of shares subject to the Rainbow Option and CSI options shall
be subject to adjustment as necessary to accomplish this end, as
determined by CSI. For purposes of this Section 4.8, the term
"eligible individual" means, except as CSI may
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otherwise determine, an individual who at the time of the
Distribution is an employee of CSI or of an entity that is then a
subsidiary of CSI. Each
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Rainbow Option shall be subject to terms substantially similar to
those which apply to other stock options issued by the Distributed
Newco, except that the vested status and exercisability of the
Rainbow Option, and the term and expiration provisions of such
option, shall be the same as the Eligible CSI Option to which it
relates. It is the intention of the parties to more fully document
the provisions of this Section 4.8 on or prior to the Closing, and
CSI and each Newco shall take such measures as are necessary to carry
out the provisions of this Section 4.8, including, without
limitation, reserving a sufficient number of shares and causing the
shares to be registered under the Securities Act and applicable state
securities laws, if any.
4.9. Expenses. Except as otherwise provided in this Agreement, the
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Ancillary Agreements or any other agreement between the parties
relating to the Transformation, each Newco shall be responsible, to
the extent determined reasonable in CSI's sole discretion, for its
own fees, costs and expenses incurred in connection with the
Transformation, any IPO and any Distribution and shall bear its
proportionate share of such fees, costs and expenses incurred by CSI.
4.10. Dispute Resolution.
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4.10.1. If a dispute, controversy or claim ("Dispute") arises between
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or among two or more parties relating to the interpretation
or performance of this Agreement or the Ancillary Agreements
or otherwise relating to the Transformation, other than a
dispute under any Intercompany Agreement or supplements
thereto or the Tax Sharing Agreement which shall be resolved
in the manner set forth in the relevant agreement, the
appropriate senior executives of each party who shall have
the authority to resolve the matter shall meet within fifteen
(15) days from the date the Dispute arises to attempt in good
faith to negotiate a resolution of the Dispute prior to
pursuing other available remedies. The earlier of fifteen
(15) days from the date one party notifies the other party or
parties of the Dispute and the date of the initial meeting
between the appropriate senior executives shall be referred
to herein as the "Dispute Resolution Commencement Date".
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Discussions and correspondence relating to trying to resolve
such Dispute shall be treated as confidential information
developed for the purpose of settlement and shall be exempt
from discovery or production and shall not be admissible.
Subject to Section 4.10.2 below, if the senior executives are
unable to resolve the Dispute within fifteen (15) days from
the Dispute Resolution Commencement Date, and either party
wishes to pursue its rights relating to such Dispute, then,
whether or not CSI is involved in the Dispute, the parties
shall submit the Dispute to the chief executive officer of
CSI (or
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such other executive of CSI designated by the chief executive
officer of CSI for this purpose) for resolution. The chief
executive officer (or other designated executive of CSI)
shall resolve such dispute. The decision of the chief
executive officer or other designated executive of CSI shall
be final and binding on the parties hereto.
4.10.2. Notwithstanding the provisions of Section 4.10.1, if the
senior executives of each party are unable to resolve a
Dispute within sixty (60) days from the Dispute Resolution
Commencement Date and at least one party to the Dispute is a
Newco which has consummated an IPO or is no longer a
majority-owned Subsidiary of CSI, and any party wishes to
pursue its rights relating to such Dispute (as evidenced by
the approval of the Board of Directors of such party to
pursue arbitration of the Disputee in accordance with this
Section 4.10.2), then the Dispute shall be resolved as set
forth below:
(i) The Dispute shall be submitted to final and binding
arbitration under the then current Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), by
---
three (3) arbitrators in Boston, Massachusetts. Such
arbitrators shall be selected by the mutual agreement of
the parties or, failing such agreement, shall be selected
according to the aforesaid AAA rules. The arbitrators will
be instructed to prepare and deliver a written, reasoned
opinion stating their decision within thirty (30) days of
the completion of the arbitration. The prevailing party in
such arbitration, as determined by the arbitrator, shall be
entitled to expenses, including costs and reasonable
attorneys' and other professional fees, incurred in
connection with the arbitration (but excluding any costs
and fees associated with prior negotiation or mediation).
The decision of the arbitrator shall be final and non-
appealable and may be enforced in any court of competent
jurisdiction.
(ii) Notwithstanding the foregoing Section 4.10.2(i), any
Dispute involving at least one Newco which has consummated
an IPO or is no longer a majority-owned Subsidiary of CSI
regarding the following is not required to be negotiated or
arbitrated prior to seeking injunctive relief from a court
of competent jurisdiction to prevent serious and
irreparable injury to one of the parties or to others:
breach of any obligation of confidentiality; infringement,
misappropriation, or misuse of any intellectual property
right; or any other claim where interim relief from the
court is sought to prevent serious and irreparable injury
to one of the parties or to others. However, the parties to
the Dispute shall make a good
-13-
faith effort to negotiate such Dispute, according to the
above procedures, while such court action is pending.
4.10.3. The processes set forth in this Section 4.10 shall be the
exclusive processes for the resolution of a Dispute among the
parties.
4.10.4. Unless otherwise agreed in writing, the parties will continue
to honor all other commitments under this Agreement and each
Ancillary Agreement during the course of dispute resolution
pursuant to the provisions of this Section 4.10 with respect
to all matters not subject to such dispute, controversy or
claim.
4.11. Non-Solicitation of Employees. Each party (the "Recruiting Party")
----------------------------- ----------------
agrees not to solicit or recruit the employees of any other party for
a period of (i) two years following the Transformation Date or (ii)
if both the Recruiting Party and the other party are Newcos, for a
period of the longer of (x) two years from the Transformation Date
and (y) until one such party ceases to be a majority owned subsidiary
of CSI. Notwithstanding the foregoing, this prohibition on
solicitation and recruitment does not apply to actions taken by a
party as a result of an employee's affirmative response to a general
recruitment effort carried out through a public solicitation or
general solicitation.
4.12. Intentionally Omitted.
---------------------
4.13. CSI as Stockholder. The parties acknowledge that nothing contained in
------------------
this Agreement or in the Ancillary Agreements or in any agreements
contemplated hereby or thereby is intended to interfere, or shall
interfere, with CSI's rights as a stockholder of any Newco.
4.14. Public Announcements. Each Newco agrees not to issue any press
--------------------
release or make any such public statement with respect to this
Agreement or the transactions contemplated hereby without consulting
with, and obtaining the prior written approval of, CSI.
4.15. Further Assurances. Each party agrees to take such further action and
------------------
execute, deliver and/or file such documents or instruments as are
necessary to carry out the terms and purposes of this Agreement.
4.16. Conflicting Agreements. In the event of conflict between this
----------------------
Agreement and any Ancillary Agreement or other agreement executed in
connection herewith, the provisions of this Agreement shall prevail.
4.17. Independent Directors. CSI agrees that, following the closing of any
---------------------
IPO of a Newco, for so long as CSI owns a majority of the capital
stock of such Newco, CSI will use reasonable efforts to cause the
board of
-14-
directors of such Newco to contain a number of directors who qualify
as an "independent director" as required by the rules and regulations
of the National Association of Securities Dealers or applicable stock
exchange regulations.
4.18. Retained Product Credits. Each Newco agrees that to the extent any
------------------------
holder of Retained Product Credits elects to utilize such Retained
Product Credits to purchase products and/or services of such Newco,
such Newco will use reasonable efforts to supply such products and/or
services, and CSI agrees it will reimburse such Newco for the cash
value of the products and/or services provided by the Newco in
respect of Retained Product Credits.
4.19. Covenant Not To Xxx. Each Newco covenants that it will not assert or
-------------------
bring any suit, action, claim or other proceeding against another
Newco based on, in whole or in part, such other Newco's use, in that
Newco's Product Segment (as that term is defined in that Newco's
Contribution Agreement) of those assets contributed to such other
Newco through the Ancillary Agreements.
4.20. Assertion of Patent Rights
--------------------------
4.20.1. Right to Request Permission to Assert Patent Rights. If a
---------------------------------------------------
Newco is named as a defendant in any action claiming that any
of its Products or the operation of its Company Business (as
those terms are defined in that Newco's Contribution
Agreement) infringes a patent owned by a third party, that
Newco may request permission from one or more of the other
Newcos to assert against that third party a claim of
infringement of one or more of the such other Newcos' patents
that are Contributed Registered Intellectual Property (as
that term is defined in that Newco's Contribution Agreement).
Any such request shall identify the third party and also
include that information necessary for any such other Newcos
to consider whether a basis for such a claim exists; the
likelihood of success of such a claim; and the risks
associated with asserting such a claim.
4.20.2. Assertion of Patent Rights. In response to such a request,
--------------------------
the Newco owning a patent in its sole discretion may grant or
not grant permission to the requesting Newco to assert a
claim of infringement under its patent against the named
third party. If such permission is granted, the Parties may
proceed as follows:
4.20.2.1. The Newco owning a patent may institute suit
jointly with the requesting Newco, the suit being
brought in
-15-
both their names, the out-of-pocket costs thereof
being equally, and any recovery or settlement being
shared equally. Those Newcos shall agree to the
manner in which they will exercise control over
such action, with the Newco owning the patent
having ultimate decision authority as to all
matters as to which the Newcos cannot agree. The
Newco not owning the patent may, if it so desires,
also be represented by separate counsel of its own
selection, the fees for which counsel shall be paid
by such Newco;
4.20.2.2. The Newco owning the patent may institute suit on
its own. Such Newco shall bear the entire cost of
such litigation and shall be entitled to retain the
entire amount of any recovery or settlement. The
other Newco shall have no right or interest in such
action or any recovery or settlement achieved
through it; or
4.20.2.3. The Newco owning a patent may allow the requesting
Newco to institute the suit, naming the Newco
owning the patent as a party. The requesting Newco
shall bear the entire cost of such litigation,
including expenses incurred by the Newco owning the
patent. The requesting Newco may not settle or
otherwise compromise any claims under that patent
absent the express written permission of the Newco
owning the patent. Any recovery in excess of
litigation costs will be shared equally by the
Newcos. The Newcos agree to negotiate in good faith
an appropriate compensation to the Newco owning the
patent for any non-cash settlement or non-cash
cross-license.
4.20.3. Abandonment of Actions. Should either Newco commence a suit
----------------------
under the provisions of this Section 4.20 and thereafter
elect to abandon the same, it shall give timely notice to the
other Newco, who may, if it so desires, continue prosecution
of such suit, provided, however, that the sharing of expenses
and any recovery in such suit shall be as agreed upon between
Newcos.
4.21. Transaction With Silver Lake Partners, L.P.
4.21.1. Description of Transaction. Reference is made to the Amended
--------------------------
and Restated Securities Purchase Agreement dated as of August
29, 2000 (the "Securities Purchase Agreement") by and among
-----------------------------
CSI, Silver Lake Partners, L.P. ("Silver Lake") and certain
-----------
other
-16-
assigns of Silver Lake (together with Silver Lake, the
"Investors").
---------
4.21.2. General Agreement to Perform Obligations. Each Newco
----------------------------------------
acknowledges that the Securities Purchase Agreement sets
forth certain actions (a) that such Newco will take or that
CSI will cause such Newco to take and (b) that such Newco
will not take or which CSI will cause such Newco not to take.
Each Newco hereby agrees with CSI that it will take or not
take, as applicable, all such actions as provided in the
Securities Purchase Agreement and that it shall be bound by
the terms of the Securities Purchase Agreement as if (i) it
were a party thereto and (ii) CSI's obligation to cause such
Newco to take or not take an action were a direct obligation
of such Newco to take or not take an action.
4.21.3. Specific Sections of the Securities Purchase Agreement.
------------------------------------------------------
Without limiting the generality of each Newco's agreement set
forth in Section 4.21.2, each Newco further acknowledges that
its obligations under Section 4.21.2 include the following:
4.21.3.1. Issuance of Securities Generally. Each Newco agrees
--------------------------------
to (a) take any actions that CSI agrees to cause it
to take or that is otherwise provided that it will
take and (b) not take any actions that CSI agrees
to cause it not to take or that is otherwise
provided that it will not take in Section 1.1 of
the Securities Purchase Agreement, including
without limitation as such section relates to the
issuance of securities and rights relating to
securities.
4.21.4. Adjustments to the Subsidiary Stock Purchase Rights.
---------------------------------------------------
4.21.4.1. Working Capital Contributions by CSI to the Newco.
-------------------------------------------------
Each Newco agrees to (a) take any actions that CSI
agrees to cause it to take or that is otherwise
provided that it will take and (b) not take any
actions that CSI agrees to cause it not to take or
that is otherwise provided that it will not take in
Section 1.3(b) of the Securities Purchase
Agreement, including without limitation as such
section relates to Working Capital Contributions by
CSI to such Newco.
4.21.4.2. Distributions by the Newco to CSI. Each Newco
---------------------------------
agrees to (a) take any actions that CSI agrees to
cause it to take or that is otherwise provided that
it will take
-17-
and (b) not take any actions that CSI agrees to
cause it not to take or that is otherwise provided
that it will not take in Section 1.3(c) of the
Securities Purchase Agreement, including without
limitation as such section relates to distributions
made by such Newco to CSI.
4.21.4.3. Employee Options Issued by the Newco. Each Newco
------------------------------------
agrees to (a) take any actions that CSI agrees to
cause it to take or that is otherwise provided that
it will take and (b) not take any actions that CSI
agrees to cause it not to take or that is otherwise
provided that it will not take in Section 1.4(f) of
the Securities Purchase Agreement, including
without limitation as such section relates to its
issuance of employee stock options.
4.21.4.4. Other Dilutive Events. Each Newco agrees to (a)
---------------------
take any actions that CSI agrees to cause it to
take or that is otherwise provided that it will
take and (b) not take any actions that CSI agrees
to cause it not to take or that is otherwise
provided that it will not take in Section 1.3(d) of
the Securities Purchase Agreement, including
without limitation as such section relates to
dilutive events.
4.21.5. Issuance of IPO Valuation Warrants. Each Newco agrees to (a)
----------------------------------
take any actions that CSI agrees to cause it to take or that
is otherwise provided that it will take and (b) not take any
actions that CSI agrees to cause it not to take or that is
otherwise provided that it will not take in Section 1.6 of
the Securities Purchase Agreement, including without
limitation as such section relates to its issuance of IPO
Valuation Warrants.
4.21.6. Issuance of Subsidiary Warrants. Each Newco agrees to (a)
-------------------------------
take any actions that CSI agrees to cause it to take or that
is otherwise provided that it will take and (b) not take any
actions that CSI agrees to cause it not to take or that is
otherwise provided that it will not take in Section 1.7 of
the Securities Purchase Agreement, including without
limitation as such section relates to its issuance of
Subsidiary Warrants.
4.21.7. Participation in Third-Party Investments. Each Newco agrees
to (a) take any actions that CSI agrees to cause it to take
or that is otherwise provided that it will take and (b) not
take any actions
-18-
that CSI agrees to cause it not to take or that is otherwise
provided that it will not take in Sections 1.4(a)-(d) of the
Securities Purchase Agreement, including without limitation
as such sections relate to the rights of the Investors to
participate in Third-Party Investments.
4.21.8. Compliance with Covenants.
-------------------------
4.21.8.1. Reservation of Shares. Each Newco agrees to (a)
take any actions that CSI agrees to cause it to
take or that is otherwise provided that it will
take and (b) not take any actions that CSI agrees
to cause it not to take or that is otherwise
provided that it will not take in Section 5.5 of
the Securities Purchase Agreement, including
without limitation as such section relates to its
promise to reserve sufficient shares to permit the
exercise of the Subsidiary Stock Purchase Rights,
IPO Warrants and Subsidiary Warrants.
4.21.8.2. Board of Directors. Each Newco agrees to (a) take
------------------
any actions that CSI agrees to cause it to take or
that is otherwise provided that it will take and
(b) not take any actions that CSI agrees to cause
it not to take or that is otherwise provided that
it will not take in Section 5.7(b) of the
Securities Purchase Agreement, including without
limitation as such section relates to its board of
directors. In particular, Aprisma agrees to allow
the Investors to appoint a director to its board
of directors as provided for in Section 5.7(b) of
the Securities Purchase Agreement.
4.21.9. Dispute Resolution. Each Newco agrees to comply with the
------------------
dispute resolution mechanism as set forth in Section 1.8 of
the Securities Purchase Agreement in connection with any
disputes with the Investors arising under the Securities
Purchase Agreement.
5. ALLOCATION OF ASSETS AND LIABILITIES
At the Closing, assets shall be contributed to the Newcos and Liabilities shall
be assumed by the Newcos as provided in the Contribution Agreements; provided,
however, that the parties acknowledge and agree that, notwithstanding any
provisions in the Contribution Agreements to the contrary, CSI may in its sole
discretion retain, allocate or reallocate to any Newcos assets and Liabilities,
including general corporate Liabilities of CSI, or terminate this Agreement or
any Ancillary Agreement to facilitate a tax-free Distribution
-19-
of any Newco, comply with regulatory or financial reporting requirements or
otherwise facilitate the Transformation in a manner consistent with its business
purposes.
6. INDEMNIFICATION MATTERS
This Section 6 applies to (i) this Agreement and any instruments delivered
pursuant hereto other than (A) the Ancillary Agreements and (B) any supplements
to the Intercompany Agreements and (ii) the Contribution Agreements and any
instruments delivered thereunder (collectively such documents referred to in
clause (i) and (ii) being referred to herein as the "Covered Agreements").
------------------
6.1 Survival of Representations and Warranties. All covenants, agreements
------------------------------------------
and indemnities of the parties contained herein or in the Covered
Agreements shall survive the Transformation Date except as otherwise
provided herein or therein.
6.2 Indemnity by CSI.
----------------
6.2.1 CSI hereby agrees to indemnify, defend and hold harmless each
Newco and its respective directors, officers and Subsidiaries
against and in respect of all Losses that result from:
6.2.1.1 any failure of the parties to comply with any bulk
transfer law of any jurisdiction in connection
with the Transformation; and
6.2.1.2 the conduct of CSI's business after the
Transformation Date that does not relate to any
Newco's business;
provided, however, that this Section 6.2.1 does not apply to any
Losses related to income taxes and payroll taxes (which such Losses
are governed by the Tax Sharing Agreement). Any Newco claiming
indemnification under this Section 6.2.1 shall provide CSI written
notice of such claim, whether or not arising out of a claim by a third
party.
6.2.2 CSI hereby agrees to indemnify, defend and hold harmless
Riverstone and its respective directors, officers and
Subsidiaries against and in respect of all losses arising out
of or related to any offer of recission made pursuant to
California securities law to repurchase any unexercised
options issued before the Transformation Date to employees,
consultants or advisors of CSI or Riverstone.
6.3 Indemnity by each Newco. Each Newco hereby agrees to indemnify, defend
-----------------------
and hold harmless (i) CSI and its directors, officers and affiliates
(other than the other Newcos and their respective Subsidiaries) and
(ii)
-20-
each other Newco and its directors, officers and Subsidiaries against
and in respect of all Losses that result from:
6.3.1 the Assumed Liabilities of such Newco assumed by it pursuant
to the relevant Contribution Agreement, any other Liabilities
allocated to such Newco pursuant to Section 5 hereof, and any
Liabilities arising out of the operations of such Newco;
6.3.2 the nonfulfillment of any agreement or covenant of such Newco
contained in any Covered Agreement; and
6.3.3 the conduct of such Newco's business after the Transformation
Date.
provided, however, that this Section 6.3 does not apply to any Losses
related to income taxes and payroll taxes (which such Losses are
governed by the Tax Sharing Agreement). CSI or any Newco claiming
indemnification under this Section 6.3 shall provide written notice to
the indemnifying party in respect of such claim, whether or not
arising out of a claim by a third party.
6.4 Third Party Claims. Promptly after the receipt by any party entitled
------------------
to indemnification (the "Indemnified Party") pursuant to this
-----------------
Section 6 or notice of the commencement of any action against such
Indemnified Party by a third party, such Indemnified Party shall, if a
claim with respect thereto is to be made against any party obligated
to provide indemnification (the "Indemnifying Party") pursuant to this
------------------
Section 6, give such Indemnifying Party written notice thereof in
reasonable detail in light of the circumstances then known to such
Indemnified Party. The failure to give such notice shall not relieve
any Indemnifying Party from any obligation hereunder except where, and
then solely to the extent that, such failure actually and materially
prejudices the rights of such Indemnifying Party. Such Indemnifying
Party shall have the right to defend such claim, at such Indemnifying
Party's expense and with counsel of its choice reasonably satisfactory
to the Indemnified Party, provided that the Indemnifying Party
conducts the defense of such claim actively and diligently. If the
Indemnifying Party assumes the defense of such claim, the Indemnified
Party agrees to reasonably cooperate in such defense so long as the
Indemnified Party is not materially prejudiced thereby. So long as the
Indemnifying Party is conducting the defense of such claim actively
and diligently, the Indemnified Party may retain separate co-counsel
at its sole cost and expense and may participate in the defense of
such claim, and neither any Indemnifying Party nor any Indemnified
Party will consent to the entry of any judgment or enter into any
settlement with respect to such claim without the prior written
consent of the other, which consent will not be unreasonably withheld.
In the
-21-
event the Indemnifying Party does not or ceases to conduct the defense
of such claim actively and diligently, (w) the Indemnified Party may
defend against such claim in any manner it may reasonably deem to be
appropriate, (x) upon receiving the prior written consent of the
Indemnifying Party, which consent will not be unreasonably withheld,
the Indemnified Party may consent to the entry of any judgment or
enter into any settlement with respect to such claim, (y) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against such claim, including
reasonable attorneys' fees and expenses, and (z) the Indemnifying
Party will remain responsible for any Losses the Indemnitee may suffer
as a result of such claim to the full extent provided in this Section
6.
7. CONDITIONS TO THE TRANSFORMATION
The consummation of the Transformation is subject to the satisfaction, at or
prior to the Closing, of all of the following conditions:
7.1. Shareholder Approval. The shareholders of CSI shall have approved
--------------------
the Transformation.
7.2. Execution and Delivery of Documents. Unless otherwise waived in
-----------------------------------
writing by the relevant parties benefiting therefrom, each the
parties shall have executed and delivered all Ancillary Agreements
and other documents to be executed and delivered by it on or prior
to the Transformation Date, including without limitation (i) such
documents to be executed and delivered on the Effective Date and
(ii) such documents to be executed and delivered on or prior to the
Transformation Date pursuant to Section 4.1.
7.3. Litigation. No material action shall have been instituted at or
----------
prior to the Closing by any Governmental Authority or other Person
relating to this Agreement or any of the transactions contemplated
hereby, which has a reasonable likelihood of success and the result
of which would prevent or make illegal the consummation of any such
transaction.
8. DEFINITIONS
For the purposes of this Agreement, the following terms shall have the following
meanings:
8.1. "AAA" has the meaning assigned to such term in Section 4.10.2.
---
8.2. "A-E Intercompany Agreement" has the meaning assigned to such term in
--------------------------
Section 1.5.
-22-
8.3. "A-G Intercompany Agreement" has the meaning assigned to such term
--------------------------
in Section 1.6.
8.4. "A-R Intercompany Agreement" has the meaning assigned to such term
--------------------------
in Section 1.7.
8.5. "Agreement" has the meaning assigned to such term in the preamble.
---------
8.6. "Ancillary Agreements" has the meaning assigned to such term in
--------------------
Section 1.
8.7. "Aprisma" has the meaning assigned to such term in the Preamble.
-------
8.8. "Aprisma Business" means the "Company Business" as such term is
----------------
defined in the Aprisma Contribution Agreement.
8.9. "Aprisma Contribution Agreement" has the meaning assigned to such
------------------------------
term in Section 1.1.
8.10. "Assumed Liabilities" means, with respect to a particular Newco,
-------------------
"Assumed Liabilities" as such term is defined in the Contribution
Agreement to which such Newco is party.
8.11. "CSI" has the meaning assigned to such term in the preamble.
---
8.12. "CSI Confidentiality Agreement" has the meaning assigned to such
-----------------------------
term in Section 4.5.
8.13. "Closing" has the meaning assigned to such term in Section 2.3.
-------
8.14. "Commission" means the Securities and Exchange Commission.
----------
8.15. "Confidential Information" has the meaning assigned to such term in
------------------------
Section 4.4.
8.16. "Contribution Agreements" has the meaning assigned to such term in
-----------------------
Section 1.4.
8.17. "Covered Agreements" has the meaning assigned to such term in
------------------
Section 6.
8.18. "Dispute" has the meaning assigned to such term in Section 4.10.1.
-------
8.19. "Dispute Resolution Commencement Date" has the meaning assigned to
------------------------------------
such term in Section 4.10.1.
-23-
8.20. "Distributed Newco" has the meaning assigned to such term in Section
-----------------
4.8.
8.21. "Distribution" has the meaning assigned to such term in the
------------
recitals.
8.22. "Eligible CSI Option" has the meaning assigned to such term in
-------------------
Section 4.8.
8.23. "Enterasys" has the meaning assigned to such term in the preamble.
---------
8.24. "Enterasys Business" means the "Company Business" as such term is
------------------
defined in the Enterasys Contribution Agreement.
8.25. "Enterasys Contribution Agreement" has the meaning assigned to such
--------------------------------
term in Section 1.2.
8.26. "E-G Intercompany Agreement" has the meaning assigned to such term
--------------------------
in Section 1.8.
8.27. "E-R Intercompany Agreement" has the meaning assigned to such term
--------------------------
in Section 1.9.
8.28. "Exchange Act" means the Securities and Exchange Act of 1934, as
------------
amended.
8.29. "GNTS" has the meaning assigned to such term in the preamble.
----
8.30. "GNTS Business" means the "Company Business" as such term is defined
-------------
in the GNTS Contribution Agreement.
8.31. "GNTS Contribution Agreement" has the meaning assigned to such term
---------------------------
in Section 1.3.
8.32. "Governmental Authority" means any domestic or foreign federal,
----------------------
state or local government, regulatory or administrative agency or
court.
8.33. "G-R Intercompany Agreement" has the meaning assigned to such term
--------------------------
in Section 1.10.
8.34. "Included Newco" has the meaning assigned to such term in Section
--------------
4.3.
8.35. "Indemnified Party" has the meaning assigned to such term in Section
-----------------
6.4.1.
8.36. "Indemnifying Party" has the meaning assigned to such term in
------------------
Section 6.4.1.
-24-
8.37. "Information" means information, whether or not patentable or
-----------
copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies, reports,
records, books, contracts, instruments, surveys, discoveries, ideas,
concepts, know-how, techniques, designs, specifications, drawings,
blueprints, diagrams, models, prototypes, samples, flow charts,
data, computer data, disks, diskettes, tapes, computer programs or
other software, marketing plans, customer names, communications by
or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or
under their direction (including attorney work product), and other
technical, financial, employee or business information or data.
"Intercompany Agreements" means, collectively, the A-E Intercompany
-----------------------
Agreement, A-G Intercompany Agreement, A-R Intercompany Agreement, E-G
Intercompany Agreement, E-R Intercompany Agreement and the G-R Intercompany
Agreement.
8.38. "Investors" has the meaning assigned to such term in Section 4.21.1.
---------
8.39. "IPO" has the meaning assigned to such term in the recitals.
---
8.40. "IPO Valuation Warrants" has the meaning assigned to such term in
----------------------
the Securities Purchase Agreement.
8.41. "Liability" means any debt, liability or obligation whether known or
---------
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, whether incurred directly or consequential and whether
due or to become due, including, without limitation, any liability
arising out of applicable statutory, regulatory or common law, any
contractual obligation and any obligation arising out of tort.
8.42. "Losses" means obligations, judgments, liens, injunctions, charges,
------
orders, decrees, rulings, damages, dues, assessments, losses, fines,
penalties, expenses, fees, costs, amounts paid in settlement
(including reasonable attorneys' and expert witness fees and
disbursements in connection with the investigation, defense or
settlement of any action or threatened action), arising out of any
claim, damages, complaint, demand, cause of action, audit,
investigation, hearing, action, suit or other proceeding asserted or
initiated or otherwise existing in respect of any matter.
8.43. "Manufactured Products Agreement" has the meaning assigned to such
-------------------------------
term in Section 1.12.
8.44. "Newco Confidentiality Agreement" has the meaning assigned to such
-------------------------------
term in Section 4.5.
-25-
8.45. "Newco Stock" has the meaning assigned to such term in Section 4.8.
-----------
8.46. "Newcos" has the meaning assigned to such term in the preamble.
------
8.47. "Person" means an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political
subdivision thereof.
8.48. "Rainbow Option" has the meaning assigned to such term in Section
--------------
4.8.
8.49. "Recipient" has the meaning assigned to such term in Section 4.8.
---------
8.50. "Recruiting Party" has the meaning assigned to such term in Section
----------------
4.11.
8.51. "Retained Product Credits" means credits held by third parties which
------------------------
obligate CSI to provide product and/or services to the holders of
such credits in consideration of such credits; provided that any
such outstanding credits which constitute a Liability assumed by any
Newco pursuant to a Contribution Agreement or otherwise shall not
constitute "Retained Product Credits".
8.52. "Retained Third Party Tool Rights" has the meaning assigned to such
--------------------------------
term in Section 4.1.2.
8.53. "Riverstone" has the meaning assigned to such term in the preamble.
----------
8.54. "Riverstone Business" means the "Company Business" as such term is
-------------------
defined in the Riverstone Contribution Agreement.
8.55. "Riverstone Contribution Agreement" has the meaning assigned to such
---------------------------------
term in Section 1.4.
8.56. "Securities Act" means the Securities Act of 1933, as amended.
--------------
8.57. "Securities Purchase Agreement" has the meaning assigned to such
-----------------------------
term in Section 4.21.1.
8.58. "Shared Services Agreements" has the meaning assigned to such term
--------------------------
in Section 4.1.4.
8.59. "Effective Date" has the meaning assigned to such term in the
--------------
preamble.
8.60. "Silver Lake" has the meaning assigned to such term in Section
-----------
4.21.1.
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8.61. "Subsidiary" of any Person means a corporation or other
----------
organization whether incorporated or unincorporated of which at
least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the
board of directors or others performing similar functions with
respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; provided, however, that no Person that is not
directly or indirectly wholly-owned by any other Person shall be a
Subsidiary of such other Person unless such other Person controls,
or has the right, power or ability to control, that Person.
8.62. "Subsidiary Stock Purchase Rights" has the meaning assigned to
--------------------------------
such term in the Securities Purchase Agreement.
8.63. "Subsidiary Warrants" has the meaning assigned to such term in the
-------------------
Securities Purchase Agreement.
8.64. "Tax Sharing Agreement" has the meaning assigned to such term in
---------------------
Section 1.11.
8.65. "Third Party Claim" has the meaning assigned to such term in
-----------------
Section 6.4.1.
8.66. "Third-Party Investments" has the meaning assigned to such term in
-----------------------
the Securities Purchase Agreement.
8.67. "Transformation" has the meaning assigned to such term in the
--------------
recitals.
"Transformation Date" has the meaning assigned to such term in Section
-------------------
2.2.
8.68. "Working Capital Contributions" has the meaning assigned to such
-----------------------------
term in the Securities Purchase Agreement.
9. MISCELLANEOUS
9.1. Entire Agreement. This Agreement and the Ancillary Agreements
----------------
including the schedules and exhibits hereto and thereto and the
other documents and instruments delivered pursuant hereto and
thereto constitute the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersede all prior or
contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties with respect
to such subject matter.
9.2. Amendment or Waiver. Except as provided in Section 9.10 and this
-------------------
Section 9.2, the parties hereto may not amend this Agreement except
by a written instrument executed by the parties hereto. CSI and any
one
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Newco, without the consent of any other Newco, may amend this
Agreement in a manner which does not adversely affect any other
Newco pursuant to a written instrument executed by CSI and such
Newco. Any party may waive its rights hereunder by a written
instrument executed by such party; provided, however, that unless
explicitly provided in such instrument, any waiver by any party of
any default, misrepresentation, or breach of warranty or covenant
hereunder shall not be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant
hereunder.
9.3. Severability. In the event that any provision hereof would, under
------------
applicable law, be invalid or unenforceable in any respect, such
provision shall (to the extent permitted under applicable law) be
construed by modifying or limiting it so as to be valid and
enforceable to the maximum extent compatible with, and possible
under, applicable law. The provisions hereof are severable, and in
the event any provision hereof should be held invalid or
unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
9.4. Successors and Assigns. All of the terms and provisions of this
----------------------
Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective permitted transferees and
assigns (each of which transferees and assigns shall be deemed to
be a party hereto for all purposes hereof); provided, however, that
-------- -------
(i) no transfer or assignment by any party hereto shall be
permitted without the prior written consent of the other party
hereto and any such attempted transfer or assignment without
consent shall be null and void and (ii) no transfer or assignment
by any party shall relieve such party of any of its obligations
hereunder.
9.5. Notices. Any notices or other communications required or permitted
-------
hereunder shall be sufficiently given if in writing and delivered
personally or sent by telecopier, Federal Express, or registered or
certified mail, postage prepaid, addressed as follows:
If to CSI,
to it at: Cabletron Systems, Inc.
00 Xxxxxxxxxx Xxx
Xxxxxxxx 00
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx and Chief Financial
Officer
Telecopier No.: (000) 000-0000
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with a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Fine
Telecopier No.: (617) 951-705
If to Aprisma,
to it at: Aprisma Management Technologies, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: President
Telecopier No.: (000) 000-0000
with a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Fine
Telecopier No.: (000) 000-0000
If to Enterasys,
to it at: Enterasys Networks, Inc.
00 Xxxxxxxxxx Xxx
Xxxxxxxx 00
Xxxxxxxxx, XX 00000
Attention: President
Telecopier No.: (000) 000-0000
with a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Fine
Telecopier No.: (000) 000-0000
If to GNTS,
to it at: GlobalNetwork Technology Services, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: President
Telecopier No.: (000) 000-0000
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with a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Fine
Telecopier No.: (000) 000-0000
If to Riverstone,
to it at: Riverstone Networks, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX
Attention: President
Telecopier No.: (000) 000-0000
with a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Fine
Telecopier No.: (000) 000-0000
Unless otherwise specified herein, such notices or other
communications shall be deemed received (a) on the date delivered,
if delivered personally, (b) two Business Days after being sent by
Federal Express, if sent by Federal Express, (c) one Business Day
after being delivered, if delivered by telecopier and (d) three
Business Days after being sent, if sent by registered or certified
mail. Each of the parties hereto shall be entitled to specify a
different address by giving notice as aforesaid to each of the
other parties hereto.
9.6. Interpretation. Section and subsection headings are not to be
--------------
considered part of this Agreement, are included solely for
convenience, are not intended to be full or accurate descriptions
of the content thereof and shall not affect the construction
hereof. No rule of strict construction shall apply to or be used
against any party hereto.
9.7. Third Party Beneficiaries. Nothing in this Agreement is intended or
-------------------------
shall be construed to entitle any person or entity other than the
parties and their respective transferees and assigns permitted
hereby to any claim, cause of action, remedy or right of any kind.
9.8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
9.9. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic substantive laws of the State of
Delaware,
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without giving effect to any choice or conflict of law provision or
rule that would cause the application of the laws of any other
jurisdiction.
10. Termination. This Agreement and any Ancillary Agreements and agreements
-----------
delivered pursuant hereto and thereto may be terminated with respect to any
one or more or all Newcos and/or the Transformation abandoned at any time
prior to the Closing by and in the sole discretion of CSI without the
approval of any Newco. In the event of termination pursuant to this Section
10, no party shall have any liability of any kind to the other relevant
party or parties to the extent of such termination.
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IN WITNESS WHEREOF, the undersigned have executed this instrument under
seal effective as of the date first written above.
CABLETRON SYSTEMS, INC.
Dated: November 8, 2000 By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: President, CEO
APRISMA MANAGEMENT
TECHNOLOGIES, INC.
Dated: November 8, 2000 By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
ENTERASYS NETWORKS, INC.
Dated: November 8, 2000 By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: President
GLOBALNETWORK TECHNOLOGY
SERVICES, INC.
Dated: November 8, 2000 By: /s/ Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
RIVERSTONE NETWORKS, INC.
Dated: November 8, 2000 By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxx
Title: CEO
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EXHIBITS
Exhibit A-1 Amended and Restated Aprisma Contribution Agreement
Exhibit A-2 Amended and Restated Enterasys Contribution Agreement
Exhibit A-3 Amended and Restated GNTS Contribution Agreement
Exhibit A-4 Amended and Restated Riverstone Contribution Agreement
Exhibit B-1 A-E Intercompany Agreement
Exhibit B-2 A-G Intercompany Agreement
Exhibit B-3 A-R Intercompany Agreement
Exhibit B-4 E-G Intercompany Agreement
Exhibit B-5 E-R Intercompany Agreement
Exhibit B-6 G-R Intercompany Agreement
Exhibit C Tax Sharing Agreement
Exhibit D Manufactured Products Agreement
Exhibit E Amended and Restated Securities Purchase Agreement
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