Exhibit 99.3
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement ("Agreement") is made and entered into as of
July 24, 2000, by and among: Clarent Corporation, a Delaware corporation
("Parent"); Cadmium Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"); certain owners of the Common Stock of Peak
Software Solutions, Inc., a Colorado corporation (the "Company") identified on
Exhibit A (the "Non-Designated Shareholders"); certain other owners of the
Company's Common Stock identified on Exhibit B (the "Designated Shareholders"
and, together with the Non-Designated Shareholders, the "Company Shareholders")
with respect to Sections 2, 3, 4 and 6 hereof; Xxxxx Xxxxxxxx (the
"Shareholders' Agent") with respect to certain sections hereof; and Xxxxx
Xxxxxxxx (the "Purchaser Representative") with respect to certain sections
hereof. Certain capitalized terms used in this Agreement are defined in Exhibit
C or in that certain Agreement and Plan of Merger and Reorganization of even
date herewith by and among Parent, Merger Sub, the Company, the Designated
Shareholders and the Shareholders' Agent (the "Reorganization Agreement").
Recitals
A. Pursuant to the Reorganization Agreement attached hereto as Exhibit
D, Parent, Merger Sub and the Company intend to effect a merger of the Company
with and into Merger Sub in accordance with the Reorganization Agreement, the
Delaware General Corporation Law and the Colorado Business Corporation Act (the
"Merger"). Upon consummation of the Merger, the Company will cease to exist, and
Merger Sub will remain a wholly-owned subsidiary of Parent (such remaining
company is the "Surviving Corporation").
B. The obligations of Parent and Merger Sub under the Reorganization
Agreement are conditioned upon the execution and delivery of this Agreement.
C. In connection with the consummation of the Merger, the parties
desire to enter into this Agreement to grant certain rights to and establish
certain responsibilities for the Company Shareholders.
Agreement
The parties to this Agreement agree as follows:
SECTION 1. Representations and Warranties of Non-Designated Shareholders
Each Non-Designated Shareholder severally and not jointly represents
and warrants, to and for the benefit of the Indemnitees, as follows:
1.1 Authorization, etc. Such Non-Designated Shareholder has the absolute
and unrestricted right, power, authority and capacity to execute and deliver
this Agreement and the other Transaction Agreements and to perform his
obligations hereunder and thereunder. This Agreement and the other Transaction
Agreements have been duly executed and delivered by each Non-Designated
Shareholder and constitute a legal, valid and binding obligations of each Non-
Designated Shareholder, enforceable against each Non-Designated Shareholder in
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accordance with their terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
1.2 No Conflicts or Consents.
(a) The execution and delivery of this Agreement and the other
Transaction Agreements by each Non-Designated Shareholder do not, and the
performance of this Agreement and the other Transaction Agreements by each Non-
Designated Shareholder will not: (i) conflict with or violate any law, rule,
regulation, order, decree or judgment applicable to such Non-Designated
Shareholder or by which he or any of his properties is or may be bound or
affected; or (ii) result in or constitute (with or without notice or lapse of
time) any breach of or default under, or give to any other Person (with or
without notice or lapse of time) any right of termination, amendment,
acceleration or cancellation of, or result (with or without notice or lapse of
time) in the creation of any encumbrance or restriction on any of the Company
Common Stock pursuant to any contract to which such Non-Designated Shareholder
is a party or by which such Non-Designated Shareholder or any of his affiliates
or properties is or may be bound or affected.
(b) The execution and delivery of this Agreement and the other
Transaction Agreements by each Non-Designated Shareholder do not, and the
performance of this Agreement and the other Transaction Agreements by each such
Non-Designated Shareholder will not, require any consent or approval of any
Person.
1.3 Title to Securities. Each Non-Designated Shareholder (a) holds of
record (free and clear of any Encumbrances, as defined in the Reorganization
Agreement) the number of outstanding shares of Company Common Stock set forth on
such Non-Designated Shareholder's Certificate, a form of which is attached as
Exhibit E hereof; (b) holds no other options, warrants and other rights to
acquire shares of Company Common Stock; and (c) does not directly or indirectly
own any shares of capital stock or other securities of the Company, or any
option, warrant or other right to acquire (by purchase, conversion or otherwise)
any shares of capital stock or other securities of the Company, other than the
shares and options, warrants and other rights set forth on the signature page
hereof.
1.4 Investment Representations.
(a) Each Non-Designated Shareholder understands that the Parent
Common Stock and the Escrowed Consideration have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"). Each Non-Designated
Shareholder also understands that the Parent Common Stock and the Escrowed
Consideration are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon the
representations of the Non-Designated Shareholders contained in this Agreement.
Each Non-Designated Shareholder hereby severally represents and warrants as
follows:
(i) Such Non-Designated Shareholder, either alone or with his
purchaser representative, has such knowledge and experience in financial and
business matters so that he is capable of evaluating the merits and risks of
such Non-Designated Shareholder's investment in Parent and has the capacity to
protect his own interests. Each Non-Designated Shareholder who needs a purchaser
representative to assist such Non-Designated Shareholder in
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evaluating the merits and risks of the investment in Parent has appointed such a
purchaser representative.
(ii) Such Non-Designated Shareholder must bear the economic risk
of this investment indefinitely unless the Parent Common Stock and the Escrowed
Consideration are registered pursuant to the Securities Act, or an exemption
from registration is available. Such Non-Designated Shareholder understands that
Parent has no present intention of registering the Parent Common Stock, the
Escrowed Consideration or any shares of its Common Stock. Such Non-Designated
Shareholder also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow such Non-Designated Shareholder to
transfer all or any portion of the Parent Common Stock or the Escrowed
Consideration under the circumstances, in the amounts or at the times such Non-
Designated Shareholder might propose.
(iii) Such Non-Designated Shareholder is acquiring the Parent
Common Stock and the Escrowed Consideration for his own account for investment
only, and not with a view towards their distribution.
(iv) Such Non-Designated Shareholder represents that by reason
of his respective business or financial experience, either alone or with his
purchaser representative, he has the capacity to protect his own interests in
connection with the Merger. Further, such Non-Designated Shareholder is aware of
no publication of any advertisement in connection with the transactions
contemplated in this Agreement.
(v) Such Non-Designated Shareholder has had an opportunity to
discuss Parent's business, management and financial affairs with certain
officers and members of management of Parent. Such Non-Designated Shareholder
has had the opportunity to ask questions of and receive answers from the Parent
and its management regarding the terms and conditions of this investment. Such
Non-Designated Shareholder acknowledges that he has received the information
listed in Rule 502(b)(2) promulgated under the Securities Act a reasonable time
before the Effective Time.
(vi) Such Non-Designated Shareholder acknowledges and agrees
that the Parent Common Stock and Escrowed Consideration must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Such Non-Designated
Shareholder has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act as in effect from time to time, which
permit limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the
availability of certain current public information about the Parent, the resale
occurring following the required holding period under Rule 144 and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(vii) Such Non-Designated Shareholder resides in the state of
Colorado.
(b) Legends.
(i) Each certificate representing Parent Common Stock or
Escrowed Consideration shall (unless otherwise permitted by the provisions of
this Agreement) be stamped
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or otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
(ii) Parent shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to Parent)
reasonably acceptable to Parent to the effect that the securities proposed to be
disposed of may lawfully be so disposed of without registration, qualification
or legend.
(iii) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by Parent of an order of the
appropriate blue sky authority authorizing such removal.
1.5 Accuracy of Representations. The representations and warranties
contained in this Agreement are accurate in all respects as of the date of this
Agreement.
SECTION 2. Piggyback Registration Rights.
2.1 Piggyback Registrations. Parent shall notify all Holders of
Registrable Securities hereunder in writing at least thirty (30) days prior to
the filing of any registration statement under the Securities Act for purposes
of a public offering of securities of Parent (excluding any registration
statement relating to any employee benefit plan or with respect to any corporate
reorganization or other transaction under Rule 145 of the Securities Act) and
will afford each such Holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such Holder. Each
Holder desiring to include in any such registration statement all or any part of
the Registrable Securities held by it shall, within fifteen (15) days after the
above-described notice from Parent, so notify Parent in writing. Such notice
shall state the intended method of disposition of the Registrable Securities by
such Holder. If a Holder decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the Company, such
Holder shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration statements
as may be filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein.
(a) Underwriting. If the registration statement under which Parent
gives notice under this Section 2.1 is for an underwritten offering, Parent
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder to be included in a registration pursuant to this Section 2.1
shall be conditioned upon such Holder's participation in
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such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by Parent. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to Parent; second, to stockholders of Parent other
than Holders who own shares with accompanying registration rights; third, to the
Holders on a pro rata basis based on the total number of Registrable Securities
held by the Holders; and fourth, to any other stockholders of Parent on a pro
rata basis. No such reduction shall reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to Parent and the underwriter,
delivered at least ten (10) business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration. For any
Holder which is a partnership or corporation, the partners, retired partners and
shareholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing person shall be deemed to be a single "Holder," and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder," as defined in this sentence.
(b) Right to Terminate Registration. Parent shall have the right to
terminate or withdraw any registration initiated by it under this Section 2.1
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The expenses of such
withdrawn registration shall be borne by the Parent in accordance with Section
2.2 hereof.
2.2 Expenses of Registration. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration under Section
2.1 shall be borne by Parent. All underwriting discounts and selling commissions
applicable to the sale incurred in connection with any registrations hereunder
shall be borne by the Holders of the securities so registered pro rata on the
basis of the number of shares so registered.
2.3 Obligations of Parent. Whenever effecting the registration of any
Registrable Securities, Parent shall, as expeditiously as reasonably possible:
(a) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(b) Use its reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that Parent shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
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(c) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(d) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing. Parent will use reasonable efforts to amend or supplement such
prospectus in order to cause such prospectus not to include any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing.
(e) Use its reasonable efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing Parent for the purposes of such registration,
in form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and (ii) a letter dated
as of such date, from the independent certified public accountants of Parent, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering addressed to the
underwriters.
2.4 Termination of Registration Rights. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect one
year after the Closing Date.
2.5 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of Parent to
take any action pursuant to this Section 2 that the selling Holders shall
furnish to Parent such information regarding themselves, the Registrable
Securities held by them and the intended method of disposition of such
securities as shall be required to effect the registration of their Registrable
Securities.
2.6 Indemnification. In the event any Registrable Securities are included
in a registration statement under Section 2.1:
(a) To the extent permitted by law, Parent will indemnify and hold
harmless each Holder, the partners, officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims,
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damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively a
"Violation") by Parent: (i) any untrue statement or alleged untrue statement of
a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by Parent of
the Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration
statement; and Parent will pay as incurred to each such Holder, partner,
officer, director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 2.6(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of Parent, which consent
shall not be unreasonably withheld, nor shall Parent be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless Parent, each of its directors, its officers and each person, if any,
who controls Parent within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or any person who
controls such Holder, against any losses, claims, damages or liabilities (joint
or several) to which Parent or any such director, officer, controlling person,
underwriter or other such Holder, or partner, director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder under an instrument duly executed by such
Holder and stated to be specifically for use in connection with such
registration; and each such Holder will pay as incurred any legal or other
expenses reasonably incurred by Parent or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.6(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.6 exceed the net proceeds from the offering
received by such Holder. Notwithstanding anything contained in any other of the
Transaction Agreements, the limits, caps or restrictions on indemnification in
this Section 2 shall be the only limits, caps or restrictions on indemnification
for the subject matter covered in this Section 2.
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(c) Promptly after receipt by an indemnified party under this Section
2.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.6, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.6.
(d) If the indemnification provided for in this Section 2.6 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.
(e) The obligations of Parent and Holders under this Section 2.6
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
2.7 Assignment of Registration Rights. The rights to include securities in
any registration statement pursuant to Section 2.1 may be assigned by a Holder
to a transferee or assignee of Registrable Securities, provided that (a) such
transferee or assignee acquires at least (x) all the Registrable Securities
issued to such Holder pursuant to Section 1.5 of the Reorganization Agreement or
transferred to such Holder in compliance with this Section 2.7 or (y) 25,000
shares of Registrable Securities (as adjusted for stock splits, reverse stock
splits,
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recapitalizations, etc.) and (b) such transferee or assignee is either (x) a
subsidiary, parent, general partner, limited partner, retired partner, member or
retired member of such Holder or (y) such Holder's family member or trust for
the benefit of such individual Holder; provided, however, (i) the transferor
shall, within ten (10) days after such transfer, furnish to Parent written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned and (ii) such
transferee shall agree to be subject to all restrictions set forth in this
Agreement.
2.8 "Market Stand-Off" Agreement; Agreement to Furnish Information.
(a) Market Stand-Off. Each Holder hereby agrees that such Holder
shall not sell, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any Parent Common Stock (or other securities) held by
such Holder (other than those included in the registration) for a period
specified by the representative of the underwriters of Parent Common Stock (or
other securities) of Parent not to exceed one hundred eighty (180) days
following the effective date of a registration statement of Parent filed under
the Securities Act. Parent may impose stop-transfer instructions with respect to
the shares of Parent Common Stock (or other securities) subject to the foregoing
restriction until the end of said one hundred eighty (180) day period.
(b) Other Agreements. Each Holder agrees to execute and deliver such
other agreements as may be reasonably requested by Parent or the underwriter
which are consistent with the foregoing or which are necessary to give further
effect thereto. In addition, if requested by Parent or the representative of the
underwriters of Parent Common Stock (or other securities) of Parent, each Holder
shall provide, within ten (10) days of such request, such information as may be
required by Parent or such representative in connection with the completion of
any public offering of Parent's securities pursuant to a registration statement
filed under the Securities Act that will include Registrable Securities. Each
Holder agrees that any transferee of any shares of Registrable Securities shall
be bound by this Section 2.8. The underwriters of Parent's stock are intended
third party beneficiaries of this Section 2.8 and shall have the right, power
and authority to enforce the provisions hereof as though they were a party
hereto. This Section 2.8 shall not apply to a registration relating solely to
employee benefit plans on Form S-1 or Form S-8 or similar forms that may be
promulgated in the future, or a registration relating solely to a Commission
Rule 145 transaction on Form S-4 or a similar form that may be promulgated in
the future.
2.9 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the Commission that may permit
the sale of the Registrable Securities to the public without registration,
Parent agrees to use its best efforts to file with the Commission, in a timely
manner, all reports and other documents required of the Company under the
Exchange Act.
SECTION 3. Waiver of Dissenter Rights
Each Company Shareholder hereby consents to the Merger and
irrevocably and unconditionally waives, and agrees to cause to be waived and to
prevent the exercise of, any rights of appraisal, any dissenters' rights and any
similar rights, including without limitation rights under Article 113 of the
CBCA, relating to the Merger or any related transaction that
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Shareholder or any other Person may have by virtue of the ownership of any
outstanding shares of Company Common Stock Owned by Shareholder.
Section 4. Indemnification by Non-Designated Shareholders, Etc.
4.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company, the
Designated Shareholders and the Non-Designated Shareholders in this Agreement
and the other Transaction Agreements and the representations and warranties set
forth in the Designated Shareholders' Closing Certificates (as defined in the
Reorganization Agreement), the Non-Designated Shareholder's Certificates and
the Company Shareholder's Certificate (as defined in the Escrow Agreement) shall
survive the Closing and shall expire on the second anniversary of the Closing
Date (the "Termination Date"); provided, however, that if, at any time prior to
the Termination Date, any Indemnitee (acting in good faith) delivers to the
Shareholders' Agent a written notice alleging the existence of an inaccuracy in
or a breach of any of the representations and warranties made by the Company,
any of the Designated Shareholders or any of the Non-Designated Shareholders or
set forth in the Company Closing Certificate, the Designated Shareholders'
Closing Certificates, the Non-Designated Shareholder's Certificates or the
Company Shareholder's Certificate (and setting forth in reasonable detail the
basis for such Indemnitee's belief that such an inaccuracy or breach may exist)
and asserting a claim for recovery under Section 4.2 based on such alleged
inaccuracy or breach, then the claim asserted in such notice shall survive the
Termination Date, until such time as such claim is fully and finally resolved.
All representations and warranties made by Parent and Merger Sub shall terminate
and expire as of the Effective Time, and any liability of Parent or Merger Sub
with respect to such representations and warranties shall thereupon cease.
(b) The representations, warranties, covenants and obligations of
the Company, the Designated Shareholders and the Non-Designated Shareholders,
and the rights and remedies that may be exercised by the Indemnitees, shall not
be limited or otherwise affected by or as a result of any information furnished
to, or any investigation made by or knowledge of, any of the Indemnitees or any
of their Representatives.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company and the Designated Shareholders in the Reorganization Agreement.
4.2 Indemnification by Non-Designated Shareholders.
(a) From and after the Effective Time (but subject to Section
4.1(a)), the Non-Designated Shareholders, jointly and severally (but subject to
the individual liability limitations set forth in Section 4.1(a) herein), shall
hold harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages which are
directly or indirectly suffered or incurred by any of the Indemnitees or to
which any of the Indemnitees may otherwise become subject (regardless of whether
or not such Damages relate to any third-party claim) and which arise from or as
a result of, or are directly or indirectly connected with: (i) any inaccuracy in
or breach of (or allegation of any inaccuracy in or breach of) any
representation or warranty of the Company as set forth in the Reorganization
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Agreement or in the Company Closing Certificate, as set forth in the
Reorganization Agreement, (without giving effect to any "Material Adverse
Effect" or other materiality qualification or any similar qualification
contained or incorporated directly or indirectly in such representation or
warranty); (ii) any breach of (or allegation of any breach of) any covenant or
obligation of the Company in the Reorganization Agreement or of any of the
Designated Shareholders or any of the Non-Designated Shareholders in the
Transaction Agreements; or (iii) any Legal Proceeding relating to any inaccuracy
or breach of the type referred to in clause "(i)" or "(ii)" above (including any
Legal Proceeding commenced by any Indemnitee for the purpose of enforcing any of
its rights under this Section 4).
(b) From and after the Effective Time (but subject to Section 4.1(a)),
the Non-Designated Shareholders, severally and not jointly (and subject to the
individual liability limitations set forth in Section 4.3(a) herein), shall hold
harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages which are
directly or indirectly suffered or incurred by any of the Indemnitees or to
which any of the Indemnitees may otherwise become subject (regardless of whether
or not such Damages relate to any third-party claim) and which arise from or as
a result of, or are directly or indirectly connected with: (i) any inaccuracy
in or breach of (or allegation of any inaccuracy in or breach of) any
representation or warranty of each Non-Designated Shareholder in the Transaction
Agreements or in such Non-Designated Shareholder's Company Shareholder's
Certificate or Non-Designated Shareholder's Certificate (without giving effect
to any "Material Adverse Effect" or other materiality qualification or any
similar qualification contained or incorporated directly or indirectly in such
representation or warranty); or (ii) any Legal Proceeding relating to any
inaccuracy or breach of the type referred to in clause "(i)" above (including
any Legal Proceeding commenced by any Indemnitee for the purpose of enforcing
any of its rights under this Section 4).
(c) The Non-Designated Shareholders acknowledge and agree that, if the
Surviving Corporation suffers, incurs or otherwise becomes subject to any
Damages as a result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
(d) For the purposes of this Section 4, Parent agrees that receivables
of the Company will be considered to be uncollected if not collected within one
hundred eighty (180) days after their due date.
4.3 Limit on Indemnification.
(a) The aggregate indemnification obligations of the Designated
Shareholders under the Reorganization Agreement and the Non-Designated
Shareholders pursuant to Section 4 of this Agreement shall not exceed the
Aggregate Escrowed Consideration (the "Indemnification Cap"). In addition, the
aggregate liability of each Non-Designated Shareholder under this Section 4
shall not exceed his pro rata portion of the Aggregate Escrowed Consideration
(except in the event of fraud or intentional misconduct).
11
(b) The Non-Designated Shareholders shall not be liable to any
Indemnitee for any Damages that are indemnifiable pursuant to Section 4.2 until
the aggregate amount of Damages claimed by all Indemnitees under this Agreement
or the Reorganization Agreement exceeds $600,000 (the "Threshold Amount"), after
which the Indemnitees may recover any Damages that exceed the Threshold Amount.
No Indemnitee shall be entitled to make a claim against a Non-Designated
Shareholder under Section 4.2 unless the Damages resulting from any individual
claim or series of related claims exceeds $1,000 (the "Minimum Indemnification
Amount"), provided that claims that are less than the Minimum Indemnification
Amount will be considered in determining whether the Threshold Amount has been
met.
(c) Indemnitees acknowledge that their sole and exclusive remedy with
respect to any and all claims relating to this Agreement and the transactions
contemplated hereby (other than claims in respect of fraud or intentional
misconduct) shall be pursuant to the indemnification provisions set forth in
this Section 4. Any indemnification claims shall be satisfied solely from the
Escrow Fund (as defined in the Escrow Agreement), and the Designated
Shareholders shall have no liability other than the potential recovery by
Indemnitees of such Designated Shareholder's pro rata portion of the Escrow Fund
(except in the event of fraud or intentional misconduct).
4.4 No Contribution. Each Non-Designated Shareholder waives, and
acknowledges and agrees that he shall not have and shall not exercise or assert
(or attempt to exercise or assert), any right of contribution, right of
indemnity or other right or remedy against the Surviving Corporation in
connection with any indemnification obligation or any other liability to which
he may become subject under or in connection with this Agreement or the Company
Closing Certificate.
4.5 Insurance, Etc. In the event that any Damages for which any Non-
Designated Shareholder is liable and for which any Indemnitee receives payment
pursuant to this Section 4 are subsequently reduced by any insurance payment,
then such Indemnitee shall remit the amount of such reduction to such Non-
Designated Shareholder. Parent shall use commercially reasonable efforts to
pursue claims under appropriate insurance policies to offset any Damages for
which Non-Designated Shareholders otherwise would be liable under this Section
4.
4.6 Interest. Any Non-Designated Shareholder who is required to hold
harmless, indemnify, compensate or reimburse any Indemnitee pursuant to this
Section 4 with respect to any Damages shall also be liable to such Indemnitee
for interest on the amount of such Damages (for the period commencing as of the
date on which the Shareholders' Agent first received notice of a claim for
recovery by such Indemnitee and ending on the date on which the liability of
such Non-Designated Shareholder to such Indemnitee is fully satisfied by such
Non-Designated Shareholder) at a floating rate equal to the rate of interest
publicly announced by Bank of America, N.T. & S.A. from time to time as its
prime, base or reference rate.
4.7 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Non-Designated Shareholders may become obligated to hold
harmless, indemnify, compensate or reimburse any Indemnitee pursuant to this
Section 4:
12
(a) Parent shall have the right, at its election, to proceed with the
defense of such claim or Legal Proceeding on its own with counsel selected by
Parent. If Parent so proceeds with the defense of any such claim or Legal
Proceeding:
(i) all reasonable expenses relating to the defense of such
claim or Legal Proceeding (whether or not incurred by Parent) shall be borne and
paid exclusively by the Designated Shareholders;
(ii) each Non-Designated Shareholder shall make available to
Parent any documents and materials in his possession or control that Parent
determines may be necessary or useful in connection with the defense of such
claim or Legal Proceeding; and
(iii) Parent shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the Shareholders' Agent (as
defined in Section 6.1); provided, however, that such consent shall not be
unreasonably withheld.
(b) If Parent does not elect to proceed with the defense of such claim
or Legal Proceeding on its own, it may designate the Shareholders' Agent to
assume the defense of any such claim or Legal Proceeding, in which case:
(i) The Shareholders' Agent shall proceed to defend such claim
or Legal Proceeding in a diligent manner with counsel satisfactory to Parent.
(ii) the Shareholders' Agent shall keep Parent informed of all
material developments and events relating to such claim or Legal Proceeding;
(iii) Parent shall have the right to participate in the defense of
such claim or Legal Proceeding;
(iv) the Shareholders' Agent shall not settle, adjust or
compromise such claim or Legal Proceeding without the prior written consent of
Parent; and
(v) Parent may at any time (notwithstanding the prior
designation of the Shareholders' Agent to assume the defense of such claim or
Legal Proceeding) assume the defense of such claim or Legal Proceeding with
counsel selected by Parent in which case the provisions of Section 4.8(a) shall
apply.
(c) Parent shall give the Shareholders' Agent prompt notice of the
commencement of any such Legal Proceeding against Parent or the Surviving
Corporation; provided, however, that any failure on the part of Parent to so
notify the Shareholders' Agent shall not limit any of the obligations of the
Non-Designed Shareholders under this Section 4 (except to the extent such
failure materially prejudices the defense of such Legal Proceeding).
4.8 Exercise of Remedies by Indemnitees Other Than Parent. No Indemnitee
(other than Parent or any successor thereto or assign thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy under
this Agreement unless Parent (or any successor thereto or assign thereof) shall
have consented to the assertion of such indemnification claim or the exercise of
such other remedy.
13
Section 5. Purchaser Representative.
5.1 Appointment of Purchaser Representative. Each Non-Designated
Shareholder hereby retains Xxxxx Xxxxxxxx (the "Purchaser Representative") to
act as such Non-Designated Shareholder's purchaser representative (as such term
is defined in Rule 501(h) of the Rules and Regulations promulgated under the
Securities Act) in connection with evaluating the merits and risks of the
Merger, including his exchange of Company Common Stock for Parent Common Stock,
and the Purchaser Representative hereby agrees to act as such Designated
Shareholder's purchaser representative for such purpose. Each Non-Designated
Shareholder acknowledges and agrees that Parent will rely on the foregoing for
purposes of confirming the availability of an exemption from the registration
requirements of the Securities Act.
5.2 Representations and Warranties of the Purchaser Representative. The
Purchaser Representative hereby represents and warrants, to and for the benefit
of the Non-Designated Shareholders and Parent, as follows:
(a) The Purchaser Representative meets the requirements to be a
"purchaser representative" as set forth in Rule 501(h) promulgated under the
Securities Act.
(b) The Purchaser Representative is not an affiliate, director,
officer or other employee of Parent or the beneficial owner of 10% or more of
any class of equity securities or 10% or more of the equity interest in Parent.
(c) The Purchaser Representative has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the Non-Designated Shareholders' participation in the Merger.
(d) The Purchaser Representative agrees to disclose to the Non-
Designated Shareholders in writing any material relationship between himself and
Parent that has existed during the 2 previous years, and any compensation to be
received as a result of such relationship.
(e) The Purchaser Representative has not, during the past ten (10)
years, (i) been convicted, indicted or investigated in connection with any past
or present criminal proceeding (excluding traffic violations or other minor
offenses), or (ii) been the subject of any order, judgment or decree of any
court of competent jurisdiction permanently or temporarily enjoining any of them
from acting as an investment advisor, underwriter, broker or dealer in
securities or as an affiliated person, director or employee of an investment
company, bank, savings and loan association or insurance company, or from
engaging in or continuing any conduct or practice in connection with any such
activity or in connection with the purchase or sale of any security, or (iii)
been the subject of any order of a federal or state authority barring or
suspending for more than sixty (60) days any of their rights to be engaged in
any such activity, or to be associated with persons engaged in any such
activity, which order has not been reversed or suspended.
5.3 Payment; Indemnification.
(a) The Purchaser Representative agrees that there will be no fee
for his services. The Non-Designated Shareholders agree to reimburse actual
documented expenses incurred by the Purchaser Representative in connection with
his activities under this Agreement.
14
(b) As a material inducement to the Purchaser Representative's
agreement to act as purchaser representative for the Non-Designated
Shareholders, each Non-Designated Shareholder hereby waives and releases
Purchaser Representative from, and agrees not to assert against the Purchaser
Representative, any claims, liabilities, actions, suits or proceedings arising
from or in connection with the Purchaser Representative's acting as purchaser
representative pursuant to this Section 5, provided, that such waiver, release
and agreement shall not apply to the extent that any such claim, liability,
action, suit or proceeding arises as a result of the Purchaser Representative's
bad faith or gross negligence.
Section 6. Miscellaneous Provisions
6.1 Shareholders' Agent. The Non-Designated Shareholders hereby
irrevocably appoint Xxxxx Xxxxxxxx, who also shall have been appointed as the
Designated Shareholders' Agent pursuant to Section 8.1 of the Reorganization
Agreement, as their agent for purposes of Section 4 hereof (the "Shareholders'
Agent"), and Xxxxx Xxxxxxxx hereby accepts his appointment as the Shareholders'
Agent. Parent shall be entitled to deal exclusively with the Shareholders'
Agent on all matters relating to Section 4 hereof, and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Non-Designated Shareholder
by the Shareholders' Agent, and on any other action taken or purported to be
taken on behalf of any Non-Designated Shareholder by the Shareholders' Agent, as
fully binding upon such Non-Designated Shareholder. In the event of death,
disability, incompetency or resignation of the original Shareholders' Agent, the
Non-Designated Shareholders shall, within thirty (30) days after notice from
Parent, by a majority-in-interest designate another successor Shareholders'
Agent or agents, as the case may be (the "Successor Shareholders' Agent") who
shall have all of the rights, powers and authority conferred to the
Shareholders' Agent pursuant to this Agreement and who shall have been appointed
Shareholders' Agent pursuant to Section 8.1 of the Reorganization Agreement.
Notwithstanding the foregoing, if the Non-Designated Shareholders fail to
designate such Shareholders' Agent(s) within such thirty (30) day period, Parent
shall be entitled to designate the Successor Shareholders' Agent for and on
behalf of all of the Non-Designated Shareholders, which Person shall be
independent of Parent or its Affiliates or subsidiaries (except that Parent may
pay the fees charged and expenses incurred by such Person in the event the
Company Shareholders fail to perform the obligations set forth in Section 11(a)
of the Escrow Agreement and such amounts shall be added as recoverable expenses
of Parent). If for any reason there is no Shareholders' Agent at any time, all
references herein to the Shareholders' Agent shall be deemed to refer to the
Non-Designated Shareholders or the Designated Shareholders, as appropriate.
6.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
6.3 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
15
6.4 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent:
Clarent Corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
if to Merger Sub:
Cadmium Acquisition Corp.
000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
16
if to the Shareholders' Agent:
Xxxxx Xxxxxxxx
0000 X. Xxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
6.5 Confidentiality. On and at all times after the Closing Date, each
Company Shareholder shall keep confidential, and shall not use or disclose to
any other Person, any non-public document or other non-public information in
such Company Shareholder's possession that relates to the business of the
Company or Parent.
6.6 Time of the Essence. Time is of the essence of this Agreement.
6.7 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
6.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
6.9 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
6.10 Successors and Assigns. This Agreement shall be binding upon: the
Company Shareholders and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); Parent and its
successors and assigns (if any); Merger Sub and its successors and assigns (if
any); the Purchaser Representative and his successors and assigns (if any); and
the Shareholders' Agent and his successors and assigns (if any). This Agreement
shall inure to the benefit of: the Company; the Company Shareholders (to the
extent set forth in Section 2); Parent; Merger Sub; the other Indemnitees
(subject to Section 4.8); and the respective successors and assigns (if any) of
the foregoing. Parent may freely assign any or all of its rights under this
Agreement (including its indemnification rights under Section 4), in whole or in
part, to any other Person without obtaining the consent or approval of any other
party hereto or of any other Person.
6.11 Remedies Cumulative; Specific Performance. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that,
17
in the event of any breach or threatened breach by any party to this Agreement
of any covenant, obligation or other provision set forth in this Agreement for
the benefit of any other party to this Agreement, such other party shall be
entitled (in addition to any other remedy that may be available to it) to (a) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach.
6.12 Waiver.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No Person shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
6.13 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of (a) Parent; (b) the Designated Shareholders holding in
aggregate more than 50% of the Company Common Stock held by all such Designated
Shareholders, provided that any amendment duly executed and delivered by the
Shareholders' Agent shall be deemed to have been duly executed and delivered by
all of the Designated Shareholders; and (c) the Non-Designated Shareholders
holding in aggregate more than 50% of the Company Common Stock held by all of
the Non-Designated Shareholders, provided that any amendment duly executed and
delivered by the Shareholders' Agent shall be deemed to have been duly executed
and delivered by all of the Non-Designated Shareholders.
6.14 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
6.15 Parties in Interest. Except for the provisions of Section 4, none of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties hereto and their respective successors and
assigns (if any).
6.16 Entire Agreement. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties hereto relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the Mutual Non-Disclosure
Agreement executed on behalf of Parent on and the Company on May 15, 2000 shall
18
not be superseded by this Agreement and shall remain in effect in accordance
with its terms until the earlier of (a) the Effective Time, or (b) the date on
which such Mutual Non-Disclosure Agreement is terminated in accordance with its
terms.
6.17 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
19
The parties hereto have caused this Shareholders' Agreement to be executed
and delivered as of the date first set forth above.
Clarent Corporation,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Cadmium Acquisition Corp.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Shareholders' Agent
/s/ Xxxxx Xxxxxxxx
-----------------------------
Xxxxx Xxxxxxxx
Purchaser Representative
/s/ Xxxxx Xxxxxxxx
-----------------------------
Xxxxx Xxxxxxxx
1
Designated Shareholders
/s/ Xxxx Xxxxx
-----------------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxxxxxxxx
-----------------------
Xxxxx Xxxxxxxxxxx
/s/ Xxx Xxxxxxx
-----------------------
Xxx Xxxxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------
Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxx
-----------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxxx
-----------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
-----------------------
Xxxxx Xxxxxxx
/s/ Xxx Xxxxxxxx
-----------------------
Xxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------
Xxxxx Xxxxxxxx
2
Non-Designated Shareholder
/s/ Xxxxxxx Xxxxx
-----------------------
Xxxxxxx Xxxxx
/s/ Xxxxx Xxxxxx
-----------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxx
-----------------------
Xxxxx Xxxxx
/s/ Xxxx X. Xxx
-----------------------
Xxxx X. Xxx
/s/ Xxxxx Xxxxxxx
-----------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxx
-----------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
-----------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxx
-----------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxxxx
-----------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxx
-----------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxxxxx
-----------------------
Xxxx Xxxxxxxxxx
/s/ Xxx XxXxxxx
-----------------------
Xxx XxXxxxx
/s/ Xxxxxxx Xxxxx
-----------------------
Xxxxxxx Xxxxx
3
/s/ Xxxxxx Xxxxx
-----------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxxxx
-----------------------
Xxxx Xxxxxx
/s/ Xxx Xxxxx
-----------------------
Xxx Xxxxx
/s/ Xxxxx Xxxxxxx
-----------------------
Xxxxx Xxxxxxx
/s/ Xxx Xxxxxx
-----------------------
Xxx Xxxxxx
/s/ Xxxxx Xxxx
-----------------------
Xxxxx Xxxx
/s/ Xxxxxx Xxxxxx
-----------------------
Xxxxxx Xxxxxx
/s/ Xxx Xxxxxx
-----------------------
Xxx Xxxxxx
/s/ Xxx Xxxxxxx
-----------------------
Xxx Xxxxxxx
/s/ Xxx Xxxxx
--------------
Xxx Xxxxx
/s/ Xxxx Xxxxxxxxx
-----------------------
Xxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
-----------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxx Xxxxxxxx
-----------------------
Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxxx
-----------------------
Xxxxx Xxxxxxxxx
4
Exhibit C
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit C):
Damages. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
Holder. "Holder" shall mean any Company Shareholder who owns Registrable
Securities issued to such Company Shareholder pursuant to Section 1.5 of the
Reorganization Agreement or any transferee of such Registrable Securities where
such transfer complied with Section 2.7 of this Agreement.
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) Parent's current and future affiliates (including the Surviving
Corporation); (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of
the Persons referred to in clauses "(a)", "(b)" and "(c)" above; provided,
however, that the Designated Shareholders shall not be deemed to be
"Indemnitees."
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding or any informal
proceeding), prosecution, hearing, inquiry, audit, examination or investigation
that is, has been or may in the future be commenced, brought, conducted or heard
by or before, or otherwise involving, any court, tribunal or other Governmental
Body or any arbitrator or arbitration panel.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Registrable Securities. "Registrable Securities" shall mean shares of
Parent Common Stock issued to Company Shareholders pursuant to Section 1.5 of
the Reorganization Agreement, provided that such shares of Parent Common Stock
have not been transferred except in compliance with Section 2.7 hereof.
1.
Registration Expenses. "Registration Expenses" shall mean all expenses
incurred by Parent in complying with 2.1 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for Parent, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of Parent which shall be paid in any event by
Parent).
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
2.
