Exhibit 10.2
--------------------------------------------------------------------------------
ESCROW AGREEMENT
BY AND AMONG
TEKELEC
SANTERA SYSTEMS INC.,
CERTAIN STOCKHOLDERS OF SANTERA SYSTEMS INC.
AUSTIN VENTURES VI, L.P., AS THE REPRESENTATIVE,
AND
X.X. XXXXXX TRUST COMPANY, NATIONAL ASSOCIATION, AS ESCROW AGENT
DATED AS OF APRIL 30, 2003
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Article I Definitions...................................................................... 2
1.1 Definitions................................................................ 2
1.2 Usage Generally; Interpretation............................................ 5
Article II Representative.................................................................. 5
2.1 Appointment................................................................ 5
2.2 Power and Authority........................................................ 5
2.3 Expenses................................................................... 6
2.4 Notices.................................................................... 6
2.5 Resignation................................................................ 6
2.6 Indemnification of the Representative...................................... 7
Article III Escrow......................................................................... 7
3.1 Creation of Legacy Preferred Escrow........................................ 7
3.2 Creation of New Preferred Escrow........................................... 8
3.3 Dividends and Other Distributions.......................................... 8
3.4 Reorganization............................................................. 8
3.5 Global Certificates; Legends............................................... 8
Article IV Disposition of Escrowed Shares or Funds......................................... 9
4.1 Dispositions During Escrow Period.......................................... 9
4.2 Setoff..................................................................... 11
4.3 Distributions Following the Release Date................................... 12
Article V Transfer of Escrowed Shares; Registers........................................... 13
5.1 Registration............................................................... 13
5.2 Restrictions............................................................... 13
5.3 Instrument of Accession.................................................... 13
Article VI Escrow Agent.................................................................... 13
6.1 Duties..................................................................... 13
6.2 Expenses................................................................... 14
6.3 Resignation................................................................ 15
6.4 Disputes................................................................... 15
6.5 Indemnification of the Escrow Agent........................................ 15
Article VII Indemnification................................................................ 15
7.1 Indemnification by Tekelec................................................. 15
7.2 Indemnification by the Legacy Santera Stockholders......................... 15
Article VIII Miscellaneous................................................................. 16
8.1 Notices.................................................................... 16
8.2 Expenses................................................................... 17
8.3 Binding Effect; Assignment................................................. 17
8.4 Amendment; Waiver.......................................................... 17
i
8.5 Counterparts............................................................... 18
8.6 Headings................................................................... 18
8.7 Severability............................................................... 18
8.8 Governing Law.............................................................. 18
8.9 Further Assurances......................................................... 18
8.10 Third Party Beneficiary.................................................... 18
8.11 Venue and Jurisdiction..................................................... 18
8.12 Acknowledgement............................................................ 18
ii
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Agreement") is entered into this 30th day
of April, 2003 by and among Tekelec, a California corporation ("Tekelec"),
Santera Systems Inc., a Delaware corporation ("Santera"), those legacy
stockholders of Santera who are listed on the signature pages of this Agreement,
as Legacy Santera Stockholders (together with any subsequent transferees thereof
or any other parties who execute an Instrument of Accession hereto as a Legacy
Santera Stockholder, the "Legacy Santera Stockholders"), Austin Ventures VI,
L.P., a Delaware limited partnership, as the Representative, as defined
hereunder, and X.X. Xxxxxx Trust Company, National Association ("Escrow Agent").
RECITALS
A. Concurrently herewith, Tekelec, Merger Sub, Santera and
certain of the Legacy Santera Stockholders are entering into that certain
Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which the
operations of Tekelec's packet telephony business unit (the "PTBU") will be
combined with the business operations of Santera, together with additional cash
infusions.
B. On or prior to the Closing Date, as that term is defined in
the Merger Agreement, certain Legacy Santera Stockholders will contribute an
aggregate of Twelve Million Dollars ($12,000,000) in cash to Santera in exchange
for a combination of convertible notes and Series D Preferred Stock of Santera.
C. On or prior to the Closing Date, as that term is defined in
the Merger Agreement, Tekelec will, and will cause its subsidiaries to,
contribute the PTBU (including specified liabilities) and Twenty-Eight Million
Dollars ($28,000,000) in cash to Merger Sub in exchange for an aggregate of one
hundred (100) shares of common stock of Merger Sub.
D. Upon consummation of the merger contemplated by the Merger
Agreement, Tekelec and its subsidiaries will receive twenty-eight thousand
(28,000) shares of Series B Preferred Stock, $0.001 per share (the "Series B
Preferred Stock"), of Santera, thirty-eight thousand (38,000) shares of Series A
Preferred Stock, $0.001 per share (the "Series A Preferred Stock" and, together
with the Series B Preferred Stock, the "Preferred Stock"), of Santera and one
(1) share of Common Stock, $0.001 per share (the "Common Stock"), of Santera in
exchange for one hundred one (101) shares of common stock of Merger Sub, all
subject to and on the terms and conditions set forth in the Merger Agreement.
E. Upon consummation of the merger contemplated by the Merger
Agreement, certain stockholders of Santera existing immediately prior to the
merger will receive an aggregate of sixty-two thousand (62,000) shares of Series
A Preferred Stock of Santera in exchange for shares of Series A-2 Preferred
Stock, Series B-2 Preferred Stock, Series C-2 Preferred Stock and Series D
Preferred Stock of Santera, all subject to and on the terms and conditions set
forth in the Merger Agreement.
F. As of the Closing Date, Tekelec will own thirty-eight percent
(38%) of the issued and outstanding Series A Preferred Stock and all of the
issued and outstanding Common Stock and
Series B Preferred Stock of Santera, and the Legacy Santera Stockholders will
collectively own sixty-two percent (62%) of the issued and outstanding Series A
Preferred Stock of Santera.
G. The Legacy Santera Stockholders have agreed to place all of
the shares of Series A Preferred Stock to be owned by them following the Merger
in escrows established hereunder, to be held pursuant to the terms and
conditions set forth in this Agreement and the Merger Agreement.
NOW, THEREFORE, in consideration of the conditions and provisions
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms shall, for purposes of this
Agreement, have the following meanings (terms defined in the singular or the
plural shall include the plural or the singular, as the case may be):
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" shall mean a person or entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the person or entity referred to. In this definition,
"control" means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person or entity,
whether through ownership of securities, by contract, or otherwise.
"Agreement" shall mean this Escrow Agreement, as the same may
be amended from time to time in accordance with the terms hereof.
"Amended and Restated Certificate of Incorporation" shall mean
the Amended and Restated Certificate of Incorporation of Santera in
substantially the form of attached as Exhibit K to the Merger Agreement, as the
same may be amended from time to time.
"Ancillary Agreements" shall have the meaning set forth in the
Merger Agreement.
"Change of Control" shall mean (1) the acquisition of Santera
by another entity by means of any transaction or series of related transactions
(including, without limitation, any merger, consolidation, reclassification,
recapitalization or other form of transaction in which outstanding shares of
Santera are exchanged for securities or other consideration issued, or caused to
be issued, by the acquiring entity or its subsidiary, but excluding any
transaction effected primarily for the purpose of changing Santera's
jurisdiction of incorporation) that results in the transfer or acquisition of
all of Santera's voting power to a third party that is not an Affiliate of a
stockholder of Santera, or (2) any sale or other disposition of all or
substantially all of the assets of Santera to a third party that is not an
Affiliate of a stockholder of Santera. Notwithstanding the foregoing, the
exercise of the call option by Tekelec under Section 3.1 of the Stockholders'
Agreement or the put option by the Legacy Santera Stockholders under Section 3.2
of the Stockholders' Agreement, a redemption under Section C.1(ii) of the
Amended and Restated Certificate of Incorporation or the merger contemplated by
the Merger Agreement shall not be treated as a Change of Control.
2
"Closing Date" shall have the meaning set forth in the Merger
Agreement.
"Dispute Notice" shall have the meaning set forth in Section
4.1(b) hereof.
"Disputed Amount" shall have the meaning set forth in Section
4.1(c) hereof.
"Disputed Shares" shall mean the number of shares of Series A
Preferred Stock, if any, to which the Disputed Amounts relate unless Tekelec
specifies a lower amount in a written notice to Santera.
"Distribution Directive" shall have the meaning set forth in
Section 4.1(c) hereof.
"Escrow Agent" shall have the meaning set forth in the
introduction hereto.
"Escrow Register" shall have the meaning set forth in Section
5.1 hereof.
"Indemnified Losses" shall have the meaning set forth in the
Merger Agreement.
"Instrument of Accession" shall mean that certain instrument
of accession to this Agreement, in substantially the form attached hereto as
Exhibit A.
"Legacy Preferred Account" shall have the meaning set forth in
Section 3.1 hereof.
"Legacy Santera Stockholders" shall have the meaning set forth
in the introduction hereto.
"Merger" shall mean the merger of Merger Sub with and into
Santera pursuant to the Merger Agreement and the consummation of the
transactions contemplated thereby.
"Merger Agreement" shall mean that Agreement and Plan of
Merger dated as of the date hereof among Tekelec, Merger Sub, Santera, certain
of the Legacy Santera Stockholders and the Representative.
"Merger Sub" shall mean Merger Sub, a Delaware corporation and
direct and wholly-owned subsidiary of Tekelec.
"New Preferred Account" shall have the meaning set forth in
Section 3.2 hereof.
"New Preferred Escrow Shares" shall have the meaning set forth
in Section 3.2 hereof.
"New Preferred Stock" shall mean those twelve thousand
(12,000) shares of Series A Preferred Stock to be issued to the Legacy Santera
Stockholders on the Closing Date which are attributable to the contributions by
such Legacy Santera Stockholders of an aggregate of Twelve Million Dollars
($12,000,000) in cash to Santera in exchange for an aggregate of Twelve Million
Dollars ($12,000,000) in principal amount of convertible promissory notes and
Series D Preferred Stock of Santera pursuant to the Note and Preferred Stock
Purchase Agreement (as such term is defined in the Merger Agreement).
3
"Option" with respect to any Person means any security, right,
subscription, warrant, option, call, right, "phantom" stock right or other
contract or arrangement that gives the right to (a) purchase or otherwise
receive or be issued any shares of capital stock of such Person or any security
of any kind convertible into or exchangeable or exercisable for any shares of
capital stock of such Person or (b) receive or exercise any benefits or rights
similar to any rights enjoyed by or accruing to the holder of shares of capital
stock of such Person, including any rights to participate in the equity or
income of such Person or to participate in or direct the election of any
directors or officers (or comparable Persons) of such Person or the manner in
which any shares of capital stock of such Person are voted.
"Person" shall mean an individual, sole proprietorship,
corporation, partnership, limited partnership, limited liability company, joint
venture, trust, statutory trust, unincorporated organization, mutual company,
joint stock company, estate, union, employee organization, bank, trust company,
land trust or other organization, whether or not a legal entity.
"Preferred Escrow Shares" shall have the meaning set forth in
Section 3.1 hereof.
"Preferred Stock" shall mean the Series A Preferred Stock and
the Series B Preferred Stock, collectively.
"Redemption Notice" shall have the meaning set forth in
Section 4.1(d) hereof.
"Release Date" shall mean the earliest of (i) the day after
the date that all shares of capital stock of Santera not owned by Tekelec, its
wholly owned subsidiaries or any Tekelec Designees, other than the Disputed
Shares, are redeemed pursuant to Article Fourth, Section C(1)(ii)(a)(I) or (II)
of the Amended and Restated Certificate of Incorporation, (ii) the day after the
date that Tekelec acquires all shares of capital stock of Santera not owned by
Tekelec, its wholly owned subsidiaries or any Tekelec Designees, other than
Disputed Shares, pursuant to the exercise of the call option by Tekelec or the
put option by the Representative, in each case pursuant to Article III of the
Stockholders' Agreement or (iii) March 1, 2008 provided that no stockholders of
Santera have (1) initiated the redemption of shares of capital stock of Santera
pursuant to Article Fourth Section C(1)(ii)(a)(I) or (II) of the Amended and
Restated Certificate of Incorporation by such date by delivering a Series B
Holder Redemption Notice or a Series A Holder Redemption Notice to Santera or
(2) exercised the put or call options pursuant to Article III of the
Stockholders' Agreement.
"Release Notice" shall have the meaning set forth in Section
4.1(a) hereof.
"Representative" shall mean Austin Ventures VI, L.P., who has
been appointed the representative of the Legacy Santera Stockholders hereunder
and under the Merger Agreement and all of the applicable Ancillary Agreements
and any successor thereto who may hereafter be appointed, in each case pursuant
to the terms of this Agreement,.
"Santera" shall mean Santera Systems Inc., a Delaware
corporation.
"Santera Indemnifying Person" shall have the meaning set forth
in the Merger Agreement.
4
"Series A Preferred Stock" shall mean the Series A Convertible
Preferred Stock, par value $0.001 per share, of Santera that is authorized under
the Amended and Restated Certificate of Incorporation.
"Series B Preferred Stock" shall mean the Series B Convertible
Preferred Stock, par value $0.001 per share, of Santera that is authorized under
the Amended and Restated Certificate of Incorporation.
"Stockholders' Agreement" shall mean that Stockholders'
Agreement dated as of the date hereof among Tekelec, Santera, the Legacy Santera
Stockholders and the Representative.
"Tekelec" shall mean Tekelec, a California corporation.
"Tekelec Indemnified Person" shall have the meaning set forth
in the Merger Agreement.
1.2 Usage Generally; Interpretation. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. All references herein to articles or sections shall be deemed to be
references to articles or sections of this Agreement unless the context
otherwise requires. Unless otherwise expressly provided herein, any agreement,
instrument or statute defined herein or referred to herein or in any agreement
or instrument that is referred to herein means such agreement, instrument or
statute, as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. Unless otherwise
expressly provided herein, all references to "as converted" or "as if converted"
shall mean assuming conversion of all then issued and outstanding shares of
Preferred Stock (including any or such shares that the holder thereof may not
yet have the right to convert into shares of Common Stock).
ARTICLE II
REPRESENTATIVE
2.1 Appointment. Each Legacy Santera Stockholder hereby
irrevocably appoints (which appointment is coupled with an interest) Austin
Ventures VI, L.P., and Austin Ventures VI, L.P. hereby accepts such appointment,
as the Representative for purposes of this Agreement, the Merger Agreement and
under all of the applicable Ancillary Agreements.
2.2 Power and Authority. Until the later of the Release Date, the
date on which the Stockholders' Agreement is terminated in accordance with its
terms or the date on which no shares of Series A Preferred Stock or other
property remains held in escrow hereunder, the Representative shall, and shall
have full power and authority to, exclusively act on behalf of each Legacy
Santera Stockholder in connection with all matters relating to this Agreement,
the Merger Agreement and the applicable Ancillary Agreements, including, without
limitation, exercising all of such stockholder's rights and powers in respect of
all shares of Series A Preferred Stock deposited hereunder, including, without
limitation, executing such stock powers or other instruments of transfer as may
be required hereunder, voting and/or determining whether or not to take part in
or consent to any corporate action of any kind whatsoever, receiving and
delivering at any time closing certificates or other documents, negotiating,
determining and settling all matters arising hereunder or
5
thereunder or related hereto or thereto (including, without limitation, any and
all claims and disputes (including, any allegations of breach of fiduciary duty)
related to the exercise of the redemption rights contained in, or otherwise with
respect to the amount to be paid to the Legacy Santera Stockholders in
connection with any redemption of shares of capital stock of Santera pursuant
to, Article Fourth, Section C(1)(ii)(a)(I) or (II) of the Amended and Restated
Certificate of Incorporation or related to the exercise of the put or call right
contained in, or with respect to the amount to be paid to the Legacy Santera
Shareholders in connection with any such exercise of the put or call options
contained in, Article III of the Stockholders' Agreement and any and all
indemnity matters). The Representative shall also have full power and authority
to give and receive notices by or on behalf of each Legacy Santera Stockholder.
2.3 Expenses. The Representative shall be entitled to
reimbursement from the Legacy Santera Stockholders of all reasonable expenses
incurred in the performance of its duties as Representative under this
Agreement, the Merger Agreement and each of the Ancillary Agreements. To the
extent that expenses of the Representative remain unreimbursed by the Legacy
Santera Stockholders and shares of Series A Preferred Stock or other property
(in either case, other than any Disputed Shares or Disputed Amounts) remains in
the Legacy Preferred Account or the New Preferred Account on the Release Date,
the reimbursement obligations contained in this Section 2.3 shall be satisfied
by the Legacy Santera Stockholders from the Preferred Escrow Shares and/or the
New Preferred Escrow Shares (less, in either case, any Disputed Shares or
Disputed Amounts), as appropriate to the expenses being reimbursed, pro rata
from each such Legacy Santera Stockholder based on the percentages next to each
such Legacy Santera Stockholders' name on the Escrow Register for the Legacy
Preferred Stockholders under the column entitled "Percentage of Legacy Preferred
Shares" and/or "Percentage of New Preferred Shares," as the case may be, with
each share of Series A Preferred Stock having a value of $1,000.
2.4 Notices. By giving notice to the Representative in the manner
provided by Section 8.1, a party shall be deemed to have given notice to all of
the Legacy Santera Stockholders and any action taken by the Representative may
be considered by any other party to be the action of each such Legacy Santera
Stockholder for all purposes, including for all purposes of this Agreement, the
Merger Agreement and the applicable Ancillary Agreements. In addition, the
Parties hereto acknowledge and agree that (i) none of the Legacy Santera
Stockholders shall be entitled to individually take any action which the
Representative is authorized hereunder to take on behalf of such Legacy Santera
Stockholders and (ii) the failure of the Representative to take any action it is
permitted or authorized to take hereunder on behalf of the Legacy Santera
Stockholders during the applicable time period in which such action is permitted
to have been taken by the Representative, including, without limitation,
providing any notice of dispute hereunder or under the Merger Agreement or
objecting to or otherwise making a claim with respect to or related to a
redemption of Series A Preferred Stock under the Amended and Restated
Certificate of Incorporation or an exercise of the put or call rights contained
in the Stockholders' Agreement, shall be deemed for all purposes to constitute a
complete waiver and release by each Legacy Santera Stockholder of the right to
individually take any such action.
2.5 Resignation. In the event a Representative becomes unable or
refuses to serve, the Representative or a Legacy Santera Stockholder will
promptly notify the other parties hereto in writing of the designation by a
majority of the total Preferred Escrow Shares held by such Legacy Santera
Stockholders (by reference to the applicable Escrow Register), of a successor to
act as Representative hereunder and under the Merger Agreement and each of the
Ancillary Agreements.
6
No Representative shall resign as a Representative hereunder or under the Merger
Agreement or any of the Ancillary Agreements until such time as a successor
Representative has been approved and appointed by the relevant stockholders. In
the event the relevant stockholders fail to approve and appoint a successor
Representative, the Legacy Santera Stockholder possessing the largest percentage
of the total Preferred Escrow Shares (by reference to the applicable Escrow
Register) shall appoint the successor Representative hereunder. Until the Legacy
Santera Stockholder possessing the largest percentage of the total Preferred
Escrow Shares (by reference to the applicable Escrow Register) appoints a
successor Representative hereunder, such Legacy Stockholder so possessing the
largest percentage of the total Preferred Escrow Shares shall act as
Representative hereunder.
2.6 Indemnification of the Representative. The Representative,
acting in such capacity, shall not incur any responsibility or liability for
reason of any error of law or with respect to anything done or suffered or
omitted, except for such Representative's own willful misconduct or gross
negligence in connection with or arising out of (a) this Agreement, the Merger
Agreement or the Ancillary Agreements or (b) the discharge by such
Representative of the Representative's duties hereunder or under the Merger
Agreement or the Ancillary Agreements. The Legacy Santera Stockholders shall
indemnify and hold harmless the Representative from and against any and all
claims, expenses and liabilities incurred by such Representative or asserted
against such Representative in connection with or arising out of (a) this
Agreement, the Merger Agreement or the Ancillary Agreements or (b) the discharge
by such Representative of the Representative's duties hereunder or under the
Merger Agreement or the Ancillary Agreements, except, in either case, for such
Representative's willful misconduct or gross negligence in such matters. The
Representative shall not be required to give any bond or other security for the
discharge of such Representative's duties hereunder or under the Merger
Agreement or the Ancillary Agreements. To the extent that indemnification
obligations of the Legacy Santera Stockholders to the Representative remain and
shares of Series A Preferred Stock or other property (in either case, other than
any Disputed Shares or Disputed Amounts) remains in the Legacy Preferred Account
or the New Preferred Account on the Release Date, the indemnification
obligations contained in this Section 2.6 shall be satisfied by the Legacy
Santera Stockholders from the Preferred Escrow Shares and/or the New Preferred
Escrow Shares (less, in either case, any Disputed Shares or Disputed Amounts),
as appropriate to the indemnification being paid, pro rata from each such Legacy
Santera Stockholder based on the percentages next to each such Legacy Santera
Stockholders' name on the Escrow Register for the Legacy Preferred Stockholders
under the column entitled "Percentage of Legacy Preferred Shares" and/or
"Percentage of New Preferred Shares," as the case may be, with each share of
Series A Preferred Stock having a value of $1,000.
ARTICLE III
ESCROW
3.1 Creation of Legacy Preferred Escrow. Each Legacy Santera
Stockholder hereby directs Santera to deposit with the Escrow Agent on the
Closing Date all of the shares of Series A Preferred Stock to which such Legacy
Santera Stockholder is entitled upon consummation of the Merger, other than the
New Preferred Stock (the "Preferred Escrow Shares"), which shares of Series A
Preferred Stock shall be held hereunder in a separate account known as the
"Legacy Preferred Account". All such shares of Series A Preferred Stock to be
deposited with the Escrow Agent hereunder shall be duly endorsed, or accompanied
by such instruments of transfer as to enable the Escrow Agent to cause such
certificates to be transferred into the name of the Representative, as
7
hereinafter provided. The parties acknowledge that the shares held in escrow
hereunder may be increased or decreased from time to time during the term hereof
pursuant to the terms of this Agreement. Accordingly, the term "Preferred Escrow
Shares" shall refer to the shares of Series A Preferred Stock initially placed
in escrow hereunder by the Legacy Santera Stockholders other than the New
Preferred Stock and to such greater or lesser shares as may be held pursuant
hereto at any point during the term hereof.
3.2 Creation of New Preferred Escrow. Each Legacy Santera
Stockholder hereby directs Santera to deposit with the Escrow Agent on the
Closing Date all of the New Preferred Stock to be issued to such Legacy Santera
Stockholder upon consummation of the Merger (the "New Preferred Escrow Shares"),
which shares shall be held hereunder in a separate account known as the "New
Preferred Account." All such shares of Series A Preferred Stock to be deposited
with the Escrow Agent hereunder shall be duly endorsed, or accompanied by such
instruments of transfer as to enable the Escrow Agent to cause such certificates
to be transferred into the name of the Representative, as hereinafter provided.
The parties acknowledge that the shares held in escrow hereunder may be
increased or decreased from time to time during the term hereof pursuant to the
terms of this Agreement. Accordingly, the term "New Preferred Escrow Shares"
shall refer to the shares of New Preferred Stock initially placed in escrow
hereunder and to such greater or lesser shares as may be held pursuant hereto at
any point during the term hereof.
3.3 Dividends and Other Distributions. If, at any time prior to
the release of the Preferred Escrow Shares and/or the New Preferred Escrow
Shares hereunder, any dividend or other distribution (including, without
limitation, any cash or stock dividend or other distribution) in respect of the
Series A Preferred Stock is paid to the holders of the Series A Preferred Stock,
the Representative, as the record holder of such shares of Series A Preferred
Stock, shall receive and deliver to the Escrow Agent any such dividends or
distributions to hold any such cash, stock or other property hereunder. All
cash, stock or other property received by the Escrow Agent (i) with respect to
the Preferred Escrow Shares shall be held in the Legacy Preferred Account and
(ii) with respect to the New Preferred Escrow Shares shall be held in the New
Preferred Account.
3.4 Reorganization. In the event of a Change of Control prior to
the Release Date, the Representative shall receive and deliver to the Escrow
Agent to hold under this Agreement any property received on account of the
ownership of the Preferred Escrow Shares held hereunder prior to such Change of
Control.
3.5 Global Certificates; Legends. All certificates of Series A
Preferred Stock transferred and delivered to the Escrow Agent pursuant to this
Agreement shall promptly be surrendered by the Escrow Agent to Santera and
cancelled, and new global certificates, one for each of the Preferred Escrow
Shares and the New Preferred Escrow Shares, shall promptly be issued in the name
of the Representative, as nominee for the Legacy Santera Stockholders. The
Representative shall promptly deliver to the Escrow Agent to be held hereunder,
such new global certificates along with blank stock powers in substantially the
form attached hereto as Exhibit B and other instruments of transfer signed by
such Representative for purposes of enabling the Escrow Agent to transfer the
Preferred Escrow Shares and the New Preferred Escrow Shares in accordance with
the terms hereof. From time to time during the term of this Agreement, the
Representative shall, upon the reasonable request of the Escrow Agent, Tekelec
or Santera, execute such additional blank stock powers or other instruments of
transfer and deliver the same to the Escrow Agent to be held by such Escrow
Agent in order to ensure that such Escrow Agent can promptly and timely take all
8
actions required by the Escrow Agent to be taken hereunder. Each of such new
global certificates shall include the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
AN ESCROW AGREEMENT DATED APRIL 30, 2003, AS AMENDED FROM TIME TO TIME,
A COPY OF WHICH IS ON FILE AT THE OFFICE OF SANTERA SYSTEMS INC.
This legend shall be in addition to any other legends which are required by
federal or state laws (including, but not limited to any legend required by the
Act or state "blue sky" laws, or any rule or regulation thereunder), by the
Stockholders' Agreement or as otherwise may be reasonably required by the Escrow
Agent.
ARTICLE IV
DISPOSITION OF ESCROWED SHARES OR FUNDS
4.1 Dispositions During Escrow Period.
(a) If Tekelec claims that a Tekelec Indemnified Person
has suffered Indemnified Losses for which it is entitled to indemnification from
Santera pursuant to Section 7.2 hereof or Section 11.2 of the Merger Agreement
at any time prior to the Release Date when shares of Series A Preferred Stock or
other property remains in the Legacy Preferred Account, Tekelec shall deliver
the written notice required by Section 11.3(b) of the Merger Agreement (any
notice from Tekelec under this Section 4.1 shall be referred to as a "Release
Notice") to the Representative and the Escrow Agent to release from the Legacy
Preferred Account and transfer to Santera shares of Series A Preferred Stock (or
other property held in such escrow if no shares of Series A Preferred Stock then
remain in any such account) in an amount equal to the amount of such claim. The
parties hereto acknowledge and agree that all shares of Series A Preferred Stock
shall be valued for all purposes at $1,000 per share (as adjusted for any stock
dividends, combinations, reverse stock splits, stock splits, recapitalizations,
reorganizations, reclassifications or other similar event with respect to the
Series A Preferred Stock). All other property contained in any escrow hereunder
shall be valued in good faith as mutually agreed by Tekelec and the
Representative, and such parties agree to promptly advise the Escrow Agent of
the value of any such property.
(b) Any notice delivered to the Representative and the
Escrow Agent under this Section 4.1 shall specifically identify the amount of
the claim (to the extent known) and the aggregate number of shares of Series A
Preferred Stock or, if no shares of Series A Preferred Stock then remain in any
such account, the value of other property, in either case, to be transferred by
the Escrow Agent to Santera from the Legacy Preferred Account. If the
Representative does not notify Tekelec and the Escrow Agent that it disputes the
validity or amount of such claim in a writing signed by the Representative
containing a description in reasonable detail of the basis (to the extent the
Representative has knowledge thereof, or to the extent the Representative does
not have such knowledge at the time of the notice, by stating that the
Representative has a good faith basis after a reasonable investigation to
dispute the validity or amount of such claim, as evidenced by a certificate
signed by the Representative to such effect) for the dispute and the amount in
dispute (a "Dispute Notice"), within thirty (30) calendar days after Tekelec has
provided the Representative with its Release Notice, then the Escrow Agent shall
promptly transfer to Santera from the Legacy Preferred Account the aggregate
number of shares of Series A Preferred Stock set forth in the Release Notice
9
by delivering to Santera the global stock certificate then representing such
Preferred Escrow Shares, together with a stock power and/or such other
instruments of transfer as reasonably requested by Santera or Tekelec, in either
case, as executed by the Representative and held by the Escrow Agent in escrow
hereunder and as completed by the Escrow Agent to represent the number of shares
of Series A Preferred Stock to be so transferred to Santera hereunder, or, if no
such shares of Series A Preferred Stock then remain in any such account but
other property does so remain, such other property having a value equal to the
value of such number of shares of Series A Preferred Stock. Promptly upon its
receipt of such global stock certificate and transfer documentation from the
Escrow Agent, Santera shall prepare and deliver to the Escrow Agent a new global
stock certificate representing the number of shares of Series A Preferred Stock
not transferred to Santera pursuant to such transfer documentation. The parties
acknowledge that there may be multiple Release Notices given by Tekelec during
the term hereof and that any Release Notice may be amended by Tekelec from time
to time on or prior to the Release Date (e.g., to increase or decrease the
claimed amount stated therein), any such amendment being effective as of and
from the date of delivery thereof to the Representative and the Escrow Agent.
(c) In the event that a Dispute Notice signed by the
Representative has been provided to Tekelec and the Escrow Agent within the
required thirty (30) calendar day period, the Escrow Agent shall promptly (i)
deliver to Santera the global stock certificate then representing such Preferred
Escrow Shares, together with a stock power and/or such other instruments of
transfer as reasonably requested by Santera or Tekelec, in either case, as
executed by the Representative and held by the Escrow Agent in escrow hereunder
and as completed by the Escrow Agent to represent that number of shares of
Series A Preferred Stock with a value equal to the undisputed portion (if any)
of the amount set forth in the Release Notice, or if no shares of Series A
Preferred Stock then remain in escrow, such other property having a value equal
to such undisputed portion, and (ii) withhold the shares of Series A Preferred
Stock or such other property in an amount equal to the amount in dispute (the
"Disputed Amount"), which shares of Series A Preferred Stock or other property
shall be distributed in accordance with this Section 4.1(c). Promptly upon its
receipt of such global stock certificate and transfer documentation from the
Escrow Agent, Santera shall prepare and deliver to the Escrow Agent a new global
stock certificate representing the number of shares of Series A Preferred Stock
not transferred to Santera pursuant to such transfer documentation. The Disputed
Amount shall be held by the Escrow Agent in accordance with the terms hereof
until the earlier to occur of the following: (i) the Representative and Tekelec
jointly direct the transfer of shares or other property with a value equal to
the Disputed Amount by delivering written instruction to the Escrow Agent, or
(ii) the Escrow Agent receives a copy of a final judgment or order of a court of
competent jurisdiction (a "Distribution Directive") with respect to the Disputed
Amount (which judgment or order shall also be delivered by Tekelec to the
Representative or by the Representative to Tekelec, as the case may be). Upon
receipt of such instructions, or as promptly as practicable but in no event more
than fifteen (15) calendar days after receipt of such Distribution Directive,
the Escrow Agent shall deliver to Santera the global stock certificate then
representing such Preferred Escrow Shares, together with a stock power and/or
such other instruments of transfer as reasonably requested by Santera or
Tekelec, in either case, as executed by the Representative and held by the
Escrow Agent in escrow hereunder and as contemplated by the Escrow Agent to
represent that number of shares of Series A Preferred Stock (valued at $1,000
per share, as adjusted for any stock dividends, combinations, reverse stock
splits, stock splits, recapitalizations, reorganizations, reclassifications or
other similar event with respect to the Series A Preferred Stock) with an
aggregate value equal to the amount indicated in the Distribution Directive, or
if no shares of Series A Preferred Stock then remain in escrow, such other
10
property having an aggregate value equal to such amount. If no shares of Series
A Preferred Stock remain, the other property remaining in such account, having a
value equal to the Disputed Amount, shall be distributed to Santera. Promptly
upon its receipt of such global stock certificate and transfer documentation
from the Escrow Agent, Santera shall prepare and deliver to the Escrow Agent a
new global stock certificate representing the number of shares of Series A
Preferred Stock not transferred to Santera pursuant to such transfer
documentation, and Santera shall retire the transferred shares.
(d) If at any time on or prior to the Release Date, the
Escrow Agent shall receive a written notice (i) from Tekelec which states that
Tekelec has exercised its call right under Article III of the Stockholders'
Agreement, (ii) from the Representative that the put right under Article III of
the Stockholders' Agreement has been exercised or (iii) from Santera that it
intends to redeem the shares of Series A Preferred Stock pursuant to the Article
Fourth Section C(1)(ii)(a) of the Amended and Restated Certificate of
Incorporation (each such notice in (i), (ii), or (iii), a "Redemption Notice"),
the Escrow Agent shall continue to hold in escrow the Preferred Escrow Shares
and the New Preferred Escrow Shares until (A) it shall receive further
instructions as to the disposition of such shares in writing signed by Tekelec
and the Representative (and the parties agree that, unless otherwise directed by
Tekelec, the Escrow Agent shall continue to hold a sufficient number of shares
of Series A Preferred Stock held in the Legacy Preferred Account (including any
fractions thereof) to satisfy any Disputed Amounts hereunder, notwithstanding
any redemption or transfer otherwise contemplated by the terms of the Amended
and Restated Certificate of Incorporation or the Stockholders' Agreement) or (B)
it shall be otherwise ordered by a Distribution Directive. Tekelec and the
Representative hereby agree (promptly following the delivery of a Redemption
Notice to the Escrow Agent) to jointly prepare and deliver instructions to the
Escrow Agent that are designed to permit and facilitate the closing of any
purchase and sale or redemption referenced in such Redemption Notice in
accordance with the terms of the Stockholders' Agreement or the Amended and
Restated Certificate of Incorporation, as the case may be; provided, that the
parties agree that, unless otherwise directed by Tekelec, the Escrow Agent shall
continue to hold a sufficient number of shares of Series A Preferred Stock
(including any fractions thereof) to satisfy any Disputed Amounts hereunder,
notwithstanding any redemption or transfer otherwise contemplated by the terms
of the Amended and Restated Certificate of Incorporation or the Stockholders'
Agreement.
4.2 Setoff. Tekelec shall be entitled to setoff, and/or at any
time following the Closing, cause Santera to setoff, (i) any amount that Tekelec
claims Santera owes it under Article XI of the Merger Agreement, including any
amounts owed pursuant to that letter agreement dated April 30, 2003, against (x)
any amounts owed by Tekelec to Santera (other than amounts owed by Tekelec to
Santera as indemnification payments pursuant to Article XI of the Merger
Agreement or upon exercise of the Tekelec Option (as defined in the
Stockholders' Agreement) pursuant to the Stockholders' Agreement) or to any of
the Legacy Santera Stockholders under this Agreement, the Merger Agreement or
the Stockholders' Agreement or (y) after the Closing, any amounts owed by
Santera to the Legacy Santera Stockholders upon redemption of shares of Series A
Preferred Stock under the Amended and Restated Certificate of Incorporation
and/or (ii) any amount that Tekelec claims a Legacy Santera Stockholder owes it
or Santera under the Merger Agreement against (x) any amounts owed by Tekelec to
Santera (other than amounts owed by Tekelec to Santera as indemnification
payments pursuant to Article XI of the Merger Agreement or upon exercise of the
Tekelec Option (as defined in the Stockholders' Agreement) pursuant to the
Stockholders' Agreement) or to any such Legacy Santera Stockholder under this
Agreement, the Merger
11
Agreement or the Stockholders' Agreement or (y) after the Closing, any amounts
owed by Santera to any such Legacy Santera Stockholder upon redemption of shares
of Series A Preferred Stock under the Amended and Restated Certificate of
Incorporation; provided, in any such case, that Tekelec informs the
Representative in writing of such proposed setoff in advance of such setoff and
describes the grounds upon which Tekelec claims the right to make such setoff
(or cause Santera to make such setoff) and provides the Representative a
reasonable opportunity to contest such setoff. If the Representative disputes
such setoff, it shall notify Tekelec thereof within thirty (30) days after
receipt of the notice of setoff, whereupon Tekelec and the Representative shall
meet and attempt in good faith to resolve their differences with respect to such
claimed right of setoff. If the dispute has not been resolved within thirty (30)
days after such Parties first meet to attempt such resolution, any Party may
initiate litigation in accordance with this Agreement. This Section 4.2 does not
create any independent obligation of a Party to Tekelec, nor shall this Section
4.2 circumvent the limitations set forth in Sections 11.5, 11.6, 11.8 and 11.9
of the Merger Agreement.
4.3 Distributions Following the Release Date.
(a) Promptly following the Release Date (and in any event
no later than 15 calendar days thereafter), but in any event subject to the
proviso at the end of this sentence, the Escrow Agent shall release (i) to
Santera a certificate representing the shares of Series A Preferred Stock then
remaining in the Legacy Preferred Account, and Santera shall promptly issue to
each Person listed on the Escrow Register for the Legacy Santera Stockholders a
certificate representing such Person's pro rata portion of such shares, computed
in accordance with the percentages set forth next to such Person's name on the
Escrow Register for the Legacy Santera Stockholders under the column entitled
"Percentage of Legacy Preferred Shares" and (ii) to each Legacy Santera
Stockholder, such Person's pro rata portion of such other cash, stock or other
property then remaining in the Legacy Preferred Account, computed in accordance
with the percentages set forth next to such Person's name on the Escrow Register
for the Legacy Santera Stockholders under the column entitled "Percentage of
Legacy Preferred Shares;" provided, however, in each of the cases (i) and (ii),
the Escrow Agent shall retain (and not deliver to Santera or such stockholders)
shares of Series A Preferred Stock (including, if applicable, any fractions
thereof), and if there is not a sufficient number of shares of Series A
Preferred Stock, cash, stock or other property, in either case, in an amount in
the aggregate equal to all Disputed Amounts outstanding on the Release Date
which have not been resolved in accordance with Section 4.1. Tekelec and the
Representative shall use their respective commercially reasonable efforts to
resolve all disputes or claims as punctually as possible following the Release
Date and upon such resolution, such parties shall promptly deliver written
notice to the Escrow Agent with instructions for disposition of such shares of
Series A Preferred Stock, or fractions thereof, and such other property.
(b) Promptly following the Release Date, the Escrow Agent
shall release (i) to Santera a certificate representing the New Preferred Escrow
Shares, and Santera shall promptly issue to each Person listed on the Escrow
Register for the Legacy Santera Stockholders a certificate representing such
Person's pro rata portion of the New Preferred Escrow Shares, computed in
accordance with the percentages set forth next to such Person's name on the
Escrow Register for the Legacy Santera Stockholders under the columns entitled
"Percentage of New Preferred Escrow Shares" and (ii) to each Legacy Santera
Stockholder, such Person's pro rata portion of such other cash, stock or other
property then remaining in the New Preferred Account, computed in accordance
with the percentages set forth next to such Person's name on the Escrow Register
for the Legacy Santera Stockholders under the columns entitled "Percentage of
New Preferred Shares."
12
ARTICLE V
TRANSFER OF ESCROWED SHARES; REGISTERS
5.1 Registration. The Escrow Agent shall keep or cause to be kept
a register or registers (each, an "Escrow Register") for the purpose of
registering the transfers or exchanges of the Preferred Escrow Shares or the New
Preferred Escrow Shares. Upon request of the Escrow Agent and immediately
following any transfer or exchange thereof, Santera shall furnish or cause to be
furnished to the Escrow Agent a list, in such form as the Escrow Agent may
reasonably require, of the name of each Legacy Santera Stockholder and the
percentage of the Preferred Escrow Shares or the New Preferred Escrow Shares, as
the case may be, allocated to each such Legacy Santera Stockholder. The initial
Escrow Register for the Preferred Escrow Shares is set forth on Exhibit C
hereto, and the initial Escrow Register for the New Preferred Escrow Shares is
set forth on Exhibit D hereto.
5.2 Restrictions. No Legacy Santera Stockholder shall sell,
assign, give, pledge, encumber, dispose or otherwise transfer ownership of any
right, title or interest to all or any portion of the Series A Preferred Stock
deposited with the Escrow Agent hereunder, by operation of law or otherwise,
except in accordance with the Stockholders' Agreement. Upon receipt of
satisfactory evidence of such compliance and transfer from a Legacy Santera
Stockholder, Santera shall reflect such transfer on its books and records and
shall notify the Escrow Agent of such transfer and instruct the Escrow Agent to
make a corresponding adjustment to the applicable Escrow Register.
5.3 Instrument of Accession. Every stockholder of Santera who is
not an original signatory to this Agreement and, unless such new stockholder is
a wholly-owned subsidiary of Tekelec, every person who becomes a stockholder of
Santera after date hereof as a result of the transfer or other disposition of
shares of Series A Preferred Stock by a Legacy Santera Stockholder shall, as a
condition to becoming a stockholder, become a party to this Agreement by signing
an Instrument of Accession hereto. No Person shall be entitled to receive any
shares of stock of Santera through transfer from another stockholder or
otherwise until Santera has received an Instrument of Accession signed by such
Person, and no transfer or other disposition of shares of stock shall be
effective for any purpose hereunder unless and until recorded on the applicable
Escrow Register.
ARTICLE VI
ESCROW AGENT
6.1 Duties.
(a) This Agreement sets forth, exclusively, the duties of
the Escrow Agent and no additional duties or obligations shall be inferred
herefrom or implied hereby.
(b) The Escrow Agent shall not be responsible for the
validity of any documents or other property delivered to it pursuant hereto, may
act and rely conclusively upon any instrument or signature believed by it to be
genuine and may assume that any person purporting to give any notice or
instructions hereunder, believed by the Escrow Agent to be authorized, has been
duly authorized so to do.
13
(c) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith, or
for any mistake of fact or law, or for anything which it may in good faith do or
refrain from doing in connection herewith, except to the extent that any act or
omission constitutes gross negligence or willful misconduct. In no event shall
the Escrow Agent be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including, but not limited to, lost profits), even if
the Escrow Agent has been advised of such loss or damage and regardless of the
form of action.
(d) The Escrow Agent may consult with, and obtain advice
from, legal counsel in the event of any dispute or question as to the
construction of any of the provisions hereof or its duties hereunder, and it
shall incur no liability and shall be fully protected in acting in good faith in
accordance with the advice of such counsel.
(e) The Escrow Agent shall not be bound by any
modification of this Escrow Agreement unless it shall have specifically
consented thereto in writing.
(f) In the event any instructions (including any fund
transfer instructions) are given to the Escrow Agent hereunder (other than in
writing at the time of execution of this Agreement), whether in writing, by
facsimile or otherwise, the Escrow Agent is authorized to seek confirmation of
such instructions by telephone call-back to the person or persons designated on
Exhibit E attached hereto, and the Escrow Agent may rely upon the confirmations
of anyone purporting to be the person or persons so identified. If the Escrow
Agent is unable to contact any of the authorized representatives identified in
Exhibit E, the Escrow Agent is hereby authorized to seek confirmation of such
instructions by telephone call-back to any one or more of the executive officers
of Santera, Tekelec or the Representative, as the case may be, which shall
include the titles of Chief Executive Officer, Chief Financial Officer, General
Partner or General Counsel, as the Escrow Agent may select. Each such executive
officer shall deliver to the Escrow Agent a fully executed incumbency
certificate within forty-five (45) days after the date of this Agreement and
shall update the same when and as requested by the Escrow Agent, and the Escrow
Agent may rely upon the confirmation of anyone purporting to be any such
officer. The persons and telephone numbers for call-backs may be changed only in
writing actually received and acknowledged by the Escrow Agent. The parties
hereto hereby acknowledge that the foregoing security procedure is commercially
reasonable.
(g) The Escrow Agent and the beneficiary bank in any
transfer hereunder (including any funds transfer hereunder) may rely solely upon
any account numbers or similar identifying number provided by any of the other
parties hereto to identify: (i) the beneficiary, (ii) the beneficiary's bank or
(iii) an intermediary bank. The Escrow Agent may apply any of the escrowed funds
for any payment order it executes using any such identifying number, even where
its use may result in a person other than the beneficiary being paid, or the
transfer of funds to a bank other than the beneficiary's bank or an intermediary
bank.
6.2 Expenses. Santera shall upon demand pay to the Escrow Agent
(i) the amount of all reasonable expenses, including the reasonable fees and
expenses of counsel, which the Escrow Agent may incur, and (ii) the Escrow
Agent's normal fees for all services rendered, in each case in connection with
the discharge of the Escrow Agent's duties, and the exercise or enforcement of
the rights of the parties hereunder.
14
6.3 Resignation. The Escrow Agent may resign by giving written
notice in writing to Tekelec, Santera and the Representative of such
resignation, specifying a date which such resignation shall take effect, which
shall in no event be earlier than sixty (60) days after the giving of such
notice, and shall be discharged from its duties and obligations upon the
appointment of a successor Escrow Agent as hereafter provided and the delivery
to such successor of the Escrow Amount. Immediately upon receipt of such notice,
Tekelec, Santera and the Representative shall appoint a successor Escrow Agent
who shall be mutually acceptable to them. Any such successor Escrow Agent shall
deliver to Tekelec, Santera and the Representative and to the resigning Escrow
Agent a written instrument accepting such appointment hereunder, and thereupon
it shall succeed to all the rights and duties of the Escrow Agent hereunder, and
shall be entitled to receive the Preferred Escrow Shares and the New Preferred
Escrow Shares. In the event that a successor Escrow Agent shall not be so
appointed by the date of resignation specified by the Escrow Agent, the Escrow
Agent shall have the right to appoint as a successor Escrow Agent any national
bank, and the parties hereto agree to accept any such successor Escrow Agent
appointed by the Escrow Agent.
6.4 Disputes. In the event of any dispute between Tekelec, Santera
or the Representative, or between the Escrow Agent and any one or more of the
other parties hereto, with regard to the Escrow Agent or its duties, or any
other matter concerning the disposition of the Preferred Escrow Shares or the
New Preferred Escrow Shares or in the event that the Escrow Agent, in good
faith, is in doubt as to what action it should take hereunder, the Escrow Agent
may deposit the Preferred Escrow Shares and the New Preferred Escrow Shares with
any court described in Section 12.17 of the Merger Agreement pending the
decision of such court, and the Escrow Agent shall be entitled to refrain from
action pending, and rely upon, the decision of such court. The rights of the
Escrow Agent under this Section 6.4 are cumulative of all other rights which it
may have by law or otherwise.
6.5 Indemnification of the Escrow Agent. Tekelec, Santera and the
Legacy Santera Stockholders hereby agree, jointly and severally, to indemnify
and hold the Escrow Agent harmless against and from any loss, liability or
expense incurred without gross negligence or willful misconduct on its part and
arising out of or in connection with its services hereunder.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Tekelec. Tekelec hereby agrees to hold the
Representative, Santera and the Legacy Santera Stockholders harmless and
indemnify each of them from and against (i) any and all claims, losses, damages,
liabilities, expenses or costs incurred by any of them to the extent resulting
from or arising out of any claim by the Escrow Agent pursuant to Section 6.5
hereof as a result of a claim made by Tekelec against such Escrow Agent and (ii)
Tekelec's proportionate share (calculated by reference to Tekelec's ownership of
Santera at the time of any such claim) of any and all claims, losses, damages,
liabilities, expenses or costs incurred by any of them to the extent resulting
from or arising out of any claim by the Escrow Agent pursuant to Section 6.5
hereof as a result of a claim made by Santera against such Escrow Agent.
7.2 Indemnification by the Legacy Santera Stockholders. The Legacy
Santera Stockholders hereby agree, jointly and severally, to hold Tekelec and
Santera harmless and indemnify each of them from and against any and all claims,
losses, damages, liabilities, expenses or costs incurred by either of them to
the extent resulting from or arising out of any claim by the Escrow
15
Agent pursuant to Section 6.5 hereof as a result of any matter other than as a
result of a claim made by Tekelec or Santera against such Escrow Agent pursuant
to Section 7.1 hereof. To the extent that shares of Series A Preferred Stock or
other property remains in the Legacy Preferred Account, the indemnification
obligations contained in this Section 7.2 shall be satisfied by the Legacy
Santera Stockholders, pro rata from each such Legacy Santera Stockholder based
on the percentages next to each such Legacy Santera Stockholders' name on the
Escrow Register for the Legacy Preferred Stockholders under the column entitled
"Percentage of Legacy Preferred Shares", all in accordance with the provisions
of Section 4.1 hereof.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, consents, approvals, requests and other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, one (1) day after being delivered to an overnight courier
or when telecopied (with a confirmatory copy sent by overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Santera, to:
Santera Systems Inc.
0000 Xxxx Xxxxx Xxxxxxx, #000
Xxxxx, Xxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Xxxx & Xxxx P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: A. Xxxxxxx Xxxxxxxxxxxx
Facsimile No.: (000) 000-0000
If to Tekelec, to:
Tekelec
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx X. Xxxxxx
Tekelec
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
16
Facsimile No.: (000) 000-0000
and
Xxxxx Xxxx LLP
One Metropolitan Square
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: J. Xxxx Xxxxxx and Xxxxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
If to the Legacy Santera Stockholders, to the Representative:
Austin Ventures VI, L.P.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000)-000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
8911 Capital of Texas Highway North
Westech 360, Suite 3350
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
If to the Escrow Agent:
X.X. Xxxxxx Trust Company, National Association
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxx
Facsimile No.: (000) 000-0000
8.2 Expenses Except as otherwise provided in this Agreement or the
Merger Agreement, each party hereto will pay its own costs and expenses incurred
in connection with the negotiation, execution and performance of this Agreement
and the transactions contemplated hereby.
8.3 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the respective successors and permitted assigns
of the parties hereto.
8.4 Amendment; Waiver. No modification, amendment or waiver of any
provision of this Agreement will be effective unless such modification,
amendment or waiver is approved in writing by Santera, Tekelec, the Legacy
Santera Stockholders who own a majority in interest of the capital stock of
Santera owned by all Legacy Santera Stockholders, calculated on an as converted
17
basis, and the Escrow Agent. The failure of any party to enforce any of the
provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
8.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument. All signatures of the parties hereto may
be transmitted by facsimile, and such facsimile will, for all purposes, be
deemed to be the original signature of such party whose signature it reproduces
and will be binding upon such party.
8.6 Headings The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
8.7 Severability. If any provision of this Agreement shall be
determined to be illegal or unenforceable, the remaining provisions of this
Agreement shall remain in full force and effect, and this Agreement shall be
construed as if the illegal or unenforceable provision were not a part hereof,
so long as the remaining provisions of this Agreement shall be sufficient to
carry out the overall intent of the parties as expressed herein.
8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflicts of law doctrine.
8.9 Further Assurances. Each party hereto shall perform all other
acts and execute and deliver all other documents as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
8.10 Third Party Beneficiary. Nothing set forth in this Agreement
shall be construed to confer any benefit to any third party who is not a party
to this Agreement.
8.11 Venue and Jurisdiction. Any disputes arising out of, in
connection with or with respect to this Agreement, the subject matter hereof,
the performance or non-performance of any obligation hereunder, or any of the
transactions contemplated hereby shall be adjudicated as set forth in Section
12.17 of the Merger Agreement.
8.12 Acknowledgement. Tekelec, Santera and each of the Legacy
Santera Stockholders acknowledge and agree that in determining whether a Tekelec
Indemnified Person has incurred Indemnified Losses with respect to any
particular matter, and in calculating the amount of the Indemnified Losses that
a Tekelec Indemnified Person is entitled to hereunder or under the Merger
Agreement with respect to any such matter, all of the Indemnified Losses
incurred by Santera and/or the Surviving Corporation, as that term is defined in
the Merger Agreement, other than those Indemnified Losses with respect to which
Santera and/or the Surviving Corporation is entitled to indemnification pursuant
to Section 11.1 of the Merger Agreement, with respect to such matters shall be
deemed to have been incurred by the Tekelec Indemnified Persons for all purposes
hereunder and under the Merger Agreement.
8.13 Additional Parties. The parties hereto acknowledge and agree
that any stockholders of Santera that execute this Agreement after the date
hereof and prior to the Closing shall be considered a Legacy Santera Stockholder
for all purposes hereunder.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
SANTERA SYSTEMS INC.
By: /s/ Xxxxx Xxxxx
_______________________________
Name: Xxxxx Xxxxx
_____________________________
Title: President and CEO
____________________________
Tax Identification #: _____________
TEKELEC
By: /s/ Xxxxxxxxx X. Xxx
_______________________________
Name: Xxxxxxxxx X. Xxx
_____________________________
Title: President and CEO
____________________________
By: Xxxx X. Xxxxxx
_______________________________
Name: Xxxx X. Xxxxxx
_____________________________
Title: CFO
____________________________
Tax Identification #: 00-0000000
_____________
AUSTIN VENTURES VI, L.P., as Representative
By: AV Partners VI, L.P., its General
Partner
By: /s/ Xxxxxx X. Xxxxxxx
_______________________________
Xxxxxx X. Xxxxxxx, General
Partner
AUSTIN VENTURES VI, L.P.
By: AV Partners VI, L.P., its
General Partner
By: /s/ Xxxxxx X. Xxxxxxx
_______________________________
Xxxxxx X. Xxxxxxx, General Partner
AUSTIN VENTURES VI AFFILIATES FUND, L.P.
By: AV Partners VI, L.P., its General
Partner
By: /s/ Xxxxxx X. Xxxxxxx
_______________________________
Xxxxxx X. Xxxxxxx, General Partner
AUSTIN VENTURES VIII, L.P.
By: AV Partners VIII, L.P., its General
Partner
By: /s/ Xxxxxx X. Xxxxxxx
_______________________________
Xxxxxx X. Xxxxxxx, General Partner
ESCROW AGREEMENT
Signature Page
REDPOINT VENTURES II, L.P., by its General
Partner, Redpoint Ventures II, LLC
By: /s/ R. Xxxxxx Xxxx
_____________________________
R. Xxxxxx Xxxx, Managing
Director
REDPOINT ASSOCIATES II, LLC, as nominee
By: /s/ R. Xxxxxx Xxxx
_______________________________
R. Xxxxxx Xxxx, Managing
Director
REDPOINT TECHNOLOGY PARTNERS Q-I,
L.P., by its General Partner, Redpoint
Ventures I, LLC
By: /s/ R. Xxxxxx Xxxx
_______________________________
Name: R. Xxxxxx Xxxx
_____________________________
Title: Managing Director
____________________________
REDPOINT TECHNOLOGY PARTNERS A-I,
L.P., by its General Partner, Redpoint
Ventures I, LLC
By: /s/ R. Xxxxxx Xxxx
_______________________________
Name: R. Xxxxxx Xxxx
_____________________________
Title: Managing Director
____________________________
MERITECH CAPITAL PARTNERS L.P.
By: Meritech Capital Associates L.L.C.
its General Partner
By: Meritech Management Associates L.L.C.
a managing member
By: /s/ Xxxx Xxxxxxx
_______________________________
Xxxx Xxxxxxx
Name: _____________________________
Title: ____________________________
MERITECH CAPITAL AFFILIATES L.P.
By: Meritech Capital Associates L.L.C.
its General Partner
By: Meritech Management Associates L.L.C.
a managing member
By: /s/ Xxxx Xxxxxxx
_______________________________
Xxxx Xxxxxxx
Name: _____________________________
Title: ____________________________
ESCROW AGREEMENT
Signature Page
SEQUOIA CAPITAL FRANCHISE FUND, L.P.
By: SCFF Management, LLC
A Delaware Limited Liability Company
General Partner
By: /s/ Xxxx Xxxxxxx
_______________________________
Name: Xxxx Xxxxxxx
_____________________________
Title: ____________________________
SEQUOIA CAPITAL FRANCHISE PARTNERS,
L.P.
By: SCFF Management, LLC
A Delaware Limited Liability Company
General Partner
By: /s/ Xxxx Xxxxxxx
_______________________________
Name: Xxxx Xxxxxxx
_____________________________
Title: ____________________________
SEQUOIA CAPITAL VIII, L.P.
By: SC VIII Management, LLC
A California Limited Liability Company
General Partner
By: /s/ Xxxx Xxxxxxx
_______________________________
Name: Xxxx Xxxxxxx
_____________________________
Title: ____________________________
SEQUOIA INTERNATIONAL TECHNOLOGY
PARTNERS VIII, L.P.
By: SC VIII Management, LLC
A California Limited Liability Company
General Partner
By: /s/ Xxxx Xxxxxxx
_______________________________
Name: Xxxx Xxxxxxx
_____________________________
Title: ____________________________
ESCROW AGREEMENT
Signature Page
SEQUOIA INTERNATIONAL TECHNOLOGY
PARTNERS VIII (Q), L.P.
By: SC VIII Management, LLC
A California Limited Liability Company
General Partner
By: /s/ Xxxx Xxxxxxx
_______________________________
Name: Xxxx Xxxxxxx
_____________________________
Title: ____________________________
SEQUOIA 1997
By: /s/ Xxxx Xxxxxxx
_______________________________
Name: Xxxx Xxxxxxx
_____________________________
Title: ____________________________
CMS PARTNERS LLC
By: /s/ Xxxx Xxxxxxx
_______________________________
Name: Xxxx Xxxxxxx
_____________________________
Title: ____________________________
INSTITUTIONAL VENTURE PARTNERS VIII,
L.P., by its General Partner, Institutional
Venture Management VIII, LLC
By: /s/ R. Xxxxxx Xxxx
_______________________________
R. Xxxxxx Xxxx, Managing Director
IVM INVESTMENT FUND VIII, LLC, by its
Manager, Institutional Venture Management
VIII, LLC
By: /s/ R. Xxxxxx Xxxx
_______________________________
R. Xxxxxx Xxxx, Managing Director
BROADBAND FUND, L.P., by its General Partner,
BBF Management, LLC, by its Manager,
Institutional Venture Management VIII, LLC
By: /s/ R. Xxxxxx Xxxx
_______________________________
R. Xxxxxx Xxxx, Managing Director
ESCROW AGREEMENT
Signature Page
EXHIBIT A
Form of Instrument of Accession
Reference is made to that certain Escrow Agreement dated as of April
30, 2003, a copy of which is attached hereto (the "Escrow Agreement"), by and
among Santera Systems Inc., a Delaware corporation ("Santera"), Tekelec, a
California corporation ("Tekelec"), those legacy stockholders of Santera who are
listed on the signature page of the Escrow Agreement ("Legacy Santera
Stockholders"), Austin Ventures VI, L.P., as the representative thereunder of
the Legacy Santera Stockholders (the "Representative"), and X.X. Xxxxxx Trust
Company, National Association ("Escrow Agent"). Any terms not defined herein
shall be defined as in the Escrow Agreement.
The undersigned,_________ , in order to become the owner or holder of
shares (the "Acquired Shares") of _____________________ , $____ par value per
share, of Santera, hereby agrees that by the undersigned's execution hereof (a)
the undersigned is a Stockholder party to the Escrow Agreement subject to all of
the restrictions, conditions and obligations applicable to Stockholders set
forth in the Escrow Agreement and (b) all of the Acquired Shares (and any and
all shares of stock of Santera issued in respect thereof) are and will remain
subject to all of the rights, restrictions, conditions and obligations
applicable to [Preferred Escrow Shares] [New Preferred Escrow Shares] and shall
remain in the [Legacy Preferred Account] [New Preferred Account], in each case
as set forth in the Escrow Agreement. This Instrument of Accession shall take
effect and shall become a part of said Escrow Agreement immediately upon
execution.
Executed as of the date set forth below under the laws of the State of
Delaware.
Signature:_______________________
Address:_________________________
_________________________
Date:____________________________
Accepted:
SANTERA SYSTEMS INC.
By: ____________________________
Date: ___________________________
EXHIBIT B
Form of Stock Power
For value received, the undersigned,_____________________ , hereby
surrenders, sells, assigns and conveys________________ (________) shares of
___________________________ , $ _______ par value per share, of Santera Systems
Inc., a Delaware corporation ("Santera"), standing in the name of ______________
____ on the books of Santera as of________________________ and represented by
Certificate No.____________ herewith to____________________ , and does hereby
irrevocably constitute and appoint ___________________________ to transfer said
stock on the books of Santera with full power of substitution in the premises.
Dated:______________________________
_________________________________
Name
EXHIBIT C
Escrow Register - Legacy Preferred Shares
Number of Legacy Percentage of Legacy
Name Preferred Shares Preferred Shares
EXHIBIT D
Escrow Register - New Preferred Shares
Number of Legacy Percentage of Legacy
Name Preferred Shares Preferred Shares
EXHIBIT E
Confirmation Instructions
If to Santera, to:
NAME(S) TELEPHONE NUMBER(S)
Xxxx Xxxxx (000) 000-0000
Xxxxx Xxxxxxx (000) 000-0000
If to Tekelec, to:
NAME(S) TELEPHONE NUMBER(S)
Xxxxxxxxx X. Xxx (000) 000-0000
Xxxx X. Xxxxxx (000) 000-0000
Xxxxxx X. Xxxxxx (000) 000-0000
If to the Representative, to:
NAME(S) TELEPHONE NUMBER(S)
Xxxxxx X. Xxxxxxx (000) 000-0000
Telephone confirmations shall be made by the Escrow Agent to each of Santera,
Tekelec and the Representative if joint instructions are required pursuant to
this Agreement.
