TECHNOLOGY TRANSFER AND DISTRIBUTION AGREEMENT
by and between
BEI TECHNOLOGIES, INC.,
a Delaware corporation
and
OPTICNET, INC.,
a Delaware corporation
October 6, 2000
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS.....................................................................................1
1.1 General.........................................................................................1
1.2 References; Interpretation......................................................................2
ARTICLE 2 TECHNOLOGY CONTRIBUTION AND DISTRIBUTION........................................................3
2.1 Technology Contribution and Transfer of Assets; Contribution of OpticNet Shares; Other
Transactions....................................................................................3
(a) Technology Contribution and Transfer of Assets................................3
(b) Issuance of Shares to Technologies............................................3
(c) Execution of Ancillary Agreements.............................................3
(d) Transfer Of Agreements........................................................3
(e) Consents......................................................................4
(f) Delivery Of Shares To Agent...................................................4
(g) No Fractional Shares..........................................................4
(h) Other Transactions............................................................4
2.2 Further Assurances..............................................................................4
2.3 No Representations Or Warranties................................................................5
2.4 Transfers Not Effected Prior To Effective Time; Transfers Deemed Effective As Of
Effective Time..................................................................................5
ARTICLE 3 ACCESS TO INFORMATION...........................................................................6
3.1 Provision Of Corporate Records..................................................................6
3.2 Access To Information...........................................................................6
3.3 Reimbursement; Other Matters....................................................................6
3.4 Confidentiality.................................................................................6
ARTICLE 4 DISPUTE RESOLUTION..............................................................................7
ARTICLE 5 INSURANCE.......................................................................................8
5.1 Coverage........................................................................................8
5.2 Administration..................................................................................8
5.3 Insurance Proceeds..............................................................................9
5.4 Agreement For Waiver Of Conflict And Shared Defense.............................................9
5.5 Cooperation.....................................................................................9
1.
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE 6 EMPLOYEE OBLIGATIONS AND BENEFIT PLANS..........................................................9
6.1 Technologies 401(k) Plan........................................................................9
6.2 Participation by holders of Restricted Stock....................................................9
6.3 Other Benefits.................................................................................10
6.4 Solicitation of Employees......................................................................10
6.5 Severance Claims...............................................................................11
ARTICLE 7 MISCELLANEOUS..................................................................................11
7.1 Complete Agreement; Construction...............................................................11
7.2 Ancillary Agreements...........................................................................11
7.3 Counterparts...................................................................................11
7.4 Survival Of Agreements.........................................................................11
7.5 Expenses.......................................................................................11
7.6 Notices........................................................................................11
7.7 Waivers........................................................................................12
7.8 Amendments.....................................................................................12
7.9 Assignment.....................................................................................12
7.10 Successors And Assigns.........................................................................12
7.11 Termination....................................................................................12
7.12 Subsidiaries...................................................................................12
7.13 Third Party Beneficiaries......................................................................12
7.14 Attorney Fees..................................................................................13
7.15 Title And Readings.............................................................................13
7.16 Exhibits And Schedules.........................................................................13
7.17 Specific Performance...........................................................................13
7.18 Governing Law..................................................................................13
7.19 Consent To Jurisdiction........................................................................13
7.20 Severability...................................................................................14
7.21 Force Majeure..................................................................................14
7.21.1 Acts Constituting Force Majeure.......................................................14
7.21.2 Notice Requirement....................................................................14
ii.
TECHNOLOGY TRANSFER AND DISTRIBUTION AGREEMENT
The following TECHNOLOGY TRANSFER AND DISTRIBUTION AGREEMENT dated as
of October 6, 2000, is entered into by and between BEI TECHNOLOGIES, INC., a
Delaware corporation ("Technologies"), and OPTICNET, INC., a Delaware
corporation ("OpticNet").
WHEREAS, in exchange for the contribution of certain technology and
related assets to OpticNet by Technologies as described herein (the "Technology
Contribution"), OpticNet shall distribute to Technologies shares of the Voting
Common Stock, par value $0.0001 per share, of OpticNet (the "OpticNet Common
Shares");
WHEREAS, the Board of Directors of Technologies has determined to
distribute the OpticNet Common Shares received in exchange for the Technology
Contribution to the holders of the Common Stock, par value $0.001 of
Technologies (the "Distribution"); and
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 GENERAL. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Agent" shall mean ChaseMellon Shareholder Services, LLC, as
transfer agent for Technologies and OpticNet.
"Ancillary Agreements" shall mean all of the written
agreements, instruments, understandings, assignments or other arrangements
(other than this Agreement) entered into in connection with the transactions
contemplated hereby, including, without limitation, (i) the InterCompany
Services Agreement and (ii) the License and Technical Assistance Agreement, and
any other agreements or documents related thereto.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury regulations promulgated thereunder, including any
successor legislation.
"Commission" shall have the meaning set forth in section
3.2(b).
"Distribution" shall mean the distribution to holders of
record of Technologies Common Stock as of the Distribution Record Date of the
OpticNet Common Shares owned by Technologies on the basis of one (1) OpticNet
Common Share received for every two (2) shares of Technologies Common Stock held
on the Record Date. The Distribution shall be deemed effective as of the
Effective Time.
1.
"Distribution Mailing Date" shall mean November 21, 2000, or
such other date as may hereafter be determined by Technologies' Board of
Directors as the date on or after which certificates representing the OpticNet
Common Shares shall be distributed by the Agent to holders of record of
Technologies Common Stock on the Distribution Record Date.
"Distribution Record Date" shall mean October 30, 2000, or
such other date as may hereafter be determined by Technologies' Board of
Directors as the record date for the Distribution.
"Effective Time" shall mean after the close of business on the
Distribution Record Date and immediately preceding the effectiveness of the
Technologies Stock Dividend.
"Information Statement" shall mean the Information Statement
sent to the holders of shares of Technologies Common Stock in connection with
the Distribution, including any amendment or supplement thereto.
"InterCompany Services Agreement" shall mean the InterCompany
Services Agreement dated as of the date hereof between Technologies and
OpticNet.
"License and Technical Assistance Agreement" shall mean the
License and Technical Assistance Agreement dated as of the date hereof between
Technologies' majority-owned subsidiary Xxxxx, Inc. ("XxXxx") (as the
"Licensor") and OpticNet (as the "Licensee").
"OpticNet Business" shall mean the business pertaining to the
technology and related assets transferred by Technologies to OpticNet in the
Technology Contribution, and as previously conducted by Technologies within its
wholly-owned subsidiary XxXxx, Inc. prior to the Effective Time, and such
business activities acquired, developed or established by or for OpticNet, as
the case may be, after the Effective Time.
"Restated Certificate" shall mean OpticNet's Amended and
Restated Certificate of Incorporation, to be filed with the Secretary of State
of the State of Delaware following the date hereof such that each share of
OpticNet's Nonvoting Common Stock, Voting Common Stock and Preferred Stock
issued and outstanding as of the date of this Agreement, respectively, shall be
split into four (4) shares of the Nonvoting Common Stock, Voting Common Stock
and Preferred Stock of OpticNet, respectively.
"Technology Contribution" shall have the meaning set forth in
the recitals of this Agreement.
"Technologies Stock Dividend" shall mean that dividend,
payable in shares of the Common Stock of Technologies, of one fully paid and
non-assessable share for each share of the Common Stock of Technologies
outstanding at the close of business on October 30, 2000, or such other date as
may hereafter be determined by Technologies' Board of Directors as the date on
which such dividend shall be payable and shall occur immediately following the
Distribution.
1.2 REFERENCES; INTERPRETATION. References to an "Exhibit" or to a
"Schedule" are, unless otherwise specified, to one of the Exhibits or Schedules
attached to this Agreement,
2.
and references to a "Section" are, unless otherwise specified, to one of the
Sections of this Agreement.
ARTICLE 2
TECHNOLOGY CONTRIBUTION AND DISTRIBUTION
2.1 TECHNOLOGY CONTRIBUTION AND TRANSFER OF ASSETS; CONTRIBUTION OF
OPTICNET SHARES; OTHER TRANSACTIONS.
(a) Technology Contribution and Transfer of Assets. At or
prior to the Effective Time, Technologies shall transfer to OpticNet all right,
title and interest in and to the assets set forth on Schedule A hereto that are
to comprise the OpticNet Business, including those assets comprising the
OpticNet Business in the possession of any subsidiary of Technologies.
(b) Issuance of Shares to Technologies. In exchange for the
Technology Contribution as set forth above, at or prior to the Effective Time
and following the filing of the Restated Certificate with the Secretary of State
of the State of Delaware, OpticNet shall issue to Technologies an aggregate of
3,616,000 shares of OpticNet Voting Common Stock.
(c) Execution of Ancillary Agreements. At or prior to the
Effective Time, each of Technologies and XxXxx, as applicable, and OpticNet
shall enter into each of the following:
(i) the InterCompany Services Agreement in
substantially the form attached as Exhibit A hereto;
(ii) the License and Technical Assistance Agreement
in substantially the form attached as Exhibit B hereto; and
any and all other agreements in respect of the Distribution reasonably necessary
or appropriate in connection with the transactions contemplated hereby.
(d) Transfer Of Agreements.
(i) Technologies hereby agrees that at or prior to
the Effective Time or as soon as reasonably practicable thereafter, subject to
the limitations set forth in this Section 2.1(d) and the terms of the Ancillary
Agreements, it will, and it will cause its subsidiaries to, assign, transfer and
convey to OpticNet all of Technologies' or such subsidiaries' respective right,
title and interest in and to any and all agreements that, in Technologies' sole
judgment, relate exclusively to the OpticNet Business.
(ii) Subject to the provisions of this Section 2.1(d)
and the terms of the Ancillary Agreements, any agreement to which both of
Technologies (or one or more of its subsidiaries) and OpticNet is a party that
inures, in Technologies' sole judgment, to the benefit of both the businesses
conducted by Technologies and its subsidiaries and the OpticNet Business shall
be assigned in part, on or prior to the Effective Time or as soon as reasonably
practicable
3.
thereafter, so that each of OpticNet and Technologies (or its subsidiaries)
shall be entitled to the rights and benefits inuring to its business under such
agreement.
(iii) The assignee of any agreement assigned, in
whole or in part, hereunder, shall assume and agree to pay, perform, and fully
discharge all obligations of any assignor arising under such agreement after the
Effective Time or, in the case of a partial assignment under paragraph (d)(ii)
above; such obligations related to the portion of the agreement assigned to such
party as determined in accordance with the terms of the relevant agreement,
where determinable on the face thereof, and otherwise as determined in
accordance with the practice of the parties prior to the Distribution.
(iv) Notwithstanding anything in this Agreement to
the contrary, this Agreement shall not constitute an agreement to assign any
agreement, in whole or in part, or any rights thereunder if the agreement to
assign or attempt to assign, without the consent of a third party, would
constitute a breach thereof or in any way adversely affect the rights of the
assignor or the assignee, as applicable, until such consent is obtained. In the
event an attempted assignment would be ineffective or would adversely affect the
rights of any party hereto so that the assignee would not, in fact, receive all
such rights, the parties will cooperate with each other in any arrangement
designed to provide for the assignee the benefits of, and to permit the assignee
to assume liabilities under, any such agreement.
(e) Consents. The parties hereto shall use commercially
reasonable efforts to obtain required consents to assignment of agreements
hereunder.
(f) Delivery Of Shares To Agent. At or prior to the Effective
Time, Technologies shall deliver to the Agent the share certificate or
certificates representing the OpticNet Common Shares issued to Technologies by
OpticNet pursuant to Section 2.1(b) and shall instruct the Agent to distribute,
on or as soon as practicable following the Distribution Mailing Date, such
OpticNet Common Shares to the holders of record of Technologies Common Stock on
the Distribution Record Date as further contemplated by, and subject to the
conditions contained in, the Information Statement and this Agreement. OpticNet
shall provide all share certificates that the Agent shall require in order to
effect the Distribution.
(g) No Fractional Shares. OpticNet shall issue only whole
shares of its Voting Common Stock in connection with the Distribution. Instead
of a fractional share to which a Technologies stockholder would otherwise be
entitled, on the Distribution Record Date, Technologies will pay to such
stockholder a cash amount based on a per share value of $0.08, determined to be
the value per share of OpticNet's Voting Common Stock as of the Distribution
Record Date by the Board of Directors of OpticNet.
(h) Other Transactions. At or prior to the Effective Time,
Technologies and OpticNet shall have consummated those other transactions in
connection with the Distribution that are contemplated by the Information
Statement and not specifically referred to in subparagraphs (a)-(g) above.
2.2 FURTHER ASSURANCES. In case at any time after the Effective Time
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement and the
4.
Ancillary Agreements, the proper officers of each party to this Agreement shall
take all such necessary actions. Without limiting the foregoing, Technologies
and OpticNet shall use commercially reasonable efforts to obtain all consents
and approvals, to enter into all other agreements and to make all filings and
applications that may be required for the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements, including, without
limitation, any applicable governmental and regulatory filings and novations.
2.3 NO REPRESENTATIONS OR WARRANTIES. Each of the parties hereto
understands and agrees that, except as otherwise expressly provided, no party
hereto is, in this Agreement or in any other agreement or document contemplated
by this Agreement or otherwise, making any representation or warranty
whatsoever, including, without limitation, as to title, value or legal
sufficiency. It is also agreed and understood that all assets either transferred
to or retained by the parties, as the case may be, shall be "as is, where is"
and that (subject to Section 2.2) the party to which such assets are to be
transferred hereunder shall bear the economic and legal risk that any
conveyances of such assets shall prove to be insufficient or that such party's
or any of the subsidiaries' title to any such assets shall be other than good
and marketable and free from encumbrances. Similarly, each party hereto
understands and agrees that no party hereto is, in this Agreement or in any
other agreement or document contemplated by this Agreement or otherwise,
representing or warranting in any way that the obtaining of any consents or
approvals, the execution and delivery of any amendatory agreements and the
making of any filings or applications contemplated by this Agreement will
satisfy the provisions of any or all applicable agreements or the requirements
of any or all applicable laws or judgments, it being agreed and understood that
the party to which any assets are transferred shall bear the economic and legal
risk that any necessary consents or approvals are not obtained or that any
requirements of laws or judgments are not complied with.
2.4 TRANSFERS NOT EFFECTED PRIOR TO EFFECTIVE TIME; TRANSFERS DEEMED
EFFECTIVE AS OF EFFECTIVE TIME. To the extent that any transfers contemplated by
this Article 2 shall not have been consummated at or prior to the Effective
Time, each of the parties hereto (and as to Technologies, its subsidiaries),
shall cooperate to effect such transfers as promptly following the Effective
Time as shall be practicable. Nothing herein shall be deemed to require the
transfer of any assets which by their terms or operation of law cannot be
transferred; provided, however, that the parties hereto (and as to Technologies,
its subsidiaries) shall cooperate to seek to obtain any necessary consents or
approvals for the transfer of all assets contemplated to be transferred pursuant
to this Article 2. In the event that any such transfer of assets has not been
consummated, from and after the Effective Time, the party retaining such asset
shall hold such asset in trust for the use and benefit of the party entitled
thereto (at the expense of the party entitled thereto) and take such other
action as may be reasonably requested by the party to whom such asset is to be
transferred in order to place such party, insofar as is reasonably possible, in
the same position as would have existed had such asset been transferred as
contemplated hereby. As and when any such asset becomes transferable, such
transfer shall be effected forthwith. The parties agree that, as of the
Effective Time, each party hereto shall be deemed to have acquired complete and
sole beneficial ownership over all of the assets, together with all rights,
powers and privileges incident thereto, and all duties, obligations and
responsibilities incident thereto, which such party is entitled to acquire
pursuant to the terms of this Agreement.
5.
ARTICLE 3
ACCESS TO INFORMATION
3.1 PROVISION OF CORPORATE RECORDS. After the Effective Time, upon the
prior written request by one party for specific and identified agreements,
documents, books, records or files, including, without limitation, computer
and/or other software files, microfiche, tape recordings and photographs
(collectively, "Records"), relating to or affecting the requesting party, the
other party shall arrange, as soon as reasonably practicable following the
receipt of such request, for the provision of copies of such Records in the
possession of such party or, if applicable, of its subsidiaries, to the other
party (or the originals thereof if the party making the request has a reasonable
need for such originals), to the extent such items are not already in the
possession of the requesting party.
3.2 ACCESS TO INFORMATION.
(a) From and after the Effective Time, Technologies and
OpticNet shall afford to the other and its authorized accountants, counsel and
other designated representatives (including governmental representatives and
auditors in connection with governmental claims or audits) reasonable access
during normal business hours, subject to appropriate restrictions for
classified, privileged or confidential information, to the personnel,
properties, books and records of such party and, in the case of Technologies,
its subsidiaries, insofar as such access is reasonably required by the other
party.
(b) For a period of five years following the Effective Time,
each of Technologies and OpticNet shall provide to the other at the request of
such party, any documents which shall be filed by such party with the Securities
and Exchange Commission (the "Commission"), and in the case of Technologies, at
the request of OpticNet, those filed by its subsidiaries, pursuant to the
periodic and interim reporting requirements of the Securities Exchange Act of
1934 and the rules and regulations of the Commission promulgated thereunder.
3.3 REIMBURSEMENT; OTHER MATTERS.
(a) Except to the extent otherwise contemplated by any
Ancillary Agreement, a party providing Records or access to information to the
other party under this Article 3 shall be entitled to receive from the
recipient, upon the presentation of reasonably documented invoices therefor,
payments for such amounts relating to supplies, disbursements and other
out-of-pocket expenses as are reasonably incurred in providing such Records or
access to information.
(b) The parties hereto shall comply with those document
retention policies set forth in Schedule 3.3(b) hereto or established and agreed
to in writing by their respective authorized officers at or prior to the
Effective Time in respect of records and related matters.
3.4 CONFIDENTIALITY. Neither Technologies nor any of subsidiaries, on
the one hand, nor OpticNet, on the other hand, shall use or permit the use of
(without the prior written consent of the other(s)) and shall hold, and shall
cause its consultants and advisors to hold, in
6.
strict confidence, all information concerning the other party or parties in its
possession or custody or under its control (except to the extent that (A) such
information has been in the public domain or becomes part of the public domain
through no fault of such party, (B) such information has been later lawfully
acquired by such party, without an obligation of confidence, from a third party
legally free to disclose such information, (C) this Agreement or any other
Ancillary Agreement or any other agreement entered into pursuant hereto permits
such use or disclosure of such information or (D) such information is
independently developed by such party without reference to such information) to
the extent such information (x) relates to the period up to the Effective Time,
(y) relates to any Ancillary Agreement or (z) is obtained in the course of
performing services for the other party pursuant to any Ancillary Agreement, and
each party shall not (without the prior written consent of the other) otherwise
release or disclose such information to any other person, except such party's
auditors and attorneys, unless compelled to disclose such information by
judicial or administrative process or unless such disclosure is required by law
and such party has used commercially reasonable efforts to consult with the
other affected party or parties prior to such disclosure. To the extent that a
party hereto is compelled by judicial or administrative process to disclose such
information under circumstances in which any evidentiary privilege would be
available, such party agrees to assert such privilege in good faith prior to
making such disclosure. Each of the parties hereto agrees to consult with each
relevant other party in connection with any such judicial or administrative
process, including, without limitation, in determining whether any privilege is
available, and further agrees to allow each such relevant party and its counsel
to participate in any hearing or other proceeding (including, without
limitation, any appeal of an initial order to disclose) in respect of such
disclosure and assertion of privilege.
ARTICLE 4
DISPUTE RESOLUTION
In the event of a controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or any of the Ancillary
Agreements or otherwise arising out of, or in any way related to this Agreement
or any of the Ancillary Agreements, including, without limitation, any claim
based on contract, tort, statute or constitution (collectively, "Agreement
Disputes"), the Presidents (or their designee) of the respective parties shall
negotiate in good faith for a reasonable period of time to settle such Agreement
Dispute.
If after such reasonable period such Presidents (or their designees)
are unable to settle such Agreement Dispute (and in any event after 60 days have
elapsed from the time the parties began such negotiations), such Agreement
Dispute shall be determined, at the request of either party, by arbitration
before a single arbitrator conducted in San Francisco, California, before and in
accordance with the then-existing Rules of Practice and Procedure of the San
Francisco office of JAMS/Endispute, Inc. ("JAMS") (the "Rules"), and any
judgment or award rendered by the arbitrator shall be final, binding and
nonappealable (except upon grounds specified in 9 U.S.C. section 10 or
California Code of Civil Procedure Section 1285 et seq. as in effect on the date
hereof), and judgment may be entered by any state or Federal court having
jurisdiction thereof in accordance with Section 7.19 hereof. Each party shall
have the right to conduct the following discovery: one-time service of up to 25
document requests upon the other party, with receipt of
7.
all responsive documents within 30 days; exchange of witness lists identifying
any witnesses the party intends to call at the arbitration hearing and any other
persons with material information about the dispute, including a brief
description of each identified person's knowledge; the taking of depositions of
any fact (non-expert) witnesses, provided that, the total time for all of each
party's depositions of fact witnesses shall not exceed ten eight-hour days,
including breaks; and the designation of up to two expert witnesses per party,
with the right to depose the opposing party's experts, however the total time
for all of each party's depositions of expert witnesses shall not exceed two
eight-hour days, including breaks. Any controversy concerning whether an
Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has
been waived, whether an assignee of this Agreement is bound to arbitrate, or as
to the interpretation or enforceability of this Article 4 shall be determined by
the arbitrator. The arbitrator shall be a retired or former judge of any Federal
or California trial or appellate court or such other qualified person as the
parties may agree to designate, provided such individual has had substantial
professional experience with regard to settling commercial disputes. The
arbitration hearing shall commence no later than eight months following the
service of the Demand for Arbitration. The arbitrator shall make detailed
findings of fact and law in writing in support of his or her decision and shall
serve his or her award and findings of fact within 15 days following the later
of the conclusion of the arbitration hearing or submission of the final briefs.
The arbitrator shall be entitled, if appropriate, to award any remedy in such
proceedings, including, without limitation, monetary damages, specific
performance and all other forms of legal and equitable relief; provided,
however, the arbitrator shall not be entitled to award punitive damages and
shall not reform, modify or materially change this Agreement or any of the
Ancillary Agreements. In his or her award the arbitrator shall allocate, in his
or her discretion, among the parties to the arbitration all costs of the
arbitration, including, without limitation, the fees and expenses of the
arbitrator and reasonable attorneys' fees, costs and expert witness expenses of
the parties. The parties hereto agree to comply with any award made in any such
arbitration proceedings that has become final in accordance with the Rules and
agree to the entry of a judgment in any jurisdiction upon any award rendered in
such proceedings becoming final under the Rules.
ARTICLE 5
INSURANCE
5.1 COVERAGE. From and after the Effective Time and through September
30, 2001 (or such earlier or later date as may be mutually agreed upon by the
parties hereto), Technologies agrees to be responsible for obtaining and
maintaining certain insurance coverage on behalf of OpticNet for the account of
the same (the "Interim Insurance Coverage Period") and, with respect to all
existing insurance policies for Technologies set forth on Schedule B hereto,
shall name OpticNet as an additional insured thereunder and in such coverage
amounts as detailed therein ("Insurance Coverage").
5.2 ADMINISTRATION. During the Interim Insurance Coverage Period,
Technologies shall be responsible for all claims administration with respect to
any claim asserted on behalf of OpticNet which may be within the terms of the
Insurance Coverage for OpticNet, including without limitation providing notice
to any and all insurance carriers issuing a policy set forth on
8.
Schedule B, pursuing all claims made under the insurance policies set forth on
Schedule B and pursuing all of OpticNet's rights under the Insurance Coverage,
including asserting any claim for breach of contract or bad faith against any
insurance carrier providing a policy set forth on Schedule B, as the case may
be. OpticNet hereby appoints Technologies as its agent and attorney in fact to
pursue its rights under the Insurance Coverage and to otherwise perform any and
all claims administration during the Interim Insurance Coverage Period.
5.3 INSURANCE PROCEEDS. Proceeds received with respect to any claims
covered under the Insurance Coverage shall be paid to OpticNet with respect to
claims asserted on behalf of OpticNet and to Technologies with respect to claims
asserted on behalf of Technologies.
5.4 COOPERATION. The parties hereto agree to use commercially
reasonable efforts to cooperate with respect to the various insurance matters
contemplated by this Agreement.
ARTICLE 6
EMPLOYEE OBLIGATIONS AND BENEFIT PLANS
6.1 TECHNOLOGIES 401(K) PLAN. From the Effective Time and through
September 30, 2001 (or such earlier or later date as may be mutually agreed upon
by the parties hereto, the "401(k) Participation Termination Date"), OpticNet
employees consisting of (i) persons formerly employed by Technologies or a
subsidiary thereof prior to their employment by OpticNet and (ii) persons with
no former employment by Technologies or a subsidiary thereof may elect to
continue to participate or initially participate, as the case may be, in the
401(k) plan of Technologies listed on Schedule C hereto (the "Technologies
401(k) Plan"), which shall become a multi-employer plan (as defined in the Code)
as of, or prior to, the Effective Date for this purpose. Effective no later than
the date immediately following the 401(k) Participation Termination Date,
OpticNet will establish its own qualified retirement plan (the "OpticNet 401(k)
Plan") for its employees. Prior service with Technologies or any of its
subsidiaries shall be recognized under the OpticNet 401(k) Plan for the purpose
of meeting all vesting, eligibility and other service-related requirements
thereunder. Effective no later than the date immediately following the 401(k)
Participation Termination Date, OpticNet employees will no longer participate in
the Technologies 401(k) Plan but will become participants in the OpticNet 401(k)
Plan and as soon as administratively feasible, the account balances of the
OpticNet employees held in the Technologies 401(k) Plan will be transferred to
the OpticNet 401(k) Plan in a trustee-to-trustee transfer (the "Transferred
Assets"). OpticNet hereby agrees to assume, and shall indemnify and hold
harmless Technologies from and against, any and all claims brought against
Technologies or any of its subsidiaries under the OpticNet 401(k) Plan with
respect to the period following the Effective Time during which OpticNet
employees participated in the Technologies 401(k) Plan or with respect to the
Transferred Assets.
6.2 PARTICIPATION BY HOLDERS OF RESTRICTED STOCK. Technologies and
OpticNet shall cause each holder as of the Distribution Record Date of shares of
vested and unvested Common Stock of Technologies originally issued to the holder
as subject to certain restrictions ("Technologies Restricted Stock"), to receive
as a result of the Distribution vested and unvested shares of OpticNet Common
Stock. Each holder as of the Distribution Record Date of vested and unvested
shares of Technologies Restricted Stock will receive vested and
9.
unvested shares of OpticNet Common Stock on a proportionate basis to the
percentage of vested and unvested, respectively, shares of Technologies
Restricted Stock held by such holder. Shares of vested and unvested OpticNet
Common Stock shall be distributed such that for every two shares of vested and
unvested stock of Technologies Restricted Stock the holder thereof shall receive
one share of OpticNet Common Stock. Vesting of unvested shares of OpticNet
Common Stock issued shall be in accordance with the vesting schedule and terms
applicable to the corresponding shares of Technologies Restricted Stock held by
the holder thereof; provided that employment by OpticNet shall be deemed to be
employment by Technologies or any of its subsidiaries for purposes of satisfying
the vesting requirements of the unvested shares of OpticNet Common Stock
received.
6.3 OTHER BENEFITS. Subject to applicable plan eligibility
requirements, from the Effective Time, and through September 30, 2001 (or such
earlier or later date as may be mutually agreed upon by the parties hereto, the
"Benefits Participation Termination Date"), OpticNet employees consisting of (i)
persons formerly employed by Technologies or a subsidiary thereof prior to their
employment by OpticNet and (ii) persons with no former employment by
Technologies or a subsidiary thereof may elect to continue to participate or
initially participate, as the case may be, in the health, disability and other
welfare benefit plans sponsored by Technologies as provided on Schedule C
hereto. Effective no later than the date immediately following the Benefits
Participation Termination Date, OpticNet will adopt welfare benefit plans and
programs (the "OpticNet Benefit Plans") affording benefits reasonably similar to
those provided under Technologies' welfare benefit plans. Effective no later
than the date immediately following the Benefits Participation Termination Date,
OpticNet employees will no longer participate in the Technologies welfare
benefit plans and programs but will become participants in the OpticNet Benefit
Plans in accordance with the terms of the OpticNet Benefit Plans. Technologies
will not be responsible for and will incur no liability with respect to the
OpticNet Benefit Plans. The Technologies group medical plan or plans shall
provide required group health continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1984 ("COBRA") for qualifying events that
occur prior to the time OpticNet employees no longer participate in the
Technologies welfare benefit plans. OpticNet, with respect to its employees,
shall provide COBRA coverage for qualifying events that occur on or after the
time OpticNet employees no longer participate in the Technologies welfare
benefit plans. OpticNet hereby agrees to assume, and shall indemnify and hold
harmless Technologies from and against, all claims brought against Technologies
or any of its subsidiaries under the OpticNet Benefit Plans, including, without
limitation, any claims under COBRA for qualifying events of OpticNet's employees
and dependents that occur on or after the time OpticNet employees no longer
participate in the Technologies welfare benefit plans.
6.4 Solicitation of Employees. Technologies and OpticNet acknowledge
that prior to, and following the Effective Date, OpticNet may hire individuals
who are, or have been, employees of Technologies or XxXxx and contributors to
the OpticNet Business, either prior to, or following the Effective Date. Upon
employment by OpticNet of such persons, Technologies or XxXxx, as applicable,
will have no further responsibility or liability with respect to the employment
relationship of such employees upon their termination of employment by
Technologies or XxXxx, other than with respect to the final settlement of
obligations with respect to such employees under the Technologies 401(k) Plan
and other welfare benefit plans of Technologies, as applicable.
10.
6.5 SEVERANCE CLAIMS. OpticNet shall assume, and shall indemnify and
hold Technologies harmless against, all claims and liabilities for severance,
change-in-control or termination benefits arising out of or resulting from the
transfer of employment of any employee of Technologies or any of its
subsidiaries to OpticNet at or after the Effective Time.
ARTICLE 7
MISCELLANEOUS
7.1 COMPLETE AGREEMENT; CONSTRUCTION. This Agreement, including the
Exhibits and Schedules, and the Ancillary Agreements shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments and writings with respect
to such subject matter. Notwithstanding any other provisions in this Agreement
to the contrary, in the event and to the extent that there shall be a conflict
between the provisions of this Agreement and the provisions of any Ancillary
Agreement, such Ancillary Agreement shall control as to the particular subject
matter of such Ancillary Agreement.
7.2 ANCILLARY AGREEMENTS. This Agreement is not intended to address,
and should not be interpreted to address, the matters specifically and expressly
covered by the Ancillary Agreements.
7.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more such counterparts have been signed by
each of the parties and delivered to the other parties.
7.4 SURVIVAL OF AGREEMENTS. Except as otherwise contemplated by this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Effective Time.
7.5 EXPENSES. Except as otherwise set forth in this Agreement or any
Ancillary Agreement, all costs and expenses incurred on or prior to the
Effective Time (whether or not paid on or prior to the Effective Time) in
connection with the preparation, execution, delivery and implementation of this
Agreement and any Ancillary Agreement, the Information Statement and the
Distribution and the consummation of the transactions contemplated thereby shall
be charged to and paid by BEI Technologies, Inc. and thereafter allocated
between Technologies and OpticNet on an equitable basis. Except as otherwise set
forth in this Agreement or any Ancillary Agreement, each party shall bear its
own costs and expenses incurred after the Effective Time.
7.6 NOTICES. All notices and other communications hereunder shall be in
writing and hand delivered or mailed by registered or certified mail (return
receipt requested) or sent by any means of electronic message transmission with
delivery confirmed (by voice or otherwise) to the parties at the following
addresses (or at such other addresses for a party as shall be specified by like
notice) and will be deemed given on the date on which such notice is received:
11.
To BEI TECHNOLOGIES, INC.:
Xxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
TO OPTICNET, INC.:
Xxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: President
7.7 WAIVERS. The failure of either party to require strict performance
by the other party of any provision in this Agreement will not waive or diminish
that party's right to demand strict performance thereafter of that or any other
provision hereof.
7.8 AMENDMENTS. Subject to the terms of Section 7.11 hereof, this
Agreement may not be modified or amended except by an agreement in writing
signed by the parties.
7.9 ASSIGNMENT. This Agreement shall be assignable in whole in
connection with a merger or consolidation or the sale of all or substantially
all the assets of a party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant party hereto by
operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the other party to this Agreement. Otherwise this Agreement
shall not be assignable, in whole or in part, directly or indirectly, by any
party hereto without the prior written consent of the other and an attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void.
7.10 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns.
7.11 TERMINATION. This Agreement may be terminated and the Distribution
may be amended, modified or abandoned at any time prior to the Effective Time by
and in the sole discretion of Technologies without the approval of OpticNet or
the shareholders of Technologies. In the event of such termination, no party
shall have any liability of any kind to any other party or any other person.
After the Effective Time, this Agreement may not be terminated except by an
agreement in writing signed by the parties.
7.12 SUBSIDIARIES. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any subsidiary of such party at
the time such performance is anticipated to occur in order to facilitate the
Distribution.
7.13 THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and their respective subsidiaries and should not
be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
12.
7.14 TITLE AND READINGS. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
7.15 EXHIBITS AND SCHEDULES. The Exhibits and Schedules shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
7.16 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges that
there is no adequate remedy at law for failure by such party to comply with the
provisions of this Agreement and that such failure would cause immediate harm
that would not be adequately compensable in damages, and therefore agrees that
its agreements contained herein may be specifically enforced without the
requirement of posting a bond or other security, in addition to all other
remedies available to the other party hereto under this Agreement.
7.17 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AS SUCH LAWS ARE APPLIED
TO AGREEMENTS BETWEEN CALIFORNIA RESIDENTS ENTERED INTO AND PERFORMED ENTIRELY
IN CALIFORNIA.
7.18 CONSENT TO JURISDICTION. This Section 7.19 shall not limit the
provisions of Article 4 hereof. Each of the parties irrevocably submits to the
exclusive personal jurisdiction and venue of (a) the Superior Court for the City
and County of San Francisco, California and (b) the United States District Court
for the Northern District of California, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the parties agrees to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Northern
District of California located in San Francisco, California or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Superior Court for the City and County of San Francisco,
California. Each of the parties further agrees that service of any process,
summons, notice or document by United States registered mail to such party's
address set forth above shall be effective service of process for any action,
suit or proceeding in California with respect to any matters to which it has
submitted to jurisdiction in this Section 7.19. Each of the parties irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Superior Court for the City and County of San
Francisco, California, or (ii) the United States District Court for the Northern
District of California located in San Francisco, California, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
7.19 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
13.
7.20 FORCE MAJEURE.
7.20.1 Acts Constituting Force Majeure. Neither party shall be
liable to the other for a delay in its performance of this Agreement arising
from causes beyond its reasonable control. Without limiting the generality of
the foregoing, such events include any act of God; accident; explosion; fire;
earthquake; flood; strikes; labor disputes; riots; sabotage; embargo; equipment
failure; federal, state, or local legal restriction or limitation. Neither party
shall be required to resolve labor disputes, but shall use commercially
reasonable efforts to seek alternative sources to the extent practicable.
7.20.2 Notice Requirement. When circumstances occur that delay
the performance of either party under this Agreement, whether or not such
circumstances are excused pursuant to Section 7.21.1 above, such party shall,
when it first becomes aware of such circumstances, promptly notify the other
party, by facsimile or by telephone confirmed in writing within two (2) business
days in the case of oral notice. Within ten (10) business days of the date when
either party first becomes aware of the event which it contends is responsible
for the delay, it shall supply to the other party in writing the reason(s) for
and anticipated duration of such delay, the measures taken and to be taken to
prevent or minimize the delay, and the timetable for the implementation of such
measures.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
BEI TECHNOLOGIES, INC.
By:
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Name:
--------------------------------------------
Title:
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OPTICNET, INC.
By:
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Name:
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Title:
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14.
SCHEDULE A
TRANSFERRED ASSETS
(see attached)
SCHEDULE B
INSURANCE COVERAGE FOR OPTICNET
The following insurance coverages are to be provided on behalf of
OpticNet by BEI Technologies on an interim basis:
Package Policy
o Worldwide Property - covers real and personal property against
"All Risks" of direct physical loss or damage, except as
specifically excluded.
o Worldwide Electronic Errors and Omissions - covers legal
liability for failure of Insured's electronic products to
perform the intended function or purpose after installation
and testing.
o Domestic Legal Liability - covers legal liability to members
of the public for Bodily Injury and Property Damage.
o Automobile - covers against claims for Bodily Injury or
Property Damage arising out of the use of automobiles by its
employees or agents in the conduct of its business.
Foreign Package
o Foreign Voluntary Workers' Compensation - provides for payment
of U.S. or other benefits and excess repatriation costs due
employees as a result of occupational death or injury
occurring while employee is outside the United States.
o Foreign Auto DIC / Excess - covers legal liability to members
of the public for Bodily Injury and Property Damage caused by
and arising out of any non-owned or hired automobile outside
of the United States.
o Foreign General Liability - covers legal liability to members
of the public for Bodily Injury and Property Damage outside
the United States.
Umbrella Liability
o Covers legal liability to members of the public for Bodily
Injury and Property Damage (including legal defense) in excess
of underlying primary insurance for occurrences anywhere in
the world as defined in policy form.
Cargo Policy
o Covers worldwide shipments against "All Risks" of direct
physical loss, subject to policy terms, conditions and
exclusions.
Aircraft Products Liability
o Covers legal liability for Bodily Injury or Property Damage
resulting from aviation products.
Executive Protection Policy
o Crime - covers losses due to fraudulent or dishonest acts
committed by an employee whether acting alone or in collusion
with others.
o Fiduciary Liability - covers legal liability for damages
(including defense) as a result of any wrongful act or alleged
breach of fiduciary duty, committed by an insured trustee of
the health and welfare plans, as defined by the ERISA Act of
1974.
o Special Contingency - responds in the event of:
- Xxxxxx demand or payment for actual or alleged kidnapping
- Extortion threat to bodily harm, to wrongfully abduct,or
detain any employee
- Extortion threat made specifically to (1) damage, destroy
or contaminate the Insured's property; (2) disseminate,
divulge or utilize proprietary information; (3) computer
virus.
The following coverage will be obtained on behalf of OpticNet directly by
OpticNet:
Directors & Officers Liability - covers OpticNet's directors and officers for
legal liability arising from alleged wrongful acts in their capacity as
directors and officers.
2.
SCHEDULE C
EMPLOYEE WELFARE BENEFIT PLANS
Employee Welfare Benefit Plans of Technologies pursuant to which
benefits shall be provided to eligible employees of OpticNet (which eligibility
shall be subject to the terms of the applicable Employee Welfare Benefit Plan
and also such conditions for participation by employees as may be set by the
Board of Directors of OpticNet):
o BEI Technologies, Inc. 401(K) Plan
o The Group Life Insurance, Medical and Dental Plan for
Employees of BEI Technologies, Inc.
o The Basic Group Life, Supplemental Group Life and Dependent
Group Life Insurance Plan for Employees of BEI Technologies,
Inc.
o The Short Term Disability and Long Term Disability Plan for
Employees of BEI Technologies, Inc.
o The Travel Accident Plan for Employees of BEI Technologies,
Inc.
o BEI Technologies, Inc. Cafeteria Plan (Premium Conversion)
o BEI Technologies, Inc. Accidental Death and Dismemberment Plan
o BEI Technologies, Inc. Severance Plan
o Any Employee Welfare Benefit Plans subject to Provisions of
the Employee Retirement Income Securities Act of 1974
sponsored, maintained or administered by BEI Technologies,
Inc. and its Subsidiaries as they now exist or may hereafter
be constituted, acquired or formed
SCHEDULE 3.3(B)
DOCUMENT RETENTION POLICY
I. GENERAL GUIDELINES AFFECTING DOCUMENT RETENTION.
Generally, the document retention policy is shaped by the following
requirements and issues:
A. LEGAL REQUIREMENTS. The comprehensive document retention policy must
conform to legal requirements that affect the businesses.
B. INDUSTRY PRACTICE. Standards and customs in the industries in which
the companies do business will often determine record retention policies. These
standards and customs, coupled with accrued experience within the companies,
often provide a basis for decisions made concerning the relative utility of
competing policies.
C. INDIVIDUAL REQUIREMENTS. Need for access and retrieval of documents
also determines the parameters of the document retention policy.
II. PARTICULAR CATEGORIES OF DOCUMENTS AND THEIR RETENTION.
Several categories of documents that bear special consideration are
identified below. While minimum retention periods are suggested, the retention
of the documents identified below and of documents not included in the
identified categories should be determined primarily by the application of the
general guidelines affecting document retention identified above, as well as any
other pertinent factors known to the respective company.
A. TAX RECORDS. Tax records include, but may not be limited to,
documents concerning payroll, expenses, proof of deductions, business costs,
accounting procedures, and other documents concerning each company's revenues.
Tax records should be retained for at least six years from the date of filing
the applicable return.
B. EMPLOYMENT RECORDS/PERSONNEL RECORDS. State and federal statutes
require the companies to keep certain recruitment, employment and personnel
information. The companies should also keep personnel files that reflect
performance reviews and any complaints brought against the company or individual
employees under applicable state and federal statutes. The companies should also
keep all final memoranda and correspondence reflecting performance reviews and
actions taken by or against personnel in the employee's personnel file.
Employment Records/Personnel Records should be retained for six years.
C. BOARD MATERIALS. Meeting minutes should be retained in perpetuity in
the companies' respective minute books. A clean copy of all Board materials
should be kept for no less than three years by each company.
D. PRESS RELEASES/PUBLIC FILINGS. The companies should retain permanent
copies of all press releases and publicly filed documents under the theory that
each company
1.
should have its own copy to test the accuracy of any document a member of the
public can theoretically produce against that company.
With regard to Registration Statement materials or any periodic reports
filed with the SEC or any government agency, a copy of the materials actually
filed or publicly disseminated should be kept in a permanent file by the
company.
E. LEGAL FILES. Counsel should be consulted to determine the retention
period of particular documents.
F. MARKETING AND SALES DOCUMENTS. Each company should keep final copies
of marketing and sales documents for the same period of time it keeps other
corporate files --generally three years.
An exception to the three-year policy may be sales invoices, contracts,
leases, licenses and other legal documentation. These documents should be kept
for at least three (3) years beyond the life of the agreement.
G. DEVELOPMENT/INTELLECTUAL PROPERTY AND TRADE SECRETS. Development
documents are often subject to intellectual property protection in their final
form (e.g., patents and copyrights). The documents detailing the development
process are often also of value to a company and are protected as a trade secret
where the company:
(a) derives independent economic value from the secrecy of the
information; and
(b) the company has taken affirmative steps to keep the
information confidential.
Each company should keep all documents designated as containing trade
secret information for at least the life of the trade secret.
H. CONTRACTS. Final, execution copies of all contracts entered into by
a company should be kept by that company. Each company should retain copies of
the final contracts for at least three (3) years beyond the life of the
agreement, and longer in the case of publicly filed contracts.
I. ELECTRONIC MAIL. Email that needs to be saved should be either:
(a) printed in hard copy and kept in the appropriate file; or
(b) downloaded to a computer file and kept electronically or
on disk as a separate file.
The retention period depends upon the subject matter of the email, as
covered elsewhere in this policy.
2.
EXHIBIT A
INTERCOMPANY SERVICES AGREEMENT
EXHIBIT B
LICENSE AND TECHNICAL ASSISTANCE AGREEMENT
