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COMPANY AFFILIATE AGREEMENT
THIS COMPANY AFFILIATE AGREEMENT (this "AGREEMENT") is made and entered into
as of December , 2000, between Polycom, Inc., a Delaware corporation
("PARENT"), and the undersigned holder of ordinary shares of Accord
Networks Ltd., an Israeli corporation ("COMPANY"), who may be deemed an
affiliate ("AFFILIATE") of Company. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Reorganization
Agreement (as defined below).
RECITALS
A. The Company, Merger Sub (as defined below) and Parent are entering into
an Agreement and Plan of Merger and Reorganization of even date herewith (the
"REORGANIZATION AGREEMENT") which provides for the merger (the "MERGER") of
Merger Sub Ltd., a wholly-owned subsidiary of Parent ("MERGER SUB"), with and
into the Company. Pursuant to the Merger, all issued and outstanding capital
stock of the Company (the "COMPANY CAPITAL STOCK") as of the Effective Time will
be converted into Common Stock of Parent as set forth in the Reorganization
Agreement;
B. The execution and delivery of this Agreement by Affiliate is a material
inducement to Parent to enter into the Reorganization Agreement; and
C. Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of Company as the term "affiliate" is used (i) for purposes of
Rule 144 of the Rules and Regulations (the "RULES AND REGULATIONS") of the
United States Securities and Exchange Commission (the "COMMISSION") and (ii) in
Accounting Series Releases 130 and 135, as amended, although nothing contained
herein shall be construed as an admission by Affiliate that Affiliate is in fact
an "affiliate" of Company.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree as
follows:
1. ACKNOWLEDGMENTS BY AFFILIATE. Affiliate acknowledges and understands
that the representations, warranties and covenants by Affiliate set forth herein
will be relied upon by Parent, the Company and their respective affiliates,
counsel and accounting firms for purposes of determining Parent's eligibility to
account for the Merger as a "pooling of interests." Affiliate has carefully read
this Agreement and the Reorganization Agreement and has had the opportunity to
discuss the requirements of this Agreement with Affiliate's professional
advisors, who Affiliate believes are qualified to advise Affiliate with regard
to such matters. Affiliate fully understands the limitations this Affiliate
Agreement places upon Affiliates ability to hold, sell, transfer or otherwise
dispose of the securities of the Company and the securities of Parent.
2. BENEFICIAL OWNERSHIP OF COMPANY CAPITAL STOCK. Except for ordinary
shares of Company, options to purchase ordinary shares of Company, and warrants
to purchase ordinary shares of Company set forth on the signature page hereto
(the "SHARES"), Affiliate does not beneficially own any equity securities of
Company or any option, warrant or other right to acquire equity securities of
Company. Affiliate has not engaged in any sale or other transfer of the Shares
in contemplation of the Merger. All shares of Company Capital Stock and common
stock of Parent ("PARENT COMMON STOCK") acquired by Affiliate subsequent to the
date hereof (including shares of Parent Common Stock acquired in the Merger)
shall be subject to the provisions of this Agreement, to the extent such
provisions are then still applicable, as if held by Affiliate as of the date
hereof.
3. COVENANTS RELATED TO POOLING OF INTERESTS. In accordance with Staff
Accounting Bulletin No. 65, during the period from the date 30 days prior to the
Effective Time until the day Parent publicly announces financial results
covering at least 30 days of combined operations of Parent and the Company (the
"RESTRICTED PERIOD"), Affiliate shall not sell, exchange, transfer, pledge,
distribute, make any gift or otherwise dispose of or grant any option, establish
any "short" or put-equivalent position with respect to or enter into any similar
transaction (through derivatives or otherwise) intended or having the effect,
directly or indirectly, to reduce Affiliate's risk relative to any shares of
Parent Common Stock or Company Capital Stock (including the Shares). Parent may,
at its discretion, place a stop transfer notice consistent with the foregoing,
with respect to Affiliate's shares of Parent Common
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Stock provided that such notice shall be countermanded as soon as practicable
upon expiration of the necessity therefor.
4. COMPLIANCE WITH RULE 145 AND THE SECURITIES ACT.
(a) Affiliate has been advised that (i) the issuance of shares of Parent
Common Stock in connection with the Merger is expected to be effected pursuant
to a registration statement on Form S-4 promulgated under the Securities Act of
1933, as amended (the "SECURITIES ACT"), and the resale of such shares shall be
subject to restrictions set forth in Rule 145 under the Securities Act, and
(ii) Affiliate may be deemed to be an affiliate of the Company. Affiliate
accordingly agrees not to sell, transfer or otherwise dispose of any Parent
Common Stock issued to Affiliate in the Merger unless (i) such sale, transfer or
other disposition is made in conformity with the requirements of Rule 145(d)
promulgated under the Securities Act, (ii) such sale, transfer or other
disposition is made pursuant to an effective registration statement under the
Securities Act or an appropriate exemption from registration, (iii) Affiliate
delivers to Parent a written opinion of counsel, reasonably acceptable to Parent
in form and substance, that such sale, transfer or other disposition is
otherwise exempt from registration under the Securities Act or (iv) an
authorized representative of the Commission shall have rendered written advice
to Affiliate to the effect that the Commission would take no action, or that the
staff of the Commission would not recommend that the Commission take any action,
with respect to the proposed disposition if consummated (the "NO ACTION
CORRESPONDENCE").
(b) Parent shall give stop transfer instructions to its transfer agent
with respect to any Parent Common Stock received by Affiliate in the Merger and
there shall be placed on the certificates representing such Parent Common Stock,
or any substitutions therefor issued prior to the end of the Restricted Period,
a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY
WITH RULE 145(d), OR (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (C) IN ACCORDANCE WITH
A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN
FORM AND SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend) and Parent shall instruct its transfer agent to
remove such legend, if Affiliate delivers to Parent (i) satisfactory written
evidence that the shares have been sold in compliance with Rule 145 (in which
case, the substitute certificate shall be issued in the name of the transferee),
(ii) the No Action Correspondence, (iii) an opinion of counsel, in form and
substance reasonably satisfactory to Parent, to the effect that public sale of
the shares by the holder thereof is no longer subject to Rule 145, or (iv) a
written request for removal of such legend after the first anniversary of the
Effective Time.
5. TERMINATION. This Agreement shall be terminated and shall be of no
further force and effect in the event of the termination of the Reorganization
Agreement pursuant to Article VII thereof.
6. MISCELLANEOUS.
(b) WAIVER; SEVERABILITY. No waiver by any party hereto of any condition
or of any breach of any provision of this Agreement shall be effective unless in
writing and signed by each party hereto. In the event that any provision of this
Agreement, or the application of any such provision to any person, entity or set
of circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to persons, entities or circumstances other than
those as to which it is determined to be invalid, unlawful, void or
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unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
(b) BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other party hereto.
(c) AMENDMENTS AND MODIFICATION. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) INJUNCTIVE RELIEF. Each of the parties acknowledge that (i) the
covenants and the restrictions contained in this Agreement are necessary,
fundamental, and required for the protection of Parent and the Company and to
preserve for Parent the benefits of the Merger; (ii) such covenants relate to
matters which are of a special, unique, and extraordinary character that gives
each of such covenants a special, unique, and extraordinary value; and (iii) a
breach of any such covenants or any other provision of this Agreement shall
result in irreparable harm and damages to Parent and the Company which cannot be
adequately compensated by a monetary award. Accordingly, it is expressly agreed
that in addition to all other remedies available at law or in equity, Parent and
the Company shall be entitled to the immediate remedy of a temporary restraining
order, preliminary injunction, or such other form of injunctive or equitable
relief as may be used by any court of competent jurisdiction to restrain or
enjoin any of the parties hereto from breaching any such covenant or provision
or to specifically enforce the provisions hereof.
(e) GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Delaware.
(f) ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
of Affiliate and Parent relating to the subject matter hereof and supersedes all
prior agreements and understandings between Affiliate and Parent relating to the
subject matter hereof.
(g) FURTHER ASSURANCES. Affiliate shall execute and/or cause to be
delivered to Parent such instruments and other documents and shall take such
other actions as Parent may reasonably request to effectuate the intent and
purposes of this Agreement.
(h) THIRD PARTY RELIANCE. Counsel to and independent auditors for Parent
and the Company shall be entitled to rely upon this Affiliate Agreement.
(i) SURVIVAL. The representations, warranties, covenants and other
provisions contained in this Agreement shall survive the Merger.
(j) NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered
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or certified mail (return receipt requested), postage prepaid, to the parties at
the following address (or at such other address for a party as shall be
specified by like notice):
If to Parent:
Polycom, Inc.
1565 Barber Lane
Milpitas, CA 95035
Attention: Michael R. Kourey
Telephone No.: (408) 526-9000
Telecopy No.: (408) 526 9100
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Mark A. Bertelsen, Esq.
Telephone No.: (650) 493-9300
Telecopy No.: (650) 493-6811
and to:
Yigal Arnon & Co.
22 Rivlin Street
Jerusalem 91000, Israel
Attention: Barry P. Levenfeld, Esq.
Telecopy No.: (972-2) 623-9236
If to Affiliate:
To the address for notice set forth on the signature page hereof.
(k) COUNTERPARTS. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Affiliate Agreement to be
duly executed on the day and year first above written.
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<S> <C>
POLYCOM, INC. AFFILIATE
By: --------------------------------------- By: ---------------------------------------
Name: ------------------------------------- Affiliate's Address for Notice:
Title: -----------------------------------
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Shares beneficially owned:
------------ Ordinary Shares
------------ Ordinary Shares issuable upon
exercise of outstanding options
------------ Ordinary Shares issuable upon
exercise of outstanding warrants
------------ shares of Parent Common Stock
</TABLE>
[SIGNATURE PAGE TO COMPANY AFFILIATE AGREEMENT]
