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Exhibit 2.1
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AMENDED AND RESTATED TRANSFORMATION AGREEMENT
This Amended and Restated Transformation Agreement (this "Agreement") is
entered into as of June 3, 2000 (the "Effective Date") by and among Cabletron
Systems, Inc., a Delaware corporation ("CSI"), Aprisma Management Technologies,
Inc., a Delaware corporation ("Aprisma"), Enterasys Networks, Inc., a Delaware
corporation ("Enterasys"), GlobalNetwork Technology Services, Inc., a Delaware
corporation ("GNTS") and Riverstone Networks, Inc., a Delaware corporation
("Riverstone" and collectively with Aprisma, Enterasys and GNTS, the "Newcos").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in Section 8 hereof.
RECITALS
WHEREAS, CSI currently owns all of the issued and outstanding capital stock
of each Newco;
WHEREAS, it is currently contemplated that (i) Compaq Computer Corporation
will invest $14 million in preferred stock of Aprisma and (ii) Silver Lake
Partners, L.P. and other investors will invest in certain purchase rights and
warrants with respect to the equity securities of the Newcos;
WHEREAS, subject to the approval of the stockholders of CSI, the parties
have each determined that it would be appropriate and desirable, in accordance
with the Contribution Agreements, for CSI to contribute and transfer to each
Newco, and for such Newco, to receive and assume, directly or indirectly,
certain assets and liabilities currently held by CSI and its affiliates and
associated with the Aprisma Business in the case of Aprisma, the GNTS Business
in the case of the GNTS, the Riverstone Business in the case of Riverstone and
the Enterasys Business in the case of Enterasys and to consummate the other
transactions contemplated hereby (the "Transformation");
WHEREAS, the Board of Directors of CSI has determined that the
Transformation will provide flexibility to better develop and implement other
strategic transactions designed to maximize the long-term competitive and
strategic advantages of CSI's products and services by separating the operations
associated with the Aprisma Business, the Enterasys Business, the GNTS Business
and the Riverstone Business;
WHEREAS, CSI has announced that it currently plans to conduct an initial
public offering ("IPO") for each of the Newcos followed by a distribution (a
"Distribution") of the remaining shares of one or more of the Newcos to CSI's
stockholders, although CSI is not obligated to complete any such transactions
and will only implement any such transactions if the Board of Directors of CSI
continues to believe that it is in the best interests of CSI, CSI's stockholders
and the Newcos; and
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WHEREAS, the parties intend in this Agreement, including the Exhibits
hereto, to set forth the principal arrangements between them regarding the
Transformation; and
WHEREAS, the parties desire to amend and restate this and certain Ancillary
Agreements as of the Effective Date to correct certain mutual mistakes of the
parties and to clarify their rights and obligations under this Agreement and the
Ancillary Agreements.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
1. DOCUMENTS AND ITEMS TO BE DELIVERED ON THE EFFECTIVE DATE
On the Effective Date, concurrent with the execution and delivery hereof, each
of the parties will duly execute and deliver to each other party which is a
party thereto all of the following items and agreements to which it is a party
(collectively, together with all agreements and documents contemplated by such
agreements, the "Ancillary Agreements"):
1.1. An Amended and Restated Asset Contribution Agreement between CSI
and Aprisma (the "Aprisma Contribution Agreement") substantially
in the form of Exhibit A-1;
1.2. An Amended and Restated Asset Contribution Agreement between CSI
and Enterasys (the "Enterasys Contribution Agreement")
substantially in the form of Exhibit A-2;
1.3. An Amended and Restated Asset Contribution Agreement between CSI
and GNTS (the "GNTS Contribution Agreement") substantially in the
form of Exhibit A-3;
1.4. An Amended and Restated Asset Contribution Agreement between CSI
and Riverstone (the "Riverstone Contribution Agreement" and
collectively with the agreements referenced in Sections 1.1 to 1.3
above, the "Contribution Agreements") substantially in the form of
Exhibit A-4;
1.5. An Intercompany Agreement between Aprisma and Enterasys (the "A-E
Intercompany Agreement") substantially in the form of Exhibit B-1
attached hereto;
1.6. An Intercompany Agreement between Aprisma and GNTS (the "A-G
Intercompany Agreement") substantially in the form of Exhibit B-2
attached hereto;
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1.7. An Intercompany Agreement between Aprisma and Riverstone (the "A-R
Intercompany Agreement") substantially in the form of Exhibit B-3
attached hereto;
1.8. An Intercompany Agreement between Enterasys and GNTS (the "E-G
Intercompany Agreement") substantially in the form of Exhibit B-4
attached hereto;
1.9. An Intercompany Agreement between Enterasys and Riverstone (the
"E-R Intercompany Agreement") substantially in the form of Exhibit
B-5 attached hereto;
1.10. An Intercompany Agreement between GNTS and Riverstone (the "G-R
Intercompany Agreement") substantially in the form of Exhibit B-6
attached hereto;
1.11. A Tax Sharing Agreement among CSI and all Newcos (the "Tax Sharing
Agreement") substantially in the form of Exhibit C; and
1.12. A Flextronics Assignment and Assumption Agreement (the
"Manufactured Products Agreement") between CSI and Enterasys
substantially in the form of Exhibit D hereto.
2. TRANSFORMATION
2.1. Effective Date. The parties acknowledge and agree that the Newcos,
either as separate entities or through their predecessor divisions
of CSI, will conduct business in accordance with the terms and
conditions hereof and of the Ancillary Agreements from and after
the Effective Date.
2.2. Transformation Date. Subject to the approval of the Transformation
by the stockholders of CSI and the other conditions set forth in
Section 7 hereof and in the Ancillary Agreements, the effective
time and date of the Transformation and the consummation of the
transactions contemplated hereby and by the Ancillary Agreements
shall be 11:59 p.m., Boston Time, July 29, 2000 or such other date
as may be fixed by CSI (the "Transformation Date"). To the extent
that any Contribution Agreement provides for the transfer of assets
or liabilities held by a Subsidiary of CSI, the capital stock of
which is to be transferred to a Newco other than that Newco to
which such assets or liabilities are to be transferred, the
transfer of such assets and liabilities shall occur immediately
prior to the transfer of the capital stock of such Subsidiary.
2.3. Closing of Transactions. The closing of the transactions
contemplated hereby and by the Ancillary Agreements (the "Closing")
shall occur on the Transformation Date at the offices of Ropes &
Gray, One International
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Place, Boston, Massachusetts 02110, by the execution and delivery
of the instruments of transfer, assumptions of liability,
undertakings, agreements, instruments or other documents to be
delivered on the Transformation Date pursuant to this Agreement and
the Ancillary Agreements.
3. POST-TRANSFORMATION TRANSACTIONS INVOLVING THE NEWCOS
3.1. Discretion of CSI. No Newco shall commence or consummate an IPO
without the approval of CSI and all terms, including the timing of,
an IPO shall be subject to CSI's approval. CSI shall, in its sole
and absolute discretion, determine whether to consummate a
Distribution with respect to any Newco and the terms and conditions
of any such Distribution. The parties acknowledge that (i) CSI is
not obligated to complete any such IPO or Distribution and will
only implement any such transaction if the Board of Directors of
CSI continues to believe that it is in the best interest of CSI,
CSI's stockholders and the Newcos and (ii) CSI may pursue other
strategic alternatives in lieu of an IPO and/or Distribution with
respect to any Newco.
3.2. IRS Ruling. The parties acknowledge that CSI currently plans to
seek a private letter ruling from the Internal Revenue Service to
the effect that (i) Section 355 of the Code will apply to a
Distribution of Newco stock by CSI to CSI's stockholders; and (ii)
no gain or loss will be recognized by (and no amounts will be
included in the income of) the stockholders of CSI upon their
receipt of Newco stock pursuant to the Distribution.
3.3. Cooperation. If requested by CSI, each Newco shall cooperate with
CSI in all respects to accomplish an IPO and Distribution with
respect to such Newco and shall, at CSI's direction, promptly take
any and all actions necessary or desirable to effect such IPO or
Distribution, including, without limitation: filing a registration
statement with respect to the IPO under the Securities Act,
including any amendments thereto as may be required; making any
filings under the Exchange Act; entering into an underwriting
agreement with respect to the IPO; preparing an information
statement with respect to the Distribution; filing any documents
with the Commission as may be required with respect to an IPO or
Distribution; listing the stock of such Newco on the Nasdaq
National Market or a stock exchange selected by CSI; and obtaining,
and complying with the terms of, any private letter ruling from the
Internal Revenue Service as described in Section 3.2 above. CSI
shall select any underwriter(s), investment banker(s) and
manager(s) in connection with an IPO and Distribution, as well as
any financial printer, solicitation and/or exchange agent and
outside legal counsel for CSI and each Newco in connection with an
IPO and a Distribution.
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4. CERTAIN COVENANTS AND OTHER MATTERS
4.1. Other Agreements.
4.1.1. Instruments and Agreements. The parties agree to execute or cause
to be executed by the appropriate parties and deliver, as
appropriate at the Closing, such other agreements, instruments
and other documents as may be necessary or desirable in order to
effect the purposes of this Agreement and the Ancillary
Agreements, including without limitation as contemplated by this
Section 4.1 below.
4.1.2. Retained Third Party Tools. The parties acknowledge that pursuant
to the terms of the Contribution Agreements, rights with respect
to certain Third Party Tools (as such term is defined in the
Contribution Agreements), including without limitation those
Third Party Tools set forth on Schedule 3.4 to each Contribution
Agreement, will be retained by CSI and not be contributed to any
one Newco pursuant to a Contribution Agreement (the "Retained
Third Party Tool Rights"). CSI acknowledges that certain of the
Retained Third Party Tool Rights may be necessary or useful for
the performance of the business of certain Newcos and to such
extent agrees to hold such Retained Third Party Tool Rights for
the use and benefit, insofar as reasonably possible and not in
violation of their terms, of such Newcos (at the expense of such
Newcos) and shall take such other actions as may be reasonably
required in order to place such Newcos, insofar as reasonably
possible and not in violation of such Retained Third Party Tool
Rights, in the same position as if such Retained Third Party Tool
Rights had been transferred to such Newcos under the relevant
Contribution Agreements. The parties acknowledge and agree that
this Section 4.1.2 is not intended to extend the use of any
Retained Third Party Tool Rights beyond their current and
historical use by CSI and its businesses, but rather to enable
the continued use of such Retained Third Party Tools consistent
with their current and historical use by CSI and its businesses.
4.1.3. Intentionally Omitted.
4.1.4. Shared Services Agreements. At the Closing and at the direction
of CSI, each of the Newcos will enter into a Shared Services
Agreement (collectively the "Shared Services Agreements") with
respect to certain corporate, human resource, information
technology, accounting, and other services that have been
provided
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by CSI to the Newcos or their predecessor divisions of CSI since
March 1, 2000, and that will continue to be provided by CSI to
the Newcos on an interim basis, after the Transformation Date.
Each Shared Services Agreement will provide for service charges
for such services. Each Shared Services Agreement will also
permit CSI to engage subcontractors, including the Newcos, to
perform all or any portion of the services described therein. The
applicable Newco or Newcos will enter into agreements with CSI
with respect to the provision of certain of such services by such
Newco(s). The Shared Services Agreements, subject to certain
limitations, will also allow CSI and the Newcos to adjust from
time to time the nature and level of services to be provided
thereunder.
4.2. Agreement for Exchange of Information.
4.2.1. General. CSI shall provide to each Newco, and each Newco shall
provide to CSI at any time before a Distribution with respect to
such Newco, any Information in the possession or under the
control of such party that the requesting party reasonably needs
(i) to comply with reporting, disclosure, filing or other
requirements imposed on the requesting party (including under
applicable securities laws) by a Governmental Authority having
jurisdiction over the requesting party, (ii) for use in preparing
its financial statements; (iii) for use in any other judicial,
regulatory, administrative or other proceeding or in order to
satisfy audit, accounting, claims, regulatory, litigation or
other similar requirements, (iv) to comply with its obligations
under this Agreement or any Ancillary Agreement or (v) in
connection with its respective ongoing business; provided,
however, that in the event that any party determines that any
such provision of Information could be commercially detrimental,
violate any law or agreement, or waive any attorney-client
privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that
avoids any such harm or consequence.
4.2.2. Continued Cooperation after a Distribution. After a Distribution
with respect to a Newco (except in the case of a legal or other
proceeding by one party against another party which shall be
governed by such discovery rules as may be applicable under
Section 4.10 or otherwise), CSI and such Newco shall use its
reasonable commercial efforts to make available to each other
party, upon written request, the former, current and future
directors, officers, employees, other personnel and agents of
such party as witnesses and any books, records or other documents
within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving
consideration
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to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may
reasonably be required in connection with any legal,
administrative or other proceeding in which the requesting party
may from time to time be involved, regardless of whether such
legal, administrative or other proceeding is a matter with
respect to which indemnification may be sought hereunder. The
requesting party shall bear all costs and expenses in connection
therewith except as to those proceedings as to which the
requesting party is entitled to indemnity from the other party.
4.2.3. Ownership of Information. Any Information owned by a party that
is provided to a requesting party pursuant to this Section 4.2
shall be deemed to remain the property of the providing party.
Unless specifically set forth herein or in the Ancillary
Agreements or in an instrument delivered pursuant hereto or
thereto, nothing contained in this Agreement shall be construed
as granting or conferring rights of license or otherwise in any
such Information.
4.2.4. Record Retention. To facilitate the possible exchange of
Information pursuant to this Section 4.2 and other provisions of
this Agreement and the Ancillary Agreements, each party agrees to
use its reasonable commercial efforts to retain all Information
in its respective possession or control that might be reasonably
required by another party.
4.2.5. Limitation of Liability. No party shall have any liability to any
other party in the event that any Information exchanged or
provided pursuant to this Section 4.2 is found to be inaccurate.
No party shall have any liability to any other party if any
Information is destroyed or lost.
4.3. Auditors and Audits. Each Newco agrees that, for so long as CSI is
required in accordance with United States generally accepted accounting
principles to consolidate such Newco's results of operations and
financial position (during such period, such Newco being referred to as
an "Included Newco"):
4.3.1. Selection of Auditors. Such Included Newco shall not select a
different accounting firm from that used by CSI to serve as its
independent certified public accountants (its "auditors") for
purposes of providing an opinion on its consolidated financial
statements without CSI's prior written consent.
4.3.2. Date of Auditors' Opinion and Quarterly Reviews. The parties will
cooperate in establishing a timetable for the preparation of
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audited financial statements and the clearance of quarterly
financial statements. Each Included Newco shall use its best
efforts to enable its auditors to complete their audit such that
they will date their opinion on such Included Newco's audited
annual financial statements on the same date that CSI's auditors
date their opinion on CSI's audited annual financial statements,
and to enable CSI to meet its timetable for the printing, filing
and public dissemination of CSI's annual financial statements.
Each Included Newco shall use its best efforts to enable its
auditors to complete their quarterly review procedures such that
they will provide clearance on such Included Newco's quarterly
financial statements on the same date that CSI's auditors provide
clearance on CSI's quarterly financial statements.
4.3.3. Annual and Quarterly Financial Statements. Each Included Newco
shall provide to CSI and the other Included Newcos on a timely
basis all Information it holds that CSI or another Included
Newco, as applicable, reasonably requires to meet its schedule
for the preparation, printing, filing, and public dissemination
of its annual and quarterly financial statements. CSI shall
provide to each Included Newco on a timely basis all financial
Information it holds that such Included Newco reasonably requires
to meet its schedule for the preparation, printing, filing, and
public dissemination of its annual and quarterly financial
statements. CSI and each Included Newco shall instruct its
auditors and financial personnel to provide such assistance as is
required to assist in the preparation of CSI's or such Included
Newco's or another Included Newco's, as the case may be, annual
and quarterly statements.
4.3.4. Conflict with Third-Party Agreements. Nothing in Sections 4.2 and
4.3 shall require any party to violate any agreement with any
third party regarding the confidentiality of confidential and
proprietary information relating to that third party or its
business; provided, however, that in the event that a party is
required under Sections 4.2 and 4.3 to disclose any such
Information, it shall use all commercially reasonable efforts,
but without payment of additional amounts and without other
concessions, to seek to obtain such third party's consent to the
disclosure of such information.
4.4. Confidentiality. Each of the parties and its affiliates shall hold as
confidential and shall not, except with the express prior written
consent of the party which owns such confidential information (in the
case of confidential information existing prior to the Transformation
Date, the ownership of which shall be determined pursuant to the
Contribution Agreements and the other Ancillary Agreements) directly or
indirectly
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disclose, communicate or divulge to any Person, or use for the benefit
of any Person, any information or data with respect to the conduct or
details of the business of any other party hereto held as confidential
information by such party whether obtained pursuant to Section 4.2
hereof or otherwise, including, without limitation, methods of
operation, customers and customer lists, details of contracts with
customers, consultants, suppliers or employees, products, proposed
products, former products, proposed, pending or completed acquisitions
of any company, division, product line or other business unit, prices
and pricing policies, fees, costs, plans, designs, technology,
inventions, trade secrets, know-how, software, marketing methods,
policies, plans, personnel, or other proprietary matters (collectively,
"Confidential Information"). The restriction contained in the preceding
sentence shall not apply to any Confidential Information to the extent
that (i) such information is publicly available, (ii) such information
is or hereafter becomes lawfully obtainable from other sources without
breach hereof, (iii) the disclosure is made to a Governmental Authority
where it is necessary or appropriate to disclose such information to
such Governmental Authority having jurisdiction over the parties, or
(iv) disclosure is otherwise required by any legal requirement;
provided, however that in the cases set forth in clauses (iii) and (iv)
above, the disclosing party shall provide prior notice to the owner of
the Confidential Information and take reasonable steps to assist such
owner in contesting the requirement for the disclosure thereof. The
parties acknowledge that treatment of confidential information exchanged
pursuant to the Intercompany Agreements shall be governed by the
provisions of such agreements and not this Section 4.4.
4.5. Employee Confidentiality Agreements. Any agreement or instrument
relating to confidentiality, non-disclosure or non-competition
obligations of a former employee of CSI and its affiliates who has been,
or a current employee of CSI who will be, transferred to a Newco in
connection with the Transformation (a "CSI Confidentiality Agreement")
shall remain in full force and effect according to its terms; provided,
however, that none of the following acts committed by former CSI
employees within the scope of their employment with a particular Newco
shall constitute a breach of such CSI Confidentiality Agreements: (i)
the use or disclosure of confidential information of CSI for or on
behalf of such Newco, if such disclosure is consistent with the rights
granted to such Newco and restrictions imposed on such Newco under this
Agreement, any Ancillary Agreement or any other agreement between the
parties; (ii) the rendering of any services, directly or indirectly, to
such Newco to the extent such services are consistent with the rights
granted to such Newco and the restrictions imposed on such Newco under
this Agreement, any Ancillary Agreement or any other agreement between
the parties. CSI hereby retains all of its rights under the CSI
Confidentiality Agreements (except as provided in the immediately
preceding sentence), but hereby transfers
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and assigns to each Newco a portion of its rights under the CSI
Confidentiality Agreements of all former CSI employees employed by such
Newco to the extent required to permit such Newco to enjoin, restrain,
recover damages from or obtain specific performance of the CSI
Confidentiality Agreements or obtain other remedies against any Newco
employee who breaches his or her CSI Confidentiality Agreement. CSI and
the relevant Newco may separately enforce the CSI Confidentiality
Agreements of former CSI employees employed by such Newco, in the case
of such Newco, to the extent necessary to reasonably protect its
interests; provided, however, that such Newco shall not commence any
legal action relating thereto without CSI's written consent. In
addition, each Newco shall use reasonable commercial efforts to cause
each of its employees to execute a new confidentiality agreement which
protects the confidential information of such Newco (each a "Newco
Confidentiality Agreement"). CSI and each Newco agree to cooperate as
follows: (A) each Newco shall advise CSI of any violation(s) of the CSI
Confidentiality Agreements by former CSI employees and cooperate with
CSI in enforcing the CSI Confidentiality Agreements; (B) CSI shall use
reasonable commercial efforts to enforce its rights under the CSI
Confidentiality Agreements and (C) each Newco shall use reasonable
commercial efforts to enforce its rights under the Newco Confidentiality
Agreements.
4.6. CSI Guidelines, etc. Each Newco acknowledges that until a Distribution
with respect to such Newco, (i) such Newco will be subject to general
CSI oversight and will follow CSI's corporate guidelines as from time to
time in effect. Without limiting the foregoing, without prior CSI
written approval (which written approval may be evidenced by (i) the
affirmative vote of the chief executive officer of CSI in connection
with a vote of the Board of Directors of such Newco if he is a member of
such Board or (ii) if the chief executive officer of CSI is not a member
of such Board, by the affirmative vote of all officers of CSI sitting on
such Board in connection with a vote of such Board), no Newco shall:
(i) amend (A) its By-laws, (B) its 2000 Option Plan (including
any increase in the shares available for issuance under
such plan), or (C) any awards issued under its 2000 Option
Plan;
(ii) issue any equity securities or other securities other than
options under its 2000 Option Plan;
(iii) grant any stock options or other rights to purchase any
equity securities or other securities of such Newco in
excess of the options reserved under its 2000 Option Plan;
(iv) grant any rights to serve on its Board of Directors; or
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(v) make any significant changes in its accounting or financial
reporting policies.
4.7. Intercompany Agreements. The parties acknowledge and agree that the
Newcos, either as separate entities or through their predecessor
divisions of CSI, have conducted business in accordance with the terms
and conditions reflected in the Intercompany Agreements from March 1,
2000 through the date hereof and shall continue to do so through the
Transformation.
4.8. Rainbow Awards. In the event of a Distribution by CSI of shares of
stock of a Newco (the "Distributed Newco"), the Distributed Newco shall
cause there to be issued, to each "eligible individual" (as hereinafter
defined) who at the close of the record date for the Distribution holds
an option to acquire shares of CSI stock that has been granted in
connection with the performance of services other than an option under
CSI's stock purchase program or programs (any such eligible individual
being hereinafter referred to as a "Recipient" and any such option held
by a Recipient at the close of the record date for the Distribution
being hereinafter referred to as an "Eligible CSI Option"), an option
(the "Rainbow Option") to acquire, on the terms hereinafter provided,
shares of stock of the same class as the stock distributed generally in
the Distribution ("Newco Stock"). Subject to adjustment as referenced
below, each Rainbow Option shall be for the number of shares of Newco
Stock that the Recipient would have been entitled to receive in the
Distribution with respect to the shares of CSI stock subject to the
Eligible CSI Option if he or she had owned such shares of CSI stock
outright on the record date of the Distribution. The per-share exercise
price for each Rainbow Option shall be fixed in such manner as CSI in
its sole discretion determines to be appropriate to reflect the
Distribution. CSI, in connection with the Distribution, shall also
reduce the per-share exercise price of each Eligible CSI Option to such
extent, if any, as it deems appropriate to reflect the Distribution. It
is the intention of the parties that the provisions of this Section 4.8
shall be administered insofar as is possible to preserve, with respect
to the Rainbow Option and the Eligible CSI Option immediately after the
Distribution, the same aggregate spread between fair market value of
the shares underlying those options and exercise price and the same
ratio of exercise price to the fair market value of the shares
underlying those options as existed with respect to the Eligible CSI
Option immediately before the record date of the Distribution. The
number of shares subject to the Rainbow Option and CSI options shall be
subject to adjustment as necessary to accomplish this end, as
determined by CSI. For purposes of this Section 4.8, the term "eligible
individual" means, except as CSI may otherwise determine, an individual
who at the time of the Distribution is an employee of CSI or of an
entity that is then a subsidiary of CSI. Each
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Rainbow Option shall be subject to terms substantially similar to those
which apply to other stock options issued by the Distributed Newco,
except that the vested status and exercisability of the Rainbow Option,
and the term and expiration provisions of such option, shall be the
same as the Eligible CSI Option to which it relates. It is the
intention of the parties to more fully document the provisions of this
Section 4.8 on or prior to the Closing, and CSI and each Newco shall
take such measures as are necessary to carry out the provisions of this
Section 4.8, including, without limitation, reserving a sufficient
number of shares and causing the shares to be registered under the
Securities Act and applicable state securities laws, if any.
4.9. Expenses. Except as otherwise provided in this Agreement, the Ancillary
Agreements or any other agreement between the parties relating to the
Transformation, each Newco shall be responsible, to the extent
determined reasonable in CSI's sole discretion, for its own fees, costs
and expenses incurred in connection with the Transformation, any IPO
and any Distribution and shall bear its proportionate share of such
fees, costs and expenses incurred by CSI.
4.10. Dispute Resolution.
4.10.1. If a dispute, controversy or claim ("Dispute") arises between
or among two or more parties relating to the interpretation or
performance of this Agreement or the Ancillary Agreements or
otherwise relating to the Transformation, other than a dispute
under any Intercompany Agreement or supplements thereto or the
Tax Sharing Agreement which shall be resolved in the manner set
forth in the relevant agreement, the appropriate senior
executives of each party who shall have the authority to
resolve the matter shall meet within fifteen (15) days from the
date the Dispute arises to attempt in good faith to negotiate a
resolution of the Dispute prior to pursuing other available
remedies. The earlier of fifteen (15) days from the date one
party notifies the other party or parties of the Dispute and
the date of the initial meeting between the appropriate senior
executives shall be referred to herein as the "Dispute
Resolution Commencement Date". Discussions and correspondence
relating to trying to resolve such Dispute shall be treated as
confidential information developed for the purpose of
settlement and shall be exempt from discovery or production and
shall not be admissible. Subject to Section 4.10.2 below, if
the senior executives are unable to resolve the Dispute within
fifteen (15) days from the Dispute Resolution Commencement
Date, and either party wishes to pursue its rights relating to
such Dispute, then, whether or not CSI is involved in the
Dispute, the parties shall submit the Dispute to the chief
executive officer of CSI (or
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such other executive of CSI designated by the chief executive
officer of CSI for this purpose) for resolution. The chief
executive officer (or other designated executive of CSI) shall
resolve such dispute. The decision of the chief executive
officer or other designated executive of CSI shall be final and
binding on the parties hereto.
4.10.2. Notwithstanding the provisions of Section 4.10.1, if the senior
executives of each party are unable to resolve a Dispute within
sixty (60) days from the Dispute Resolution Commencement Date
and at least one party to the Dispute is a Newco which has
consummated an IPO or is no longer a majority-owned Subsidiary
of CSI, and any party wishes to pursue its rights relating to
such Dispute (as evidenced by the approval of the Board of
Directors of such party to pursue arbitration of the Disputee
in accordance with this Section 4.10.2), then the Dispute shall
be resolved as set forth below:
(i) The Dispute shall be submitted to final and binding
arbitration under the then current Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), by
three (3) arbitrators in Boston, Massachusetts. Such
arbitrators shall be selected by the mutual agreement of
the parties or, failing such agreement, shall be selected
according to the aforesaid AAA rules. The arbitrators will
be instructed to prepare and deliver a written, reasoned
opinion stating their decision within thirty (30) days of
the completion of the arbitration. The prevailing party in
such arbitration, as determined by the arbitrator, shall be
entitled to expenses, including costs and reasonable
attorneys' and other professional fees, incurred in
connection with the arbitration (but excluding any costs
and fees associated with prior negotiation or mediation).
The decision of the arbitrator shall be final and non-
appealable and may be enforced in any court of competent
jurisdiction.
(ii) Notwithstanding the foregoing Section 4.10.2(i), any
Dispute involving at least one Newco which has consummated
an IPO or is no longer a majority-owned Subsidiary of CSI
regarding the following is not required to be negotiated or
arbitrated prior to seeking injunctive relief from a court
of competent jurisdiction to prevent serious and
irreparable injury to one of the parties or to others:
breach of any obligation of confidentiality; infringement,
misappropriation, or misuse of any intellectual property
right; or any other claim where interim relief from the
court is sought to prevent serious and irreparable injury
to one of the parties or to others. However, the parties to
the Dispute shall make a good
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faith effort to negotiate such Dispute, according to the
above procedures, while such court action is pending.
4.10.3. The processes set forth in this Section 4.10 shall be the
exclusive processes for the resolution of a Dispute among the
parties.
4.10.4. Unless otherwise agreed in writing, the parties will continue to
honor all other commitments under this Agreement and each
Ancillary Agreement during the course of dispute resolution
pursuant to the provisions of this Section 4.10 with respect to
all matters not subject to such dispute, controversy or claim.
4.11. Non-Solicitation of Employees. Each party (the "Recruiting Party")
agrees not to solicit or recruit the employees of any other party for
a period of (i) two years following the Transformation Date or (ii) if
both the Recruiting Party and the other party are Newcos, for a period
of the longer of (x) two years from the Transformation Date and (y)
until one such party ceases to be a majority owned subsidiary of CSI.
Notwithstanding the foregoing, this prohibition on solicitation and
recruitment does not apply to actions taken by a party as a result of
an employee's affirmative response to a general recruitment effort
carried out through a public solicitation or general solicitation.
4.12. Intentionally Omitted.
4.13. CSI as Stockholder. The parties acknowledge that nothing contained in
this Agreement or in the Ancillary Agreements or in any agreements
contemplated hereby or thereby is intended to interfere, or shall
interfere, with CSI's rights as a stockholder of any Newco.
4.14. Public Announcements. Each Newco agrees not to issue any press release
or make any such public statement with respect to this Agreement or
the transactions contemplated hereby without consulting with, and
obtaining the prior written approval of, CSI.
4.15. Further Assurances. Each party agrees to take such further action and
execute, deliver and/or file such documents or instruments as are
necessary to carry out the terms and purposes of this Agreement.
4.16. Conflicting Agreements. In the event of conflict between this
Agreement and any Ancillary Agreement or other agreement executed in
connection herewith, the provisions of this Agreement shall prevail.
4.17. Independent Directors. CSI agrees that, following the closing of any
IPO of a Newco, for so long as CSI owns a majority of the capital
stock of such Newco, CSI will use reasonable efforts to cause the
board of
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directors of such Newco to contain a number of directors who
qualify as an "independent director" as required by the rules and
regulations of the National Association of Securities Dealers or
applicable stock exchange regulations.
4.18. Retained Product Credits. Each Newco agrees that to the extent any
holder of Retained Product Credits elects to utilize such Retained
Product Credits to purchase products and/or services of such Newco,
such Newco will use reasonable efforts to supply such products
and/or services, and CSI agrees it will reimburse such Newco for the
cash value of the products and/or services provided by the Newco in
respect of Retained Product Credits.
4.19. Covenant Not To Sue. Each Newco covenants that it will not assert or
bring any suit, action, claim or other proceeding against another
Newco based on, in whole or in part, such other Newco's use, in that
Newco's Product Segment (as that term is defined in that Newco's
Contribution Agreement) of those assets contributed to such other
Newco through the Ancillary Agreements.
4.20. Assertion of Patent Rights
4.20.1. Right to Request Permission to Assert Patent Rights. If a Newco
is named as a defendant in any action claiming that any of its
Products or the operation of its Company Business (as those
terms are defined in that Newco's Contribution Agreement)
infringes a patent owned by a third party, that Newco may
request permission from one or more of the other Newcos to
assert against that third party a claim of infringement of one
or more of the such other Newcos' patents that are Contributed
Registered Intellectual Property (as that term is defined in
that Newco's Contribution Agreement). Any such request shall
identify the third party and also include that information
necessary for any such other Newcos to consider whether a basis
for such a claim exists; the likelihood of success of such a
claim; and the risks associated with asserting such a claim.
4.20.2. Assertion of Patent Rights. In response to such a request, the
Newco owning a patent in its sole discretion may grant or not
grant permission to the requesting Newco to assert a claim of
infringement under its patent against the named third party. If
such permission is granted, the Parties may proceed as follows:
4.20.2.1. The Newco owning a patent may institute suit jointly with
the requesting Newco, the suit being brought in
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both their names, the out-of-pocket costs thereof being
borne equally, and any recovery or settlement being shared
equally. Those Newcos shall agree to the manner in which
they will exercise control over such action, with the
Newco owning the patent having ultimate decision authority
as to all matters as to which the Newcos cannot agree. The
Newco not owning the patent may, if it so desires, also be
represented by separate counsel of its own selection, the
fees for which counsel shall be paid by such Newco;
4.20.2.2. The Newco owning the patent may institute suit on its own.
Such Newco shall bear the entire cost of such litigation
and shall be entitled to retain the entire amount of any
recovery or settlement. The other Newco shall have no
right or interest in such action or any recovery or
settlement achieved through it; or
4.20.2.3. The Newco owning a patent may allow the requesting Newco
to institute the suit, naming the Newco owning the patent
as a party. The requesting Newco shall bear the entire
cost of such litigation, including expenses incurred by
the Newco owning the patent. The requesting Newco may not
settle or otherwise compromise any claims under that
patent absent the express written permission of the Newco
owning the patent. Any recovery in excess of litigation
costs will be shared equally by the Newcos. The Newcos
agree to negotiate in good faith an appropriate
compensation to the Newco owning the patent for any non-
cash settlement or non-cash cross-license.
4.20.3. Abandonment of Actions. Should either Newco commence a suit
under the provisions of this Section 4.20 and thereafter elect
to abandon the same, it shall give timely notice to the other
Newco, who may, if it so desires, continue prosecution of such
suit, provided, however, that the sharing of expenses and any
recovery in such suit shall be as agreed upon between Newcos.
4.21. Transaction With Silver Lake Partners, L.P.
4.21.1. Description of Transaction. Reference is made to the Amended and
Restated Securities Purchase Agreement dated as of August 29,
2000 (the "Securities Purchase Agreement") by and among CSI,
Silver Lake Partners, L.P. ("Silver Lake") and certain other
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assigns of Silver Lake (together with Silver Lake, the
"Investors").
4.21.2. General Agreement to Perform Obligations. Each Newco acknowledges
that the Securities Purchase Agreement sets forth certain actions
(a) that such Newco will take or that CSI will cause such Newco
to take and (b) that such Newco will not take or which CSI will
cause such Newco not to take. Each Newco hereby agrees with CSI
that it will take or not take, as applicable, all such actions as
provided in the Securities Purchase Agreement and that it shall
be bound by the terms of the Securities Purchase Agreement as if
(i) it were a party thereto and (ii) CSI's obligation to cause
such Newco to take or not take an action were a direct obligation
of such Newco to take or not take an action.
4.21.3. Specific Sections of the Securities Purchase Agreement. Without
limiting the generality of each Newco's agreement set forth in
Section 4.21.2, each Newco further acknowledges that its
obligations under Section 4.21.2 include the following:
4.21.3.1. Issuance of Securities Generally. Each Newco agrees to (a)
take any actions that CSI agrees to cause it to take or that
is otherwise provided that it will take and (b) not take any
actions that CSI agrees to cause it not to take or that is
otherwise provided that it will not take in Section 1.1 of
the Securities Purchase Agreement, including without
limitation as such section relates to the issuance of
securities and rights relating to securities.
4.21.4. Adjustments to the Subsidiary Stock Purchase Rights.
4.21.4.1. Working Capital Contributions by CSI to the Newco. Each Newco
agrees to (a) take any actions that CSI agrees to cause it to
take or that is otherwise provided that it will take and (b)
not take any actions that CSI agrees to cause it not to take
or that is otherwise provided that it will not take in
Section 1.3(b) of the Securities Purchase Agreement,
including without limitation as such section relates to
Working Capital Contributions by CSI to such Newco.
4.21.4.2. Distributions by the Newco to CSI. Each Newco agrees to (a)
take any actions that CSI agrees to cause it to take or that
is otherwise provided that it will take
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and (b) not take any actions that CSI agrees to cause it not
to take or that is otherwise provided that it will not take
in Section 1.3(c) of the Securities Purchase Agreement,
including without limitation as such section relates to
distributions made by such Newco to CSI.
4.21.4.3. Employee Options Issued by the Newco. Each Newco agrees to
(a) take any actions that CSI agrees to cause it to take or
that is otherwise provided that it will take and (b) not take
any actions that CSI agrees to cause it not to take or that
is otherwise provided that it will not take in Section 1.4(f)
of the Securities Purchase Agreement, including without
limitation as such section relates to its issuance of
employee stock options.
4.21.4.4. Other Dilutive Events. Each Newco agrees to (a) take any
actions that CSI agrees to cause it to take or that is
otherwise provided that it will take and (b) not take any
actions that CSI agrees to cause it not to take or that is
otherwise provided that it will not take in Section 1.3(d) of
the Securities Purchase Agreement, including without
limitation as such section relates to dilutive events.
4.21.5. Issuance of IPO Valuation Warrants. Each Newco agrees to (a) take
any actions that CSI agrees to cause it to take or that is
otherwise provided that it will take and (b) not take any actions
that CSI agrees to cause it not to take or that is otherwise
provided that it will not take in Section 1.6 of the Securities
Purchase Agreement, including without limitation as such section
relates to its issuance of IPO Valuation Warrants.
4.21.6. Issuance of Subsidiary Warrants. Each Newco agrees to (a) take
any actions that CSI agrees to cause it to take or that is
otherwise provided that it will take and (b) not take any actions
that CSI agrees to cause it not to take or that is otherwise
provided that it will not take in Section 1.7 of the Securities
Purchase Agreement, including without limitation as such section
relates to its issuance of Subsidiary Warrants.
4.21.7. Participation in Third-Party Investments. Each Newco agrees to
(a) take any actions that CSI agrees to cause it to take or that
is otherwise provided that it will take and (b) not take any
actions
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that CSI agrees to cause it not to take or that is otherwise
provided that it will not take in Sections 1.4(a)-(d) of the
Securities Purchase Agreement, including without limitation as
such sections relate to the rights of the Investors to
participate in Third-Party Investments.
4.21.8. Compliance with Covenants.
4.21.8.1. Reservation of Shares. Each Newco agrees to (a) take any
actions that CSI agrees to cause it to take or that is
otherwise provided that it will take and (b) not take any
actions that CSI agrees to cause it not to take or that is
otherwise provided that it will not take in Section 5.5 of
the Securities Purchase Agreement, including without
limitation as such section relates to its promise to reserve
sufficient shares to permit the exercise of the Subsidiary
Stock Purchase Rights, IPO Warrants and Subsidiary Warrants.
4.21.8.2. Board of Directors. Each Newco agrees to (a) take any actions
that CSI agrees to cause it to take or that is otherwise
provided that it will take and (b) not take any actions that
CSI agrees to cause it not to take or that is otherwise
provided that it will not take in Section 5.7(b) of the
Securities Purchase Agreement, including without limitation
as such section relates to its board of directors. In
particular, Aprisma agrees to allow the Investors to appoint
a director to its board of directors as provided for in
Section 5.7(b) of the Securities Purchase Agreement.
4.21.9. Dispute Resolution. Each Newco agrees to comply with the dispute
resolution mechanism as set forth in Section 1.8 of the
Securities Purchase Agreement in connection with any disputes
with the Investors arising under the Securities Purchase
Agreement.
5. ALLOCATION OF ASSETS AND LIABILITIES
At the Closing, assets shall be contributed to the Newcos and Liabilities shall
be assumed by the Newcos as provided in the Contribution Agreements; provided,
however, that the parties acknowledge and agree that, notwithstanding any
provisions in the Contribution Agreements to the contrary, CSI may in its sole
discretion retain, allocate or reallocate to any Newcos assets and Liabilities,
including general corporate Liabilities of CSI, or terminate this Agreement or
any Ancillary Agreement to facilitate a tax-free Distribution
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of any Newco, comply with regulatory or financial reporting requirements or
otherwise facilitate the Transformation in a manner consistent with its business
purposes.
6. INDEMNIFICATION MATTERS
This Section 6 applies to (i) this Agreement and any instruments delivered
pursuant hereto other than (A) the Ancillary Agreements and (B) any supplements
to the Intercompany Agreements and (ii) the Contribution Agreements and any
instruments delivered thereunder (collectively such documents referred to in
clause (i) and (ii) being referred to herein as the "Covered Agreements").
6.1 Survival of Representations and Warranties. All covenants,
agreements and indemnities of the parties contained herein or in
the Covered Agreements shall survive the Transformation Date except
as otherwise provided herein or therein.
6.2 Indemnity by CSI.
6.2.1 CSI hereby agrees to indemnify, defend and hold harmless
each Newco and its respective directors, officers and
Subsidiaries against and in respect of all Losses that
result from:
6.2.1.1 any failure of the parties to comply with any bulk
transfer law of any jurisdiction in connection with
the Transformation; and
6.2.1.2 the conduct of CSI's business after the
Transformation Date that does not relate to any
Newco's business;
provided, however, that this Section 6.2.1 does not apply to any
Losses related to income taxes and payroll taxes (which such Losses
are governed by the Tax Sharing Agreement). Any Newco claiming
indemnification under this Section 6.2.1 shall provide CSI written
notice of such claim, whether or not arising out of a claim by a
third party.
6.2.2 CSI hereby agrees to indemnify, defend and hold harmless
Riverstone and its respective directors, officers and
Subsidiaries against and in respect of all losses arising
out of or related to any offer of recission made pursuant to
California securities law to repurchase any unexercised
options issued before the Transformation Date to employees,
consultants or advisors of CSI or Riverstone.
6.3 Indemnity by each Newco. Each Newco hereby agrees to indemnify,
defend and hold harmless (i) CSI and its directors, officers and
affiliates (other than the other Newcos and their respective
Subsidiaries) and (ii)
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each other Newco and its directors, officers and Subsidiaries
against and in respect of all Losses that result from:
6.3.1 the Assumed Liabilities of such Newco assumed by it pursuant
to the relevant Contribution Agreement, any other
Liabilities allocated to such Newco pursuant to Section 5
hereof, and any Liabilities arising out of the operations of
such Newco;
6.3.2 the nonfulfillment of any agreement or covenant of such
Newco contained in any Covered Agreement; and
6.3.3 the conduct of such Newco's business after the
Transformation Date.
provided, however, that this Section 6.3 does not apply to any
Losses related to income taxes and payroll taxes (which such Losses
are governed by the Tax Sharing Agreement). CSI or any Newco
claiming indemnification under this Section 6.3 shall provide
written notice to the indemnifying party in respect of such claim,
whether or not arising out of a claim by a third party.
6.4 Third Party Claims. Promptly after the receipt by any party
entitled to indemnification (the "Indemnified Party") pursuant to
this Section 6 or notice of the commencement of any action against
such Indemnified Party by a third party, such Indemnified Party
shall, if a claim with respect thereto is to be made against any
party obligated to provide indemnification (the "Indemnifying
Party") pursuant to this Section 6, give such Indemnifying Party
written notice thereof in reasonable detail in light of the
circumstances then known to such Indemnified Party. The failure to
give such notice shall not relieve any Indemnifying Party from any
obligation hereunder except where, and then solely to the extent
that, such failure actually and materially prejudices the rights of
such Indemnifying Party. Such Indemnifying Party shall have the
right to defend such claim, at such Indemnifying Party's expense
and with counsel of its choice reasonably satisfactory to the
Indemnified Party, provided that the Indemnifying Party conducts
the defense of such claim actively and diligently. If the
Indemnifying Party assumes the defense of such claim, the
Indemnified Party agrees to reasonably cooperate in such defense so
long as the Indemnified Party is not materially prejudiced thereby.
So long as the Indemnifying Party is conducting the defense of such
claim actively and diligently, the Indemnified Party may retain
separate co-counsel at its sole cost and expense and may
participate in the defense of such claim, and neither any
Indemnifying Party nor any Indemnified Party will consent to the
entry of any judgment or enter into any settlement with respect to
such claim without the prior written consent of the other, which
consent will not be unreasonably withheld. In the
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event the Indemnifying Party does not or ceases to conduct the
defense of such claim actively and diligently, (w) the Indemnified
Party may defend against such claim in any manner it may reasonably
deem to be appropriate, (x) upon receiving the prior written
consent of the Indemnifying Party, which consent will not be
unreasonably withheld, the Indemnified Party may consent to the
entry of any judgment or enter into any settlement with respect to
such claim, (y) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of
defending against such claim, including reasonable attorneys' fees
and expenses, and (z) the Indemnifying Party will remain
responsible for any Losses the Indemnitee may suffer as a result of
such claim to the full extent provided in this Section 6.
7. CONDITIONS TO THE TRANSFORMATION
The consummation of the Transformation is subject to the satisfaction, at or
prior to the Closing, of all of the following conditions:
7.1. Shareholder Approval. The shareholders of CSI shall have approved
the Transformation.
7.2. Execution and Delivery of Documents. Unless otherwise waived in
writing by the relevant parties benefiting therefrom, each of the
parties shall have executed and delivered all Ancillary Agreements
and other documents to be executed and delivered by it on or prior
to the Transformation Date, including without limitation (i) such
documents to be executed and delivered on the Effective Date and
(ii) such documents to be executed and delivered on or prior to
the Transformation Date pursuant to Section 4.1.
7.3. Litigation. No material action shall have been instituted at or
prior to the Closing by any Governmental Authority or other Person
relating to this Agreement or any of the transactions contemplated
hereby, which has a reasonable likelihood of success and the
result of which would prevent or make illegal the consummation of
any such transaction.
8. DEFINITIONS
For the purposes of this Agreement, the following terms shall have the following
meanings:
8.1. "AAA" has the meaning assigned to such term in Section 4.10.2.
8.2. "A-E Intercompany Agreement" has the meaning assigned to such
term in Section 1.5.
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8.3. "A-G Intercompany Agreement" has the meaning assigned to such term
in Section 1.6.
8.4. "A-R Intercompany Agreement" has the meaning assigned to such term
in Section 1.7.
8.5. "Agreement" has the meaning assigned to such term in the preamble.
8.6. "Ancillary Agreements" has the meaning assigned to such term in
Section 1.
8.7. "Aprisma" has the meaning assigned to such term in the Preamble.
8.8. "Aprisma Business" means the "Company Business" as such term is
defined in the Aprisma Contribution Agreement.
8.9. "Aprisma Contribution Agreement" has the meaning assigned to such
term in Section 1.1.
8.10. "Assumed Liabilities" means, with respect to a particular Newco,
"Assumed Liabilities" as such term is defined in the Contribution
Agreement to which such Newco is party.
8.11. "CSI" has the meaning assigned to such term in the preamble.
8.12. "CSI Confidentiality Agreement" has the meaning assigned to such
term in Section 4.5.
8.13. "Closing" has the meaning assigned to such term in Section 2.3.
8.14. "Commission" means the Securities and Exchange Commission.
8.15. "Confidential Information" has the meaning assigned to such term
in Section 4.4.
8.16. "Contribution Agreements" has the meaning assigned to such term in
Section 1.4.
8.17. "Covered Agreements" has the meaning assigned to such term in
Section 6.
8.18. "Dispute" has the meaning assigned to such term in Section 4.10.1.
8.19. "Dispute Resolution Commencement Date" has the meaning assigned to
such term in Section 4.10.1.
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8.20. "Distributed Newco" has the meaning assigned to such term in
Section 4.8.
8.21. "Distribution" has the meaning assigned to such term in the
recitals.
8.22. "Eligible CSI Option" has the meaning assigned to such term in
Section 4.8.
8.23. "Enterasys" has the meaning assigned to such term in the preamble.
8.24. "Enterasys Business" means the "Company Business" as such term is
defined in the Enterasys Contribution Agreement.
8.25. "Enterasys Contribution Agreement" has the meaning assigned to
such term in Section 1.2.
8.26. "E-G Intercompany Agreement" has the meaning assigned to such term
in Section 1.8.
8.27. "E-R Intercompany Agreement" has the meaning assigned to such term
in Section 1.9.
8.28. "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
8.29. "GNTS" has the meaning assigned to such term in the preamble.
8.30. "GNTS Business" means the "Company Business" as such term is
defined in the GNTS Contribution Agreement.
8.31. "GNTS Contribution Agreement" has the meaning assigned to such
term in Section 1.3.
8.32. "Governmental Authority" means any domestic or foreign federal,
state or local government, regulatory or administrative agency or
court.
8.33. "G-R Intercompany Agreement" has the meaning assigned to such term
in Section 1.10.
8.34. "Included Newco" has the meaning assigned to such term in Section
4.3.
8.35. "Indemnified Party" has the meaning assigned to such term in
Section 6.4.1.
8.36. "Indemnifying Party" has the meaning assigned to such term in
Section 6.4.1.
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8.37. "Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies,
reports, records, books, contracts, instruments, surveys,
discoveries, ideas, concepts, know-how, techniques, designs,
specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks,
diskettes, tapes, computer programs or other software, marketing
plans, customer names, communications by or to attorneys
(including attorney-client privileged communications), memos and
other materials prepared by attorneys or under their direction
(including attorney work product), and other technical, financial,
employee or business information or data.
"Intercompany Agreements" means, collectively, the A-E Intercompany
Agreement, A-G Intercompany Agreement, A-R Intercompany Agreement, E-G
Intercompany Agreement, E-R Intercompany Agreement and the G-R
Intercompany Agreement.
8.38. "Investors" has the meaning assigned to such term in Section
4.21.1.
8.39. "IPO" has the meaning assigned to such term in the recitals.
8.40. "IPO Valuation Warrants" has the meaning assigned to such term in
the Securities Purchase Agreement.
8.41. "Liability" means any debt, liability or obligation whether known
or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, whether incurred directly or consequential and
whether due or to become due, including, without limitation, any
liability arising out of applicable statutory, regulatory or
common law, any contractual obligation and any obligation arising
out of tort.
8.42. "Losses" means obligations, judgments, liens, injunctions,
charges, orders, decrees, rulings, damages, dues, assessments,
losses, fines, penalties, expenses, fees, costs, amounts paid in
settlement (including reasonable attorneys' and expert witness
fees and disbursements in connection with the investigation,
defense or settlement of any action or threatened action), arising
out of any claim, damages, complaint, demand, cause of action,
audit, investigation, hearing, action, suit or other proceeding
asserted or initiated or otherwise existing in respect of any
matter.
8.43. "Manufactured Products Agreement" has the meaning assigned to such
term in Section 1.12.
8.44. "Newco Confidentiality Agreement" has the meaning assigned to such
term in Section 4.5.
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8.45. "Newco Stock" has the meaning assigned to such term in Section
4.8.
8.46. "Newcos" has the meaning assigned to such term in the preamble.
8.47. "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political
subdivision thereof.
8.48. "Rainbow Option" has the meaning assigned to such term in Section
4.8.
8.49. "Recipient" has the meaning assigned to such term in Section 4.8.
8.50. "Recruiting Party" has the meaning assigned to such term in
Section 4.11.
8.51. "Retained Product Credits" means credits held by third parties
which obligate CSI to provide product and/or services to the
holders of such credits in consideration of such credits;
provided that any such outstanding credits which constitute a
Liability assumed by any Newco pursuant to a Contribution
Agreement or otherwise shall not constitute "Retained Product
Credits".
8.52. "Retained Third Party Tool Rights" has the meaning assigned to
such term in Section 4.1.2.
8.53. "Riverstone" has the meaning assigned to such term in the
preamble.
8.54. "Riverstone Business" means the "Company Business" as such term
is defined in the Riverstone Contribution Agreement.
8.55. "Riverstone Contribution Agreement" has the meaning assigned to
such term in Section 1.4.
8.56. "Securities Act" means the Securities Act of 1933, as amended.
8.57. "Securities Purchase Agreement" has the meaning assigned to such
term in Section 4.21.1.
8.58. "Shared Services Agreements" has the meaning assigned to such
term in Section 4.1.4.
8.59. "Effective Date" has the meaning assigned to such term in the
preamble.
8.60. "Silver Lake" has the meaning assigned to such term in
Section 4.21.1.
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8.61. "Subsidiary" of any Person means a corporation or other
organization whether incorporated or unincorporated of which at
least a majority of the securities or interests having by the
terms thereof ordinary voting power to elect at least a majority
of the board of directors or others performing similar functions
with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries; provided, however, that no Person that
is not directly or indirectly wholly-owned by any other Person
shall be a Subsidiary of such other Person unless such other
Person controls, or has the right, power or ability to control,
that Person.
8.62. "Subsidiary Stock Purchase Rights" has the meaning assigned to
such term in the Securities Purchase Agreement.
8.63. "Subsidiary Warrants" has the meaning assigned to such term in
the Securities Purchase Agreement.
8.64. "Tax Sharing Agreement" has the meaning assigned to such term in
Section 1.11.
8.65. "Third Party Claim" has the meaning assigned to such term in
Section 6.4.1.
8.66. "Third-Party Investments" has the meaning assigned to such term
in the Securities Purchase Agreement.
8.67. "Transformation" has the meaning assigned to such term in the
recitals.
"Transformation Date" has the meaning assigned to such term in
Section 2.2.
8.68. "Working Capital Contributions" has the meaning assigned to such
term in the Securities Purchase Agreement.
9. MISCELLANEOUS
9.1. Entire Agreement. This Agreement and the Ancillary Agreements
including the schedules and exhibits hereto and thereto and the
other documents and instruments delivered pursuant hereto and
thereto constitute the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersede all prior or
contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties with respect
to such subject matter.
9.2. Amendment or Waiver. Except as provided in Section 9.10 and this
Section 9.2, the parties hereto may not amend this Agreement
except by a written instrument executed by the parties hereto. CSI
and any one
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<PAGE>
Newco, without the consent of any other Newco, may amend this
Agreement in a manner which does not adversely affect any other
Newco pursuant to a written instrument executed by CSI and such
Newco. Any party may waive its rights hereunder by a written
instrument executed by such party; provided, however, that unless
explicitly provided in such instrument, any waiver by any party of
any default, misrepresentation, or breach of warranty or covenant
hereunder shall not be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant
hereunder.
9.3. Severability. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, such
provision shall (to the extent permitted under applicable law) be
construed by modifying or limiting it so as to be valid and
enforceable to the maximum extent compatible with, and possible
under, applicable law. The provisions hereof are severable, and in
the event any provision hereof should be held invalid or
unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
9.4. Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective permitted transferees and
assigns (each of which transferees and assigns shall be deemed to
be a party hereto for all purposes hereof); provided, however,
that (i) no transfer or assignment by any party hereto shall be
permitted without the prior written consent of the other party
hereto and any such attempted transfer or assignment without
consent shall be null and void and (ii) no transfer or assignment
by any party shall relieve such party of any of its obligations
hereunder.
9.5. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing and delivered
personally or sent by telecopier, Federal Express, or registered
or certified mail, postage prepaid, addressed as follows:
If to CSI,
to it at: Cabletron Systems, Inc.
35 Industrial Way
Building 36
Rochester, NH 03867
Attention: Eric Jaeger and Chief Financial Officer
Telecopier No.: (603) 337-1518
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<PAGE>
with a copy to: Ropes & Gray
One International Place
Boston, MA 02110
Attention: David A. Fine
Telecopier No.: (617) 951-7050
If to Aprisma,
to it at: Aprisma Management Technologies, Inc.
121 Technology Drive
Durham, NH 03824
Attention: President
Telecopier No.: (603) 337-7784
with a copy to: Ropes & Gray
One International Place
Boston, MA 02110
Attention: David A. Fine
Telecopier No.: (617) 951-7050
If to Enterasys,
to it at: Enterasys Networks, Inc.
35 Industrial Way
Building 36
Rochester, NH 03867
Attention: President
Telecopier No.: (603) 337-1524
with a copy to: Ropes & Gray
One International Place
Boston, MA 02110
Attention: David A. Fine
Telecopier No.: (617) 951-7050
If to GNTS,
to it at: GlobalNetwork Technology Services, Inc.
1330 Lake Robbins Drive
Suite 460
Woodlands, TX 77380
Attention: President
Telecopier No.: (281) 681-0442
-29-
<PAGE>
with a copy to: Ropes & Gray
One International Place
Boston, MA 02110
Attention: David A. Fine
Telecopier No.: (617) 951-7050
If to Riverstone,
to it at: Riverstone Networks, Inc.
5200 Great America Parkway
Santa Clara, CA
Attention: President
Telecopier No.: (408) 878-6501
with a copy to: Ropes & Gray
One International Place
Boston, MA 02110
Attention: David A. Fine
Telecopier No.: (617) 951-7050
Unless otherwise specified herein, such notices or other
communications shall be deemed received (a) on the date delivered,
if delivered personally, (b) two Business Days after being sent by
Federal Express, if sent by Federal Express, (c) one Business Day
after being delivered, if delivered by telecopier and (d) three
Business Days after being sent, if sent by registered or certified
mail. Each of the parties hereto shall be entitled to specify a
different address by giving notice as aforesaid to each of the
other parties hereto.
9.6. Interpretation. Section and subsection headings are not to be
considered part of this Agreement, are included solely for
convenience, are not intended to be full or accurate descriptions
of the content thereof and shall not affect the construction
hereof. No rule of strict construction shall apply to or be used
against any party hereto.
9.7. Third Party Beneficiaries. Nothing in this Agreement is intended
or shall be construed to entitle any person or entity other than
the parties and their respective transferees and assigns permitted
hereby to any claim, cause of action, remedy or right of any kind.
9.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all
of which together shall constitute but one and the same
instrument.
9.9. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of the State of
Delaware,
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<PAGE>
without giving effect to any choice or conflict of law provision
or rule that would cause the application of the laws of any other
jurisdiction.
10. Termination. This Agreement and any Ancillary Agreements and
agreements delivered pursuant hereto and thereto may be terminated
with respect to any one or more or all Newcos and/or the
Transformation abandoned at any time prior to the Closing by and
in the sole discretion of CSI without the approval of any Newco.
In the event of termination pursuant to this Section 10, no party
shall have any liability of any kind to the other relevant party
or parties to the extent of such termination.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument under
seal effective as of the date first written above.
CABLETRON SYSTEMS, INC.
Dated: November 8, 2000 By: /s/ Piyush Patel
----------------------------
Name: Piyush Patel
Title: President, Chairman
and CEO
APRISMA MANAGEMENT
TECHNOLOGIES, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
ENTRASYS NETWORKS, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
GLOBALNETWORK TECHNOLOGY
SERVICES, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
RIVERSTONE NETWORKS, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument under
seal effective as of the date first written above.
CABLETRON SYSTEMS, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
APRISMA MANAGEMENT
TECHNOLOGIES, INC.
Dated: November 8, 2000 By: /s/ Michael Skubisz
---------------------------
Name: Michael Skubisz
Title: President
ENTRASYS NETWORKS, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
GLOBALNETWORK TECHNOLOGY
SERVICES, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
RIVERSTONE NETWORKS, INC.
Dated: November __, 2000 By:
----------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument under
seal effective as of the date first written above.
CABLETRON SYSTEMS, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
APRISMA MANAGEMENT
TECHNOLOGIES, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
ENTRASYS NETWORKS, INC.
Dated: November 8, 2000 By: /s/ Enrique Fiallo
--------------------------
Name: Enrique Fiallo
Title: President
GLOBALNETWORK TECHNOLOGY
SERVICES, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
RIVERSTONE NETWORKS, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument under
seal effective as of the date first written above.
CABLETRON SYSTEMS, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
APRISMA MANAGEMENT
TECHNOLOGIES, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
ENTRASYS NETWORKS, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
GLOBALNETWORK TECHNOLOGY
SERVICES, INC.
Dated: November 8, 2000 By: /s/ Earle Humphreys
--------------------------
Name: Earle Humphreys
Title: President
RIVERSTONE NETWORKS, INC.
Dated: November __, 2000 By: __________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument under
seal effective as of the date first written above.
CABLETRON SYSTEMS, INC.
Dated: November __, 2000 By:
-----------------------
Name:
Title:
APRISMA MANAGEMENT
TECHNOLOGIES, INC.
Dated: November __, 2000 By:
-----------------------
Name:
Title:
ENTRASYS NETWORKS, INC.
Dated: November __, 2000 By:
-----------------------
Name:
Title:
GLOBALNETWORK TECHNOLOGY
SERVICES, INC.
Dated: November __, 2000 By:
-----------------------
Name:
Title:
RIVERSTONE NETWORKS, INC.
Dated: November 8, 2000 By: /s/ Romulus Pereira
----------------------
Name: Romulus Pereira
Title: President and CEO
<PAGE>
Exhibits to the Amended and Restated Transformation Agreement
-------------------------------------------------------------
Exhibit A-1 Amended and Restated Aprisma Contribution Agreement
Exhibit A-2 Amended and Restated Enterasys Contribution Agreement
Exhibit A-3 Amended and Restated GNTS Contribution Agreement
Exhibit A-4 Amended and Restated Riverstone Contribution Agreement
Exhibit B-1 A-E Intercompany Agreement
Exhibit B-2 A-G Intercompany Agreement
Exhibit B-3 A-R Intercompany Agreement
Exhibit B-4 E-G Intercompany Agreement
Exhibit B-5 E-R Intercompany Agreement
Exhibit B-6 G-R Intercompany Agreement
Exhibit C Tax Sharing Agreement
Exhibit D Manufactured Products Agreement
Exhibit E Amended and Restated Securities Purchase Agreement
