Exhibit 2
ACQUISITION AGREEMENT
among
GLENAYRE TECHNOLOGIES, INC.,
WAI ACQUISITION CORP.
and
WIRELESS ACCESS, INC.
Dated as of October 1, 1997
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION.....................1
1.1 DEFINITIONS................................................1
1.2 CERTAIN RULES OF CONSTRUCTION..............................7
ARTICLE 2 THE MERGER........................................................7
2.1 THE MERGER.................................................7
2.2 THE CLOSING................................................7
2.3 EFFECTIVE TIME.............................................8
ARTICLE 3 ARTICLES OF INCORPORATION AND BYLAWS AND OFFICERS
AND DIRECTORS OF THE SURVIVING CORPORATION.................8
3.1 ARTICLES OF INCORPORATION..................................8
3.2 BYLAWS.....................................................8
3.3 DIRECTORS..................................................8
3.4 OFFICERS...................................................8
ARTICLE 4 CONVERSION OF WIRELESS CAPITAL STOCK; WIRELESS
WARRANTS; WIRELESS STOCK OPTIONS; OTHER MATTERS.............8
4.1 CONVERSION OF WIRELESS CAPITAL STOCK.......................9
4.2 WIRELESS WARRANTS.........................................10
4.3 EXCHANGE OF CERTIFICATES AND OTHER AGREEMENTS.............10
4.4 WIRELESS STOCK OPTIONS....................................11
4.5 WITHHOLDING RIGHTS........................................12
4.6 DISSENTING SHARES.........................................12
4.7 TRANSACTION EXPENSES......................................13
4.8 ESCROW....................................................13
4.9 APPLICATION OF ESCROW TO A LOSS...........................14
4.10 SHAREHOLDER REPRESENTATIVE................................16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF WIRELESS.......................20
5.1 ORGANIZATION AND QUALIFICATION............................20
5.2 ARTICLES OF INCORPORATION; BYLAWS; MINUTE BOOKS...........20
5.3 CAPITALIZATION............................................20
5.4 AUTHORITY RELATIVE TO THIS AGREEMENT......................21
5.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS................21
5.6 OTHER INTERESTS...........................................22
5.7 FINANCIAL STATEMENTS......................................22
5.8 SUBSEQUENT EVENTS.........................................22
5.9 TAX MATTERS...............................................23
5.10 EMPLOYEES AND FRINGE BENEFIT PLANS........................24
5.11 TITLE TO ASSETS...........................................26
5.12 CONDITION OF TANGIBLE ASSETS..............................28
5.13 LEASES....................................................31
5.14 ARMS-LENGTH TRANSACTIONS..................................31
5.15 LAWFULLY OPERATING........................................31
5.16 NO LITIGATION.............................................31
5.17 LABOR MATTERS.............................................31
5.18 BROKERS...................................................32
5.19 BANK ACCOUNTS.............................................32
5.20 INSURANCE.................................................32
5.21 WARRANTY AND PRODUCT LIABILITY MATTERS....................32
5.22 WARRANTY, REPURCHASE AND OTHER SERVICE OBLIGATIONS........32
5.23 CUSTOMERS AND SUPPLIERS...................................33
5.24 GUARANTEES................................................33
5.25 DEVELOPMENT OF ACCESSMATE AND ACCESSLINK II...............33
5.26 FULL DISCLOSURE...........................................33
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF GLENAYRE AND
MERGER SUB................................................33
6.1 ORGANIZATION AND QUALIFICATION............................33
6.2 CERTIFICATE OF INCORPORATION AND BYLAWS...................34
6.3 CAPITALIZATION............................................34
6.4 AUTHORITY RELATIVE TO THIS AGREEMENT......................34
6.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS................34
6.6 SEC REPORTS...............................................35
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS......................35
6.8 BROKERS...................................................35
ARTICLE 7 COVENANTS........................................................36
7.1 COVENANTS OF GLENAYRE AND WIRELESS........................36
7.2 COVENANTS OF WIRELESS.....................................36
7.3 COVENANT OF GLENAYRE AND MERGER SUB.......................40
7.4 INDEMNIFICATION OF WIRELESS OFFICERS AND DIRECTORS........40
7.6 CERTAIN BENEFIT PLANS.....................................41
7.7 RELOCATION................................................41
ARTICLE 8 CONDITIONS.......................................................41
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER................................................41
8.2 CONDITIONS TO OBLIGATION OF WIRELESS TO
EFFECT THE MERGER.........................................42
8.3 CONDITIONS TO OBLIGATION OF GLENAYRE
AND MERGER SUB TO EFFECT THE MERGER........................43
ARTICLE 9 INDEMNIFICATION..................................................44
9.1 INDEMNIFICATION...........................................44
9.2 NOTICE....................................................45
9.3 DEFINITION OF LOSS OR LOSSES..............................45
9.4 LOSS FROM DELAYED DEVELOPMENT OF ACCESSMATE
AND ACCESSLINK II.........................................45
ARTICLE 10 TERMINATION.....................................................46
10.1 TERMINATION BY MUTUAL CONSENT.............................46
10.2 TERMINATION BY EITHER GLENAYRE OR WIRELESS................46
10.3 TERMINATION BY WIRELESS...................................46
10.4 TERMINATION BY GLENAYRE...................................46
10.5 EFFECT OF TERMINATION AND ABANDONMENT.....................47
10.6 EXTENSION; WAIVER.........................................47
ARTICLE 11 GENERAL PROVISIONS..............................................47
11.1 EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES...........48
11.2 NOTICES...................................................48
11.3 ASSIGNMENT; BINDING EFFECT; BENEFIT.......................49
11.4 ENTIRE AGREEMENT; AMENDMENT TO NDA........................49
11.5 AMENDMENT.................................................49
11.6 GOVERNING LAW.............................................50
11.7 COUNTERPARTS..............................................50
11.8 WAIVERS...................................................50
11.9 SEVERABILITY..............................................50
ATTACHMENT
Attachment A Shareholder Representative Fee Schedule
EXHIBITS
Exhibit A Agreement of Merger
Exhibit B Transmittal Letter
Exhibit C Warrant Termination Agreement
Exhibit D Escrow Agreement
Exhibit E Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Exhibit F Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Exhibit G Employment Agreement
Exhibit H Forms of Noncompetition Agreement
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is executed as of October
1, 1997, by and among GLENAYRE TECHNOLOGIES, INC., a Delaware corporation
("Glenayre"), WAI ACQUISITION CORP., a newly formed California corporation and
wholly-owned subsidiary of Glenayre ("Merger Sub"), and WIRELESS ACCESS, INC., a
California corporation ("Wireless").
STATEMENT OF PURPOSE
The Boards of Directors of Glenayre, Merger Sub and Wireless each have
determined that a business combination pursuant to which Merger Sub will merge
with and into Wireless and Wireless will become a wholly-owned subsidiary of
Glenayre is in the best interests of the respective corporations and their
shareholders, and accordingly have approved this merger upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION
1.1 DEFINITIONS. In addition to any other terms defined elsewhere in
this Agreement, including any Exhibit hereto (unless such Exhibit provides for a
different definition), as used herein, the following terms shall have the
following meanings:
"Agreement of Merger" means the Agreement of Merger substantially in
the form of Exhibit A hereto.
"August 31, 1997 Balance Sheet" is defined in Section 5.11(c).
"Blue Sky Laws" means state securities Laws or "blue sky" Laws.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of North Carolina.
"CGCL" means the California General Corporation Law, as amended.
"Closing" means the consummation of the Merger.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disclosure Schedules" means the Disclosure Schedules dated the date of
this Agreement and delivered contemporaneously herewith.
"Dissenter Payment" is defined in Section 4.6(a).
"Dissenting Shares" is defined in Section 4.6(a).
"Effective Time" is defined in Section 2.3.
"Employment Agreement" means the Employment Agreement substantially in
the form of Exhibit G hereto to be executed by ▇▇▇▇ ▇. ▇▇▇▇▇.
"Encumbrances" means all liens, encumbrances, mortgages, pledges,
security interests, conditional sales agreements, charges, options to purchase,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow" is defined in Section 4.8.
"Escrow Agent" means First Union National Bank, a national banking
association organized and existing under the laws of the United States of
America and having its principal offices in Charlotte, North Carolina, or its
successor, as "Escrow Agent" under the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement substantially in the form
of Exhibit D hereto.
"Escrow Funds" is defined in Section 4.8.
"Escrow Percentage" means that percentage determined by dividing $12
million by the total amount of the Shareholder Cash Consideration.
"Escrow Portion" means (i) with respect to an Outstanding Share of
Wireless Capital Stock (other than Series F Preferred Stock and Series G
Preferred Stock), an amount equal to the Escrow Percentage of the Stock Price
Per Share, (ii) with respect to an Outstanding Share of Series F Preferred
Stock, an amount equal to the Escrow Percentage of the Series F Stock Price Per
Share and (iii) with respect to an Outstanding Share of Series G Preferred
Stock, an amount equal to the Escrow Percentage of the Series G Stock Price Per
Share.
"Escrow Returns" is defined in Section 4.8.
"Excess Wireless Transaction Expenses" is defined in Section 4.7.
2
"Excess Expense Share" is defined in Section 4.7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exclusivity Period" is defined in Section 7.2(c).
"Expiration Date" means that date that is 18 months after the Effective
Time.
"GAAP" means generally accepted accounting principles in the United
States of America as set forth in pronouncements of the Financial Accounting
Standards Board and the American Institute of Certified Public Accountants, as
such principles are from time to time supplemented and amended.
"Glenayre Common Stock" is defined in Section 6.3.
"Glenayre Material Adverse Effect" means any change or effect that is
or would be materially adverse to the business, results of operations or
financial condition of Glenayre and its subsidiaries, taken as a whole,
excluding any changes or effects caused by changes in general economic
conditions or changes generally affecting Glenayre's and its subsidiaries'
industry.
"Governmental Authority" means any foreign, federal, state or local
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Indemnity Claim" is defined in Section 9.2.
"Law" or "Laws" means any and all statutes, laws, ordinances,
proclamations, regulations, published requirements, orders, decrees and rules of
any Governmental Authority, including those covering environmental, Tax, energy,
safety, health, transportation, bribery, recordkeeping, zoning, discrimination,
antitrust and wage and hour matters, in each case as amended and in effect from
time to time.
"Leased Property" is defined in Section 5.11(a).
"Loss" or "Losses" is defined in Section 9.3.
"Merger" means the merger of Merger Sub with and into Wireless.
"Motorola Licenses" means, collectively, the following license
agreements: (i) Acknowledge Paging Protocol Essential Properties Cross License
Agreement, effective as of May 9, 1995, between Motorola, Inc. and Wireless, as
amended on September 20, 1995 (pertaining to ReFLEX(TM) 25), (ii) Acknowledge
Paging Protocol Essential Properties Cross License
3
Agreement, effective as of August 10, 1994, between Motorola, Inc. and Wireless,
as amended on September 20, 1995 (pertaining to ReFLEX(TM) 50), (iii) Voice
Paging Protocol Essential Properties Cross License Agreement, effective as of
June 19, 1996, between Motorola, Inc. and Wireless (pertaining to InFLEXion(TM)
Voice) and (iv) Patent License Agreement, effective as of June 19, 1996, between
Motorola, Inc. and Wireless (pertaining to pre-stored messages), in each case as
amended or supplemented from time to time.
"NASDAQ Stock Market" means the electronic securities market operated
by The NASDAQ Stock Market, Inc., a wholly owned subsidiary of the National
Association of Securities Dealers, Inc.
"NDA" is defined in Section 11.4.
"Noncompetition Agreements" means Noncompetition Agreements
substantially in the form of Exhibit H hereto to be executed by the individuals
listed on Schedule 8.3(h) of the Disclosure Schedules.
"Notice of Claim" is defined in Section 9.2.
"Option Exchange Ratio" means the Stock Price Per Share divided by
$15.04.
"Option Shares" means, with respect to any Wireless Stock Option, the
shares of Wireless Common Stock covered by such Wireless Stock Option
immediately prior to the Effective Time.
"ordinary course of business" means the ordinary course of Wireless'
business.
"Outstanding Share" means (1) with respect to a share of Wireless
Common Stock, each issued and outstanding share of Wireless Common Stock and (2)
with respect to a share of Wireless Preferred Stock, the share or shares of
Wireless Common Stock into which a share of such Wireless Preferred Stock is
convertible.
"Person" means an individual, corporation, partnership, limited
liability company, trust, association or other entity, including any
Governmental Authority.
"Principal Shareholders" means, collectively, the following Wireless
Shareholders: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ V; ▇▇▇ ▇. ▇▇▇▇▇▇▇▇; The ▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1996 Trust; ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Trustee of the
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇. 1996 Trust UTA dtd 4/30/96; ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Trustees of the ▇▇▇▇▇ Family Trust UDT dtd 4/30/96; ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 1997 Trust UTA dated August 15, 1997;
Gegorio & ▇▇▇▇▇▇▇ ▇▇▇▇▇ UDT 4/22/83; and any other Wireless Shareholder having
beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of Wireless
Capital Stock representing 10% or more of the voting power or other economic
interests of Wireless.
"Proportionate Percentage" means, with respect to a Wireless
Shareholder, the percentage determined by dividing (i) such Wireless
Shareholder's total Outstanding Shares of Wireless
4
Capital Stock multiplied by the applicable Escrow Portion by (ii) the total
amount of Escrow.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means that series of Wireless Preferred
Stock denominated "Series A Preferred Stock."
"Series B Preferred Stock" means that series of Wireless Preferred
Stock denominated "Series B Preferred Stock."
"Series C Preferred Stock" means that series of Wireless Preferred
Stock denominated "Series C Preferred Stock."
"Series D Preferred Stock" means that series of Wireless Preferred
Stock denominated "Series D Preferred Stock."
"Series E Preferred Stock" means that series of Wireless Preferred
Stock denominated "Series E Preferred Stock."
"Series F Preferred Stock" means that series of Wireless Preferred
Stock denominated "Series F Preferred Stock."
"Series F Stock Price Per Share" means $4.50, subject to adjustment as
provided in Section 4.1(a).
"Series G Preferred Stock" means that series of Wireless Preferred
Stock denominated "Series G Preferred Stock."
"Series G Stock Price Per Share" means $5.50, subject to adjustment as
provided in Section 4.1(a).
"Shareholder Cash Consideration" means the sum of (i) the Stock Price
Per Share multiplied by the total number of Outstanding Shares of Wireless
Capital Stock (other than Series F Preferred Stock and Series G Preferred Stock)
immediately prior to the Effective Time, (ii) the Series F Stock Price Per Share
multiplied by the total number of Outstanding Shares of the Series F Preferred
Stock immediately prior to the Effective Time and (iii) the Series G Stock Price
Per Share multiplied by the total number of Outstanding Shares of the Series G
Preferred Stock immediately prior to the Effective Time.
"Shareholder Representative" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (or his successor)
as agent and attorney-in-fact for the Wireless Shareholders pursuant to Section
4.10 and the Escrow Agreement.
5
"Stock Price Per Share" means $3.78, subject to adjustment as provided
in Section 4.1.
"Surviving Corporation" is defined in Section 2.1.
"Tax" or "Taxes" means any foreign, federal, state or local income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.
"Trading Day" means any day on which the Glenayre Common Stock is
traded on the NASDAQ Stock Market.
"Transactions" means the transactions contemplated by this Agreement.
"Transmittal Letter" means the Transmittal Letter substantially in the
form of Exhibit B hereto to be executed by each of the Wireless Shareholders
entitled to receive any portion of the Shareholder Cash Consideration.
"Warrant Price Per Share" means, with respect to any Warrant Shares, an
amount equal to the Stock Price Per Share, less the exercise price per share for
such Warrant Shares as provided in the Wireless Warrant for such Warrant Shares,
provided that the "Warrant Price Per Share" shall not be less than one cent
($.01).
"Warrant Shares" means, with respect to any Wireless Warrant, the
shares of Wireless Common Stock covered by such Wireless Warrant immediately
prior to the Effective Time.
"Warrant Termination Agreement" means an agreement, substantially in
the form of Exhibit C hereto, pursuant to which a Wireless Warrantholder agrees
to the Warrant Termination Amount for its Wireless Warrants and terminates its
Wireless Warrants.
"Warrant Termination Amount" means, with respect to any Wireless
Warrant, an amount equal to the product of (x) the number of Warrant Shares
covered by such Wireless Warrant and (y) the Warrant Price Per Share for such
Warrant Shares.
"Wireless Capital Stock" means, collectively, Wireless Common Stock
and Wireless Preferred Stock.
"Wireless Common Stock" means the Common Stock of Wireless.
"Wireless Material Adverse Effect" means any change or effect that is
or would be materially adverse to the business, results of operations or
financial condition of Wireless, excluding any changes or effects caused by
changes in general economic conditions or changes
6
generally affecting Wireless' industry.
"Wireless Optionholders" means, collectively, the holders of all
Wireless Stock Options.
"Wireless Preferred Stock" means the Preferred Stock of Wireless.
"Wireless Shareholders" means, collectively, the holders of shares of
Wireless Common Stock or Wireless Preferred Stock.
"Wireless Stock Option Plans" means, collectively, the Wireless 1992
Stock Option Plan, the Wireless 1996 Stock Option Plan and the Wireless 1996
Executive Incentive Stock Option Plan.
"Wireless Stock Option" means any option granted by Wireless pursuant
to any of the Wireless Stock Option Plans.
"Wireless Warrantholders" means, collectively, the holders of the
Wireless Warrants.
"Wireless Warrants" means any warrant or other right or option (other
than a Wireless Stock Option) issued by Wireless to acquire any of the Wireless
Capital Stock, as described on Schedule 5.3(b) of the Disclosure Schedules.
1.2 CERTAIN RULES OF CONSTRUCTION. The captions in this Agreement are
for convenience of reference only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement. All references
in this Agreement to Articles or Sections are references to the Articles or
Sections in this Agreement, unless some other reference is clearly indicated.
All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP as in effect on the date hereof. In this
Agreement, unless the context otherwise requires, (1) words describing the
singular number shall include the plural and vice versa, (2) words denoting any
gender shall include all genders and (3) references to "including" shall mean
"including without limitation."
ARTICLE 2
THE MERGER
2.1 THE MERGER.Subject to the terms and conditions set forth in this
Agreement, and in accordance with the CGCL, at the Effective Time, Merger Sub
shall be merged with and into Wireless and the separate corporate existence of
Merger Sub shall thereupon cease. Wireless shall be the surviving corporation in
the Merger (sometimes referred to herein as the "Surviving Corporation") and all
the property, rights, privileges, powers and franchises of Wireless and Merger
Sub shall vest in the Surviving Corporation and all debts, liabilities and
duties of Wireless and Merger Sub shall become the debts, liabilities and duties
of the Surviving Corporation, and Wireless shall be a wholly-owned subsidiary of
Glenayre. In connection with the Merger, each of Glenayre, Merger Sub and
Wireless shall adopt the Agreement of Merger.
7
2.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the Closing shall be held (1) at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 9:00 a.m., local
time, as promptly as practicable (and in any event within two Business Days)
following the day on which all of the conditions set forth in Article 8 shall be
fulfilled or waived in accordance herewith or (2) at such other time, date or
place as Glenayre and Wireless may agree. The Closing Date shall be the same as
the date of the Effective Time.
2.3 EFFECTIVE TIME. If all of the conditions to the Merger set forth
in Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 10, the parties
hereto shall cause the Agreement of Merger to be properly executed and filed,
together with appropriate officers' certificates, in accordance with Section
1103 of the CGCL on the Closing Date. The Merger shall become effective at the
time the Agreement of Merger is filed with the Secretary of State of California
or at such later time as Wireless, Glenayre and Merger Sub shall have agreed
upon and designated in such filing as the effective time of the Merger (the
"Effective Time").
ARTICLE 3
ARTICLES OF INCORPORATION AND BYLAWS
AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
Wireless in effect immediately prior to the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation, as amended pursuant to the
Agreement of Merger, until further amended in accordance with applicable Law.
3.2 BYLAWS. The Bylaws of Wireless in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable Law.
3.3 DIRECTORS. The directors of the Surviving Corporation
immediately after the Effective Time shall be the following Persons:
▇▇▇▇ ▇. ▇▇▇▇▇ (Chairman)
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
3.4 OFFICERS. The officers of the Surviving Corporation immediately
after the Effective Time shall be the following Persons:
Chairman of the Board ▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer ▇▇▇▇ ▇. ▇▇▇▇▇
Vice President - Finance ▇▇▇▇▇▇ ▇▇▇▇▇
8
Vice President - Manufacturing ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Treasurer ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Assistant Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ARTICLE 4
CONVERSION OF WIRELESS CAPITAL STOCK; WIRELESS WARRANTS;
WIRELESS STOCK OPTIONS;OTHER MATTERS
4.1 CONVERSION OF WIRELESS CAPITAL STOCK.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Glenayre, Merger Sub, Wireless or the holders of any
Wireless Capital Stock:
(1) each Outstanding Share of Wireless Capital Stock
(other than the Series F Preferred Stock and the Series G Preferred
Stock) immediately prior to the Effective Time (other than any
Dissenting Shares, if applicable) shall be converted into the right to
receive a cash amount equal to the Stock Price Per Share;
(2) each Outstanding Share of the Series F Preferred
Stock immediately prior to the Effective Time (other than any
Dissenting Shares, if applicable) shall be converted into the right to
receive a cash amount equal to the Series F Stock Price Per Share;
(3) each Outstanding Share of the Series G Preferred
Stock immediately prior to the Effective Time (other than any
Dissenting Shares, if applicable) shall be converted into the right to
receive a cash amount equal to the Series G Stock Price Per Share.
Notwithstanding anything herein to the contrary, if between the date of this
Agreement and the Effective Time, the Outstanding Shares of Wireless Capital
Stock shall have been changed into a different number of shares or a different
combination of shares by virtue of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Stock Price Per Share, the Series F Stock Price Per Share and the Series G
Stock Price Per Share shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares. Notwithstanding anything herein to the contrary, the amount
of Shareholder Cash Consideration which each Wireless Shareholder shall be paid
shall be reduced by such Wireless Shareholder's Excess Expense Share. At the
Effective Time, all shares of Wireless Capital Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously evidencing any such shares shall
thereafter represent the right to receive (subject to the provisions of this
Article 4 with respect to the applicable Escrow Portion and Excess Expense
Share), upon the surrender of such certificate in accordance with Section 4.3
(or in case of a lost, stolen or destroyed
9
Wireless stock certificate, compliance with the provisions of Section 4.3(c)), a
cash amount, rounded up to the nearest cent, equal to the Stock Price Per Share,
the Series F Stock Price Per Share or the Series G Stock Price Per Share (as
applicable) for each Outstanding Share of Wireless Capital Stock evidenced by
such certificate. The holders of such certificates evidencing such shares of
Wireless Capital Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such shares except as otherwise
provided herein or by Law.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of Glenayre, Merger Sub or Wireless, each share of capital
stock of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive one share of Wireless Common
Stock. From and after the Effective Time, Glenayre, as holder of all of the
outstanding shares of capital stock of Merger Sub, shall (1) have the right to
receive Wireless Common Stock as provided in this Section 4.1(b) upon its
surrender of the certificate or certificates representing all shares of the
capital stock of Merger Sub and (2) thereupon cease to have any rights with
respect to such shares of the capital stock of Merger Sub and its rights shall
be solely in respect of the Wireless Common Stock into which such shares of
capital stock of Merger Sub have been so converted. Until surrender, each
outstanding certificate which prior to the Effective Time represented capital
stock of Merger Sub shall be deemed for all corporate purposes to evidence
ownership of the number of whole shares of Wireless Common Stock into which the
shares of capital stock of Merger Sub have been so converted.
4.2 WIRELESS WARRANTS.
(a) At the later of the Effective Time and receipt by Glenayre of a
Warrant Termination Agreement, duly executed by a Wireless Warrantholder, (i)
Glenayre shall deliver to such Wireless Warrantholder against receipt of the
original Warrant Certificate representing the Wireless Warrant held by such
Wireless Warrantholder a check in the amount of the Warrant Termination Amount
with respect to such Wireless Warrant and payable to such Wireless Warrantholder
and (ii) all rights of the Wireless Warrantholder to acquire the capital stock
of Wireless pursuant to such Wireless Warrant shall cease and be of no further
force and effect and the Wireless Warrantholder shall have a right only to the
Warrant Termination Amount upon surrender of the original Warrant Certificate
representing such Warrant.
(b) For each outstanding Wireless Warrant, Schedules 4.2 and 5.3(b) of
the Disclosure Schedules sets forth (1) the Wireless Warrantholder owning such
Wireless Warrant, (2) the number of Warrant Shares and the exercise price with
respect thereto and (3) the Warrant Termination Amount.
4.3 EXCHANGE OF CERTIFICATES AND OTHER AGREEMENTS.
(a) At the Effective Time, Glenayre shall pay to the Escrow Agent as
the Escrow Funds cash in the aggregate amount of $12,000,000.
(b) Promptly after the Effective Time, Glenayre shall, after receipt
of:
10
(1) a certificate for Wireless Capital Stock (other than
Series F Preferred Stock and Series G Preferred Stock) held by a
Wireless Shareholder (or compliance with Section 4.3(c), if applicable)
and the Transmittal Letter executed by such Wireless Shareholder, (A)
determine the amount, rounded up to the nearest cent, equal to the
Escrow Portion and the Excess Expense Share (if any) with respect to
the shares of Wireless Capital Stock evidenced by such certificate and
(B) pay to such Wireless Shareholder cash in an amount, rounded up to
the nearest cent, equal to the difference between (i) the Stock Price
Per Share with respect to such shares and (ii) the Escrow Portion and
the Excess Expense Share (if any) with respect to such shares.
(2) a certificate for Series F Preferred Stock held by a
Wireless Shareholder (or compliance with Section 4.3(c), if applicable)
and the Transmittal Letter executed by such Wireless Shareholder, (A)
determine the amount, rounded up to the nearest cent, equal to the
Escrow Portion and the Excess Expense Share (if any) with respect to
the shares of Series F Preferred Stock evidenced by such certificate
and (B) pay to such Wireless Shareholder cash in an amount, rounded up
to the nearest cent, equal to the difference between (i) the Series F
Stock Price Per Share with respect to such shares and (ii) the Escrow
Portion and the Excess Expense Share (if any) with respect to such
shares.
(3) a certificate for Series G Preferred Stock held by a
Wireless Shareholder (or compliance with Section 4.3(c), if applicable)
and the Transmittal Letter executed by such Wireless Shareholder, (A)
determine the amount, rounded up to the nearest cent, equal to the
Escrow Portion and the Excess Expense Share (if any) with respect to
the shares of Series G Preferred Stock evidenced by such certificate
and (B) pay to such Wireless Shareholder cash in an amount, rounded up
to the nearest cent, equal to the difference between (i) the Series G
Stock Price Per Share with respect to such shares and (ii) the Escrow
Portion and the Excess Expense Share (if any) with respect to such
shares.
The Wireless Capital Stock certificates so surrendered shall immediately be
canceled. Until surrendered as contemplated by this Section 4.3(b) (or
compliance with Section 4.3(c), if applicable), each certificate representing
shares of Wireless Capital Stock shall be deemed at any time after the Effective
Time to evidence only the right to receive (subject to the provisions of this
Article 4 with respect to the applicable Escrow Portion and Excess Expense
Share) upon such surrender (or compliance with Section 4.3(c), if applicable)
and upon delivery to Glenayre of the Transmittal Letter executed by such
Wireless Shareholder a cash amount equal to the Stock Price Per Share, Series F
Stock Price Per Share or Series G Stock Price Per Share (as applicable) for each
Outstanding Share of Wireless Capital Stock evidenced by such certificate.
(c) In the event that a stock certificate representing shares of
Wireless Capital Stock is alleged by the holder thereof to have been lost,
stolen or destroyed, Glenayre shall nevertheless deliver to such Wireless
Shareholder and the Escrow Agent the cash amounts specified in Section
11
4.3, provided that Glenayre may require such holder to give Glenayre a bond (or
other adequate security) sufficient to indemnify it and the Surviving
Corporation against any claim that may be made against it or the Surviving
Corporation (including any expense or liability) on account of the alleged loss,
theft or destruction of such stock certificate or the payment of such cash
amount in exchange therefor.
4.4 WIRELESS STOCK OPTIONS.
(a) At the Effective Time, Wireless' obligations with respect to each
then outstanding Wireless Stock Option (whether vested or unvested), as amended
in the manner described in this Section, shall be assumed by Glenayre. The
Wireless Stock Options so assumed by Glenayre shall not expire and shall
continue to have, and be subject to, the same terms and conditions as set forth
in the applicable Wireless Stock Option Plan and/or any agreements pursuant to
which such Wireless Stock Options were granted as in effect immediately prior to
the Effective Time, except that (1) each Wireless Stock Option shall be
exercisable for that number of whole shares of Glenayre Common Stock equal to
the number of Option Shares covered by such Wireless Stock Option immediately
prior to the Effective Time, multiplied by the Option Exchange Ratio and rounded
down to the nearest whole number of shares of Glenayre Common Stock and (2) the
price at which each such Wireless Stock Option is exercisable shall be divided
by the Option Exchange Ratio (rounded up to the nearest cent).
(b) Glenayre shall reserve for issuance the aggregate number of shares
of Glenayre Common Stock that will become issuable upon the exercise of all
Wireless Stock Options outstanding at the Effective Time.
(c) For each outstanding Wireless Stock Option, Schedule 4.4(c) of the
Disclosure Schedules sets forth (1) the name, address and social security number
or Federal I. D. number, as the case may be, of the Wireless Optionholder owning
such Wireless Stock Option and (2) the number of Option Shares covered by such
Wireless Stock Option and the exercise price therefor.
4.5 WITHHOLDING RIGHTS.Glenayre and Wireless shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Wireless Capital Stock or Wireless Warrants such amounts as
Glenayre or Wireless is required to deduct and withhold with respect to the
making of such payment under the Code or any provision of any other Tax Law. To
the extent that amounts are so withheld by Glenayre or Wireless such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to such holder in respect of which such deduction and withholding was made by
Glenayre or Wireless.
4.6 DISSENTING SHARES.
(a) If provided for under the CGCL, notwithstanding any other provision
of this Agreement to the contrary, shares of Wireless Capital Stock that are
outstanding immediately prior to the Effective Time and which are held by
Wireless Shareholders who shall not have voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in writing
payment for such shares in accordance with Sections 1300 et seq. of the CGCL (a
12
"Dissenter Payment") and who shall not have withdrawn such demand or have been
deemed or otherwise have forfeited the right to a Dissenter Payment (such shares
of Wireless Capital Stock being referred to as "Dissenting Shares") shall not be
converted into or represent the right to receive any portion of the Shareholder
Cash Consideration, but instead shall be converted into and represent the right
to receive from the Surviving Corporation payment of such Wireless Shareholders'
Dissenter Payment as provided in Sections 1300 et seq. of the CGCL. Such
Wireless Shareholders shall be entitled to receive their Dissenter Payments in
accordance with the provisions of the CGCL, except that all Dissenting Shares
held by Wireless Shareholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to payment for such shares
of Wireless Capital Stock under the CGCL shall thereupon be deemed to have been
converted into, as of the Effective Time, the right to receive, without any
interest thereon, a cash amount (subject to the provisions of this Article 4
with respect to the applicable Escrow Portion and Excess Expense Share) equal to
the number of Dissenting Shares multiplied by the Stock Price Per Share, the
Series F Stock Price Per Share or the Series G Stock Price Per Share, as
applicable, upon surrender, in the manner provided in Section 4.3, of the
certificate or certificates that formerly evidenced such shares of Wireless
Capital Stock (or compliance with Section 4.3(c), if applicable) and the
delivery of the executed Transmittal Letter. All Dissenter Payments shall be
paid by Wireless.
(b) Wireless shall give Glenayre (1) prompt notice of any demands for
payment received by Wireless pursuant to Sections 1300 et seq. of the CGCL,
withdrawals of such demands and any other instruments served pursuant to the
CGCL and received by Wireless and (2) the opportunity to direct all negotiations
and proceedings with respect to demands for payment under the CGCL. Wireless
shall not, except with the prior written consent of Glenayre, make any payment
with respect to any demands for payment of, or offer to settle, or settle, any
such demands.
4.7 TRANSACTION EXPENSES.Glenayre shall bear the expenses of any
counsel, accountants or other consultants or advisors engaged by Glenayre or
Merger Sub in connection with the due diligence conducted by Glenayre or
otherwise incurred by them in connection with the Transactions. In the event the
Merger is not consummated, Wireless shall bear the expenses of any counsel,
accountants or other consultants or advisers engaged by Wireless in connection
with the due diligence conducted by Glenayre or otherwise incurred by Wireless
in connection with the Transactions. In the event the Merger is consummated,
Wireless shall incur no more than $500,000 of Wireless Transaction Expenses.
Notwithstanding the foregoing or anything in this Agreement to the contrary, if
Wireless incurs more than $500,000 of Wireless Transaction Expenses, the amount
in excess of $500,000 shall be paid out of the Shareholder Cash Consideration
("Excess Wireless Transaction Expenses"), each Wireless Shareholder to bear a
share of such Excess Wireless Transaction Expenses which is proportionate to the
Shareholder Cash Consideration which such Wireless Shareholder is entitled to
receive ("Excess Expense Share"). As used herein, "Wireless Transaction
Expenses" means the total amount of expenses incurred by Wireless in connection
with the Merger and the Transactions for the following: fees and expenses of all
attorneys, accountants, investment bankers, brokers, financial advisers or other
consultants or advisers of Wireless incurred in connection with negotiating,
drafting and preparing this Agreement and any other agreements or documents
contemplated hereby, expenses
13
of the employees or advisers of Wireless attending the Closing, the expenses of
the due diligence conducted by Wireless hereunder, and the expenses relating to
the Wireless Shareholders' meeting to approve the Merger (or the furnishing of
consents to the Wireless Shareholders). A final statement of all Wireless
Transaction Expenses shall be provided to Glenayre no later than one Business
Day before the Closing.
4.8 ESCROW. On the Closing Date, Glenayre, the Shareholder
Representative and the Escrow Agent shall enter into the Escrow Agreement. The
cash payment of $12,000,000 to be paid by Glenayre to the Escrow Agent pursuant
to Section 4.3(a) shall be referred to herein as the "Escrow Funds." All
interest, dividends or other income earned on the investment and re-investment
of the Escrow Funds and while held by the Escrow Agent shall be referred to
herein as the "Escrow Returns." The Escrow Funds and the Escrow Returns are
collectively referred to herein as the "Escrow." The Escrow shall be applied to
indemnify, defend and hold harmless Glenayre and Wireless against Losses in
accordance with the terms and conditions of this Agreement. The Escrow Agent
shall hold, invest and distribute the Escrow according to the provisions of this
Article 4 and the Escrow Agreement. In the event that there is any inconsistency
between the provisions of this Article 4 and the Escrow Agreement, the Escrow
Agreement shall control.
(a) Term of Escrow. Except as provided in Section 4.8(c), the Escrow
shall not be released by the Escrow Agent until the Expiration Date.
(b) Investment of Escrow Funds and Escrow Returns. The Escrow shall, as
nearly as may be practicable, be continuously invested and reinvested by the
Escrow Agent as provided in the Escrow Agreement.
(c) Distribution of the Escrow.
(1) The Escrow Agent shall apply the Escrow to any Loss, and
distribute Escrow to Glenayre, in accordance with Section 4.9 and the
Escrow Agreement.
(2) Not later than the Expiration Date, Glenayre shall deliver
to the Escrow Agent and the Shareholder Representative written notice
stating the name of each Wireless Shareholder, if any, who has not
complied with the delivery requirements of Section 4.3 in order to
receive any cash to which he, she or it may otherwise be entitled as a
result of the Merger (the "Nonsubmitting Shareholder"). If Glenayre
does not so deliver such notice by the Expiration Date, no Wireless
Shareholder shall be deemed to be a Nonsubmitting Shareholder. Not
later than 10 Business Days after the Expiration Date, the Escrow Agent
shall deliver to each Wireless Shareholder (other than a Nonsubmitting
Shareholder) his, her or its Proportionate Percentage of the Escrow
then held by the Escrow Agent and to Glenayre the Proportionate
Percentage of the Escrow then held by the Escrow Agent with respect to
each Nonsubmitting Shareholder to be held in trust by Glenayre for such
Nonsubmitting Shareholder, less the Escrow for which a Notice
14
of Claim was received by the Escrow Agent prior to the Expiration Date.
Any retained Escrow shall, upon final determination or settlement of the
Loss being determined or contested, be applied thereto in accordance
with Section 4.8 of this Agreement and any balance delivered to the
Wireless Shareholders (other than Nonsubmitting Shareholders) and to
Glenayre, with respect to Nonsubmitting Shareholders, in accordance with
such Wireless Shareholders' respective Proportionate Percentages.
4.9 APPLICATION OF ESCROW TO A LOSS.
(a) At any time prior to the Expiration Date, Glenayre may give the
Escrow Agent and the Shareholder Representative a Notice of Claim pursuant to
Section 9.2, together with notice that Glenayre intends to apply all or a part
of the Escrow to the payment of the Loss specified in such Notice of Claim. In
the event that a Loss has not been liquidated or determined, Glenayre may, at
any time prior to the Expiration Date, give the Escrow Agent and the Shareholder
Representative a Notice of Claim in which Glenayre describes the general nature
of the Indemnity Claim and makes a good faith estimate of the Loss.
(b) If the Shareholder Representative does not give written notice to
Glenayre and the Escrow Agent within 30 days after the receipt of such Notice of
Claim that he protests the proposed application of the Escrow to the Loss as
specified in such Notice of Claim, then the Escrow shall be applied to such Loss
as set forth in such Notice of Claim.
(c) If the Shareholder Representative does give written notice to
Glenayre and the Escrow Agent within 30 days after the receipt of such Notice of
Claim that he protests the proposed application of the Escrow to the Loss as
specified in such Notice of Claim, then the proposed application shall be
referred by Glenayre to, and settled by, binding arbitration in accordance with
the then applicable Rules of Commercial Arbitration of the American Arbitration
Association. The arbitration panel or arbitrator (as applicable) shall be
selected as provided in Section 4.9(d). The arbitration panel or arbitrator (as
applicable) shall determine the amount, if any, of such proposed application
which is proper. The venue of the arbitral proceedings shall be in Santa ▇▇▇▇▇
County, California. In reaching a decision, the arbitration panel or arbitrator
(as applicable) shall apply the principles of law that a North Carolina court,
in applying North Carolina law, would use in the event of litigation on the same
issues. The decision rendered by the arbitration panel or arbitrator (as
applicable) shall be final and binding on Glenayre, the Wireless Shareholders
and the Escrow Agent. Judgment on the award rendered by the arbitration panel or
arbitrator (as applicable) may be entered in any court having jurisdiction
thereof. All attorneys' fees, fees for expert witnesses and all other costs
incurred by the Wireless Shareholders, the Shareholder Representative and the
Escrow Agent in connection with the Indemnity Claim which is the subject of the
arbitration and any fees charged by the arbitrators or the American Arbitration
Association shall be paid out of the Escrow.
(d) In the event that the Shareholders Representative protests the
proposed application of the Escrow to a Loss as provided in Section 4.9(c) and
Glenayre and the Shareholders Representative cannot resolve such disagreement
within the 30-day period specified in Section 4.9(c), then promptly
15
thereafter Glenayre shall name an individual to serve as an arbitrator on the
arbitration panel to determine the Indemnity Claim and shall give the
Shareholder Representative notice thereof; within 10 days after such notice, the
Shareholder Representative shall name a second individual to serve as an
arbitrator on such arbitration panel; and the two individuals so named shall
agree upon and name a third individual to serve as an arbitrator on such
arbitration panel. In the event that the Shareholder Representative does not
name a second individual to serve on the arbitration panel within such 10-day
period, then the arbitrator named by Glenayre shall serve as the sole
arbitrator. In the event that the two individuals named by Glenayre and the
Shareholder Representative, respectively, cannot agree on a third member within
10 days, then the selection of a third individual to serve on the arbitration
panel shall be made by the American Arbitration Association or, if the American
Arbitration Association fails to choose an arbitrator within 15 days after
request by Glenayre or the Shareholders Representative, by the Presiding Judge
of Santa ▇▇▇▇▇ County, California.
(e) Each Wireless Shareholder shall be liable for its Proportionate
Percentage of any Loss indemnifiable under Section 9.1, provided that, but
subject to the last sentence of Section 9.1, no Wireless Shareholder shall be
liable for any Loss otherwise indemnifiable hereunder in excess of its
Proportionate Percentage of the Escrow.
(f) The approval of this Agreement and the Agreement of Merger by the
Wireless Shareholders as provided in the CGCL will constitute (1) the approval
of all provisions of this Agreement and the Agreement of Merger, including the
indemnification obligations of the Wireless Shareholders under Article 9, (2)
the approval of the Escrow Agreement and all of the arrangements relative
thereto, including the placement in escrow of the Escrow described in Section
4.3 and (3) the appointment by all Wireless Shareholders of the Shareholder
Representative pursuant to the terms of Section 4.10 and all Wireless
Shareholders shall thereby be bound by the terms of this Agreement, the
Agreement of Merger and the Escrow Agreement.
4.10 SHAREHOLDER REPRESENTATIVE.
(a) Appointment of Shareholder Representative. The approval of this
Agreement and the Agreement of Merger by the Wireless Shareholders as provided
in the CGCL shall constitute (a) the approval and appointment of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ (or his successor) as the Shareholder Representative to act as the agent
for the Wireless Shareholders pursuant to the terms hereof and (b) the approval
and authorization for all of the arrangements relating thereto, including: (i)
Glenayre's payment of the Escrow Funds to the Escrow Agent; (ii) the execution,
delivery and performance of the Escrow Agreement by the Shareholder
Representative; (iii) the distribution of the Escrow to the Wireless
Shareholders; (iv) the Shareholder Representative's performance of his
obligations under this Agreement and the Escrow Agreement, or in connection
therewith; and (v) the rights of the Shareholder Representative set forth herein
and in the Escrow Agreement. No bond shall be required of the Shareholder
Representative. The Shareholder Representative undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement and in the
Escrow Agreement and no implied covenants or obligations shall be read into this
Agreement or the Escrow Agreement against the Shareholder Representative.
16
(b) Liability and Authority of Shareholder Representative; Successors
and Assigns.
(i) The Shareholder Representative shall not incur any
liability with respect to any action taken or suffered by him or
omitted hereunder as Shareholder Representative while acting in good
faith, and any act done or suffered or omitted hereunder pursuant to
the advice of counsel shall be conclusive evidence of such good faith.
The Shareholder Representative may, in all questions arising hereunder
or under the Escrow Agreement, rely on the advice of counsel and for
anything done, omitted or suffered in good faith by the Shareholder
Representative based on such advice, the Shareholder Representative
shall not be liable to anyone. Without limiting the generality of the
foregoing, if the Shareholder Representative is required by the terms
hereof or the Escrow Agreement to determine the occurrence of any event
or contingency, the Shareholder Representative shall, in making such
determination, be liable to the Wireless Shareholders only for his
proven willful misconduct or gross negligence, as determined in light
of all the circumstances, including the time and facilities available
to him in the ordinary conduct of his business. In determining the
occurrence of any such event or contingency the Shareholder
Representative may request from any of the Wireless Shareholders or any
other Person such reasonable additional evidence as the Shareholder
Representative in his sole discretion may deem necessary to determine
any fact relating to the occurrence of such event or contingency, and
may at any time inquire of and consult with others, including any of
the Wireless Shareholders, and the Shareholder Representative shall not
be liable to any Wireless Shareholder for any damages resulting from
its delay in acting hereunder pending his receipt and examination of
additional evidence requested by him. The Shareholder Representative
may rely upon any instrument, not only as to its due execution,
validity and effectiveness, but also as to the truth and accuracy of
any information contained therein, which the Shareholder Representative
shall in good faith believe to be genuine, to have been signed or
presented by the Person or parties purporting to sign the same and to
conform to the provisions of this Agreement or the Escrow Agreement, as
the case may be.
(ii) The Shareholder Representative is authorized, in his sole
discretion, to comply with orders issued or process entered by any
court with respect to the Escrow, without determination by the
Shareholder Representative of such court's jurisdiction in the matter.
If any portion of the Escrow is disbursed to the Shareholder
Representative and is at any time attached, garnished or levied upon
under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined
by any court order, or in case any order, judgment or decree shall be
made or entered by any court affecting such property or any part
thereof, then and in any such event, the Shareholder Representative is
authorized, in his sole discretion, but in good faith, to rely upon and
comply with any such order, writ, judgment or decree which he is
advised by legal counsel selected by him is binding upon him without
the need for appeal or other action; and if the Shareholder
Representative complies with any such order, writ, judgment or decree,
he shall not be liable to any Wireless Shareholder or to any other
Person by reason of such compliance even though such order, writ,
judgment or decree may be subsequently reversed, modified, annulled,
set aside or vacated.
(iii) In no event shall the Shareholder Representative be
liable to any Wireless Shareholder for incidental, indirect, special,
consequential or punitive damages. The
17
Shareholder Representative may consult legal counsel selected by him in
the event of any dispute or question as to the construction of any of
the provisions hereof or of the Escrow Agreement or of his duties
hereunder or thereunder, and shall incur no liability and shall be
fully indemnified by the Wireless Shareholders from any liability
whatsoever in acting in good faith in accordance with the opinion or
instruction of such counsel.
(iv) In the event of the death or permanent disability of
the Shareholder Representative, or his resignation as the Shareholder
Representative, a successor Shareholder Representative shall be elected
by a majority vote of the Wireless Shareholders, with each Wireless
Shareholder to be given a vote equal to its Proportionate Percentage
pursuant to a procedure to be mutually agreed upon among the Wireless
Shareholders. The Wireless Shareholders shall cause to be delivered to
Glenayre prompt written notice of such election of a successor
Shareholder Representative. Pending the election of a successor
Shareholder Representative, the Wireless Shareholder holding the
largest number of Outstanding Shares of Wireless Capital Stock as of
the Effective Time (excluding the former Shareholder Representative)
shall act as the interim Shareholder Representative. Each interim and
successor Shareholder Representative shall have all of the power,
authority, rights and privileges conferred by this Agreement upon the
original Shareholder Representative, and the term "Shareholder
Representative" as used herein shall be deemed to include any interim
or successor Shareholder Representative.
(v) The Shareholder Representative shall have full power and
authority to represent the Wireless Shareholders and their successors
and assigns, with respect to all matters arising under this Agreement
and the Escrow Agreement, and all action taken by the Shareholder
Representative hereunder shall be binding upon the Wireless
Shareholders and their successors and assigns, as if expressly
confirmed and ratified in writing by each of them. The appointment of
the Shareholder Representative under this Agreement shall survive the
death, incapacity, dissolution, liquidation or any assignment of rights
or assets of any Wireless Shareholder. Without limiting the generality
of the foregoing, the Shareholder Representative shall have full power
and authority on behalf of the Wireless Shareholders to: (i) interpret
all of the terms and provisions of this Agreement and the Escrow
Agreement; (ii) to the extent of the Escrow, compromise or settle any
claims asserted under this Agreement or in connection with the
Transactions; (iii) authorize payments with respect thereto from the
Escrow, on behalf of the Wireless Shareholders; (iv) execute, deliver
and perform the Escrow Agreement; and (v) authorize the Escrow Agent to
distribute the Escrow to the Wireless Shareholders.
(c) Shareholder Representative Expenses. Each Wireless Shareholder
shall be liable for its Proportionate Percentage of any expenses (including
reasonable attorneys' fees) paid or incurred by the Shareholder Representative
in connection with the performance of his obligations as Shareholder
Representative. The Shareholder Representative shall be entitled, but not
limited, to reimbursement of any such expenses from the Escrow prior to any
distribution thereof to the Wireless Shareholders. Without limiting the
generality of the foregoing, each Wireless Shareholder shall be responsible for
its Proportionate Percentage of the fees and expenses of the Shareholder
Representative as set forth in Attachment A to this Agreement, and, in
furtherance thereof, the Shareholder Representative shall receive an amount as a
non-refundable retainer for his services hereunder and under the Escrow
18
Agreement equal to the amount set forth in Attachment A as the "retainer." Such
retainer shall be included in the Wireless Transaction Expenses.
(d) Right of Interpleader. Should the Shareholder Representative be in
doubt as to what action to take under this Agreement or the Escrow Agreement,
the Shareholder Representative shall have the right, but not the obligation,
either to (1) withhold any action, payment or distribution until his doubt is
resolved or (2) institute a petition for interpleader in any court of competent
jurisdiction to determine his rights and obligations.
(e) Indemnification by Wireless Shareholders. From and at all times
after the date of this Agreement, the Wireless Shareholders, in accordance with
their respective Proportionate Percentages shall, to the fullest extent
permitted by law and to the extent provided herein, indemnify and hold harmless
the Shareholder Representative against any and all actions, claims (whether or
not valid), losses, damages, liabilities, costs and expenses of any kind or
nature whatsoever (including reasonable attorney's fees, costs and expenses)
incurred by or asserted against the Shareholder Representative from and after
the date hereof, whether direct, indirect or consequential, as a result of or
arising from or in any way relating to any claim, demand, suit, action or
proceeding (including any inquiry or investigation) by any Wireless Shareholder
or any other Person, whether threatened or initiated, asserting a claim for any
legal or equitable remedy against any Person under any statute or regulation,
including, but not limited to, any federal or state securities laws, or under
any common law or equitable cause or otherwise, arising from or in connection
with the negotiation, preparation, execution, performance or failure of
performance of the Escrow Agreement by the Shareholder Representative or any
transactions contemplated therein, whether or not the Shareholder Representative
is a party to any such action, proceeding, suit or the target of any such
inquiry or investigation; provided, however, that the Shareholder Representative
shall have no right to be indemnified hereunder for any liability finally
determined by a court of competent jurisdiction, subject to no further appeal,
to have resulted solely from the gross negligence or willful misconduct of the
Shareholder Representative. The Shareholder Representative shall, in his sole
discretion, have the right to employ counsel (who may be selected by the
Shareholder Representative in his sole discretion) in any such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be paid by the Wireless Shareholders All such fees and expenses payable by
the Wireless Shareholders pursuant to the foregoing sentence shall be paid from
time to time as incurred, both in advance of and after the final disposition of
such action or claim. All of the foregoing losses, damages, costs and expenses
of the Shareholder Representative shall be payable by the Wireless Shareholders
in accordance with their respective Proportionate Percentages upon demand by the
Shareholder Representative. The obligations of the Wireless Shareholders under
this Section shall survive any termination of this Agreement or the Escrow
Agreement and the resignation or removal of the Shareholder Representative.
(f) Rights of Glenayre and Shareholder Representative. The parties
agree that nothing in this Section shall impair, limit, modify or affect, as
between Glenayre and the Shareholder Representative, on behalf of the Wireless
Shareholders, the respective rights and obligations of Glenayre, on the one
hand, and the Shareholder Representative, on behalf of the Wireless
Shareholders, on the other hand, under this Agreement or under the Escrow
Agreement.
19
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF WIRELESS
Wireless hereby makes the representations and warranties to Glenayre
and Merger Sub contained in this Article 5. As used herein, where a statement is
made "to the knowledge" of Wireless or a statement is made that Wireless "knows"
a particular fact or circumstance, such knowledge shall include the actual
knowledge, after reasonable inquiry, of each of the Persons set forth on
Schedule 5 of the Disclosure Schedules.
5.1 ORGANIZATION AND QUALIFICATION. Wireless is a corporation duly
organized, validly existing and in good standing under the Laws of California
and has the requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted.
Wireless is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the failure to be so
qualified would have a Wireless Material Adverse Effect.
5.2 ARTICLES OF INCORPORATION; BYLAWS; MINUTE BOOKS. Wireless has
provided to Glenayre a complete and correct copy of its Amended and Restated
Articles of Incorporation and Bylaws currently in effect. Such Amended and
Restated Articles of Incorporation and Bylaws are in full force and effect.
Wireless is not in violation of any provisions of its Amended and Restated
Articles of Incorporation or Bylaws. The minute books of Wireless (the originals
of which have been made available to Glenayre or its attorneys) contain all
records of meetings of directors of Wireless and Wireless Shareholders and other
corporate actions taken by them. Neither the directors nor the Wireless
Shareholders have taken any material corporate action that is not reflected in
the minute books of Wireless.
5.3 CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock of
Wireless consists of (i) 50,000,000 shares of Wireless Common Stock, 5,733,710
shares of which are issued and outstanding, 5,465,657 shares of which are
reserved for future issuance pursuant to outstanding Wireless Stock Options
(which options were not granted in violation of any preemptive rights), and
454,114 shares of which are reserved for future issuance pursuant to outstanding
Wireless Warrants (which warrants were not granted in violation of any
preemptive rights), and (ii) 13,805,985 shares of Wireless Preferred Stock. The
Wireless Preferred Stock is divided into seven series as follows: (1) 750,000
shares of Series A Preferred Stock, all of which are issued and outstanding and
convertible into 1,500,000 shares of Wireless Common Stock, (2) 3,915,333 shares
of Series B Preferred Stock, all of which are issued and outstanding and
convertible into 3,915,333 shares of Wireless Common Stock, (3) 2,500,000 shares
of Series C Preferred Stock, all of which are issued and outstanding and
convertible into 2,500,000 shares of Wireless Common Stock, (4) 2,108,951 shares
of Series D Preferred Stock, all of which are issued and outstanding and
convertible into 2,108,951 shares of Wireless Common Stock, (5) 1,517,258 shares
of Series E Preferred Stock, all of which are issued and outstanding and
convertible into 1,517,258 shares of Wireless Common Stock, (6) 511,510 shares
of Series F Preferred Stock, all
20
of which are issued and outstanding and convertible into 511,510 shares of
Wireless Common Stock, and (7) 2,502,933 shares of Series G Preferred Stock, all
of which are issued and outstanding and convertible into 2,502,933 shares of
Wireless Common Stock. The Wireless Capital Stock has been duly authorized and
all issued and outstanding shares of Wireless Capital Stock (i) have been duly
and validly issued, (ii) are fully paid and nonassessable and (iii) were not
issued in violation of any preemptive rights. The rights, preferences,
privileges and restrictions of the shares of Wireless Capital Stock are as
stated in the Amended and Restated Articles of Incorporation of Wireless. The
names and addresses of all of the record owners of the outstanding shares of
Wireless Capital Stock and the certificate numbers for such shares are set forth
on Schedule 5.3(a) of the Disclosure Schedules. Each such share of Wireless
Capital Stock is represented by a certificate.
(b) Schedule 5.3(b) of the Disclosure Schedules lists all options,
warrants or other rights, agreements, arrangements or commitments of any
character of Wireless relating to the issued or unissued capital stock of
Wireless to issue or sell any shares of capital stock of, or other equity
interests in, Wireless outstanding as of the date of this Agreement. All shares
of Wireless Common Stock subject to issuance under the Wireless Stock Options,
upon issuance on the terms and conditions specified in the Wireless Stock Option
Plans and agreements pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth on
Schedule 5.3(b) of the Disclosure Schedules, there are no outstanding
contractual obligations of Wireless to repurchase, redeem or otherwise acquire
any shares of Wireless Capital Stock or make any investment (in the form of a
loan, capital contribution or otherwise) in any other Person. All offers and
sales of Wireless Capital Stock prior to the date hereof were at all relevant
times duly registered under or exempt from the registration requirements of the
Securities Act and the applicable Blue Sky Laws.
5.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Wireless has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by Wireless and the consummation by it of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of Wireless and no other corporate proceedings on the part of
Wireless are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, any approval and adoption
of this Agreement by the Wireless Shareholders and the filing and recordation of
appropriate merger documents as required by the CGCL). This Agreement has been
duly and validly executed and delivered by Wireless and, assuming the due
authorization, execution and delivery by Glenayre and Merger Sub, constitutes a
legal, valid and binding obligation of Wireless enforceable against it in
accordance with its terms, except as such enforceability may be limited by
principles of public policy and subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and by such principles of equity as may affect the availability
of equitable remedies.
5.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth on Schedule 5.5 of the Disclosure Schedules,
subject to
21
satisfaction of the conditions set forth in Article 8, the execution
and delivery of this Agreement by Wireless do not, and the performance of the
Transactions by Wireless will not, (1) conflict with or violate the Amended and
Restated Articles of Incorporation or Bylaws of Wireless, (2) conflict with or
violate any Law applicable to Wireless, its property or its assets, except where
such conflict or violation would not have a Wireless Material Adverse Effect, or
(3) result in any breach of or constitute a default (or any event which with
notice or lapse of time or both would become a default) under, result in the
loss of a material benefit under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance on any property or asset of Wireless pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Wireless is a party or by which it or
its property or assets is bound or affected, except where such breach, default,
loss, right or Encumbrance would not have a Wireless Material Adverse Effect.
(b) The execution and delivery of this Agreement by Wireless do not,
and the performance of the Transactions by Wireless will not, require any
consent or authorization of, or filing with or notification to, any Governmental
Authority except for (1) applicable requirements, if any, of the Securities Act
or Blue Sky Laws, (2) the pre-merger notification requirements of the HSR Act
and (3) filing and recordation of appropriate merger documents as required by
the CGCL.
5.6 OTHER INTERESTS. Except as set forth on Schedule 5.6 of the
Disclosure Schedules, Wireless owns no direct or indirect interest (whether
absolute or contingent) or investment in any Person.
5.7 FINANCIAL STATEMENTS. Schedule 5.7 of the Disclosure Schedules
contains the audited financial statements of Wireless for the years ended June
30, 1997 and June 30, 1996, respectively, and unaudited interim statement of
operations and balance sheet for the two-month period ended August 31, 1997 of
Wireless (collectively, the "Financial Statements"). Each of the balance sheets
provided to Glenayre (including the related notes and schedules) fairly
presents, in all material respects, the financial position of Wireless as of its
date and each of the statements of operations and cash flows provided to
Glenayre (including any related notes and schedules) fairly presents, in all
material respects, the results of operations or cash flows of Wireless for the
periods set forth therein (subject, in the case of unaudited statements, to
normal quarterly and year-end adjustments which will be consistent with prior
quarters' and years' adjustments and which would not be material in amount or
effect) in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein (except that the unaudited
Financial Statements may not have notes thereto). The Financial Statements have
been prepared from the books and records of Wireless which fairly reflect, in
all material respects, the transactions and dispositions of the assets of
Wireless in accordance with GAAP. As of any date for which a balance sheet is
provided, Wireless had no material liabilities, contingent or otherwise, whether
due or to become due, known or unknown, as of such date other than as indicated
on the balance sheet, or in the notes thereto.
5.8 SUBSEQUENT EVENTS. Except as set forth on Schedule 5.8 of the
Disclosure
22
Schedules or as otherwise contemplated by this Agreement, since June 30, 1997
and as of the date of this Agreement, there has not been:
(a) any Wireless Material Adverse Effect;
(b) any sale, grant, dividend or other disposition, transfer or
Encumbrance of any material asset or material interest owned or possessed by
Wireless, other than those occurring in the ordinary course of business
consistent with past practices and prior periods;
(c) any expenditure or commitment by Wireless for the acquisition of
assets of any kind, in the aggregate in excess of $50,000 (excluding any single
expenditure or commitment of less than $5,000), other than expenditures or
commitments in the ordinary course of business consistent with past practices
and prior periods;
(d) any damage, destruction or loss of such character as to interfere
materially with the continued operation of any part of the business of Wireless
(whether or not such loss was insured against), or to cause a Wireless Material
Adverse Effect;
(e) any increase in the cash compensation payable or to become payable
by Wireless to any officer or key employee of Wireless, or any agreement
therefor;
(f) any change made or authorized in the Amended and Restated Articles
of Incorporation or Bylaws of Wireless, except as contemplated by the
Transactions;
(g) any loans or advances by or to Wireless, other than renewals or
extensions of existing indebtedness, uses of lines of credit and routine travel
advances to its employees, in each case in the ordinary course of business;
(h) any cancellation or payment by Wireless of any indebtedness owing
to it or any cancellation or settlement by Wireless of any claims against
others, other than in the ordinary course of business consistent with past
practices;
(i) any material failure by Wireless to operate its business other than
in the ordinary course of business, any change from past practices in the manner
of building or depleting inventories, incurring or collecting receivables, or
incurring or paying trade payables or accrued liabilities;
(j) any material failure to maintain the books and records of Wireless
consistent with past practices or any material write-down of assets shown on the
books and records of Wireless;
(k) any material change in accounting practices; or
(l) any agreement or commitment by or on behalf of Wireless to do or to
take any of the actions referred to in Section 5.8 (a) through (k).
23
5.9 TAX MATTERS. Wireless has (1) timely filed all Tax reports and
returns required to be filed by it when due (including any extensions of such
due date), and such reports and returns were true and complete, (2) duly paid
all Taxes and other charges (whether or not shown on any Tax return) due or
claimed to be due from it by federal, foreign, state or local taxing authorities
or an adequate reserve has been established therefor in the Financial Statements
and (3) true and complete copies of all Tax reports and returns for the last
three tax years have been delivered to Glenayre. The reserves for Taxes
contained in the Financial Statements and carried on the books of Wireless are
adequate to cover all Tax liabilities. Except as set forth on Schedule 5.9 of
the Disclosure Schedules, no extensions of time to file any Tax return by
Wireless are currently in effect. Since June 30, 1997, Wireless has incurred no
material Tax liabilities other than in the ordinary course of business. There
are no Tax liens (other than liens for current Taxes not yet due) upon any
properties or assets of Wireless. Except as set forth on Schedule 5.9 of the
Disclosure Schedules, there are no pending nor, to the knowledge of Wireless,
threatened examinations relating to, or claims asserted for, Taxes or
assessments against Wireless. Wireless has not granted or been requested to
grant any extension of the limitation period applicable to any claim for Taxes
or assessments with respect to Taxes. Wireless is not a party to any Tax
allocation or sharing agreement. Wireless has duly withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor or other Person that required
withholding (and have otherwise complied with all applicable Laws relating to
the payment and withholding of Taxes).
5.10 EMPLOYEES AND FRINGE BENEFIT PLANS.
(a) Schedule 5.10(a) of the Disclosure Schedules sets forth the names
and titles of all members of the Board of Directors and officers of Wireless and
all employees of Wireless.
(b) Schedule 5.10(b) of the Disclosure Schedules sets forth each
employment, bonus, commission, deferred compensation, pension, stock option,
stock appreciation right, employee stock ownership, profit-sharing or retirement
plan, arrangement or practice, each medical, vacation, retiree medical,
severance pay plan, and each other agreement or fringe benefit plan, arrangement
or practice, of Wireless, whether in the form of a written document or not,
which affects one or more of its respective employees, including all "employee
benefit plans" as defined by Section 3(3) of ERISA (collectively, the "Plans").
(c) For each Plan which is an "employee benefit plan" under Section
3(3) of ERISA, Wireless has delivered to Glenayre correct and complete copies of
the plan documents and summary plan descriptions, the three most recent
determination letters received from the Internal Revenue Service, if any, the
three most recent Form 5500 Annual Reports, if any, the three most recent trust
statements, financial statements or other documents detailing the investments
and assets of such Plan, if any, and all related trust agreements, insurance
contracts and funding agreements that implement each such Plan.
(d) Wireless has no commitment, whether in writing or not and whether
legally binding or not, (1) to create any additional Plan; (2) to modify or
change any Plan in any material respect; or (3) to maintain for any period of
time any such Plan. Schedule 5.10(d) of the Disclosure
24
Schedules sets forth an accurate and complete description of the funding
policies (and commitments, if any) of Wireless with respect to each such
existing Plan. For any Plan that is an "employee stock ownership plan" as
defined by Section 4975(e)(7) of the Code or Section 407(d)(6) of ERISA or is
invested in any securities issued by Wireless or any of its affiliates, Schedule
5.10(d) of the Disclosure Schedules also sets forth an accurate and complete
description of (1) how and when the Plan acquired any such securities and the
amount acquired and (2) any borrowings or indebtedness incurred by the Plan with
respect to any such acquisition.
(e) None of Wireless or any Plan or any trustee, administrator,
fiduciary or sponsor of any Plan has engaged in any prohibited transaction as
defined in Section 406 of ERISA or Section 4975 of the Code for which there is
no statutory exemption in Section 408 of ERISA or Section 4975 of the Code; all
filings, reports and descriptions as to the Plans (including Form 5500 Annual
Reports, summary plan descriptions, and summary annual reports) required to have
been made or distributed to participants, the Internal Revenue Service, the
United States Department of Labor and other Governmental Authorities have been
made in a timely manner. Except as set forth on Schedule 5.10(e) of the
Disclosure Schedules, there are no disputed claims, litigation, governmental
proceedings or investigations pending or, to the knowledge of Wireless,
threatened with respect to any of the Plans, the related trusts or other funding
media, or any fiduciary, trustee, administrator or sponsor of the Plans, except
for claims for health or medical benefits arising in the normal course of plan
administration that have not progressed beyond the Plan's internal claims
procedures and, if granted, will not differ in any material respect from the
plan benefits historically provided under the Plan. Such Plans have been
established, maintained and administered in all material respects in accordance
with its governing documents and in compliance in all material respects with all
applicable provisions of ERISA and the Code. Each Plan intended to qualify under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code has either received a favorable determination, opinion,
notification or advisory letter from the IRS with respect to each such Plan as
to its qualified status under the Code, including all amendments to the Code
effected by the Tax Reform Act of 1986 and subsequent legislation, or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a determination letter and make any
amendments necessary to obtain a favorable determination, and, since the date of
each most recent determination letter, no event has occurred and no condition or
circumstance has existed that resulted or is likely to result in the revocation
of any such determination or that could adversely affect the qualified status of
any such Plan.
(f) Wireless has complied in all material respects with all applicable
Laws relating to employees' employment and/or employment relationships,
including employment termination Laws, employment leave Laws, wage and hour
related Laws, anti-discrimination Laws, employee safety and workers compensation
Laws and COBRA (defined herein to mean the requirements of Section 4980B of the
Code, Proposed Treasury Regulation Section 1.162-26 and Part 6 of Subtitle B of
Title I of ERISA).
(g) Except as set forth on Schedule 5.10(g) of the Disclosure
Schedules, the consummation of the Transactions will not (1) result in the
payment or series of payments by Wireless to any employee or other Person of an
"excess parachute payment" within the meaning
25
of Section 280G of the Code, (2) entitle any employee or former employee of
Wireless to severance pay, unemployment compensation or any other payment, or
(3) accelerate the time of payment or vesting of any stock option, stock
appreciation right, deferred compensation, unreceived compensation, employee
payable or other employee benefits under any Plan (including vacation and sick
pay).
(h) None of the Plans that are "welfare benefit plans," within the
meaning of Section 3(1) of ERISA, provide for continuing benefits or coverage
after termination or retirement from employment, except for COBRA rights under a
"group health plan" as defined in Section 4980B(g) of the Code and Section 607
of ERISA.
(i) Neither Wireless nor any "affiliate" of Wireless (defined herein to
mean an entity which is a member of a "controlled group of corporations," or
under "common control," with Wireless as defined in Section 414(b) or (c) of the
Code or in the regulations promulgated thereunder) has ever participated in,
contributed to or withdrawn from a multiemployer plan as defined in Section
4001(a)(3) of ERISA, and Wireless has not incurred, and does not owe, any
liability as a result of any partial or complete withdrawal by any employer from
such a multiemployer plan as described under Sections 4201, 4203 or 4205 of
ERISA.
(j) Neither Wireless nor any "affiliate" of Wireless (as defined in
Section 5.10(i)) has ever sponsored, maintained, participated in or contributed
to an employee benefit plan or arrangement that is or was subject to Title IV of
ERISA or any of the minimum funding standards or requirements of Section 412 of
the Code.
5.11 TITLE TO ASSETS.
(a) Real Property and Leasehold Interests. Wireless owns no real
property. Schedule 5.11(a) of the Disclosure Schedules sets forth all leases
(including all amendments thereto) of real property under which Wireless is a
lessee or sublessee (the "Leases"). Wireless has delivered to Glenayre copies of
all Leases and all material notices from the landlords thereunder or its leasing
agents with respect thereto, set forth on Schedule 5.11(a) of the Disclosure
Schedules. Wireless has a valid and enforceable leasehold interest under all of
the Leases, subject only to the terms and conditions set forth in the Leases and
except as such enforceability may be limited by principles of public policy and
subject to applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies. Wireless is not in
default in any material respect under any Lease, and there does not exist any
event which with notice or the lapse of time or both would constitute such a
default by Wireless thereunder. To the knowledge of Wireless, the landlord under
each Lease is not in default thereunder and there does not exist any event which
with notice or the lapse of time or both would constitute a default by such
landlord thereunder. Except as set forth on Schedule 5.11(a) of the Disclosure
Schedules, as to all such real property leased by Wireless (the "Leased
Property"):
(1) Wireless has adequate rights of ingress and egress to all
such Leased Property; and
26
(2) no notice of violation of any applicable Law, or of any
covenant, condition, restriction or easement, affecting the Leased
Property or with respect to the use or occupancy of the Leased
Property, has been received by Wireless from any Governmental Authority
having jurisdiction over the Leased Property.
(b) Equipment. Wireless has good and marketable title to, or a valid
leasehold interest in, all machinery and equipment, computers, office supplies,
furniture, parts, transportation equipment and other tangible personal property
(other than Inventory as hereinafter defined) material to the business of
Wireless as presently conducted (the "Equipment"), free and clear of all
Encumbrances, except those set forth on Schedule 5.11(b) of the Disclosure
Schedules.
(c) Inventory. Wireless has good and marketable title to (i) all of its
inventories reflected on the balance sheet included in the financial statements
for Wireless as of August 31, 1997 (the "August 31, 1997 Balance Sheet") and
(ii) inventory acquired after August 31, 1997, excluding inventory disposed of
in the ordinary course of business (collectively, the "Inventory"), free and
clear of all Encumbrances, except those set forth on Schedule 5.11(c) of the
Disclosure Schedules.
(d) Receivables. Except as set forth on Schedule 5.11(d) of the
Disclosure Schedules, at the Closing, all accounts receivable of Wireless
reflected on the August 31, 1997 Balance Sheet, plus additional accounts
receivable of Wireless arising after August 31, 1997 and less any accounts
receivables collected in full after August 31, 1997 (the "Receivables") will
constitute valid and enforceable claims of Wireless, enforceable by it in
accordance with the terms of the instruments or documents creating them. The
Receivables are free and clear of all Encumbrances, except those set forth on
Schedule 5.11(d) of the Disclosure Schedules. All Receivables have arisen from
bona fide transactions in the ordinary course of Wireless' business. Except as
set forth on Schedule 5.11(d) of the Disclosure Schedules, all Receivables are
collectible in the ordinary course of business at the aggregate recorded amounts
thereof, net of the allowance for doubtful accounts (as determined in accordance
with GAAP as consistently applied). Schedule 5.11(d) of the Disclosure Schedules
sets forth an accurate and complete aged accounts receivable report for Wireless
as of August 31, 1997.
(e) Intellectual Property. Schedule 5.11(e) of the Disclosure Schedules
sets forth, as of the date of this Agreement, an accurate and complete list of
all patents, trademark and service ▇▇▇▇ registrations, corporate name
registrations, trade name registrations, copyright registrations, industrial
design registrations, mask work registrations and all applications for any of
the foregoing, owned by or developed by or for or used by Wireless, necessary or
material to the business of Wireless as and where now conducted. Such listed
items, together with all other trademarks and service marks, trade names,
copyrightable works, trade secrets, proprietary information, know-how, and all
other intellectual property of any type, owned by or developed by or for or used
by Wireless, in connection with and material to the business of Wireless as and
where now conducted, constitute the "Intellectual Property." Schedule 5.11(e) of
the Disclosure Schedules also sets forth an accurate and complete list of (1)
all material agreements and obligations of Wireless, or Encumbrances, relating
to the Intellectual Property as of the date of this Agreement, (2) all claims,
asserted and unasserted (but known to
27
Wireless) by Wireless against other Persons with respect to the Intellectual
Property, and (3) claims, asserted and unasserted (but known to Wireless and
probable of assertion), against Wireless by any Person based on the Intellectual
Property, or any use of the Intellectual Property by Wireless, or otherwise in
connection with the business of Wireless as and where now conducted. To the
extent that Wireless uses the intellectual property of another Person, such use
is lawful and in accordance with any applicable agreement with such other
Person. Schedule 5.11(e) of the Disclosure Schedules sets forth all material
agreements of Wireless with any other Person with respect to the use of any
Intellectual Property as of the date of this Agreement. Except as set forth on
Schedule 5.11(e) of the Disclosure Schedules, there are no instances where it
has been held or claimed and there is no basis upon which a valid claim may be
made which could reasonably be expected to have a Wireless Material Adverse
Effect, that any of the Intellectual Property or any use of the Intellectual
Property by Wireless or any business of Wireless as and where now conducted
infringes upon any intellectual property rights of any Person. Except as
disclosed in Schedule 5.11(e) of the Disclosure Schedules, there are no
instances where Wireless has claimed, and, to the knowledge of Wireless, there
is no basis upon which a claim may be made, that any Person infringes upon any
rights of Wireless with respect to the Intellectual Property.
(f) Contract Rights. Schedule 5.11(f) of the Disclosure Schedules sets
forth, as of the date of this Agreement, (1) any contract, agreement or
commitment which requires Wireless to make aggregate payments thereunder in
excess of $50,000 after August 31, 1997, (2) any contract, agreement or
commitment pursuant to which Wireless is entitled to receive aggregate payments
thereunder in excess of $50,000 after August 31, 1997, (3) any contract or
agreement that grants rights to manufacture, produce, assemble, license, market
or sell Wireless products to any other Person or otherwise affects Wireless'
exclusive right to develop, manufacture, assemble, distribute, market or sell
Wireless products and (4) any joint venture, partnership, participation or cost
sharing agreement, license agreement, lease, note or other evidence of
indebtedness, security agreement, mortgage, noncompetition agreement or power of
attorney, whether written or unwritten so long as it is an enforceable
obligation (collectively, the "Material Contracts"). The rights of Wireless
under all Material Contracts are valid and enforceable by Wireless in accordance
with its respective terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and by such principles of equity as may affect the availability
of equitable remedies. Wireless is not in default in any material respect (nor
does any circumstance exist which, with notice or the passage of time or both,
would result in such a default) under the Material Contracts (including the
Leases). To the knowledge of Wireless, the other party to each Material Contract
is not in default thereunder in any material respect (nor does any circumstance
exist which, with notice or the passage of time or both, would result in such a
default). To the knowledge of Wireless, there is no threatened cancellation of
any Material Contract. To the knowledge of Wireless, there is no outstanding
dispute under any Material Contract. All amendments or supplements to the
Material Contracts and all material notices with respect to such Material
Contracts as of the date of this Agreement are set forth on Schedule 5.11(f) of
the Disclosure Schedules.
5.12 CONDITION OF TANGIBLE ASSETS.
(a) Fixtures. The fixtures and leasehold improvements owned by Wireless
and located
28
on the Leased Property are in good condition and repair, ordinary wear and tear
excepted.
(b) Hazardous Substances. For purposes of this Agreement, the following
terms shall have the following meanings:
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in any way to
any Environmental Law (for purposes of (1) and (2) below, "Claims") or to any
material provision of any permit issued under any such Environmental Law,
including:
(1) any and all Claims by Governmental Authorities for
investigation, oversight, enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable
Environmental Law; and
(2) any and all Claims by any third party seeking damages,
response costs, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or
the environment arising from Hazardous Materials.
"Environmental Law" means any Law, now in effect and as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to the environment,
health or safety, or hazardous, toxic or dangerous materials, substances or
wastes, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ▇▇.▇▇. 9601 et seq. ("CERCLA"); the
Toxic Substances Control Act, as amended, 15 U.S.C. ▇▇.▇▇. 2601 et seq.; the
Clean Air Act, as amended, 42 U.S.C. ▇▇.▇▇. 7401 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. ▇▇.▇▇. 1251 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended, 7 U.S.C. ▇▇.▇▇. 136, et
seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ▇▇.▇▇.
1801 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
▇▇.▇▇. 6901 et seq. ("RCRA"); the Safe Drinking Water Act, 42 U.S.C. ▇▇.▇▇. 300f
et seq.; and any similar state or local Law.
"Hazardous Materials" shall mean "hazardous substances" as defined in
Section 101(14) of CERCLA, "hazardous waste" and "hazardous constituents" as
defined in RCRA and its implementing regulations, and any other substances
defined as pollutants, contaminants, toxic, hazardous or harmful or dangerous to
human health or the environment under any applicable Environmental Law,
including:
(1) any petroleum or petroleum products, chlorinated solvents,
explosives, radioactive materials, asbestos, asbestos products, urea
formaldehyde foam insulation, polychlorinated biphenyls (PCB's),
including transformers or other equipment that contain dielectric fluid
containing detectable levels of polychlorinated biphenyls in excess of
legally allowable limits, and radon gas;
29
(2) any hazardous or toxic waste, substance or material
defined as such, or as harmful to human health or the environment, in
(or for purposes of) any current Environmental Law or currently listed
as such pursuant to any Environmental Law; and
(3) any other chemical, material or substance, the addition of
which to the air, earth, surface water or groundwater is prohibited,
limited or regulated by any Environmental Law.
"Wireless Property" shall mean (1) any real property and improvements
presently owned, leased, used, operated or occupied by Wireless, and (2) any
other real property and improvements at any previous time owned, leased, used,
operated or occupied by Wireless.
"Release" means disposing, depositing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like (including abandoning or disposing of any barrels,
containers or other closed receptacles containing any Hazardous Materials), into
or upon any land or water (including surface or ground water) or air, or
otherwise entering into the environment.
Except as set forth on Schedule 5.12 of the Disclosure Schedules:
(1) to the knowledge of Wireless, during the tenancy of
Wireless with respect to any Wireless Property, Hazardous Materials
have not been Released (whether illegally or not) on any Wireless
Property by Wireless or its agents, employees or contractors;
(2) to the knowledge of Wireless, during the tenancy of
Wireless with respect to any Wireless Property, no asbestos-containing
materials or other Hazardous Materials have been installed in or
affixed to structures on any Wireless Property by Wireless or its
agents, employees or contractors;
(3) to the knowledge of Wireless, during the tenancy of
Wireless with respect to any Wireless Property, Hazardous Materials
have not been disposed of or otherwise Released on any Wireless
Property by Wireless or its agents, employees or contractors, and
Hazardous Materials used or generated by Wireless or its agents,
employees or contractors at any Wireless Property have not at any time
been illegally disposed of on any other property by any Person for whom
Wireless is legally responsible;
(4) with respect to any Wireless Property, Wireless is
currently, and has at all times in the past been, in compliance with
all Environmental Laws and the requirements of any permits, licenses,
authorizations and other governmental consents issued under such
Environmental Laws applicable to its operations except where the
failure to comply would not have a Wireless Material Adverse Effect;
30
(5) there are no past, pending or, to the knowledge of
Wireless, threatened Environmental Claims against Wireless.
(c) Equipment. All of the Equipment is in good condition and repair,
ordinary wear and tear excepted.
(d) Inventory. Except to the extent provided for by inventory reserves
reflected on the August 31, 1997 Balance Sheet, the Inventory is in good
condition, not obsolete or defective and is useable or saleable in the ordinary
course of business.
5.13 LEASES. Schedule 5.13 of the Disclosure Schedules sets forth (i)
all leases by Wireless of tangible personal property to any other Person and
(ii) all leases by Wireless of tangible personal property from any other Person,
and with a term of 12 months or greater.
5.14 ARMS-LENGTH TRANSACTIONS. Schedule 5.14 of the Disclosure
Schedules sets forth all material transactions, since June 30, 1995, between
third Persons and Wireless that have not been conducted on an arms-length basis.
Except as set forth on Schedule 5.14 of the Disclosure Schedules, (1) to the
knowledge of Wireless, none of the officers of Wireless has any direct or
indirect interest, profit participation or ownership (other than through
non-controlling investments in securities of publicly-held corporations) in
businesses which are competitors of Wireless or (2) except for routine travel
advances made to employees of Wireless in the ordinary course of business
consistent with past practices, Wireless has no outstanding loans or other
advances to any shareholder, officer, director or employee of Wireless.
5.15 LAWFULLY OPERATING. Except (i) as set forth on Schedule 5.15 of
the Disclosure Schedules or (ii) for any conflict, default or violation which
would not have a Wireless Material Adverse Effect, would not prevent or delay
consummation of the Merger in any material respect or otherwise prevent Wireless
from performing its obligations under this Agreement in any material respect,
Wireless is not in conflict with, or in default or violation of, (1) any Law
applicable to Wireless or by which any of its property or assets is bound or
affected or (2) the provisions of any note, bond, mortgage, indenture, contract,
agreement, understanding, arrangement, commitment, lease, license, permit,
franchise or other instrument or obligation to which Wireless is a party or by
which Wireless or any of its property or assets is bound or affected, nor does
any circumstance exist which with notice or the passage of time or both would
result in such a conflict, default, or violation.
5.16 NO LITIGATION. Except as set forth on Schedule 5.16 of the
Disclosure Schedules, as of the date of this Agreement, there is no pending nor,
to the knowledge of Wireless, threatened lawsuits or administrative proceedings
or investigations against Wireless or to which any of its assets are subject.
After the date of this Agreement and through the Closing Date, there will be no
pending or, to the knowledge of Wireless, threatened lawsuits or administrative
proceedings or investigations against Wireless or to which any of its assets are
subject that individually or in the aggregate could reasonably be expected to
have a Wireless Material Adverse Effect. Wireless is not subject to any
currently existing order, writ, injunction, or decree relating to its
operations. Except as set forth on Schedule 5.16 of the Disclosure Schedules,
there are no
31
material "loss contingencies" (as defined in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March 1975
("FAS 5")), which would be required by FAS 5 to be disclosed or accrued in
financial statements of Wireless were such statements prepared at the time this
warranty is made or deemed made.
5.17 LABOR MATTERS. Since June 30, 1995, Wireless has not been a party
to any collective bargaining agreement or been the subject of any union activity
or labor dispute, and there has not been any strike of any kind called or, to
the knowledge of Wireless, threatened to be called against Wireless. Wireless
has not violated any applicable Law relating to labor or labor practices or has
any liability to any of its employees, agents or consultants in connection with
grievances by, or the termination or employment of, such employees, agents or
consultants, except where such violation or liability would not have a Wireless
Material Adverse Effect. To the knowledge of Wireless, there is no union
campaign being conducted to solicit cards from employees to authorize a union to
request a National Labor Relations Board certification election with respect to
any of Wireless' employees.
5.18 BROKERS. Except as set forth on Schedule 5.18 of the Disclosure
Schedules, there is no contract, arrangement or understanding by Wireless with
any Person that may result in the obligation of Wireless or Glenayre or Merger
Sub to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the Transactions.
5.19 BANK ACCOUNTS. Schedule 5.19 of the Disclosure Schedules sets
forth all bank accounts, vaults and safe deposit boxes used by, or in the name
of, Wireless, including the account, vault or box number, the institution at
which the account, vault or box is maintained, and the signatories authorized
for the account or Persons authorized to have access to the vault or box.
5.20 INSURANCE. Schedule 5.20 of the Disclosure Schedules sets forth
all policies of insurance now in effect covering the assets, properties and
business of Wireless and all life insurance policies maintained by them.
Wireless has delivered an accurate and complete copy of each of such policies to
Glenayre. Schedule 5.20 of the Disclosure Schedules also sets forth all claims
made by Wireless since June 30, 1995 under any policies of insurance covering
the assets, properties or business of Wireless. Wireless has not done anything
by way of action or inaction that invalidates any of such policies in whole or
in part. Since June 30, 1995, no insurance policy of Wireless has been canceled
by the insurer and no application by Wireless for insurance has been rejected by
any insurer.
5.21 WARRANTY AND PRODUCT LIABILITY MATTERS. Except as set forth on
Schedule 5.21 of the Disclosure Schedules and except to the extent that any loss
therefrom would not exceed any general or specific reserves established by
Wireless in its Financial Statements, (1) the products and services currently
being provided to the marketplace by Wireless are in material compliance with
and meet in all material respects all express and implied warranties and the
requirements and standards of all Laws applicable to the sale or provision of
such products and services and (2) there are no pending nor, to the knowledge of
Wireless, threatened product or
32
service warranty or liability claims in respect of products or services sold or
provided by it, which individually or in the aggregate would reasonably be
expected to have a Wireless Material Adverse Effect.
5.22 WARRANTY, REPURCHASE AND OTHER SERVICE OBLIGATIONS. Schedule 5.22
of the Disclosure Schedules sets forth all warranties given by Wireless relating
to its products and services since June 30, 1995.
5.23 CUSTOMERS AND SUPPLIERS. Schedule 5.23 of the Disclosure Schedules
sets forth, with respect to the fiscal year of Wireless ended on June 30, 1997,
(1) the largest customer of Wireless during such period and (2) the largest
supplier of Wireless during such period. Except to the extent set forth on
Schedule 5.23 of the Disclosure Schedules, since June 30, 1997 and through the
date of this Agreement, no material adverse change has occurred in the business
relationship of Wireless with its customers and suppliers listed in such
Schedule.
5.24 GUARANTEES. Wireless is not a guarantor or otherwise liable for
any liability or obligation (including indebtedness) of any other Person.
5.25 DEVELOPMENT OF ACCESSMATE AND ACCESSLINK II. On or before the
following respective target dates, the minimum number of units of the AccessMate
(Initial Version) device, the AccessMate device and the AccessLink II device set
forth on Schedule 5.25 of the Disclosure Schedules will have been manufactured
using the standard AVEX production line and each such device will, in all
material respects, be fully functional, designed in accordance with, and have
the capabilities specified in, the specifications in such Schedule 5.25:
Device Target Date
AccessMate (Initial Version) March 31, 1998
AccessMate May 1, 1998
AccessLink II June 30, 1998
5.26 FULL DISCLOSURE. All of the written information provided by
Wireless and its representations herein, in the Exhibits hereto or in the
Disclosure Schedules are true, correct, and complete in all material respects
and no written representation, warranty or statement made by Wireless in this
Agreement, the Exhibits or in the Disclosure Schedules contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact necessary to make such representation, warranty, or statement, in
light of the circumstances under which it was made, not misleading to Glenayre.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF GLENAYRE AND MERGER SUB
Glenayre and Merger Sub hereby jointly and severally represent and
warrant to Wireless and the Wireless Shareholders that:
33
6.1 ORGANIZATION AND QUALIFICATION. Each of Glenayre and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted. Glenayre and Merger Sub are each duly qualified or licensed as a
foreign corporation to do business, and each is in good standing, in each
jurisdiction where the character of the properties owned, leased, or operated by
such corporation or the nature of its business makes such qualification or
licensing necessary.
6.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Articles or
Certificate of Incorporation and the Bylaws of Glenayre and Merger Sub are in
full force and effect. Neither Glenayre nor Merger Sub is in violation of any
provision of its Articles or Certificate of Incorporation or Bylaws.
6.3 CAPITALIZATION. The authorized capital stock of Glenayre consists
of 200,000,000 shares of Common Stock, par value $.02 per share ("Glenayre
Common Stock"), and 5,000,000 shares of Preferred Stock, par value $.01 per
share ("Glenayre Preferred Stock"). As of August 31, 1997, approximately
61,780,416 shares of Glenayre Common Stock were issued and approximately
60,409,404 shares of Glenayre Common Stock were outstanding, all of which shares
were validly issued and are fully paid and nonassessable. As of the date hereof,
no shares of Glenayre Preferred Stock are issued and outstanding. The authorized
capital stock of Merger Sub consists of 1,000 shares of common stock, all of
which shares are issued and outstanding and held of record by Glenayre free and
clear of all Encumbrances, except for restrictions imposed by applicable
securities Laws. These shares were validly issued and are fully paid and
nonassessable.
6.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Glenayre and Merger
Sub has all necessary power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by Glenayre and Merger Sub and the
consummation by Glenayre and Merger Sub of the Transactions have been duly and
validly authorized by all necessary corporate action on the part of Glenayre and
Merger Sub and no other corporate proceedings on the part of Glenayre or Merger
Sub are necessary to authorize this Agreement or to consummate the Transactions
(other than the filing and recordation of the appropriate merger documents as
required by the CGCL). This Agreement has been duly and validly executed and
delivered by Glenayre and Merger Sub and, assuming the due authorization,
execution and delivery by Wireless, constitutes a legal, valid and binding
obligation of each of Glenayre and Merger Sub, enforceable against them in
accordance with its terms, except as such enforceability may be limited by
principles of public policy and subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and by such principles of equity as may affect the availability
of equitable remedies.
6.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Glenayre and Merger
Sub do not,
34
and the performance of the Transactions by Glenayre and Merger Sub will not, (1)
conflict with or violate the Articles or Certificate of Incorporation or Bylaws
of Glenayre or Merger Sub, (2) conflict with or violate any Law applicable to
Glenayre or Merger Sub or by which any of its property or assets is bound or
affected, or (3) result in any breach of or constitute a default (or any event
which with notice or the passage of time or both would result in a default)
under, result in the loss of a material benefit under or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of an Encumbrance on any property or asset of Glenayre or Merger
Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Glenayre or Merger Sub is a party or by which any of them or any of its property
or assets is bound or affected.
(b) The execution and delivery of this Agreement by Glenayre and Merger
Sub do not, and the performance of the Transactions by Glenayre and Merger Sub
will not, require any consent or authorization of, or filing with or
notification to, any Governmental Authority, except (1) for (i) applicable
requirements, if any, of the Exchange Act, the Securities Act and Blue Sky Laws,
(ii) the pre-merger notification requirements of the HSR Act and (iii) filing
and recordation of appropriate merger documents as required by the CGCL, and (2)
where failure to obtain such consents, approvals, authorizations or to make such
filings or notifications, would not prevent or delay consummation of the Merger
in any material respect, or otherwise prevent Glenayre or Merger Sub from
performing its obligations under this Agreement in any material respect, and
would not, individually or in the aggregate, have a Glenayre Material Adverse
Effect.
6.6 SEC REPORTS. Glenayre has filed all forms, reports and documents
required to be filed by it under the Exchange Act with the SEC since January 1,
1997, and has delivered to Wireless (1) its Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, (2) its Quarterly Reports on Form 10-Q for
the periods ended March 31, 1997 and June 30, 1997 and (3) all proxy statements
relating to Glenayre's meetings of shareholders held since January 1, 1997 (the
forms, reports and other documents referred to in clauses (1), (2) and (3) above
being referred to herein, collectively, as the "Glenayre SEC Reports"). The
Glenayre SEC Reports (1) comply in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder and (2) did not at
the time they were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. Glenayre has heretofore furnished to Wireless a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Glenayre with
the SEC pursuant to the Exchange Act.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of Glenayre's
balance sheet dated June 30, 1997, except for the potential write-off of
in-process research and development expenditures, there has not been: (i) any
event that has had or is reasonably expected to have a Glenayre Material Adverse
Effect, (ii) any material change by Glenayre in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP, or
(iii) any material revaluation by Glenayre of any of its material assets,
including writing down
35
the value of capitalized inventory or writing off notes or accounts receivable,
other than in the ordinary course of business.
6.8 BROKERS. Neither Glenayre nor Merger Sub has entered into any
contract, arrangement or understanding with any Person (other than ▇▇▇▇▇▇▇▇▇,
Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation) which may result in the obligation of
Wireless, Glenayre or Merger Sub to pay any finder's fees, brokerage or other
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the Transactions.
ARTICLE 7
COVENANTS
7.1 COVENANTS OF GLENAYRE AND WIRELESS. During the period from the
date hereof and continuing until the Effective Time (except as expressly
contemplated or permitted hereby, or to the extent Wireless consents in
writing in the case of Glenayre's and Merger Sub's obligations and to the
extent Glenayre consents in writing in the case of Wireless' obligations) each
of Glenayre, Merger Sub and Wireless covenants with the other that, insofar as
the obligations relate to it:
(a) Glenayre, Merger Sub and Wireless shall cooperate and use their
respective best efforts to file a Notification and Report Form for Certain
Mergers and Acquisitions under the HSR Act with the U.S. Department of Justice
and the Federal Trade Commission.
(b) Glenayre, Merger Sub and Wireless shall cooperate and use their
respective best efforts (1) to prepare all documentation, to effect all filings
and to obtain all consents and authorizations of all Governmental Authorities
and other third Persons necessary to consummate the Transactions and (2) to
cause the Transactions to be consummated as expeditiously as is reasonably
practicable.
7.2 COVENANTS OF WIRELESS. Wireless covenants and agrees with Glenayre
and Merger Sub that during the period from the date hereof and continuing
until the Effective Time (except as expressly contemplated or permitted
hereby, or to the extent that Glenayre shall otherwise consent in writing):
(a) Wireless shall carry on and conduct its business only in the
ordinary course in substantially the same manner as previously conducted and
shall use all reasonable efforts to preserve intact its present business
organizations, maintain its rights and franchises and preserve its relationships
with customers, suppliers and others having business dealings with it to the end
that its goodwill and ongoing businesses shall not be impaired in any material
respect at the Effective Time.
(b) Wireless shall allow all designated officers, attorneys,
accountants and other representatives of Glenayre access at all reasonable times
during regular business hours to the
36
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles and financial position,
or otherwise pertaining to the business and affairs, of Wireless as Glenayre
shall reasonably request.
(c) Subject to the exercise by the Wireless Board of Directors of its
fiduciary duties required by applicable Law, Wireless agrees that for a period
of 90 days from the date hereof (the "Exclusivity Period") (1) it shall not, and
shall direct and use its best efforts to cause Wireless' directors, officers,
employees, Principal Shareholders, advisors, accountants and attorneys (the
"Representatives"), including such Representatives of any of Wireless'
affiliated Persons, not to initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including any proposal or offer to its shareholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, Wireless (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any Person in furtherance of an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal; (2) it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted previously with respect
to any of the foregoing and will take the necessary steps to inform the
Representatives of the obligations undertaken in this Section 7.2(c); and (3) it
will notify Glenayre immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it.
(d) Subject to the timing of the review by the U.S. Department of
Justice and the Federal Trade Commission of the Pre-Merger Notification and
Report Form to be filed by the parties, Wireless shall take all action necessary
in accordance with California Law and its Amended and Restated Articles of
Incorporation and Bylaws to convene a special meeting of the Wireless
Shareholders (or seek consent in lieu of a meeting) for the purpose of
considering and approving the Merger and Wireless shall consult with Glenayre in
connection therewith. Wireless shall promptly prepare an appropriate proxy
statement or similar disclosure document (the "Proxy Statement") and mail it to
the Wireless Shareholders. Glenayre shall furnish to Wireless for inclusion in
the Proxy Statement all such information relating to Glenayre and its
subsidiaries as Wireless may reasonably request. Wireless agrees that the Proxy
Statement at the time of mailing thereof and at the time of the meeting of the
shareholders of Wireless (or during the period that consents are solicited or
received) will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of circumstances under which they were made, not
misleading; provided, however, that the foregoing shall not apply to the extent
that any such untrue statement of a material fact or omission to state a
material fact relates to Glenayre or its subsidiaries and was furnished by
Glenayre. Glenayre agrees that the information relating to it or its
subsidiaries and furnished by it for inclusion in the Proxy Statement, at the
time of mailing thereof and at the time of the meeting of the shareholders of
Wireless (or during the period that consents are solicited or received), will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. No
amendment or supplement to the Proxy Statement
37
will be made by Glenayre or Wireless without the approval of the other party.
The form of proxy (or consent) accompanying the Proxy Statement will state that
a vote by a Wireless Shareholder in favor of the Merger shall also constitute a
consent by such Wireless Shareholder to be bound by the terms of this Agreement
and shall be in a form reasonably satisfactory to Glenayre. Wireless shall use
its best efforts to solicit from the Wireless Shareholders proxies in favor of
the Merger (and consenting to be bound by the terms of this Agreement) and shall
take all other actions necessary or advisable to secure the vote or consent of
the Wireless Shareholders required by California Law to approve the Merger.
(e) Wireless shall use all reasonable efforts to obtain and furnish to
Glenayre prior to the Effective Time a Warrant Termination Agreement executed by
each Wireless Warrantholder.
(f) Wireless shall use all reasonable efforts to obtain and furnish to
Glenayre prior to the Effective Time the written consents set forth on Section B
of Schedule 5.5 of the Disclosure Schedules.
(g) Except as disclosed in Schedule 7.2(g) of the Disclosure Schedules,
Wireless will make all normal and customary repairs, replacements, and material
improvements to its facilities, will not dispose of any Equipment other than at
fair market value and with the prior written consent of Glenayre, and without
limiting the generality of the foregoing or the covenants set forth in Section
7.2(a), Wireless will not, without the prior written consent of Glenayre (such
consent to be given by ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ on
behalf of Glenayre, which consent shall not be unreasonably withheld) or as
otherwise contemplated by this Agreement:
(1) change any provision of its Amended and Restated Articles
of Incorporation or Bylaws (except as contemplated by the
Transactions);
(2) except for (i) the issuance of Wireless Common Stock
pursuant to the exercise of any Wireless Stock Options or any Wireless
Warrant, (ii) the granting of options to employees under the Wireless
Stock Option Plans in accordance with the guidelines set forth in
Schedule 7.2(g)(2) of the Disclosure Schedules or (iii) the repurchase
by Wireless of Wireless Capital Stock pursuant to existing agreements
in accordance with the guidelines set forth in Schedule 7.2(g)(2) of
the Disclosure Schedules, change the number of shares of the
authorized, issued or outstanding capital stock of Wireless, including
any issuance, purchase, redemption, split, combination or
reclassification thereof, or issue or grant any option, warrant, call,
commitment, subscription, right or agreement to purchase relating to
the authorized or issued capital stock of Wireless, or declare, set
aside or pay any dividend or other distribution in cash or in kind with
respect to the outstanding capital stock of Wireless;
(3) incur any liabilities or obligations, whether directly or
indirectly, or by way of guaranty, and whether or not evidenced by any
note, bond, debenture, or similar instrument, except pursuant to
existing credit facilities as described in
38
Schedule 5.11(f) of the Disclosure Schedules or as otherwise permitted
herein, and except in the ordinary course of business consistent with
past practices and prior periods;
(4) except as set forth on Schedule 7.2(g)(4) of the
Disclosure Schedules or as required by the introductory sentence of
this Section 7.2(g), make any capital expenditures (or enter into any
lease required to be capitalized in accordance with GAAP) individually
in excess of $25,000 or in the aggregate in excess of $50,000
(excluding any single expenditure of less than $5,000), other than
reasonable expenditures necessary to maintain existing assets in good
working order and repair, reasonable wear and tear excepted;
(5) pay any bonuses or commissions to any employee of Wireless
except as set forth on Schedule 7.2(g)(5) of the Disclosure Schedules
and except pursuant to programs or arrangements in effect on the date
of this Agreement; enter into any new or amend in any respect any
existing employment agreement with any Person; adopt any new or amend
in any respect any existing Plan, except as may be otherwise required
by Law; purchase any "key man" life insurance policy covering any
employee or director of Wireless or any other Person; grant any
increase in compensation or benefits of any kind to its employees,
officers or directors, except regularly scheduled general increases in
the ordinary course of business and consistent with past practices and
policies; or effect any change in any respect in retirement benefits to
any class of employees or officers, except as otherwise required by
Law;
(6) except as set forth on Schedule 7.2(g)(6) of the
Disclosure Schedules, sell, mortgage, pledge, or otherwise dispose of
or encumber any material asset owned by Wireless, other than sales,
mortgages, pledges or other dispositions or Encumbrances occurring in
the ordinary course of business consistent with past practices and
prior periods or as required by agreements existing as of the date of
this Agreement and disclosed in the Disclosure Schedules;
(7) except as set forth on Schedule 7.2(g)(7) of the
Disclosure Schedules, make any material modification of or material
amendment to any of the contracts or agreements set forth on Schedules
5.11(a) , 5.11(e), 5.11(f) or 5.13 of the Disclosure Schedules;
(8) fail to maintain in full force and effect all insurance
now carried by Wireless;
(9) institute any changes in management personnel or policy of
a significant
nature;
(10) except as set forth on Schedule 7.2(g)(10) and Schedule
5.8 of the
39
Disclosure Schedules, take any action or fail to take any action that,
if taken or omitted, would be required to be disclosed under the
provisions of Section 5.8 (had such action or omission occurred prior
to the date of this Agreement);
(11) enter into any contract or agreement required to be
disclosed under the provisions of Section 5.11(a), 5.11(e), 5.11(f) or
5.13 (had such contract or agreement been entered into prior to the
date of this Agreement); or
(12) make any agreement or commitment by or on behalf of
Wireless to do or take any of the actions referred to in the foregoing
Section 7.2(g)(1) through (11).
(h) Without the prior written consent of Glenayre, Wireless shall not
knowingly take any action which would cause or would be reasonably likely to
cause any of the conditions to the Merger set forth in Article 8 not to be
fulfilled, including taking, causing to be taken, or permitting or suffering to
be taken or to exist any action, condition or thing which would cause the
representations and warranties made by Wireless herein not to be true and
correct in all material respects as of any time between the date of this
Agreement and the Closing Date.
(i) Within 15 days after the end of each calendar month, Wireless shall
promptly provide to Glenayre its monthly balance sheet as of the end of such
month and its statement of operations for the month then ended.
(j) Except as and to the extent required by Law, neither Wireless nor
its representatives shall make any written public statements regarding the
Merger or this Agreement without the prior approval of Glenayre.
7.3 COVENANT OF GLENAYRE AND MERGER SUB.
(a) Glenayre and Merger Sub covenant with Wireless that, during the
period from the date hereof and continuing until the Effective Time (except as
expressly contemplated or permitted hereby, or to the extent that Wireless shall
otherwise consent in writing), neither Glenayre nor Merger Sub shall knowingly
take any action which would cause or would be reasonably likely to cause any of
the conditions to the Merger set forth in Article 8 not to be fulfilled,
including taking, causing to be taken, or permitting or suffering to be taken or
to exist any action, condition or thing which would cause the representations
and warranties made by Glenayre and Merger Sub herein not to be true and correct
in all material respects as of any time between the date of this Agreement and
the Closing Date.
(b) Except as and to the extent required by Law, Glenayre shall not
make any written public statements regarding the Merger or this Agreement
without the prior approval of Wireless.
7.4 INDEMNIFICATION OF WIRELESS OFFICERS AND DIRECTORS.
After the Effective Time and to the extent not prohibited by Law, Glenayre
shall cause Wireless to continue to indemnify and hold harmless each person who
immediately prior to the Effective Time was an officer,
40
director or employee of Wireless or other person entitled to be indemnified by
Wireless pursuant to and in accordance with (i) all applicable statutory and
common laws, (ii) the Amended and Restated Articles of Incorporation and Bylaws
of Wireless as they are currently in effect on the date hereof, and (iii) any
agreement between Wireless and such officer, director or employee, to the same
extent as provided in such Amended and Restated Articles of Incorporation and
Bylaws or agreement; provided that it is agreed that the foregoing undertaking
shall not grant to any such officers, directors or employees or other person
rights of indemnity against Wireless more extensive than those such persons may
currently have against Wireless. This section shall survive the consummation of
the Merger, is intended to benefit the indemnified parties, and shall be binding
on all successors and assigns of Glenayre and Wireless.
7.5 FILING OF S-8. Concurrently with the Closing, (i) Glenayre shall
cause to be filed with the SEC a registration statement on Form S-8 with respect
to the Wireless Stock Options, providing for issuance of Glenayre Common Stock
upon exercise of the Wireless Stock Options after the Effective Time, and will
use its best efforts to cause such registration statement to become effective,
and (ii) Glenayre shall cause the Glenayre Common Stock issuable upon exercise
of the Wireless Stock Options after the Effective Time to be approved for
listing on the NASDAQ Stock Market.
7.6 CERTAIN BENEFIT PLANS. Glenayre shall take such reasonable actions
as are necessary to allow eligible employees of Wireless to participate in the
benefit programs of Glenayre, or in alternative benefit programs substantially
comparable to those applicable to employees of Glenayre on substantially similar
terms, as soon as practicable after the Effective Time in accordance with the
terms of such programs. To the extent reasonably possible, eligible employees of
Wireless shall receive credit under any Glenayre employee welfare benefit plans
(within the meaning of Section 3(l) of ERISA) for the duration of their service
with Wireless, and such Glenayre employee welfare benefit plans shall not
provide any pre-existing condition exclusions with respect to the Wireless
employees, and the deductibles under such Glenayre employee welfare benefit
plans shall be reduced by any deductibles paid under the Plans with respect to
the Wireless employees for the plan year in which the Effective Time occurs.
7.7 RELOCATION. Glenayre does not currently intend to relocate any of
the employees of Wireless to a facility outside the San Francisco Bay area. In
the event that Glenayre shall desire to relocate any such employees within the
12-month period immediately after the Effective Time, Glenayre shall consult
with senior management of Wireless.
ARTICLE 8
CONDITIONS
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, except
to the extent that the parties hereto may mutually waive in writing any one or
more thereof in whole or in part:
41
(a) This Agreement and the Transactions shall have been approved in the
requisite manner, according to the Amended and Restated Articles of
Incorporation and By-laws of Wireless and CGCL, by the holders of the issued and
outstanding shares of Wireless Capital Stock entitled to vote thereon and all
other necessary shareholder approvals shall have been received, which
approval(s) and the voting thereon shall be certified by the Chief Executive
Officer of Wireless.
(b) No action or proceeding shall have been instituted before a court
or other Governmental Authority to restrain or prohibit the Transactions or to
obtain an amount of damages or other material relief in connection with the
execution of the Agreement or the related agreements or the consummation of the
Merger; and no Governmental Authority shall have given notice to any party
hereto to the effect that consummation of the Transactions would constitute a
violation of any applicable Law or that it intends to commence proceedings to
restrain consummation of the Merger.
(c) All consents, authorizations, orders and approvals of any
Governmental Authority (or filings or registrations with any Governmental
Authority) required in connection with the execution, delivery and performance
of this Agreement shall have been obtained or made, except for filings in
connection with the Merger and any other documents required to be filed after
the Effective Time and except where the failure to have obtained or made any
such consent, authorization, order, approval, filing or registration would not
have a material adverse effect on the business of Glenayre and Wireless, taken
as a whole, following the Effective Time.
(d) The applicable waiting period under the HSR Act shall have expired
or been terminated.
(e) Glenayre, Merger Sub and Wireless shall have executed and delivered
the Agreement of Merger and appropriate certificates for filing with the
Secretary of State of California.
(f) Glenayre, the Shareholder Representative and the Escrow Agent shall
have entered into the Escrow Agreement.
8.2 CONDITIONS TO OBLIGATION OF WIRELESS TO EFFECT THE MERGER. The
obligations of Wireless to effect the Merger shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, except to the
extent that Wireless may, in its sole and absolute discretion, waive in writing
any one or more thereof in whole or in part:
(a) Glenayre shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of Glenayre and Merger
Sub contained in this Agreement shall be true and correct in all material
respects as of the Closing Date, and Wireless shall have received a certificate
of the Chief Executive Officer of Glenayre, dated the Closing Date, certifying
to such effect.
(b) From the date of this Agreement through the Effective Time, there
shall not have
42
occurred any change in the financial condition, business or
operations of Glenayre that would have or would be reasonably likely to have a
Glenayre Material Adverse Effect other than (i) any such change that affects
Wireless and Glenayre in a substantially similar manner and (ii) any change in
the two-way paging industry as a whole.
(c) Wireless shall have received a written opinion letter, dated as of
the Closing Date, from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. substantially
in the form of Exhibit E attached hereto.
(d) Wireless shall have received a good standing certificate for
Glenayre from the Secretary of State of Delaware and for Merger Sub from the
Secretary of State of California.
(e) Wireless shall have received from Glenayre and Merger Sub certified
copies of all resolutions adopted by the Board of Directors of each respective
corporation and the sole shareholder of Merger Sub in connection with this
Agreement and the Transactions.
8.3 CONDITIONS TO OBLIGATION OF GLENAYRE AND MERGER SUB TO EFFECT THE
MERGER. The obligations of Glenayre and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, except to the extent that Glenayre and Merger Sub may, in their sole
and absolute discretion, waive in writing any one or more thereof in whole or in
part:
(a) Wireless shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of Wireless contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date, and Glenayre shall have received a certificate of the Chief
Executive Officer of Wireless, dated the Closing Date, certifying to such
effect.
(b) From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business,
operations or prospects of Wireless that would be reasonably likely to have a
Wireless Material Adverse Effect other than (i) any such change that affects
Wireless and Glenayre in a substantially similar manner and (ii) any change in
the two-way paging industry as a whole.
(c) Glenayre shall have received a written opinion letter, dated as of
the Closing Date, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ substantially in the
form of Exhibit F attached hereto.
(d) Glenayre shall have received reasonable assurances from Wireless to
the effect that no Wireless Warrantholder shall have any right to receive any
capital stock or other property, except for such Wireless Warrantholder's
Warrant Termination Amount, from Wireless or Glenayre.
(e) The consents set forth on Section B of Schedule 5.5 of the
Disclosure Schedules shall have been obtained in form and substance satisfactory
to Glenayre.
43
(f) As of the Closing Date, Wireless shall have signed purchase orders
and contracts totaling at least $22,500,000 in commitments for Wireless
products, and Glenayre shall have received a certificate of the Chief Financial
Officer of Wireless, dated the Closing Date, certifying to such effect.
(g) Glenayre shall have received good standing certificates for
Wireless from the Secretary of State of California and from the Secretary of
State of each state where Wireless is qualified to do business.
(h) Each of the individuals set forth on Schedule 8.3(h) of the
Disclosure Schedules shall have executed and delivered to Glenayre the
Noncompetition Agreement that pertains to him or her.
(i) ▇▇▇▇ ▇. ▇▇▇▇▇ shall have executed and delivered to Glenayre the
Employment Agreement.
(j) There shall have occurred no material adverse change in Wireless'
development schedule or product release targets of the AccessMate or the
AccessLink II devices, and Glenayre shall have received a certificate of the
Chief Executive Officer of Wireless, dated the Closing Date, certifying to such
effect.
(k) The Motorola Licenses shall not have been terminated and no such
termination shall be threatened by Motorola.
(l) No material intellectual property infringement claims shall have
been made or threatened against Wireless.
(m) To the extent such consent is required by applicable Law or the
terms of their Wireless Stock Option agreements, all Wireless Optionholders
shall have agreed to the substitution of their Wireless Stock Options for
Glenayre stock options as provided in Section 4.4.
(n) The Wireless Shareholders shall have no voting, registration,
rights of first refusal or other rights with respect to the Wireless Common
Stock or Wireless Preferred Stock after the Effective Time.
(o) Glenayre shall have received from Wireless certified copies of all
resolutions adopted by the Board of Directors and shareholders of Wireless in
connection with this Agreement and the Transactions.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION. Subject to the limitation set forth in Section
4.8(e), the Wireless
44
Shareholders hereby indemnify, defend and hold harmless Glenayre and its
successors and assigns, from and against any and all Loss or Losses that
Glenayre or Wireless or its respective subsidiaries, its respective successors
and assigns, or any one or more of them, may sustain or incur, directly or
indirectly, arising out of or incident to or by reason of (1) the breach of any
representation or warranty made by Wireless in this Agreement, or any document,
certificate or other agreement entered into, furnished or to be furnished by
Wireless pursuant to this Agreement, (2) any breach of any covenant to be
performed by or on the part of Wireless under this Agreement, or any document,
certificate, or other agreement or instrument entered into, furnished or to be
furnished by Wireless pursuant to this Agreement, (3) any matter set forth on
Schedule 9.1 of the Disclosure Schedules, or (4) the matters set forth in
Section 9.4. Notwithstanding any provision of this Section 9.1 to the contrary,
the Wireless Shareholders shall have no liability for indemnification under this
Section 9.1 except to the extent that the aggregate amount of Losses exceeds
$250,000 (except to the extent otherwise provided in Schedule 9.1 of the
Disclosure Schedules). All rights to indemnification under this Section 9.1
shall expire on the Expiration Date except as to any matter as to which Glenayre
has given Notice of Claim pursuant to Section 9.2 prior to such date.
Notwithstanding anything in this Article 9 or elsewhere in this Agreement to the
contrary, except for (1) the obligation of the Shareholders to pay any of the
fees and expenses which they are to bear under Section 4.7, (2) common law
fraud, (3) any remedies available to Glenayre under the Noncompetition
Agreements or the Employment Agreement or (4) any remedies available to Glenayre
or Wireless under Section 10.5, the indemnification provisions of this Article 9
shall be the sole and exclusive remedy available to Glenayre for any breach of
Wireless' representations, warranties, agreements, covenants or any other
agreement or provision contained in this Agreement or in the Disclosure
Schedules or in any certificate or agreement delivered pursuant to this
Agreement or otherwise in connection with this Agreement and the Transactions,
or any causes of action related to any of the foregoing.
9.2 NOTICE. If any matter shall arise that may involve or give rise to
a claim by Glenayre against the Wireless Shareholders under the provisions of
Section 9.1 (an "Indemnity Claim"), Glenayre shall give prompt written notice
thereof (the "Notice of Claim") to the Shareholder Representative and the Escrow
Agent stating the general nature of the Indemnity Claim with reasonable detail
as to the alleged basis of the Indemnity Claim and the Section of this Agreement
of which a violation is alleged. If any Indemnity Claim is based upon any claim,
demand, suit or action of any third party against Glenayre, Wireless or its
respective subsidiaries, or its respective successors or assigns (a "Third Party
Claim"), then Glenayre shall, or shall cause Wireless to, undertake the defense
of such Third Party Claim, shall conduct such defense as would a reasonable and
prudent person to whom no indemnity were available and shall permit the
Shareholder Representative (at the sole expense of the Wireless Shareholders) to
participate in (but not control) such defense.
9.3 DEFINITION OF LOSS OR LOSSES. For purposes of this Agreement,
"Loss" or "Losses" shall mean (i) with respect to the matters covered by Section
9.4, "Loss" as defined in Section 9.4 or (ii) with respect to all other matters,
any and all liabilities, losses, damages, actions, suits, proceedings, claims,
demands, assessments, fines, penalties, judgments, fees, costs and expenses
(including reasonable accountants' and attorneys' fees) of every nature and
character arising out of the matters or circumstances referred to in Section
9.1. Except for matters covered
45
by Section 9.4, the amount of any indemnifiable Losses hereunder shall be
reduced by the amount of (i) insurance proceeds net of deductibles and
incidental expenses and premium increases reasonably anticipated to result
therefrom and (ii) proceeds or amounts from third parties (regardless of when
received but only if actually received), in each case of clauses (i) and (ii) in
connection with or as a result of such Losses. In addition, except for matters
covered by Section 9.4, the amount of any indemnifiable Loss shall be reduced to
the extent that a general or specific reserve in the August 31, 1997 Balance
Sheet, as such reserves may be increased as described in Schedule 5.21 of the
Disclosure Schedules with respect to Section 5.21, is available to cover such
Loss.
9.4 LOSS FROM DELAYED DEVELOPMENT OF ACCESSMATE AND ACCESSLINK II. In
the event that the AccessMate (Initial Version) device does not fully meet the
requirements of Section 5.25 on or before March 31, 1998, then Glenayre's Loss
shall be deemed to be $55,000 for each Business Day from April 1, 1998 through
the earlier of (i) the day on which such requirements are fully met and (ii) May
1, 1998. In the event that the AccessMate device does not fully meet the
requirements of Section 5.25 on or before May 1, 1998, then Glenayre's Loss
shall be deemed to be $55,000 for each Business Day from May 2, 1998 through the
day on which such requirements are fully met. In the event that the AccessLink
II device does not fully meet the requirements of Section 5.25 on or before June
30, 1998, then Glenayre's Loss shall be deemed to be $55,000 for each Business
Day from July 1, 1998 through the day on which such requirements are fully met.
Any amounts determined under this Section 9.4 shall be liquidated damages.
ARTICLE 10
TERMINATION
10.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval of this Agreement by the Wireless Shareholders, by the
mutual consent of Glenayre and Wireless.
10.2 TERMINATION BY EITHER GLENAYRE OR WIRELESS. This Agreement may be
terminated and the Merger may be abandoned by action or authorization of the
Board of Directors of either Glenayre or Wireless if (1) the Merger shall not
have been consummated by January 15, 1998, or (2) the approval of the Wireless
Shareholders required by Section 8.1(a) shall not have been obtained at a
meeting duly convened therefor (or at any adjournment thereof) or pursuant to a
written consent in lieu of a meeting, or (3) a United States federal or state
court of competent jurisdiction or any Governmental Authority, shall have issued
an order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Transactions and such order, decree,
ruling or other action shall have become final and nonappealable; provided,
however, that the party seeking to terminate this Agreement pursuant to this
clause (3) shall have used all reasonable efforts to remove such order, decree,
ruling or action.
10.3 TERMINATION BY WIRELESS. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the shareholders of Wireless, by action or authorization of the
Board of Directors of Wireless if (1)
46
there has been a breach by Glenayre or Merger Sub of any representation or
warranty contained in this Agreement which would have or would be reasonably
likely to have a Glenayre Material Adverse Effect; (2) there has been a material
breach of any of the covenants or agreements set forth in this Agreement on the
part of Glenayre or Merger Sub, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such breach is given by
Wireless to Glenayre or (3) Glenayre or Merger Sub shall have willfully failed
to comply with its obligations under Section 7.1 or all of the conditions
precedent to Glenayre's and Merger Sub's obligation to effect the Merger shall
have been satisfied for at least two Business Days but Glenayre and Merger Sub
shall nevertheless willfully refuse to effect the Merger.
10.4 TERMINATION BY GLENAYRE. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, by action or
authorization of the Board of Directors of Glenayre if (1) there has been a
breach by Wireless of any representation or warranty contained in this Agreement
which would have or would be reasonably likely to have a Wireless Material
Adverse Effect, (2) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of Wireless, which breach is
not curable or, if curable, is not cured within 30 days after written notice of
such breach is given by Glenayre to Wireless, (3) Wireless initiates any
negotiations with or solicits a proposal from, a third party during the
Exclusivity Period for any Acquisition Proposal, or (4) the Board of Directors
of Wireless ceases or terminates negotiations with Glenayre relating to the
Transactions after receipt of an unsolicited Acquisition Proposal from a third
party (other than Glenayre).
10.5 EFFECT OF TERMINATION AND ABANDONMENT. Upon termination of this
Agreement pursuant to this Article, this Agreement shall be void and of no other
effect, and there shall be no liability by reason of this Agreement or the
termination thereof on the part of any party hereto or on the part of the
respective directors, officers, employees, agents or shareholders of any of
them, in each case except that the agreements set forth in Section 7.2(j) and
Articles 10 and 11 and the NDA shall survive termination of this Agreement
pursuant to this Article 10 and except as follows:
(a) In the event such termination is by Wireless pursuant to clause (3)
of Section 10.3, then, as Wireless' sole and exclusive remedy with respect
thereto and as liquidated damages therefor, Glenayre shall pay to Wireless, in
cash or other immediately available funds, the sum of $5,000,000 in exchange for
1,250,000 shares of a new series of Preferred Stock of Wireless at a purchase
price of $4.00 per share upon substantially the same terms and conditions as set
forth in that certain Series F Preferred Stock Purchase Agreement dated as of
June 10, 1996 among Wireless and the purchasers of the Series F Preferred Stock,
and the related agreements and documents.
(b) In the event such termination is by Glenayre pursuant to clause (3)
or (4) of Section 10.4, then, as Glenayre's sole and exclusive remedy with
respect thereto, Wireless shall pay Glenayre immediately upon such termination,
in cash or other immediately available funds, $2,000,000, and such sum shall
constitute liquidated damages.
47
10.6 EXTENSION; WAIVER. At any time prior to the Effective Time,
Glenayre or Wireless, by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (1) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (2) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (3) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of Glenayre or Wireless to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The right of Glenayre or Wireless to terminate this
Agreement pursuant to this Article 10 shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any party
hereto, whether prior to or after execution of this Agreement.
ARTICLE 11
GENERAL PROVISIONS
11.1 EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES. Except as set
forth in Section 10.5, the representations, warranties, covenants and agreements
of each party hereto shall survive the Effective Time and shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any other party hereto, any Person controlling any such party or any
of its officers or directors, whether prior to or after the execution of this
Agreement, and shall expire on the Expiration Date. All statements contained in
the Schedules of the Disclosure Schedules shall be deemed to be representations
and warranties by the applicable party hereunder.
11.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the facsimile numbers
specified below:
(a) If to Glenayre, Merger Sub or, after the Effective Time,
Wireless:
Glenayre Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
48
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
NationsBank Corporate Center, Suite 4200
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇ III
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Wireless (prior to the Effective Time):
Wireless Access, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to any Wireless Shareholder:
To its address set forth on the books and records of Wireless
as of the Closing, as thereafter updated.
(d) If to the Shareholder Representative:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
11.3 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to
49
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and its respective successors and assigns.
11.4 ENTIRE AGREEMENT; AMENDMENT TO NDA. Except for the Bilateral
Non-Disclosure Agreement, dated for reference May 20, 1997 (the "NDA"), by and
between Wireless and Glenayre, this Agreement, the Exhibits and the Schedules
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto. The NDA shall be deemed amended by this Agreement
to include the Transactions as part of the definition of "Project" in the NDA.
11.5 AMENDMENT. This Agreement may be amended by the parties hereto at
any time before or after approval of matters presented in connection with the
Merger by the shareholders of Wireless, but after any such shareholder approval,
no amendment shall be made which by Law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not be
modified or amended, prior to the Effective Time, except by an instrument in
writing signed on behalf of Glenayre, Merger Sub and Wireless and, after the
Effective Time, except by an instrument in writing signed on behalf of Glenayre,
the Surviving Corporation and the Shareholder Representative.
11.6 GOVERNING LAW. The validity of this Agreement, the construction of
its terms and the determination of the rights and duties of the parties hereto
shall be governed by and construed in accordance with the laws of the United
States and those of the State of North Carolina applicable to contracts made and
to be performed wholly within such state and without regard to the conflict of
laws principles thereof.
11.7 COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
11.8 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party hereto of a breach of any
provision hereunder shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provision hereunder.
11.9 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so
50
broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
* * *
51
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
[CORPORATE SEAL] GLENAYRE TECHNOLOGIES, INC.
ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------- -----------------------
Secretary Name: ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Title: President & CEO
---------------------
[CORPORATE SEAL] WAI ACQUISITION CORP.
ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------- ----------------------
Secretary Name: ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Title: President & CEO
-------------------
[CORPORATE SEAL] WIRELESS ACCESS, INC.
ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------- -------------------
Secretary Name: ▇▇▇▇ ▇▇▇▇▇
-----------------
Title: President & CEO
-------------------
The undersigned hereby agrees to be bound by the terms of the foregoing
Acquisition Agreement solely for purposes of agreeing to perform his duties as
Shareholder Representative thereunder.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
ATTACHMENT A
SHAREHOLDER REPRESENTATIVE FEE SCHEDULE
I. RETAINER: $25,000
The Retainer is non-refundable but will be applied to time spent in
activities associated with acting as Shareholder Representative.
II. HOURLY RATE: $250
For any activities associated with acting as Shareholder
Representative. Time will be billed against Retainer.
III.OUT OF POCKET EXPENSES
Out of pocket expenses including but not limited to postage, telephone,
freight, courier and express mail will be billed in addition to the
fees set forth herein.
EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is dated as of __________
___, 1997, by and among WAI ACQUISITION CORP., a California corporation ("SUB"),
GLENAYRE TECHNOLOGIES, INC., a Delaware corporation ("Glenayre"), and WIRELESS
ACCESS, INC., a California corporation ("Wireless").
WITNESSETH:
WHEREAS, SUB has outstanding 1,000 shares of Common Stock, all of which
are owned of record and beneficially by Glenayre;
WHEREAS, Wireless is a California corporation authorized to issue
50,000,000 shares of Common Stock of which 5,599,418 shares are outstanding (the
"Wireless Common Stock"), 750,000 shares of Series A Preferred Stock all of
which are outstanding (the "Wireless Series A Preferred Stock"), 3,915,333
shares of Series B Preferred Stock all of which are outstanding (the "Wireless
Series B Preferred Stock"), 2,500,000 shares of Series C Preferred Stock all of
which are outstanding (the "Wireless Series C Preferred Stock"), 2,108,951
shares of Series D Preferred Stock all of which are outstanding (the "Wireless
Series D Preferred Stock"), 1,517,258 shares of Series E Preferred Stock all of
which are outstanding (the "Wireless Series E Preferred Stock"), 511,510 shares
of Series F Preferred Stock all of which are outstanding (the "Wireless Series F
Preferred Stock"), 2,502,933 shares of Series G Preferred Stock all of which are
outstanding (the "Wireless Series G Preferred Stock"); the Wireless Series A
Preferred Stock, the Wireless Series B Preferred Stock, the Wireless Series C
Preferred Stock, the Wireless Series D Preferred Stock, the Wireless Series E
Preferred Stock, the Wireless Series F Preferred Stock and the Wireless Series G
Preferred Stock are hereinafter referred to as the "Wireless Preferred Stock";
and
WHEREAS, the Boards of Directors of Wireless, Glenayre and SUB deem it
advisable and in the best interests of Wireless, Glenayre and SUB and their
respective shareholders, that SUB merge with and into Wireless in a merger (the
"Merger") to be consummated under the terms and conditions set forth herein and
in accordance with the laws of the State of California; and
WHEREAS, the Boards of Directors of Wireless on _______ ___, 1997, of
Glenayre on _______ ___, 1997, and of SUB on _______ ___, 1997, have, by
resolutions duly adopted, approved this Agreement; and
WHEREAS, the shareholders of Wireless on _______ ___, 1997, and the
sole shareholder of SUB on _______ ___, 1997 have approved the Merger pursuant
to the terms of this Agreement; and
WHEREAS, Glenayre has agreed that when the Merger becomes effective,
and as and when required hereby, it will deliver such amount of cash as shall be
required in exchange for
the shares of Wireless Common Stock and Wireless Preferred Stock outstanding on
the effective date of the Merger; and
WHEREAS, Glenayre, SUB and Wireless have entered into an Acquisition
Agreement dated as of October ___, 1997 (the "Acquisition Agreement"), setting
forth certain agreements and conditions in connection with the Merger;
NOW, THEREFORE, the parties hereby agree that SUB shall be and is
hereby merged into Wireless (sometimes referred to herein as the "Surviving
Corporation"), and that the terms and conditions of the Merger and the mode of
carrying them into effect, including the manner of converting the shares of
Wireless Common Stock and Wireless Preferred Stock into the right to receive
cash, shall be as follows:
1. MERGER; EFFECTIVE DATE OF MERGER.
1.1 The Merger shall be effected in accordance with the provisions of
and have the effect provided in Sections 1100 et seq. of the California General
Corporation Law. Upon the effectiveness of the Merger, the separate existence of
SUB shall cease and Wireless shall succeed, without other transfer, to all the
rights, privileges, powers, immunities and franchises of SUB, all of the
properties and assets of SUB, and all of the debts, choses in action and other
interests due or belonging to SUB, and shall be subject to and responsible for
all the debts, liabilities and obligations of SUB in the same manner as if
Wireless had itself incurred them. All rights of creditors and all liens upon
the property of SUB shall be preserved unimpaired, provided such liens shall be
limited to the property affected by such liens immediately prior to the
Effective Time (defined below). Any action or proceeding pending by or against
SUB may be prosecuted to judgment which shall bind Wireless, or Wireless may be
proceeded against or substituted in the place of SUB.
1.2 The Merger shall become effective on the date that this Agreement
of Merger is filed with the Secretary of State of the State of California (the
"Effective Time").
1.3 If, at any time after the Effective Time, Wireless considers or is
advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or record in
Wireless its right, title and interest in, to and under any of the rights,
properties or assets of SUB acquired or to be acquired by Wireless as a result
of, or in connection with, the Merger or to otherwise carry out this Agreement,
then the officers and directors of Wireless shall and will be authorized to
execute and deliver, in the name and on behalf of Wireless or SUB or otherwise,
all such deeds, bills of sale, assignments and assurances, and to take and do,
in the name and on behalf of Wireless or SUB or otherwise, all such other
actions as may be necessary or desirable to vest, perfect or record any and all
right, title and interest in, to and under such rights, properties or assets in
Wireless or otherwise carry out this Agreement.
2. SURVIVING CORPORATION'S ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS;
OFFICERS. At the Effective Time, the Amended and Restated Articles of
Incorporation and Bylaws of
2
Wireless as in effect on the Effective Time shall be the Amended and Restated
Articles of Incorporation and Bylaws of the Surviving Corporation from and after
the Effective Time (until altered, amended or repealed in the manner specified
therein or as provided by law), except that paragraph IV(B)(5) of the Amended
and Restated Articles of Incorporation of Wireless immediately prior to the
Effective Time is hereby deleted and shall have no force or effect.
3. CONVERSION OF SHARES.
3.1 At the Effective Time, each share of Wireless Common Stock and each
share of Wireless Series B Preferred Stock, Wireless Series C Preferred Stock,
Wireless Series D Preferred Stock and Wireless Series E Preferred Stock issued
and outstanding immediately prior to the Effective Time (except for shares, if
any, of Wireless Common Stock or Wireless Preferred Stock which shall then
constitute "dissenting shares" within the meaning of Section 1300 et seq. of the
California General Corporation Law ("Dissenting Shares")), shall be converted
into the right to receive $3.78.
3.2 At the Effective Time, each share of Wireless Series A Preferred
Stock issued and outstanding immediately prior to the Effective Time (except for
shares, if any, of Wireless Series A Preferred Stock which shall then constitute
Dissenting Shares), shall be converted into the right to receive $7.56.
3.3 At the Effective Time, each share of Wireless Series F Preferred
Stock issued and outstanding immediately prior to the Effective Time (except for
shares, if any, of Wireless Series F Preferred Stock which shall then constitute
Dissenting Shares), shall be converted into the right to receive $4.50.
3.4 At the Effective Time, each share of Wireless Series G Preferred
Stock issued and outstanding immediately prior to the Effective Time (except for
shares, if any, of Wireless Series G Preferred Stock which shall then constitute
Dissenting Shares), shall be converted into the right to receive $5.50.
3.5 Each holder of shares of Wireless Common Stock or Wireless
Preferred Stock, upon surrender at or after the Effective Time to Glenayre for
cancellation of the one or more certificates representing such shares (or in
case of a lost, stolen or destroyed Wireless stock certificate, compliance with
the provisions of Section 3.9), shall thereafter be entitled to receive cash in
the amounts specified above.
3.6 Until surrender as hereinabove provided (or compliance with Section
3.8, if applicable), (i) each outstanding certificate which prior to the
Effective Time represented shares of Wireless Common Stock or Wireless Preferred
Stock (other than certificates for Dissenting Shares) shall be deemed for all
corporate purposes, to evidence the right to receive the aggregate amount of
cash to be delivered with respect to such shares of Wireless Common Stock or
Wireless Preferred Stock; and (ii) each outstanding certificate evidencing
Dissenting Shares shall evidence the right of the holder thereof to pursue such
holder's remedies as a dissenting shareholder as provided in the California
General Corporation Law.
3
3.7 All cash delivered upon the surrender for exchange of shares of
Wireless Common Stock or Wireless Preferred Stock (or compliance with Section
3.9, if applicable) in accordance with the terms hereof shall be deemed to have
been delivered in full satisfaction of all rights pertaining to such shares of
Wireless Common Stock or Wireless Preferred Stock. There shall be no further
registration of transfers on the stock transfer books of Wireless of the shares
of Wireless Common Stock or Wireless Preferred Stock which were outstanding
immediately prior to the Effective Time. If for any reason certificates are
presented to Wireless after the Effective Time, they shall be cancelled as
provided herein.
3.8 Immediately upon the Effective Time, each outstanding share of
capital stock of SUB, by virtue of the Merger, and without any action on the
part of the holder thereof, shall automatically be converted into and become one
share of Common Stock of Wireless as the Surviving Corporation. From and after
the Effective Time, Glenayre, as holder of all of the outstanding shares of
capital stock of SUB, shall have the right to receive Common Stock of Wireless
as provided hereinabove upon its surrender of the certificate or certificates
representing all shares of the capital stock of SUB. Until surrender, each
outstanding certificate which prior to the Effective Time represented capital
stock of SUB shall be deemed for all corporate purposes to evidence ownership of
the number of whole shares of Common Stock of Wireless into which the shares of
capital stock of SUB have been so converted. From and after the Effective Time,
Glenayre, as owner of all outstanding shares of the capital stock of SUB, shall
thereupon cease to have any rights with respect to such shares and its rights
shall be solely in respect of the Common Stock of Wireless into which such
shares of capital stock of SUB have been so converted.
3.9 In the event that a stock certificate representing shares of
Wireless Common Stock or Wireless Preferred Stock is alleged by the holder
thereof to have been lost, stolen or destroyed, Glenayre shall nevertheless
deliver to such holder the consideration described in Sections 3.1, 3.2, 3.3 or
3.4 provided that Glenayre may require such holder to give Glenayre a bond (or
other adequate security) sufficient to indemnify it and Wireless against any
claim that may be made against it or Wireless (including any expense or
liability) on account of the alleged loss, theft or destruction of the Wireless
stock certificate or the payment of cash in exchange therefor.
4. TERMINATION AND AMENDMENT.
4.1 Notwithstanding the approval of this Agreement by the shareholders
of Wireless and SUB, this Agreement may be terminated at any time prior to the
Effective Time by the mutual agreement of the Boards of Directors of Glenayre,
SUB and Wireless.
4.2 Notwithstanding the approval of this Agreement by the shareholders
of Wireless and SUB, this Agreement shall terminate in the event that the
Acquisition Agreement shall be terminated prior to the Effective Time as therein
provided.
4.3 In the event of the termination of this Agreement as provided
above, this Agreement shall become void and there shall be no liability on the
part of Wireless, SUB or
4
Glenayre or their respective officers or directors hereunder, except as
otherwise provided in the Acquisition Agreement.
4.4 This Agreement may be amended by the parties hereto at any time
before or after approval hereof by the shareholders of Wireless or SUB but,
after any such approval, no amendment shall be made which by law requires the
further approval of the shareholders of Wireless or SUB without first obtaining
such approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
IN WITNESS WHEREOF, the parties to this Agreement pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors, have caused this Agreement to be executed in their
respective corporate names by the President or a Vice President and by the
Secretary or Assistant Secretary of each party hereto.
WAI ACQUISITION CORP.
By ___________________________________________
________________________________, President
By ___________________________________________
________________________________, Secretary
GLENAYRE TECHNOLOGIES, INC.
By ___________________________________________
________________________________, President
By ___________________________________________
________________________________, Secretary
WIRELESS ACCESS, INC.
By ___________________________________________
________________________________, President
By ____________________________________________
_________________________________, Secretary
5
EXHIBIT B
TRANSMITTAL LETTER
Glenayre Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Ladies and Gentlemen:
The undersigned holder of Common Stock and/or Preferred Stock of
Wireless Access, Inc. ("Wireless") hereby acknowledges that he, she or it has
received and reviewed (1) the Proxy Statement dated _____________, 1997
(hereinafter referred to as the "Proxy Statement") and (2) the Acquisition
Agreement dated as of October 1, 1997 by and among Glenayre Technologies, Inc.
("Glenayre"), WAI Acquisition Corp. and Wireless (hereinafter referred to as the
"Acquisition Agreement") attached as Annex I to the Proxy Statement. Pursuant to
the terms of the Acquisition Agreement, WAI Acquisition Corp., which is a
wholly-owned subsidiary of Glenayre, will merge with and into Wireless (the
"Merger"), and, after the Merger, Wireless will be a wholly-owned subsidiary of
Glenayre. Capitalized terms used but not otherwise defined herein shall have the
same meanings as are ascribed to them in the Acquisition Agreement.
1. This Transmittal Letter should be completed, signed and mailed or delivered
with the certificates (and stock powers executed in blank as described below) of
the undersigned that previously represented shares of Wireless Capital Stock, to
the attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ at the following address:
Glenayre Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. The undersigned hereby delivers to Glenayre the below-described certificates,
which are enclosed herewith, together with duly executed stock powers relating
thereto, in exchange for cash in an amount equal to the sum of (a) with respect
to Wireless Capital Stock other than Series F Preferred Stock and Series G
Preferred Stock, $3.78 multiplied by the total number of Outstanding Shares of
such Wireless Capital Stock represented by such certificates, (B) with respect
to Series F Preferred Stock, $4.50 multiplied by the total number of Outstanding
Shares of such Series F Preferred Stock represented by such certificates and (C)
with respect to Series G Preferred Stock, $5.50 multiplied by the total number
of Outstanding Shares of such Series G Preferred Stock represented by such
certificates (the "Cash Amount"). The undersigned acknowledges that, pursuant to
the Acquisition Agreement, a portion of the Cash Amount shall be placed in
Escrow and shall be subject to indemnification claims pursuant and subject to
the Acquisition Agreement.
3. The undersigned hereby warrants that the undersigned is the legal owner, free
and clear of all Encumbrances, of the shares of Wireless Capital Stock described
below and that the undersigned has full authority to deliver to you the
certificate(s) identified below and that such delivery does not require the
consent of any third party. The undersigned will, upon request, execute any
additional documents reasonably necessary to complete the delivery of such
certificate(s). The undersigned shall indemnify Glenayre and Wireless from any
damages incurred by Glenayre or Wireless as a result of any inaccuracy in such
representation.
Please issue a check in payment of the Cash Amount the undersigned is
entitled to receive, and please mail such check to the registered owner at the
address specified on the following page.
--------------------------------------------------------------------------------
DESCRIPTION OF CERTIFICATE(S) DELIVERED
(SEE INSTRUCTIONS 2 AND 3)
--------------------------------------------------------------------------------
WIRELESS CAPITAL STOCK
--------------------------------------------------------------------------------
-------------------------------------------------- ------------- ---------------
Class or Series of Number of Shares of Wireless
Name(s) of Registered Owner Certificate Wireless Capital Capital Stock Represented by Such
(as it or they appear on certificate(s)) Number Stock Certificate
-------------------------------------------------- ------------- ---------------------- -----------------------------------
-------------------------------------------------- ------------- ---------------------- -----------------------------------
-------------------------------------------------- ------------- ---------------------- -----------------------------------
-------------------------------------------------- ------------- ---------------------- -----------------------------------
-------------------------------------------------- ------------- ---------------------- -----------------------------------
-------------------------------------------------- ------------- ---------------------- -----------------------------------
---------------------- -----------------------------------
-------------------------------------------------- ------------- ---------------------- -----------------------------------
---------------------- -----------------------------------
---------------------------------------------------------------- ---------------------- -----------------------------------
Total Shares of
Wireless Capital
Stock
---------------------------------------------------------------- ---------------------- -----------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Signature(s) of Owner(s)) (See Instruction 2)
(Must be signed by registered owner(s) exactly as name(s) appear(s) on stock
certificate(s). If signature is by attorney, executor, administrator, trustee or
guardian or others acting in a fiduciary capacity, please set forth full title
and see Instruction 2.)
Name(s) -----------------------------------------------------------------------
-----------------------------------------------------------------------
(Please Print)
Address -----------------------------------------------------------------------
-----------------------------------------------------------------------
(Include Zip Code)
-------------------------------------------- -------------------------
(Area Code and Telephone No.) (Tax Identification or
Social Security No.)
Dated -------------------------
--------------------------------------------------------------------------------
(See Instruction 7)
--------------------------------------------------------------------------------
PAYER'S NAME: GLENAYRE TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
----------------------------------- --------------------------------------------
SUBSTITUTE
PART 1 - PLEASE PROVIDE YOUR TIN (SOCIAL ----------------------------------
Form W-9 SECURITY NUMBER OR EMPLOYER IDENTIFICATION Social Security Number
Department of the Treasury NUMBER) IN THE BOX AT RIGHT AND CERTIFY BY
Internal Revenue Service SIGNING AND DATING BELOW OR
Payer's Request for Taxpayer
Identification Number [TIN]
Employer Identification Number
--------------------------------------------------------------------------------
PART 2 - Check the box if you are NOT
subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the
Internal Revenue Code because (1) you have
not been notified that you are subject to
backup withholding as a result of failure to
report all interest or dividends or (2) the
Internal Revenue Service has notified you
that you are no longer subject to backup
withholding [ ]
---------------------------------------------------------- ---------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I
CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS PART 3 --
TRUE, CORRECT, AND COMPLETE
SIGNATURE DATE Awaiting TIN [ ]
----------------------------------- ---------------------------------------------------------- ---------------------
INSTRUCTIONS
1. DELIVERY OF TRANSMITTAL LETTER AND CERTIFICATES. This Transmittal
Letter or a photocopy hereof, filled in and signed, must be used in connection
with a delivery of certificates.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF
THE SHAREHOLDER, BUT IT IS RECOMMENDED THAT DOCUMENTS BE DELIVERED EITHER
PERSONALLY OR BY REGISTERED MAIL PROPERLY INSURED WITH RETURN RECEIPT REQUESTED.
2. SIGNATURES ON TRANSMITTAL LETTER AND ENDORSEMENTS. In case of
endorsement or signatures by executors, administrators, trustees, guardians,
attorneys, corporations and the like, the certificates delivered must be
accompanied by evidence satisfactory to Glenayre of authority of the person to
make the endorsement, or to sign, together with all supporting documents
necessary to validate the delivery. If certificates are delivered by joint
holders or owners, all such persons must sign. If certificates are registered in
different forms, it will be necessary to fill in, sign and submit as many
separate Transmittal Letters or photocopies thereof as there are different
registrations of certificates.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate number(s) and the number of shares of Wireless Capital Stock should
be listed on a separate signed schedule attached hereto.
4. DEPOSIT OF CERTIFICATES. Payment of the Cash Amount will be made
only against deposit of the certificates of Wireless Capital Stock to be
exchanged therefor with Glenayre.
5. LOST OR STOLEN CERTIFICATES. Please notify Glenayre in writing at
its address set forth above for the procedure to be followed if any certificate
has been lost, stolen, destroyed or mutilated and replacement instructions will
be mailed to you.
6. DISSENTERS RIGHTS. Shareholders who are seeking to exercise their
dissenters rights under the California General Corporation Law should not
deliver certificates for shares pursuant to this Transmittal Letter.
7. SUBSTITUTE FORM W-9. IF YOU HAVE NOT PREVIOUSLY PROVIDED GLENAYRE
WITH YOUR SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION NUMBER ON FORM
W-9 OR CERTIFIED THEREIN THAT YOU ARE NOT SUBJECT TO BACK-UP WITHHOLDING, YOU
SHOULD COMPLETE THE SUBSTITUTE FORM W-9 INCLUDED HEREIN.
All questions with respect to this Transmittal Letter will be
determined by Glenayre, which determinations shall be conclusive and binding.
Questions should be directed to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ at Glenayre at the address set
forth above or by telephone at (▇▇▇) ▇▇▇-▇▇▇▇.
Additional copies of this Transmittal Letter may be obtained from
Glenayre at its address set forth above. Photocopies of this Transmittal Letter
will be accepted, however.
EXHIBIT C-1
(FOR "BELOW-WATER" WARRANTS)
WARRANT TERMINATION AGREEMENT
This Warrant Termination Agreement is entered into as of __________
___, 1997 by and among Wireless Access, Inc., a California corporation (the
"Company"), NatSteel Electronics (S) PTE. LTD. ("Holder") and Glenayre
Technologies, Inc., a Delaware corporation ("Glenayre").
WHEREAS Holder is the holder of a Warrant to purchase 110,000 shares of
the Common Stock of the Company (the "Warrant Shares") at an exercise price of
$5.00 per share (the "Exercise Price"), represented by Warrant Certificate No.
W-4.2 (the "Warrant Certificate") and also the holder of shares of the Series F
Preferred Stock of the Company;
WHEREAS the Company has entered into that certain Acquisition Agreement
by and among the Company, Glenayre and WAI Acquisition Corp., a California
corporation and wholly-owned subsidiary of Glenayre pursuant to which Glenayre
will acquire the Company and the Company will become a wholly-owned subsidiary
of Glenayre (the "Acquisition").
WHEREAS pursuant to the Acquisition holders of the Common Stock and
Preferred Stock of the Company (other than Series F and Series G Preferred
Stock) will have their shares converted into the right to receive cash in the
amount of $3.78 per share (the "Stock Price Per Share"), holders of Series F
Preferred Stock will have their shares converted into the right to receive cash
in the amount of $4.50 per share and holders of Series G Preferred Stock will
have their shares converted into the right to receive cash in the amount of
$5.50 per share.
WHEREAS, the parties desire to terminate the Warrant effective upon the
consummation of the Acquisition (the "Effective Time") and to pay the Holder a
cash amount equal to the product of (x) the number of Warrant Shares and (y)
US$.01 (one cent) (the "Termination Amount");
WHEREAS it is a condition to the Acquisition that the Warrant terminate
upon the Effective Time.
WHEREAS, in order to consummate the Acquisition, the parties desire to
cancel the Warrant effective at the Effective Time.
NOW, THEREFORE, in consideration for the foregoing, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. PAYMENT OF TERMINATION AMOUNT; TERMINATION OF WARRANT. At the later
of the Effective Time and receipt by Glenayre of this Agreement, duly executed
by the Holder, (i) Glenayre shall deliver to the Holder against receipt of the
original Warrant Certificate representing the Warrant a check in the amount of
the Termination Amount and payable to the Holder, (ii) the Company shall
cancel the Warrant and (iii) all rights of the Holder to acquire the capital
stock of the Company pursuant to the Warrant shall cease and be of no further
force and effect, and Holder shall have a right to the Termination Amount only
upon surrender of the original Warrant Certificate representing the Warrant.
2. REPRESENTATIONS AND WARRANTIES OF HOLDER. The Holder hereby
represents and warrants to the Company and Glenayre the following:
(a) The Holder is the legal and beneficial owner of the Warrant, free
and clear of all liens, encumbrances, mortgages, pledges, security interests,
conditional sales agreements, charges, option to purchase, rights of first
refusal, reservations, restrictions or other encumbrances or defects in title.
(b) The Holder has all necessary power and authority and is competent
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly and validly executed and delivered by the Holder
and, assuming the due authorization, execution and delivery by Wireless,
constitutes the legal, valid and binding obligation of the Holder enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(c) The execution and delivery of this Agreement by the Holder do not,
and the performance of its obligations hereunder will not, (1) conflict with or
violate any statute, law, ordinance, proclamation, regulation, published
requirement, order, decree and rules of any governmental authority applicable to
the Holder or by which any of its property or assets is bound or affected, or
(2) result in any breach of or constitute a default (or any event which with
notice or lapse of time or both would become a default) under any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Holder is a party or by which the
Holder or its property or assets is bound or affected.
(d) The execution and delivery of this Agreement by the Holder do not,
and the performance of its obligations hereunder will not, require any consent
or authorization of, or filing with or notification to, any foreign, federal,
state or local government, political subdivision or governmental or regulatory
authority, agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority, except for applicable requirements, if any, of the
Securities Act of 1933, as amended or any state securities or "blue sky" laws.
(e) Holder acknowledges that as of the Effective Time all of its rights
to acquire capital stock of the Company pursuant to the Warrant shall cease and
be of no further force and effect.
3. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
(b) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
and understandings between the parties
with respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
(c) The validity of this Agreement, the construction of its terms and
the determination of the rights and duties of the parties hereto shall be
governed by and construed in accordance with the laws of California applicable
to contracts made and to be performed wholly within such state.
(d) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
(e) This Agreement shall terminate in the event the Acquisition
Agreement is terminated or the Acquisition is not consummated for any reason.
IN WITNESS WHEREOF, this Warrant Termination Agreement has been
executed as of the date first hereinabove written.
WIRELESS ACCESS, INC. NATSTEEL ELECTRONICS (S)
PTE. LTD.
By: _________________________________ By: __________________________
Its: _________________________________ Its: ___________________________
GLENAYRE TECHNOLOGIES, INC.
By: _________________________________
Its: __________________________________
EXHIBIT C-2
(FOR "ABOVE-WATER" WARRANTS)
WARRANT TERMINATION AGREEMENT
This Warrant Termination Agreement is entered into as of ___________
__, 1997 by and between Wireless Access, Inc., a California corporation (the
"Company"), ▇▇▇▇▇, ▇▇▇▇▇ & Company ("Holder") and Glenayre Technologies, Inc., a
Delaware corporation ("Glenayre").
WHEREAS Holder is the holder of a Warrant to purchase 100,000 shares of
the Common Stock of the Company (the "Warrant Shares") at an exercise price of
$3.50 per share (the "Exercise Price"), represented by Warrant Certificate No.
W-1 (the "Warrant Certificate");
WHEREAS the Company has entered into that certain Acquisition Agreement
by and among the Company, Glenayre and WAI Acquisition Corp., a California
corporation and wholly-owned subsidiary of Glenayre pursuant to which Glenayre
will acquire the Company and the Company will become a wholly-owned subsidiary
of Glenayre (the "Acquisition"). Pursuant to the Acquisition Agreement, holders
of the Common Stock of the Company will have their shares converted into the
right to receive cash in the amount of $3.78 per share (the "Stock Price Per
Share").
WHEREAS, the parties desire to terminate the Warrant effective upon the
consummation of the Acquisition (the "Effective Time") and to pay Holder a cash
amount equal to the product of (x) the number of Warrant Shares and (y) the
amount by which the Stock Price Per Share exceeds the Exercise Price (the
"Termination Amount").
NOW, THEREFORE, in furtherance of the Acquisition and in consideration
for the Termination Amount, the parties agree as follows:
1. PAYMENT OF TERMINATION AMOUNT; TERMINATION OF WARRANT. At the later
of the Effective Time and receipt by Glenayre of this Agreement, duly executed
by the Holder, (i) Glenayre shall deliver to the Holder against receipt of the
original Warrant Certificate representing the Warrant a check in the amount of
the Termination Amount and payable to the Holder, (ii) the Company shall cancel
the Warrant and (iii) all rights of the Holder to acquire the capital stock of
the Company pursuant to the Warrant shall cease and be of no further force and
effect and Holder shall have a right to the Termination Amount only upon
surrender of the original Warrant Certificate representing the Warrant.
2. REPRESENTATIONS AND WARRANTIES OF HOLDER. The Holder hereby
represents and warrants to the Company and Glenayre the following:
(a) The Holder is the legal and beneficial owner of the Warrant, free
and clear of all liens, encumbrances, mortgages, pledges, security interests,
conditional sales agreements, charges, option to purchase, rights of first
refusal, reservations, restrictions or other encumbrances or defects in title.
(b) The Holder has all necessary power and authority and is competent
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly and validly executed and delivered by the Holder
and, assuming the due authorization, execution and delivery by Wireless,
constitutes the legal, valid and binding obligation of the Holder enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and by such principles of
equity as may affect the availability of equitable remedies.
(c) The execution and delivery of this Agreement by the Holder do not,
and the performance of its obligations hereunder will not, (1) conflict with or
violate any statute, law, ordinance, proclamation, regulation, published
requirement, order, decree and rules of any governmental authority applicable to
the Holder or by which any of its property or assets is bound or affected, or
(2) result in any breach of or constitute a default (or any event which with
notice or lapse of time or both would become a default) under any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Holder is a party or by which the
Holder or its property or assets is bound or affected.
(d) The execution and delivery of this Agreement by the Holder do not,
and the performance of its obligations hereunder will not, require any consent
or authorization of, or filing with or notification to, any foreign, federal,
state or local government, political subdivision or governmental or regulatory
authority, agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority, except for applicable requirements, if any, of the
Securities Act of 1933, as amended or any state securities or "blue sky" laws.
(e) The Holder acknowledges that as of the Effective Time all of its
rights to acquire capital stock of the Company pursuant to the Warrant shall
cease and be of no further force and effect.
3. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
(b) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
and understandings between the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
(c) The validity of this Agreement, the construction of its terms and
the determination of the rights and duties of the parties hereto shall be
governed by and construed in accordance with the laws of California applicable
to contracts made and to be performed wholly within such state.
(d) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, this Warrant Termination Agreement has been
executed as of the date first hereinabove written.
WIRELESS ACCESS, INC. ▇▇▇▇▇, ▇▇▇▇▇ & CO.
By: _________________________________ By: __________________________
Its: _________________________________ Its: ___________________________
GLENAYRE TECHNOLOGIES, INC.
By: _________________________________
Its: __________________________________
EXHIBIT D
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is dated as of
________________ ___, 1997 by and among GLENAYRE TECHNOLOGIES, INC., a Delaware
corporation ("Glenayre"); ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as agent and attorney-in-fact for
the Shareholders identified on Schedule 1 hereto (the "Shareholder
Representative"); and FIRST UNION NATIONAL BANK (the "Escrow Agent").
Statement of Purpose
Pursuant to the terms of an Acquisition Agreement dated as of October
1, 1997 among Glenayre, WAI Acquisition Corp., which is a wholly-owned
subsidiary of Glenayre ("WAI"), and Wireless Access, Inc. ("Wireless") (the
"Acquisition Agreement"), WAI is merging with and into Wireless (the "Merger"),
which will then become a wholly-owned subsidiary of Glenayre.
Pursuant to the Merger and the Acquisition Agreement, all of the issued
and outstanding shares of the capital stock of Wireless shall be converted into
the right to receive, and be exchanged for, cash and each outstanding warrant
shall be terminated in consideration of the receipt of cash, in each case as set
forth in the Acquisition Agreement. The Acquisition Agreement requires that a
portion of the cash described above be delivered to the Escrow Agent to be held
by the Escrow Agent, subject to the terms, provisions and conditions set forth
herein, as security for the indemnification obligations of the Shareholders
under Article 9 of the Acquisition Agreement, which funds are to be held,
invested and disbursed in accordance with the terms of this Agreement. The
Shareholder Representative has been appointed to act as agent and
attorney-in-fact for the Shareholders in connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing Statement of Purpose
and the mutual promises contained herein, the parties hereto hereby agree as
follows:
1. GENERAL.
(a) Definitions. In addition to any other terms defined elsewhere in
this Agreement, including any Schedule hereto (unless such Schedule provides for
a different definition), as used herein, the following terms shall have the
following meanings:
"Affiliate" means any Person which (1) directly or indirectly controls,
is controlled by or is under common control with a specified Person, (2) owns or
controls 5% or more of the outstanding equity interests of a specified Person or
(3) is an officer, director, general partner or trustee of a specified Person.
For this purpose, the term "control" means possession, directly or indirectly
(through one or more intermediaries), of the power to direct or cause the
direction of management and policies of a Person through an ownership of voting
securities or other ownership interests, contract, voting trust or otherwise.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of North Carolina.
"Closing" means the consummation of the Merger.
"Closing Date" means the date on which the Closing occurs.
"Effective Time" means the date on which the Merger becomes effective.
"Escrow" is defined in Paragraph 4 of this Agreement.
"Expiration Date" means the date that is 18 months after the Effective
Time.
"Glenayre Indemnitees" means Glenayre and Wireless and their respective
successors and assigns.
"Indemnity Claim" means any matter which arises that may involve or
give rise to a claim by Glenayre against the Shareholders for any Loss.
"Loss" or "Losses" means (i) with respect to the matters covered by
Section 9.4 of the Acquisition Agreement, "Loss" as defined in Section 9.4 of
the Acquisition Agreement or (ii) with respect to all other matters, any and all
liabilities, losses, damages, actions, suits, proceedings, claims, demands,
assessments, fines, penalties, judgments, fees, costs and expenses (including
reasonable accountants' and attorneys' fees) of every nature and character
sustained or incurred, directly or indirectly, by the Glenayre Indemnitees,
arising out of or incident to or by reason of (1) the breach of any
representation or warranty made by Wireless in the Acquisition Agreement, or any
document, certificate or other agreement entered into, furnished or to be
furnished by Wireless pursuant to the Acquisition Agreement, (2) any breach of
any covenant to be performed by or on the part of Wireless under the Acquisition
Agreement, or any document, certificate, or other agreement or instrument
entered into, furnished or to be furnished by Wireless pursuant to the
Acquisition Agreement, (3) any matter set forth on Schedule 9.1 to the
Acquisition Agreement or (4) the matters set forth in Section 9.4 of the
Acquisition Agreement.
"Notice of Claim" means the written notice given to the Shareholder
Representative and the Escrow Agent by Glenayre which states the general nature
of the Indemnity Claim with reasonable detail as to the alleged basis of the
Indemnity Claim and the Section of the Acquisition Agreement of which a
violation is alleged.
"Proportionate Percentage" means, with respect to a Shareholder, the
percentage set forth opposite such Shareholder's name on Schedule 1 hereto,
which percentage, together with the Proportionate Percentage of each other
Shareholder, equals 100%.
"Shareholder" means a holder of capital stock of Wireless, as set forth
on Schedule 1 hereto.
2
"Transmittal Letter" means the Transmittal Letter executed by each
Shareholder and delivered to Glenayre in connection with the Acquisition
Agreement.
(b) All representations, warranties, agreements, undertakings and
obligations of the Shareholder Representative contained herein are made by the
Shareholder Representative as agent for the Shareholders.
(c) All instructions received by the Escrow Agent from Glenayre must be
signed by an authorized representative of Glenayre, as shown on Schedule 2
hereto (an "Authorized Representative"). Instructions received from the
Shareholder Representative will be signed by the Shareholder Representative,
that individual's specimen signature being found on the execution page of this
Agreement.
2. CONSENT OF SHAREHOLDERS. By virtue of the Shareholders' approval of
the Acquisition Agreement, the Shareholders, who are entitled to receive the
Cash Consideration (as such term is defined in the Acquisition Agreement)
pursuant and subject to the Acquisition Agreement, have, without the necessity
of any further act of any Shareholder, consented to: (a) the establishment of
the Escrow to secure certain obligations which may be owed to the Glenayre
Indemnitees under the Acquisition Agreement in the manner set forth herein, (b)
the appointment of the Shareholder Representative as their representative for
purposes of this Agreement and as attorney-in-fact and agent for and on behalf
of each Shareholder, and the taking by the Shareholder Representative of any and
all actions and the making of any decisions required or permitted to be taken or
made by him under this Agreement (including the settling of claims, the release
of the Escrow and related actions) and (c) all of the other terms, conditions
and limitations in this Agreement.
3. APPOINTMENT OF THE ESCROW AGENT. Glenayre and the Shareholder
Representative hereby appoint the Escrow Agent as "Escrow Agent," and the Escrow
Agent hereby accepts such appointment, with respect to the "Escrow" as that term
is herein defined.
4. THE ESCROW. Promptly after the execution and delivery hereof,
Glenayre will deliver to the Escrow Agent cash in the total amount as stated on
Schedule 1 hereto. Such cash, together with all interest and other income earned
thereon, is referred to herein as the "Escrow."
5. THE ESCROW AGENT'S DUTIES. Except as may be otherwise provided in
Paragraph 10, in which event the special instructions in said Paragraph 10 shall
be controlling, the Escrow Agent shall hold the Escrow in safekeeping and
deliver the same or any part thereof, only as set forth in this Agreement.
(a) Term of Escrow. Except as provided in subsection (c) hereof, the
Escrow shall not be released by the Escrow Agent until the Expiration Date.
(b) Investment of Escrow. The Escrow Agent shall invest and reinvest
cash balances each day in such money market or other short-term investment funds
as shall be specified in writing by the Shareholder Representative; provided,
however, that no investment or reinvestment may be made except in the following:
3
(i) direct obligations of the United States of America or
obligations the principal of and the interest on which are
unconditionally guaranteed by the United States of America;
(ii) certificates of deposit issued by any bank, bank and trust
company, or national banking association (including the Escrow Agent
and its affiliates), which certificates of deposit are insured by the
Federal Deposit Insurance Corporation or a similar governmental agency;
(iii) repurchase agreements with any bank, trust company, or
national banking association (including the Escrow Agent and its
affiliates); or
(iv) Evergreen Institutional Treasury Money Market Fund.
If the Escrow Agent has not received written instructions from the
Shareholder Representative at any time that an investment decision must be made,
the Escrow Agent shall invest such cash balances, or any portion thereof as to
which no such written instruction has been received, in investments described in
clause (iv) above. Each of the foregoing investments shall be made in the name
of the Escrow Agent. No investment shall be made in any instrument or security
that has a maturity of greater than six (6) months. Notwithstanding anything to
the contrary contained herein, the Escrow Agent may, without notice to either
Glenayre or the Shareholder Representative, sell or liquidate any of the
foregoing investments at any time if the proceeds thereof are required for any
release of funds permitted or required hereunder, and the Escrow Agent shall not
be liable or responsible for any loss, cost or penalty resulting from any such
sale or liquidation. With respect to any funds received by the Escrow Agent for
deposit into the Escrow or any written instruction from the Shareholder
Representative received by the Escrow Agent with respect to investment of any
funds in the Escrow after ten o'clock, a.m., Charlotte, North Carolina, time,
the Escrow Agent shall not be required to invest such funds or to effect such
investment instruction until the next day upon which banks in Charlotte, North
Carolina are open for business.
(c) Distribution of the Escrow.
(i) The Escrow Agent shall apply the Escrow to any Loss, and
distribute the Escrow to Glenayre, in accordance with Paragraph 6 of
this Agreement,
(ii) Not later than the Expiration Date, Glenayre shall
deliver to the Escrow Agent and the Shareholder Representative written
notice stating the name of each Shareholder, if any, who has not
complied with the delivery requirements of Section 4.3 of the
Acquisition Agreement in order to receive any cash to which he, she or
it may otherwise be entitled as a result of the Merger (the
"Nonsubmitting Shareholder"). If Glenayre does not so deliver such
notice by the Expiration Date, no Shareholder shall be deemed to be a
Nonsubmitting Shareholder. Not later than 10 Business Days after the
Expiration Date, the Escrow Agent shall deliver
4
(A) to each Shareholder (other than a Nonsubmitting
Shareholder) his, her or its Proportionate Percentage of the
Escrow then held by the Escrow Agent and
(B) to Glenayre the Proportionate Percentage of the Escrow
then held by the Escrow Agent with respect to each
Nonsubmitting Shareholders to be held in trust by Glenayre for
such Nonsubmitting Shareholder,
less the Escrow for which a Notice of Claim was received by the Escrow
Agent prior to the Expiration Date. Any retained Escrow shall, upon
final determination or settlement of the Loss being determined or
contested, be applied thereto in accordance with Paragraph 6 of this
Agreement and any balance delivered to the Shareholders (other than
Nonsubmitting Shareholders) and to Glenayre, with respect to
Nonsubmitting Shareholders (to be held in trust by Glenayre for such
Nonsubmitting Shareholder), in accordance with their respective
Proportionate Percentages.
6. APPLICATION OF ESCROW TO A LOSS.
(a) At any time prior to the Expiration Date, Glenayre may give the
Escrow Agent and the Shareholder Representative a Notice of Claim, together with
notice that Glenayre intends to apply all or a part of the Escrow to the payment
of the Loss specified in such Notice of Claim. In the event that a Loss has not
been liquidated or determined, Glenayre may, at any time prior to the Expiration
Date, give the Escrow Agent and the Shareholder Representative a Notice of Claim
in which Glenayre describes the general nature of the Indemnity Claim and makes
a good faith estimate of the Loss.
(b) If the Shareholder Representative does not give written notice to
Glenayre and the Escrow Agent within 30 days after the receipt of such Notice of
Claim that he protests the proposed application of the Escrow to the Loss as
specified in such Notice of Claim, then the Escrow shall be applied to such Loss
as set forth in such Notice of Claim.
(c) If the Shareholder Representative does give written notice to
Glenayre and the Escrow Agent within 30 days after the receipt of such Notice of
Claim that he protests the proposed application of the Escrow to the Loss as
specified in such Notice of Claim, then the proposed application shall be
referred by Glenayre to, and settled by, binding arbitration in accordance with
the then applicable Rules of Commercial Arbitration of the American Arbitration
Association. The arbitration panel or arbitrator (as applicable) shall be
selected as provided in Paragraph 6(d) of this Agreement. The arbitration panel
or arbitrator (as applicable) shall determine the amount, if any, of such
application which is proper. The venue of the arbitral proceedings shall be in
Santa ▇▇▇▇▇ County, California. In reaching a decision, the arbitration panel or
arbitrator (as applicable) shall apply the principles of law that a North
Carolina court, in applying North Carolina law, would use in the event of
litigation on the same issues. The decision rendered by the arbitration panel or
5
arbitrator (as applicable) shall be final and binding on Glenayre, the
Shareholders and the Shareholder Representative. Judgment on the award rendered
by the arbitration panel or arbitrator (as applicable) may be entered in any
court having jurisdiction thereof. All attorneys' fees, fees for expert
witnesses and all other costs incurred by the Shareholders, the Shareholder
Representative and the Escrow Agent in connection with the Indemnity Claim which
is the subject of the arbitration and any fees charged by the arbitrators or the
American Arbitration Association shall be paid out of the Escrow.
Notwithstanding anything herein to the contrary, the Escrow Agent shall not be
obligated to participate in such arbitration, but, subject to its rights as
provided in this Agreement, shall act in good faith with respect to the
application of the Escrow as provided in the decision rendered by the
arbitration panel or arbitrator (as applicable).
(d) In the event that the Shareholder Representative protests the
proposed application of the Escrow to a Loss as provided in Paragraph 6(c) and
Glenayre and the Shareholder Representative cannot resolve such disagreement
within the 30-day period specified in Paragraph 6(c), then promptly thereafter
Glenayre shall name an individual to serve as an arbitrator on the arbitration
panel to determine the Indemnity Claim and shall give the Shareholder
Representative notice thereof; within 10 days after such notice, the Shareholder
Representative shall name a second individual to serve as an arbitrator on such
arbitration panel; and the two individuals so named shall agree upon and name a
third individual to serve as an arbitrator on such arbitration panel. In the
event that the Shareholder Representative does not name a second individual to
serve on the arbitration panel within such 10-day period, then the arbitrator
named by Glenayre shall serve as the sole arbitrator. In the event that the two
individuals named by Glenayre and the Shareholder Representative, respectively,
cannot agree on a third member within 10 days, then the selection of a third
individual to serve on the arbitration panel shall be made by the American
Arbitration Association or, if the American Arbitration Association fails to
choose an arbitrator within 15 days after request by Glenayre or the Shareholder
Representative, by the Presiding Judge of Santa ▇▇▇▇▇ County, California,
Superior Court.
(e) Each Shareholder shall be liable for his, her or its Proportionate
Percentage of any Loss indemnifiable under this Agreement and the Acquisition
Agreement, provided that, but subject to the last sentence of this Paragraph
6(e), no Shareholder shall be liable for any Loss otherwise indemnifiable
hereunder (i) in excess of his, her or its Proportionate Percentage of the
Escrow and (ii) except to the extent that the aggregate amount of all Losses
exceeds $250,000 (except to the extent otherwise provided in Schedule 9.1 of the
Disclosure Schedules). Except for matters covered by Section 9.4 of the
Acquisition Agreement, the amount of any indemnifiable Losses hereunder shall be
reduced by the amount of (i) insurance proceeds net of deductibles and
incidental expenses and premium increases reasonably anticipated to result
therefrom and (ii) proceeds or amounts from third parties (regardless of when
received but only if actually received), in each case of clauses (i) and (ii) in
connection with or as a result of such Losses. In addition, except for matters
covered by Section 9.4 of the Acquisition Agreement, the amount of any
indemnifiable Loss shall be reduced to the extent that a general or specific
reserve in the August 31, 1997 Balance Sheet (as such reserve may be increased
as described in Schedule 5.21 of the Disclosure Schedules with respect to
Section 5.21 of the Acquisition Agreement) is available to cover such Loss.
Notwithstanding anything to the contrary contained herein, except for (1) the
obligation of the Shareholders to pay any of the fees and expenses which they
are to bear under
6
Section 4.7 of the Acquisition Agreement, (2) common law fraud, (3) any remedies
available to Glenayre under any Noncompetition Agreement or Employment Agreement
with any Shareholder and (4) any remedies available to Glenayre under Section
10.5 of the Acquisition Agreement, the indemnification provisions of this
Agreement and Article 9 of the Acquisition Agreement shall be the sole and
exclusive remedy available to Glenayre for any breach of Wireless'
representations, warranties, agreements, covenants or any other agreement or
provision contained in this Agreement or the Disclosure Schedules or in any
certificate or agreement delivered pursuant to this Acquisition Agreement or
otherwise in connection with the Acquisition Agreement and the transactions
contemplated by the Acquisition Agreement, or any causes of action related to
the foregoing.
7. THE ESCROW AGENT'S AUTHORITY TO ACT.
(a) The Escrow Agent may act in accordance with the terms of this
Agreement upon any written notice, request, waiver, consent, certificate,
receipt, authorization, power of attorney or other document which it in good
faith believes to be genuine.
(b) The Escrow Agent shall be deemed to have properly delivered any
item of Escrow upon (i) placing the item in the United States mail in a suitable
package or envelope with first class prepaid postage affixed, addressed to the
addressee at such addressee's address as set forth in this Agreement or such
other address as the party shall have furnished to the Escrow Agent in writing;
(ii) delivery in person at the Escrow Agent's offices; or (iii) delivery in any
other manner pursuant to written instructions of the person to whom delivery is
to be made.
(c) In performing its duties under this Agreement, or upon the claimed
failure to perform any of its duties hereunder, the Escrow Agent shall not be
liable to anyone for damages, losses or expenses which may be incurred as a
result of the Escrow Agent so acting or failing to so act; provided, however,
that the Escrow Agent shall not be relieved from liability for damages arising
out of its proven gross negligence or willful misconduct under this Agreement.
8. OTHER AGREEMENTS. The Escrow Agent is not a party to, nor is it
bound by, any other agreement or undertaking between Glenayre and the
Shareholders, the Shareholder Representative or any of them relating to the
subject matter hereof, it being the intention of the parties hereto that the
Escrow Agent assent to and be obligated to give consideration only to the terms
and provisions hereof. Unless otherwise provided in Paragraph 12, the Escrow
Agent shall have no duty to determine or inquire into the happening or
occurrence of any event or contingency or the performance or failure of
performance of any of Glenayre, the Shareholders or the Shareholder
Representative with respect to arrangements or contracts with each other or with
others, the Escrow Agent's sole duty hereunder being to hold the Escrow and to
dispose of and deliver the same in accordance with instructions given to it as
provided in Paragraphs 5 and 6 of this Agreement.
7
9. STANDARD OF CARE.
(a) The Escrow Agent undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and no implied covenants
or obligations shall be read into this Agreement against the Escrow Agent.
(b) If the Escrow Agent is required by the terms hereof to determine
the occurrence of any event or contingency, the Escrow Agent shall, in making
such determination, be liable only for its proven willful misconduct or gross
negligence, as determined in light of all the circumstances, including the time
and facilities available to it in the ordinary conduct of its business. In
determining the occurrence of any such event or contingency the Escrow Agent may
request from Glenayre or any of the Shareholders or the Shareholder
Representative or any other person such reasonable additional evidence as the
Escrow Agent in its sole discretion may deem necessary to determine any fact
relating to the occurrence of such event or contingency, and may at any time
inquire of and consult with others, including without limitation, Glenayre or
any of the Shareholders or the Shareholder Representative, and the Escrow Agent
shall not be liable for any damages resulting from its delay in acting hereunder
pending its receipt and examination of additional evidence requested by it.
(c) Whenever the Escrow Agent is required by the terms hereof to take
action upon the occurrence of any event of contingency, the time prescribed for
such action shall in all cases be a reasonable time after written notice
received by the Escrow Agent for the happening of such event or contingency;
provided, however, that this provision shall not be deemed to limit or reduce
the time allowed the Escrow Agent for action as provided in Paragraph 9(b).
10. RESIGNATION AND REMOVAL OF THE ESCROW AGENT. The Escrow Agent may
resign from the performance of its duties hereunder at any time by giving ten
(10) days' prior written notice to Glenayre and the Shareholder Representative
or may be removed, with or without cause, by Glenayre and the Shareholder
Representative, acting jointly by furnishing joint written instructions to the
Escrow Agent, at any time by the giving of ten (10) days' prior written notice
to the Escrow Agent. Such resignation or removal shall take effect upon the
appointment of a successor Escrow Agent as provided hereinbelow. Upon any such
notice of resignation or removal, Glenayre and the Shareholder Representative
jointly shall appoint a successor Escrow Agent hereunder, which shall be a
commercial bank, trust company or other financial institution with a combined
capital and surplus in excess of $10,000,000. Upon the acceptance in writing of
any appointment as the Escrow Agent hereunder by a successor Escrow Agent, such
successor Escrow Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Escrow Agent, and the
retiring Escrow Agent shall be discharged from its duties and obligations under
this Agreement, but shall not be discharged from any liability for actions taken
as the Escrow Agent hereunder prior to such succession. After any retiring
Escrow Agent's resignation or removal, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Escrow Agent under this Agreement.
8
11. LIABILITY OF THE ESCROW AGENT.
(a) The Escrow Agent shall have no liability or obligation with respect
to the Escrow except for the Escrow Agent's proven willful misconduct or gross
negligence. The Escrow Agent's sole responsibility shall be for the safekeeping,
investment, and disbursement of the Escrow in accordance with the terms of this
Agreement. The Escrow Agent shall have no implied duties or obligations and
shall not be charged with knowledge or notice of any fact or circumstance not
specifically set forth herein. The Escrow Agent may rely upon any instrument,
not only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained therein, which the Escrow Agent
shall in good faith believe to be genuine, to have been signed or presented by
the person or parties purporting to sign the same and to conform to the
provisions of this Agreement. The Shareholder Representative represents and
warrants that he is authorized as agent and attorney-in-fact to make and enter
into this Agreement on behalf of the Shareholders. In no event shall the Escrow
Agent be liable for incidental, indirect, special, consequential or punitive
damages. The Escrow Agent shall not be obligated to take any legal action or
commence any proceeding in connection with the Escrow, any account in the Escrow
is deposited, this Agreement or the Acquisition Agreement, or to appear in,
prosecute or defend any such legal action or proceeding. The Escrow Agent may
consult legal counsel selected by it in the event of any dispute or question as
to the construction of any of the provisions hereof or of any other agreement or
of its duties hereunder, and shall incur no liability and shall be fully
indemnified from any liability whatsoever in acting in good faith in accordance
with the opinion or instruction of such counsel. Glenayre and the Shareholder
Representative (but only as agent and attorney-in-fact for the Shareholders),
jointly and severally, shall promptly pay, upon demand, the reasonable fees and
expenses of any such counsel.
(b) The Escrow Agent is authorized, in its sole discretion, to comply
with orders issued or process entered by any court with respect to the Escrow,
without determination by the Escrow Agent of such court's jurisdiction in the
matter. If any portion of the Escrow is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part thereof, then and in any such
event, the Escrow Agent is authorized, in its sole discretion, but in good
faith, to rely upon and comply with any such order, writ, judgment or decree
which it is advised by legal counsel selected by it is binding upon it without
the need for appeal or other action; and if the Escrow Agent complies with any
such order, writ, judgment or decree, it shall not be liable to any of the
parties hereto or to any other person or entity by reason of such compliance
even though such order, writ, judgment or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
12. INDEMNIFICATION OF THE ESCROW AGENT. From and at all times after
the date of this Agreement, Glenayre and the Shareholder Representative (but
only as agent and attorney-in-fact for the Shareholders), jointly and severally,
shall, to the fullest extent permitted by law and to the extent provided herein,
indemnify and hold harmless the Escrow Agent and each director, officer,
employee, attorney, agent and affiliate of Escrow Agent (collectively, the
"Indemnified Parties") against any and all actions, claims (whether or not
valid), losses, damages, liabilities, costs and
9
expenses of any kind or nature whatsoever (including without limitation
reasonable attorney's fees, costs and expenses) incurred by or asserted against
any of the Indemnified Parties from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way relating
to any claim, demand, suit, action or proceeding (including any inquiry or
investigation) by any person, including without limitation Glenayre or the
Shareholder Representative, whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any person under any statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or failure
of performance of this Agreement or any transactions contemplated herein,
whether or not any such Indemnified Party is a party to any such action,
proceeding, suit or the target of any such inquiry or investigation; provided,
however, that no Indemnified Party shall have the right to be indemnified
hereunder for any liability finally determined by a court of competent
jurisdiction, subject to no further appeal, to have resulted solely from the
gross negligence or willful misconduct of such Indemnified Party. If any such
action or claim shall be brought or asserted against any Indemnified Party, such
Indemnified Party shall promptly notify Glenayre and the Shareholder
Representative in writing, and Glenayre and the Shareholder Representative shall
assume the defense thereof, including the employment of counsel and the payment
of all expenses. Such Indemnified Party shall, in its sole discretion, have the
right to employ separate counsel (who may be selected by such Indemnified Party
in its sole discretion) in any such action and to participate in the defense
thereof, and the fees and expenses of such counsel shall be paid by such
Indemnified Party, except that Glenayre and/or the Shareholder Representative
shall be required to pay such fees and expenses if (a) Glenayre and/or the
Shareholder Representative agree to pay such fees and expenses, (b) Glenayre
and/or the Shareholder Representative shall fail to assume the defense of such
action or proceeding or shall fail, in the reasonable discretion of such
Indemnified Party, to employ counsel satisfactory to such Indemnified Party in
any such action or proceeding, (c) Glenayre or the Shareholder Representative is
the plaintiff in any such action or proceeding or (d) the named parties to any
such action or proceeding (including any impleaded parties) include both such
Indemnified Party and Glenayre and/or the Shareholder Representative, and such
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to Glenayre or the Shareholder Representative. Glenayre and the
Shareholder Representative (but only as agent and attorney-in-fact for the
Shareholders) shall be jointly and severally liable to pay fees and expenses of
counsel pursuant to the preceding sentence, except that any obligation to pay
under clause (a) shall apply only to the party so agreeing. All such fees and
expenses payable by Glenayre and/or the Shareholder Representative pursuant to
the foregoing sentence shall be paid from time to time as incurred, both in
advance of and after the final disposition of such action or claim. All of the
foregoing losses, damages, costs and expenses of the Indemnified Parties shall
be payable by Glenayre and the Shareholder Representative (but only as agent and
attorney-in-fact for the Shareholders), jointly and severally, upon demand by
such Indemnified Party. The obligations of Glenayre and the Shareholder
Representative under this Paragraph 12 shall survive any termination of this
Agreement and the resignation or removal of the Escrow Agent.
The parties agree that neither the payment by Glenayre or the
Shareholder Representative of any claim by the Escrow Agent or any Indemnified
Party for indemnification hereunder nor the
10
disbursement of any amounts to the Escrow Agent or any Indemnified Party from
the Escrow in respect of a claim by the Escrow Agent or any Indemnified Party
for indemnification shall impair, limit, modify or affect, as between Glenayre
and the Shareholder Representative, on behalf of the Shareholders, the
respective rights and obligations of Glenayre, on the one hand, and the
Shareholder Representative, on behalf of the Shareholders, on the other hand,
under the Acquisition Agreement.
13. TIME OF PERFORMANCE. Whenever under the terms hereof the time for
performance of any provision shall fall on a date which is not a regular
business day of the Escrow Agent, the performance thereof on the next succeeding
regular business day of the Escrow Agent shall be deemed to be in full
compliance. Whenever time is referred to in this Agreement, it shall be the time
recognized by the Escrow Agent in the ordinary conduct of its normal business
transactions.
14. DEATH, DISABILITY, ETC. The death, disability, bankruptcy,
insolvency, reorganization or absence of any of Glenayre, the Shareholder
Representative or any of the Shareholders shall not affect or prevent
performance by the Escrow Agent of its obligations or its right to rely upon
instructions received hereunder.
15. REMEDIES OF THE ESCROW AGENT.
(a) As additional consideration for and as an inducement for the Escrow
Agent to act hereunder, it is understood and agreed that in the event of any
disagreement between the parties to this Agreement or in the event any other
person or entity claims an interest in the Escrow or any part thereof, and such
disagreement or claim results in adverse claims and demands being made by them
or any of them in connection with or for any part of the Escrow, the Escrow
Agent shall be entitled, at the option of the Escrow Agent, to refuse to comply
with the instructions or demands of the parties to this Agreement, or any of
such parties, so long as such disagreement or adverse claim shall continue. In
such event, the Escrow Agent shall not be required to make delivery or other
disposition of the Escrow. Anything herein to the contrary notwithstanding, the
Escrow Agent shall not be or become liable to Glenayre, the Shareholder
Representative or the Shareholders or any of them for the failure of the Escrow
Agent to comply with the conflicting or adverse demands of Glenayre or the
Shareholder Representative or any of such parties or of any other persons or
entities claiming an interest in the Escrow or any part thereof. The Escrow
Agent shall be entitled to refrain and refuse to deliver or otherwise dispose of
the Escrow or any part thereof or to otherwise act hereunder, as stated above,
unless and until (i) the rights of the parties and all other persons and
entities claiming an interest in the Escrow have been duly determined in
accordance with Paragraph 6(c) or (ii) the parties to this Agreement and such
other persons and entities have reached an agreement resolving their differences
and have notified the Escrow Agent in writing of such agreement and have
provided the Escrow Agent with indemnity satisfactory to it against any
liability, claims or damages resulting from compliance by the Escrow Agent with
such agreement. In addition to the foregoing, the Escrow Agent shall have the
right to tender into the registry or custody of any court having jurisdiction,
any part of or all of the Escrow. Upon such tender, the parties hereto agree
that the Escrow Agent shall be discharged from all further duties under this
Agreement; provided, however, that the filing of any such legal proceedings
shall not deprive the
11
Escrow Agent of its compensation hereunder earned prior to such filing and
discharge of the Escrow Agent of its duties hereunder.
(b) While any arbitration or proceeding arising out of or relating to
this Agreement or the Escrow is pending, whether the same be initiated by the
Escrow Agent or by others, the Escrow Agent shall have the right at its option
to stop all further performance of this Agreement and performance of
instructions (except its duty to safe keep and invest the Escrow) until all
differences shall have been resolved by agreement or until the rights of all
parties shall have been fully and finally determined in accordance with
Paragraph 6(c) hereof. The rights of the Escrow Agent under this Paragraph are
in addition to all other rights which it may have by law or otherwise.
16. FEES AND EXPENSES.
(a) Glenayre hereby agrees to pay the Escrow Agent for its ordinary
services hereunder the fees determined in accordance with, and payable as
specified in, the Schedule of Fees set forth in Schedule 3 attached hereto,
provided that the sweep fee for the Evergreen Institutional Treasury Money
Market Fund shall be paid out of the Escrow. Such expenses shall be paid to the
Escrow Agent within 10 days following receipt by Glenayre of a written statement
setting forth such expenses.
(b) In the event fees and expenses of the Escrow Agent are to be paid
pursuant to Paragraph 12 hereof, it is understood and agreed by Glenayre and the
Shareholder Representative that such fees and expenses are in addition to those
described above and that such fees and expenses shall be subject to periodic
review and modification by the Escrow Agent as determined by the Escrow Agent in
its sole discretion.
(c) In the event that the fees and expenses of the Shareholder
Representative, as outlined in the Schedule of Fees set forth in Attachment A to
the Acquisition Agreement, for his services as agent and attorney-in-fact for
the Shareholders, exceed the retainer provided in the Acquisition Agreement,
Glenayre and the Shareholder Representative agree that they shall deliver joint
instructions to the Escrow Agent to release from the Escrow to the Shareholder
Representative an amount equal to the excess of such fees and expenses over such
retainer.
17. EFFECTIVE DATE. The effective date of this Agreement shall be the
date hereof.
18. TERMINATION. Unless sooner terminated as hereinafter provided, this
Agreement shall terminate without action of any party when all of the terms
hereof shall have been fully performed.
19. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and such counterparts shall constitute and
be one and the same instrument.
20. ASSIGNMENT OF INTERESTS. Neither Glenayre nor the Shareholder
Representative shall assign or attempt to assign or transfer its or his interest
hereunder or any part thereof.
12
21. AMENDMENTS. This Agreement cannot be amended or modified except by
another agreement in writing signed by all the parties hereto or by their
respective successors in interest.
22. HEADINGS. The paragraph headings contained herein are for
convenience of reference only and are not intended to define, limit or describe
the scope or intent of any provision of this agreement.
23. GOVERNING LAW. This Agreement shall be deemed to have been made and
shall be construed and interpreted in accordance with the laws of the State of
North Carolina without giving effect to the conflict of laws principles thereof.
24. CONSENT TO JURISDICTION AND VENUE. In the event that any party
hereto commences a lawsuit or other proceeding relating to or arising form this
Agreement, the parties hereto agree that the United States District Court for
the Western District of North Carolina shall have the sole and exclusive
jurisdiction over any such proceeding. If such court lacks federal subject
matter jurisdiction, the parties agree that the Superior Court Division of the
General Court of Justice of Mecklenburg County, North Carolina shall have sole
and exclusive jurisdiction. Any of these courts shall be proper venue of any
such lawsuit or judicial proceeding and the parties hereto waive any objection
to such venue. The parties hereto consent to and agree to submit to the
jurisdiction of any of the courts specified herein and agree to accept service
of process to vest personal jurisdiction over them in any of these courts.
25. WITHHOLDING. The Escrow Agent shall not be responsible or liable
for determination or payment of any taxes assessed against the Escrow or the
income therefrom nor for the preparation or filing of any tax returns other than
withholding required by statute or treaty. Each of Glenayre and the Shareholder
Representative agrees to provide the Escrow Agent any information necessary to
perform any such required withholding and the Escrow Agent shall be entitled to
rely on such information, including without limitation the withholding status of
each Shareholder as set forth in his, her or its Transmittal Letter. If the
Escrow Agent is responsible for tax reporting as set forth in this Paragraph 25,
it will be rendered under the TIN's set forth in the Transmittal Letters.
26. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the facsimile numbers
specified below:
13
If to Glenayre:
Glenayre Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
NationsBank Corporate Center, Suite 4200
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇ III
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Shareholder Representative:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Shareholder:
Such Shareholder's address set forth on his, her or its Transmittal
Letter
If to the Escrow Agent:
First Union National Bank, as Escrow Agent
Bond Administration
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
14
Glenayre shall forward to the Escrow Agent a copy of each Transmittal Letter
promptly upon its receipt of such Transmittal Letter.
27. REPORTS. At least quarterly, the Escrow Agent shall provide
Glenayre and the Shareholder Representative with a full accounting of the Escrow
and a report of all transactions regarding the Escrow (including receipts,
investments and disbursements) not previously reported.
28. DEALINGS. The Escrow Agent and any stockholder, director, officer
or employee of the Escrow Agent may buy, sell and deal in any of the securities
of Glenayre and become pecuniarily interested in any transaction in which
Glenayre, Glenayre or the Shareholder Representative may be interested, and
contract and lend money to Glenayre, Glenayre or the Shareholder Representative
and otherwise act as fully and freely as though it were not Escrow Agent under
this Agreement. Nothing herein shall preclude the Escrow Agent from acting in
any other capacity for Glenayre, Glenayre or the Shareholder Representative or
for any other entity.
* * * * *
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first stated above.
GLENAYRE TECHNOLOGIES, INC.
By:________________________________
Title:_____________________________
SHAREHOLDER REPRESENTATIVE:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as Agent and
Attorney-in-Fact for the Shareholders
ESCROW AGENT:
FIRST UNION NATIONAL BANK,
as Escrow Agent
By:________________________________
Title:_____________________________
ATTACHMENTS
Schedule 1 - Shareholders, Amount of Escrow and Proportionate Percentages
Schedule 2 - Glenayre Authorized Representatives
Schedule 3 - Fee Schedule
16
SCHEDULE 1
SHAREHOLDERS, AMOUNT OF ESCROW AND PROPORTIONATE PERCENTAGES
Name Cash Amount Proportionate Percentage
---------- -------
$12,000,000 100.00%
SCHEDULE 2
GLENAYRE AUTHORIZED REPRESENTATIVES
Name Signatures
▇▇▇▇ ▇. ▇▇▇▇▇ ________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ________________________
SCHEDULE 3
FEE SCHEDULE
I. ACCEPTANCE FEE $500
Initial fee for reviewing documents, communications with counsel,
setting up account and administration of records.
II. ANNUAL ADMINISTRATION FEE $2,000
Maintenance of assets, providing monthly customer statements, carrying
out duties defined in the Escrow Agreement.
III. INDIVIDUAL TRANSACTIONS
a. $10 Per Check Disbursement
b. $20 Per Wire Disbursement
IV. INVESTMENT MANAGEMENT OPTIONS
a. Automatic Cash Management 15 BASIS PTS.
(Evergreen Institutional Treasury Money Mkt. Fund)
b. Individual Securities Transactions
(buy/sell) $25 PER TRANSACTION
V. OUT OF POCKET EXPENSES
Advance or out-of-pocket expenses including but not limited to postage,
telephone, freight, legal courier and express mail will be billed in
addition to the fees quoted herein.
VI. TAX REPORTING (IF NECESSARY)
Includes producing and mailing of individual 1099's $25 PER 1099
EXHIBIT E
______________, 1997
Wireless Access, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Acquisition Agreement dated as of October 1, 1997 (the
"Acquisition Agree- ment") by and among Glenayre Technologies,
Inc. ("Glenayre"), WAI Acquisition Corp. ("Merger Sub") and
Wireless Access, Inc. ("Wireless")
Ladies and Gentlemen:
We have acted as counsel to Glenayre Technologies, Inc. and WAI
Acquisition Corp. in connection with the transactions contemplated by the
Acquisition Agreement . This opinion letter is delivered pursuant to Section
8.2(c) of the Acquisition Agreement. All capitalized terms used herein and not
otherwise defined herein shall have the same meanings herein as are ascribed to
them in the Acquisition Agreement.
As such counsel, we have examined originals or copies of the
Acquisition Agreement, the Agreement of Merger, the Escrow Agreement, the
Employment Agreement, the Noncomp- etition Agreements, the Warrant Termination
Agreements and the Stock Option Agreement by and among Wireless, Glenayre and
certain shareholders and warrantholders of Wireless (such documents being
referred to collectively herein as the "Transaction Documents" or individually
as a "Transaction Document"). We have also examined the certificate of
incorporation and bylaws of Glenayre and Merger Sub, the corporate minute books
of Glenayre and Merger Sub, certified resolutions of the Board of Directors of
Glenayre and Merger Sub with respect to the transactions contemplated by the
Transaction Documents, certificates of officers of Glenayre, Merger Sub and
public officials, and such other documents, and have made such other
investigations, as we have deemed necessary or appropriate for the purpose of
giving the opinions herein expressed.
Wireless Access, Inc.
______________, 1997
Page 2
In giving the opinions expressed herein and making our investigations
in connection herewith, we have assumed (a) the due authorization, execution and
delivery by the parties thereto other than Glenayre and Merger Sub of the
documents examined by us, (b) the genuineness of all signatures of individuals,
(c) the personal legal capacity of all individual signatories, (d) the
authenticity of all documents presented to us as originals, (e) the conformity
to the originals of all documents presented to us as copies, and (f) the
integrity and completeness of Glenayre and Merger Sub's corporate minute books
and stock records presented to us for our examination. Nothing has come to our
attention in the course of our representation of Glenayre and Merger Sub that
would cause us to believe that the foregoing assumptions are unwarranted.
Except for the matters governed by California law and addressed by the
opinion of Stradling, Yocca, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, California counsel (the
"California Opinion"), a copy of which is attached hereto and upon which we
have, with your permission, relied for purposes of this opinion letter, the
opinions set forth herein are limited to matters governed by the laws of the
State of North Carolina, the corporation law of the State of Delaware and the
federal laws of the United States, and no opinion is expressed herein as to the
laws of any other jurisdiction.
We express no opinion herein concerning the possible application to the
Transaction Documents, the transactions contemplated thereby, or the obligations
of the parties thereunder of Section 548 of the Bankruptcy Code, 11 U.S.C.
ss.548, [Sections 39-15 through 39-22 of the North Carolina General Statutes],
or other similar laws relating to "fraudulent transfers" or "fraudulent
conveyances."
Opinions or statements herein given "to the best of our knowledge" and
the factual matters on which we have relied in giving other opinions herein
(except for our opinions as to corporate matters that we have given in reliance
upon our own investigation of Glenayre and Merger Sub's corporate minute books
and certificates of officers of Glenayre and Merger Sub and public officials)
are based upon (a) information coming to our attention in the course of our
representation of Glenayre and Merger Sub in connection with the transactions
contemplated by the Transaction Documents, or otherwise actually known to the
lawyers in our firm who have given substantive attention to such transactions,
(b) the Company's representations and warranties contained in the Transaction
Documents, and (c) inquiries of representatives of the Company whom we believe
to be reasonably well-informed as to the factual matters in question, but
without any other investigations made for purposes of giving such opinions or
statements unless otherwise stated herein. However, nothing has come to our
attention in the course of our representation of the Company in connection with
the transactions contemplated by the Transaction Documents that would cause us
to believe that our reliance thereon for purposes of such opinions is
unwarranted.
Wireless Access, Inc.
______________, 1997
Page 3
Based upon and subject to the foregoing and the further limitations and
qualifications hereinafter expressed, it is our opinion that:
1. Glenayre is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and has the full corporate
power and authority to own its properties and to carry on its business as now
being conducted. Merger Sub is a corporation duly organized and validly existing
in good standing under the laws of the State of California and has the full
corporate power and authority to own its properties and to carry on its business
as now being conducted.
2. Glenayre and Merger Sub each has full corporate power and authority
to execute and deliver and perform its obligations under the Transaction
Documents, and all corporate actions or approvals required for the execution,
delivery and performance thereof by Glenayre and Merger Sub have been duly taken
or obtained.
3. Each of the Transaction Documents has been duly executed and
delivered by each of Glenayre and Merger Sub and constitutes the legal, valid
and binding obligation of each of Glenayre and Merger Sub, enforceable against
each of Glenayre and Merger Sub in accordance with its terms.
4. Neither the execution and delivery by Glenayre and Merger Sub of the
Transaction Documents nor its compliance with the provisions thereof constitute
or will constitute a violation of the certificate or articles of incorporation
or bylaws of Glenayre or Merger Sub or any applicable law or regulation, or, to
the best of our knowledge, conflict with or result in any breach of any material
contract or agreement to which Glenayre or Merger Sub is now a party or by which
it or its property is bound or any judgement, writ, order or decree of any
judicial or administrative authority by which Glenayre or Merger Sub or its
property is bound. Except for the filing of the Agreement of Merger with the
California Secretary of State and certain other filings not yet due as of the
date hereof, to the best of our knowledge, no consent, approval or authorization
of, or prior notice to or prior filing with, any governmental authority or other
third party, not heretofore obtained, given or filed as required, is required of
Glenayre or Merger Sub in connection with the execution and delivery by Glenayre
and Merger Sub of the Transaction Documents or as a condition to the
enforceability thereof.
5. The shares of Glenayre Common Stock issuable upon exercise of the
Wireless Stock Options assumed by Glenayre in accordance with the Acquisition
Agreement have been duly reserved and authorized for issuance upon exercise of
such options and, when issued in accordance with the respective terms of such
options, such shares will be duly authorized and validly issued, fully paid and
nonassessable. Assuming the Wireless Stock Options assumed by Glenayre in the
Transactions were valid and binding obligations of Wireless prior to the
Wireless Access, Inc.
______________, 1997
Page 4
assumption thereof and assuming the consummation of the Transactions will not
cancel or invalidate such options in accordance with their respective terms,
such options represent valid and binding obligations of Glenayre when assumed by
Glenayre in accordance with the terms of the Acquisition Agreement.
The opinions expressed above are subject to the following
qualifications, exceptions and limitations in addition to those set forth above:
(a) Enforceability of the Transaction Documents may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar state
or federal laws from time to time in effect which affect the
enforcement of creditors' rights generally.
(b) Enforceability of the Transaction Documents is subject to
general equitable principles and to general standards of commercial
reasonableness.
(c) Provisions of the Transaction Documents purporting to
require that waivers be in writing may be ineffective to preclude oral
waivers or waivers by conduct or course of dealing.
(d) Provisions of the Transaction Documents purporting to
require a party thereto to pay or reimburse attorneys' fees incurred by
another party, or to indemnify another party therefor, may be limited
by applicable statutes and decisions relating to the collection and
award of attorneys' fees.
(e) Provisions of the Transaction Documents purporting to
release, exculpate or indemnify a party as to such party's liability
for its own acts or omissions, to the extent such acts or omissions
involve such party's gross negligence, recklessness, willful misconduct
or unlawful conduct, may not be enforceable.
(f) No opinion is expressed as to the validity or
enforceability of provisions of the Transaction Documents relating to
indemnity and contribution for liabilities under federal or state
securities laws.
This opinion letter is delivered solely for your benefit in connection
with the closing under the Acquisition Agreement and may not be relied upon by
any other person or for any other purpose without our prior written consent. Our
opinions expressed herein are as of the date hereof, and we undertake no
obligation to advise you of any changes in applicable law or
Wireless Access, Inc.
______________, 1997
Page 5
any other matters that may come to our attention after the date hereof that may
affect our opinions expressed herein.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
EXHIBIT F
OPINION OF ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
November __, 1997
Glenayre Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Wireless Access, Inc., a California
corporation ("Wireless"), in connection with the merger (the "Merger") of
Wireless with and into WAI Acquisition Corp., a California corporation ("Merger
Sub") and a wholly owned subsidiary of Glenayre Technologies, Inc., a Delaware
corporation ("Glenayre"), pursuant to the Acquisition Agreement among Wireless,
Glenayre and Merger Sub dated as of October 1, 1997 (the "Acquisition
Agreement"). This opinion is furnished to you pursuant to Section 8.3(c) of the
Acquisition Agreement. Unless otherwise defined herein, the capitalized terms
used in this opinion have the meaning given to them in the Acquisition
Agreement.
As such counsel, we examined originals or copies of the following:
(a) executed copy of the Acquisition Agreement;
(b) executed copy of the Agreement of Merger dated November __, 1997
among Wireless, Glenayre and Merger Sub relating to the merger of Merger Sub
with and into Wireless, as submitted for filing with the Secretary of State of
the State of California;
(c) faxed copy of the Agreement of Merger containing the date and time
of filing with the Secretary of State of the State of California, as affixed
thereon by the Secretary of State of the State of California;
(d) the Amended and Restated Articles of Incorporation of Wireless, as
amended up to the Effective Time;
(e) the Bylaws of Wireless, as amended up to the Effective Time;
(f) the minutes of the meetings of, and actions by written consent of,
the Board of Directors, any committees thereof and shareholders of Wireless
relating to the transactions covered by this opinion;
(g) an executed copy of the Escrow Agreement dated as of the date
hereof between Wireless, Glenayre, Merger Sub and the Shareholder
Representative;
(h) executed copies of the Warrants and the Warrant Termination
Agreements;
(i) executed copies of the Wireless Stock Option Agreements;
(j) certificates of good standing of, and evidencing the payment of all
franchise taxes and fees by, Wireless, dated as of a recent date, issued by the
Secretary of State of California;
(k) the certificate of the Chief Executive Officer of Wireless, dated
the date hereof, delivered to Glenayre and Merger Sub pursuant to Section 8.3(a)
of the Acquisition Agreement;
(l) the agreements, instruments and other documents included in the
Wireless Disclosure Schedule to the Acquisition Agreement dated October 1, 1997
(collectively, the "Reviewed Documents");
(m) the certificate, dated the date hereof, of the President and Chief
Executive Officer and of the Chief Financial Officer of Wireless regarding
certain facts necessary to support the opinions set forth herein (the "Officers'
Certificate"); and
(n) such other instruments, corporate records, certificate and other
documents as we deemed necessary as a basis for the opinions hereinafter
expressed.
In such examination, we have assumed the genuineness of all signatures
on original documents, the conformity to original documents of all copies
submitted to us and the due execution and delivery of all documents by any party
other than Wireless where due execution and delivery are a prerequisite to the
effectiveness thereof.
As used in this opinion, the expression "to our knowledge" or "known to
us" with reference to matters of fact means that, after an examination of
documents made available to us by Wireless, and after inquiries of officers of
Wireless, but without any further independent factual investigation, no
information that would give us current actual knowledge of the inaccuracy of
such statement has
come to the attention of those attorneys in this firm who have rendered or are
rendering substantive legal services to the Company. However, except as
otherwise expressly indicated, we have not undertaken any independent
investigation to determine the accuracy of such statement, and any limited
inquiry undertaken by us during the preparation of this opinion letter should
not be regarded as such an investigation. No inference as to our knowledge of
any matters bearing on the accuracy of any such statement should be drawn from
the fact of our representation of the Company.
For purposes of this opinion, we are assuming that you and Merger Sub
have all requisite power and authority, and have taken any and all necessary
corporate action, to execute and deliver the Acquisition Agreement and the
Agreement of Merger, and we assume that the representations and warranties made
by you and Merger Sub in the Acquisition Agreement and pursuant thereto are true
and correct. In addition, in rendering the opinions as to due incorporation and
good standing in paragraph 1 below, we have relied exclusively upon certificates
or oral confirmation received from the Secretary of State of California.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium and other similar federal or
state laws affecting the rights of creditors generally;
(b) We express no opinion as to the effect of rules of law
governing specific performance, injunctive relief or other equitable remedies
(regardless of whether any such remedy is considered in a proceeding at law or
in equity)
(c) We express no opinion as to compliance with applicable
anti-fraud provisions of federal or state laws concerning the issuance of
securities;
(d) We express no opinion as to the enforceability of any of
the agreements other than the Acquisition Agreement, the Escrow Agreement, the
Agreement of Merger, the Wireless Stock Option Agreements and the Warrant
Termination Agreement (collectively, the "Transaction Documents");
(e) With respect to our opinion in paragraph 3 regarding the
enforceability of the Acquisition Agreement, with your consent we have assumed
that the law and court decisions of North Carolina to the extent they are
applicable to the transactions contemplated by the Acquisition Agreement are the
same as the laws and court decisions of the State of California.
(f) With respect to our opinion in paragraph 4 hereof
regarding the capitalization of Wireless, we have relied exclusively upon
representations from the Company in the Officers' Certificate; and
(g) We are members of the Bar of the State of California and
we express no opinion as to any matter relating to the laws of any jurisdiction
other than the federal laws of the United States of America and the laws of the
State of California.
Based upon and subject to the foregoing, and except as set forth in the
Acquisition Agreement and the Wireless Disclosure Schedules to the Acquisition
Agreement, we are of the opinion that:
1. Wireless is corporation duly organized and validly existing in good
standing under the laws of the State of California and has the full corporate
power and authority to own its properties and to carry on its business as now
being conducted.
2. Wireless has full corporate power and authority to execute and
deliver and perform its obligations under the Transaction Documents, and all
corporate actions or approvals required for the execution, delivery and
performance thereof by Wireless have been duly taken or obtained. The Agreement
of Merger has been duly and validly approved by the Wireless Shareholders in
accordance with the Amended and Restated Articles of Incorporation and Bylaws of
Wireless and the California General Corporation Law.
3. Each of the Transaction Documents has been duly executed and
delivered by Wireless and constitutes the legal, valid and binding obligation of
Wireless, enforceable against it in accordance with its terms.
4. The authorized capital stock of Wireless consists of 50,000,000
shares of Common Stock, [5,733,710] shares of which are issued and outstanding
as of the date hereof, 750,000 shares of Series A Preferred Stock, all of which
are issued and outstanding, 3,915,333 shares of Series B Preferred Stock, all of
which are issued and outstanding, 2,500,000 shares of Series C Preferred Stock,
all of which are issued and outstanding, 2,108,951 shares of Series D Preferred
Stock, all of which are issued and outstanding, 1,517,258 shares of Series E
Preferred Stock, all of which are issued and outstanding, 511,510 shares of
Series F Preferred Stock, all of which are issued and outstanding and 2,502,933
shares of Series G Preferred Stock, all of which are issued and outstanding. The
Wireless Capital Stock has been duly authorized and all issued and outstanding
shares of Wireless Capital Stock have been duly and validly issued, are fully
paid and nonassessable and were not issued in violation of any preemptive
rights. The rights, preferences, privileges and restrictions of the shares of
Wireless Capital Stock are as stated in the Amended and Restated Articles of
Incorporation of Wireless as amended by the Merger Agreement. Wireless has
reserved [5,465,657] shares of Wireless Common Stock for future issuance
pursuant to outstanding Wireless Stock Options. Each of the Wireless Stock
Option Agreements and the Wireless Warrants has been duly executed and delivered
by Wireless and constitutes the legal, valid and binding obligation of Wireless,
enforceable against it in accordance with its terms. Except for the Wireless
Stock Option Agreements and the Wireless Warrants, to our knowledge, there are
no outstanding options, warrants or conversion or similar rights which obligate
Wireless to issue additional shares of its capital stock.
5. Neither the execution and delivery by Wireless of the Transaction
Documents nor its compliance with the provisions thereof constitute or will
constitute a violation of the Amended and Restated Articles of Incorporation or
Bylaws of Wireless or any applicable law or regulation, or, to our knowledge,
conflict with or result in any breach of any Reviewed Document or any judgment,
writ, order or decree of any judicial or administrative authority by which
Wireless or its property is bound. Except for the filing of the Agreement of
Merger with the California Secretary of State and certain other filings not yet
due as of the date hereof, to our knowledge and except as set forth in the
Wireless Disclosure Schedules, no consent, approval or authorization of, or
prior notice to or prior filing with, any governmental authority or other third
party, not heretofore obtained, given or filed as required, is required of
Wireless in connection with the execution and delivery by Wireless of the
Transaction Documents or as a condition to the enforceability thereof.
6. Upon the filing of the Agreement of Merger with the Secretary of
State of the State of California, together with the appropriate officers'
certificates and tax clearance certificates as required, the Merger shall be
effective in accordance with the California General Corporation Law.
This opinion letter is delivered solely for your benefit in connection
with the Transaction and may not be relied upon by any other person or for any
other purpose without our prior written consent. Our opinions expressed herein
are as of the date hereof, and we undertake no obligation to advise you of any
changes in applicable law or any other matters that may come to our attention
after the date hereof that may affect our opinions expressed herein.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
(Glenayre letterhead)
Exhibit G
October 1, 1997
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
President
Wireless Access, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
On this date, Glenayre Technologies, Inc. ("Glenayre") and Wireless
Access, Inc. ("WAI") are entering into an Acquisition Agreement (the
"Acquisition Agreement") pursuant to which Glenayre will acquire WAI. As we have
discussed, it is important to Glenayre that you serve as President and General
Manager of Glenayre's Wireless Access group (the "Group") after the Effective
Time (defined below), on the following terms and conditions:
1. EMPLOYMENT AND DUTIES.
(a) Glenayre will employ you, and you agree that you will serve, as the
President and General Manager of the Group pursuant to the terms of this letter
agreement.
(b) You will perform such duties and exercise such powers as are
commensurate with your office and as may be reasonably requested of you by the
President and Chief Executive Officer of Glenayre (the "Glenayre CEO"), subject
to the control and direction of the Glenayre CEO. During the term of your
employment by Glenayre, you will:
(1) devote substantially all of your business time, attention
and abilities to the business of the Group, provided that you may act
as a director of other companies and engage in personal investment
activities so long as such activities do not interfere with the
performance of your duties hereunder;
(2) faithfully serve the Group and use your best efforts to
promote and develop the interests of the Group; and
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
October 1, 1997
Page 2
(3) not acquire, directly or indirectly, any proprietary or
other equity interest in any corporation or other entity or
association, which is engaged in the business of subscriber paging
devices or otherwise competes with Glenayre or its subsidiaries,
provided that you may own, directly or indirectly, solely as a passive
investment, (a) the voting securities of a publicly traded company
which so competes, so long as you do not own more than 2% of the voting
securities of such company or (b) an interest in a fund (such as a
venture capital fund) which owns shares of such an entity where you
have no management authority or direction over such fund.
2. TERM OF EMPLOYMENT.
(a) Your term of employment hereunder will be for a period of one year,
beginning at the Effective Time and will be automatically renewed for additional
one-year terms unless either Glenayre or you notifies the other at least 90 days
prior to such termination date that your employment will terminate on such
termination date; provided that, if this Agreement is so terminated by Glenayre,
Glenayre shall pay to you a lump sum payment equal to six months of Base Salary,
plus the amounts set forth in Paragaraph 3(a) below. Notwithstanding the
foregoing, this Agreement may be terminated immediately prior to the end of any
such one-year terms as follows:
(1) Glenayre may terminate your employment for "Cause";
(2) Glenayre may terminate your employment upon your "Total
and Permanent Disability";
(3) Your employment will terminate automatically upon your
death;
(4) You may terminate your employment hereunder at any time
for "Good Reason";
(5) Glenayre may terminate your employment at any time without
"Cause", provided that Glenayre complies with the provisions of
Paragraphs 3(a), 3(b) and 3(d) below.
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
October 1, 1997
Page 3
(b) "Cause" means the occurrence of any of the following:
(1) dishonesty or fraud on your part which is intended to
result in your substantial personal enrichment at the expense of
Glenayre or its affiliates;
(2) your conviction (after the exhaustion of all appeals) of a
felony involving moral turpitude or the entry of a plea of nolo
contendere for such a felony; or
(3) a material violation of your responsibilities as set forth
in this letter agreement which are willful and deliberate.
However, "Cause" shall not include (i) any personal or policy
disagreement between you, Glenayre or any member of the Board of
Directors of Glenayre or (ii) any action taken by you in connection
with your duties if you acted in good faith and in a manner you
reasonably believed to be in the best interest of Glenayre and the
Group and had no reasonable cause to believe your conduct was unlawful.
(c) You will be considered to have a "Total and Permanent Disability"
if you qualify for disability benefits under a long-term disability plan
sponsored by Glenayre.
(d) "Good Reason" means the occurrence of the following without your
express written consent: (1) a significant change in the nature or scope of
your authority as contemplated by this letter agreement; (2) a change in your
reporting structure such that you no longer report directly to ▇▇▇▇ ▇. ▇▇▇▇▇;
(3) an assignment to you of duties (or a change in your title resulting in
duties) which are materially inconsistent with your status, duties or
responsibilities as contemplated by this letter agreement; (4) a reduction in
your rate of Base Salary or level of participation in Glenayre's MBO Plan
(defined below); or (5) a change (or the requirement by Glenayre of a change)
of more than 30 miles in the principal location where you currently perform
services; provided, however, that you must first (i) provide the Glenayre CEO
with written notice specifying the particular failure of Glenayre under
clauses (1), (3), (4) or (5) above and (ii) allow the Glenayre CEO 30 days
from receipt of written notice to cure such failure.
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
October 1, 1997
Page 4
(e) "Change of Control" is defined in your Executive Severance Benefit
Agreement.
(f) "Executive Severance Benefit Agreement" means the Executive
Severance Benefit Agreement entered into today by Glenayre and you.
3. PAYMENTS UPON TERMINATION OF EMPLOYMENT. If your employment with
Glenayre hereunder is terminated, Glenayre will pay you the following amounts:
(a) If your employment hereunder is terminated for any reason
whatsoever, you will be paid an amount equal to the sum of (i) your accrued but
unpaid Base Salary, plus (ii) your accrued but unpaid vacation pay, plus (iii)
any other compensation payments or benefits which have accrued and are payable
in connection with such termination.
(b) If your employment hereunder is terminated (i) by Glenayre because
of your "Total and Permanent Disability", (ii) because of your death, (iii) by
you for "Good Reason" or (iv) by Glenayre pursuant to Paragraph 2(a)(5), you (or
your estate) will also be paid a pro rata share of your bonus under Glenayre's
MBO Plan described in Paragraph 4(b) below for Glenayre's fiscal year in which
the termination occurs, calculated, for purposes of determining whether the MBO
targets have been met, under the assumption that the results of operations and
financial condition of Glenayre and WAI as of your termination date continue on
the same basis through the end of such fiscal year.
(c) If your employment hereunder is terminated because of your death,
Glenayre will continue to pay your Base Salary to your estate for a period of 12
months after your death.
(d) If your employment hereunder is terminated (i) by Glenayre without
"Cause" pursuant to Paragraph 2(a)(5) (except in the event of a "Change of
Control") or (ii) by you for "Good Reason" (except in the event of a "Change of
Control"), then Glenayre will pay you, in addition to the payments described in
Paragraphs 3(a) and 3(b) above, an amount equal to your Base Salary at the time
of termination.
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
October 1, 1997
Page 5
(e) If your employment hereunder is terminated following a "Change of
Control", then any payments due to you are provided for under your Executive
Severance Benefit Agreement.
4. COMPENSATION AND BENEFITS. Subject to the terms of this letter
agreement, you will be paid compensation and provided benefits as follows:
(a) You will be paid an initial salary of $175,000 per annum (as
adjusted from time to time, the "Base Salary"), payable in accordance with ▇▇▇▇-
▇▇▇▇'▇ customary payroll practices. The Base Salary may be increased (but not
decreased) by the Board of Directors of Glenayre from time to time.
(b) You will participate at a 60% level in the Glenayre Management by
Objectives Bonus Plan, as in effect from time to time (the "MBO Plan"). Your
level of participation in the MBO Plan may be increased (but not decreased) by
the Board of Directors of Glenayre from time to time.
(c) You will receive an automobile allowance commensurate with the
allowance provided to Glenayre's other senior executives in comparable
positions.
(d) You may take four weeks of vacation each year as mutually
convenient to you and Glenayre.
(e) You will also be entitled to participate in all bonus,
compensation, savings, stock option, and other incentive plans and programs and
in all qualified and non-qualified retirement plans, life, medical/dental
insurance plans and short and long-term disability insurance plans of Glenayre,
to the extent that you qualify under the eligibility requirements of the plan or
program.
(f) You will be reimbursed for all reasonable expenses incurred by you
on behalf of Glenayre.
(g) Glenayre's management will recommend to the Plan Administration
Committee of Glenayre's Board of Directors that you be granted an option, on or
promptly after the Effective Time, to purchase 75,000 shares of Glenayre's
common stock with an exercise price equal to the fair market value of Glenayre's
common stock on the date of grant with vesting terms which are the same as those
contained in options granted to other officers of Glenayre.
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
October 1, 1997
Page 6
5. LOCATION OF OFFICE. Your principal place of employment will be in
Santa ▇▇▇▇▇ County, California and shall not be changed without your agreement.
6. MISCELLANEOUS. This letter agreement will be governed by the laws of
the State of California. This letter agreement will be binding upon and inure to
the benefit of Glenayre and its successors and assigns and you, your heirs and
personal representatives. This letter agreement constitutes the entire agreement
between Glenayre and you with respect to the subject matter hereof (other than
the Executive Severance Benefit Agreement and Noncompetition Agreement signed by
you on this date, the Proprietary Information and Inventions Agreement
previously signed by you and any stock option agreements between WAI and you
currently in effect and stock option agreements between you and Glenayre
hereafter entered into) and all other agreements are cancelled. If any provision
of this letter agreement is held invalid or unenforceable, the same shall not
affect or impair any other provision of this letter agreement and such
invalidity or unenforceability shall not have any effect on or impair the
obligations of Glenayre or you.
7. EFFECTIVE DATE. This letter agreement shall not become
effective unless and until the "Effective Time" (as defined in the Acquisition
Agreement) occurs and then shall automatically become effective without any
further action on the part of Glenayre or you. This letter agreement shall
automatically terminate upon the termination of the Acquisition Agreement for
any reason prior to the Effective Time.
* * *
If you agree that the terms and conditions set forth above reflect our
understanding concerning your employment by Glenayre after the "Effective Time",
please sign where provided below and return a fully executed copy to me. Upon
your execution of this letter, this letter will become a binding contract
between Glenayre and you, effective upon the occurrence of the Effective Time,
but terminable in accordance with the last sentence of Paragraph 7 above.
Very truly yours,
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief
Executive Officer
CONFIRMED AND AGREED TO:
By:__________________________
▇▇▇▇ ▇. ▇▇▇▇▇
EXHIBIT H-1
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is dated as of October
___, 1997, by and between GLENAYRE TECHNOLOGIES, INC., a Delaware corporation
("Glenayre"), and _______________________________ the ("Equityholder").
STATEMENT OF PURPOSE
Pursuant to the Acquisition Agreement dated as of October __, 1997 (the
"Acquisition Agreement") among Glenayre, WAI Acquisition Corp. ("Merger Sub")
and Wireless Access, Inc. ("Wireless"), Merger Sub will be merged with and into
Wireless, which will become a wholly-owned subsidiary of Glenayre (the
"Merger").
Wireless is engaged in the "Business" (as defined below). The value to
Glenayre of the Merger is dependent in part upon Glenayre's ability to have
Wireless continue the Business and to obtain for its benefit the good will and
going concern value associated therewith. In connection with the acquisition of
all of the outstanding shares of Wireless in the Merger under the Acquisition
Agreement and as a material condition of the closing of the Merger (the
"Closing") and material inducement to Glenayre therefor, and in consideration of
the (i) receipt by the Equityholder of cash in exchange for his shares of
Wireless' Common Stock and/or (ii) the substitution of options to purchase
Glenayre Common Stock for the options held by the Equityholder to purchase
Common Stock of Wireless, the Equityholder has agreed to enter into certain
covenants relating to competition and confidentiality as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the Statement of Purpose and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by the Equityholder, the Equityholder does hereby agree with
Glenayre as follows:
1. NONCOMPETITION, NON-DISCLOSURE AND RELATED MATTERS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Business" means any of the following activities:
(1) The design, development, manufacture,
marketing or sale of subscriber devices, modules or telemetry
equipment for wireless voice or data communications in any
radio spectrum between 100 MHz and 1 GHz, including both
two-way interactive paging and alphanumeric-like paging
(1.5-way paging) and specifically including any products that
compete with the AccessLink device, the AccessMate device or
the AccessLink II device; or
(2) The design, development, manufacture, marketing
or sale of integrated circuits whose primary purpose is to
enable construction of subscriber devices, modules or
telemetry equipment described in clause (1) above
"Cause" means any of the following: (1) any act of dishonesty
or fraud on the part of the Equity holder which is intended to result
in his substantial personal enrichment at the expense of Wireless,
Glenayre or any affiliate of Glenayre, (2) a material violation of the
Equityholder's responsibilities as determined by the Board of
Directors of Wireless, which is willful and deliberate or (3) the
conviction of the Equityholder (after the exhaustion of all appeals)
of a felony involving moral turpitude or the entry of a plea of nolo
contendere for such a felony. However, "Cause" shall not include (i)
any personal or policy disagreement between the Equityholder and
Glenayre or Wireless or any member of the Board of Directors of
Glenayre or Wireless, or (ii) any action taken by the Equityholder in
connection with the Equityholder's duties if the Equityholder acted in
good faith and in a manner the Equityholder reasonably believed to be
in the best interest of Glenayre or Wireless and had no reasonable
cause to believe the Equityholder's conduct was unlawful.
"Competition" means engagement in any part of the Business.
"Customer" means any Person to whom any products, processes,
goods or services have heretofore been sold or licensed or offered for
sale or license, or from whom purchases or licenses thereof have been
solicited, at any time during the two years preceding the date of this
Agreement, by Wireless.
"Effective Time" means the time when the Merger becomes
effective as defined in the Acquisition Agreement.
"Employee" means any individual employed by Glenayre, Wireless
or any affiliate of Glenayre at any time during the Restricted Period.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, trust or other entity.
"Restricted Period" means the period beginning on the date
hereof and ending on the second anniversary of the Effective Time.
"Restricted Territory" means California, Oregon, Washington,
Nevada, Arizona, New Mexico, Wyoming, Texas, all other states in the
continental United States of America west of the Mississippi River, all
states in the continental United States of America east of the
Mississippi River, the remainder of the United States of America and
British Columbia, Canada, in which areas the parties acknowledge that
Glenayre has been in business prior to the Closing.
(b) The Equityholder agrees that during the Restricted Period he will
not either directly or indirectly:
(1) engage in any Competition in any Restricted Territory; or
(2) be or become an employee, officer, director, shareholder,
partner, agent or consultant of, or acquire or have any proprietary or
other equity interest in either (i) any Business conducted by Motorola,
NEC, Ericsson, Philips or Panasonic or (ii) any Person who engages in
any Competition in any Restricted Territory; provided, that the
Equityholder may own, directly or indirectly, solely as a passive
investment, (a) securities issued by such Person if such securities are
publicly traded and do not constitute more than 2% in the aggregate of
the outstanding equity securities of such Person or (b) an interest in
a fund (such as a
2
venture capital fund) which owns shares of such a Person where the
Equityholder has no management authority or direction over such fund.
Provided, however, that the restrictions of this Section 1(b) shall immediately
terminate if the Equityholder's employment by Wireless is terminated by Glenayre
or Wireless without Cause.
(c) The Equityholder agrees that during the Restricted Period and in
the Restricted Territory he will not, directly or indirectly through or on
behalf of any other Person, solicit or enter into any transaction with any
Customer for the purpose of any sale or license to such Customer of products,
processes, goods or services the sale or license of which would constitute
Competition. Provided, however, that the restrictions of this Section 1(c) shall
immediately terminate if the Equityholder's employment by Wireless is terminated
by Glenayre or Wireless without Cause.
(d) The Equityholder agrees that during the Restricted Period he will
not without Glenayre's consent (which consent shall be in Glenayre's sole
discretion), directly or indirectly through or on behalf of any other Person,
solicit or attempt to solicit any Employee to leave his or her employment with
Glenayre, Wireless or any affiliate of Glenayre.
(e) The Proprietary Information and Inventions Agreement attached
hereto as Exhibit 1 is hereby incorporated herein as if fully set forth herein
and shall for all purposes be deemed to be part of this Agreement.
(f) The Equityholder acknowledges that, in view of the nature of the
Business and the business objectives of Glenayre in entering into this Agreement
and the Acquisition Agreement, the restrictions contained in this Section 1 are
reasonably necessary to protect the legitimate business interests of Glenayre,
and that any violation of such restrictions will result in irreparable injury to
Glenayre for which damages will not be an adequate remedy. The Equityholder,
therefore, acknowledges that, if he violates any such restrictions, Glenayre
shall be entitled to preliminary and permanent injunctive relief as well as to
an equitable accounting of earnings, profits and other benefits arising from
such violation.
(g) If any of the provisions contained in this Section 1 shall for any
reason be held to be overly broad as to duration, scope, activity or subject,
any such provision shall be construed by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable law or the
determination by a court of competent jurisdiction.
(h) The rights and remedies of Glenayre hereunder are not exclusive of
or limited by or in limitation of any other rights or remedies which it may
have, whether at law, in equity, by contract or otherwise, all of which shall be
cumulative.
2. Severability. Should any provision of this Agreement or part thereof
be held under any circumstances in any jurisdiction to be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of any other provision or other part of such provision, or of
such provision or part thereof under any other circumstances or in any other
jurisdiction.
3. Miscellaneous. The construction, validity and enforceability of this
Agreement shall be governed by the laws of the State of California, without
regard to its conflict
3
of laws provisions. No failure or delay of Glenayre in enforcing any of its
rights hereunder at any time shall constitute or evidence any waiver of such
rights. This Agreement and the Acquisition Agreement constitute the sole and
entire agreement and understanding between the parties hereto as to the subject
matter hereof, and supersedes all prior discussions, agreements and
understandings of every kind and nature between them as to such subject matter.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns. The captions of this Agreement are for convenience of reference only
and shall not affect in any manner any of the terms, covenants or conditions
hereof. Words of the masculine gender shall mean and include correlative words
of the feminine and neuter genders and words importing the singular number shall
mean and include the plural number and vice versa. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
4. Effective Date. This Agreement shall not become effective unless and
until the Effective Time (as defined in the Acquisition Agreement) occurs and
then shall automatically become effective without any further action on the part
of Glenayre or the Equityholder. This Agreement shall automatically terminate
upon the termination of the Acquisition Agreement for any reason prior to the
Effective Time.
IN WITNESS WHEREOF, this Agreement has been duly executed by Glenayre
and the Equityholder as of the day and year first above written.
GLENAYRE TECHNOLOGIES, INC.
By:
Name:
Title:
------------------------------
[NAME]
4
EXHIBIT H-2
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is dated as of October
___, 1997, by and between GLENAYRE TECHNOLOGIES, INC., a Delaware corporation
("Glenayre"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ the ("Equityholder").
STATEMENT OF PURPOSE
Pursuant to the Acquisition Agreement dated as of October __, 1997 (the
"Acquisition Agreement") among Glenayre, WAI Acquisition Corp. ("Merger Sub")
and Wireless Access, Inc. ("Wireless"), Merger Sub will be merged with and into
Wireless, which will become a wholly-owned subsidiary of Glenayre (the
"Merger").
Wireless is engaged in the "Business" (as defined below). The value to
Glenayre of the Merger is dependent in part upon Glenayre's ability to have
Wireless continue the Business and to obtain for its benefit the good will and
going concern value associated therewith. In connection with the acquisition of
all of the outstanding shares of Wireless in the Merger under the Acquisition
Agreement and as a material condition of the closing of the Merger (the
"Closing") and material inducement to Glenayre therefor, and in consideration of
the (i) receipt by the Equityholder of cash in exchange for his shares of
Wireless' Common Stock and/or (ii) the substitution of options to purchase
Glenayre Common Stock for the options held by the Equityholder to purchase
Common Stock of Wireless, the Equityholder has agreed to enter into certain
covenants relating to competition and confidentiality as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the Statement of Purpose and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by the Equityholder, the Equityholder does hereby agree with
Glenayre as follows:
1. NONCOMPETITION, NON-DISCLOSURE AND RELATED MATTERS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Business" means any of the following activities:
(1) The design, development, manufacture,
marketing or sale of subscriber devices, modules or telemetry
equipment for wireless voice or data communications in any
radio spectrum between 100 MHz and 1 GHz, including both
two-way interactive paging and alphanumeric-like paging
(1.5-way paging) and specifically including any products that
compete with the AccessLink device, the AccessMate device or
the AccessLink II device;
(2) The design, development, manufacture, marketing
or sale of integrated circuits whose primary purpose is to
enable construction of subscriber devices, modules or
telemetry equipment described in clause (1) above
"Cause" means any of the following: (1) any act of dishonesty
or fraud on the part of the Equity holder which is intended to result
in his substantial personal enrichment at the expense of Wireless,
Glenayre or any affiliate of Glenayre, (2) a material violation of the
Equityholder's responsibilities as determined by the Board of
Directors of Wireless, which is willful and deliberate or (3) the
conviction of the Equityholder (after the exhaustion of all appeals)
of a felony involving moral turpitude or the entry of a plea of nolo
contendere for such a felony. However, "Cause" shall not include (i)
any personal or policy disagreement between the Equityholder and
Glenayre or Wireless or any member of the Board of Directors of
Glenayre or Wireless, or (ii) any action taken by the Equityholder in
connection with the Equityholder's duties if the Equityholder acted in
good faith and in a manner the Equityholder reasonably believed to be
in the best interest of Glenayre or Wireless and had no reasonable
cause to believe the Equityholder's conduct was unlawful.
"Competition" means engagement in any part of the Business.
"Customer" means any Person to whom any products, processes,
goods or services have heretofore been sold or licensed or offered for
sale or license, or from whom purchases or licenses thereof have been
solicited, at any time during the two years preceding the date of this
Agreement, by Wireless.
"Effective Time" means the time when the Merger becomes
effective as defined in the Acquisition Agreement.
"Employee" means any individual employed by Glenayre, Wireless
or any affiliate of Glenayre at any time during the Restricted Period.
"Person" means an individual, corporation, partnership,
limited liability company, joint venture, trust or other entity.
"Restricted Period" means the period beginning on the date
hereof and ending on the second anniversary of the Effective Time.
2
"Restricted Territory" means California, Oregon, Washington,
Nevada, Arizona, New Mexico, Wyoming, Texas, all other states in the
continental United States of America west of the Mississippi River, all
states in the continental United States of America east of the
Mississippi River, the remainder of the United States of America and
British Columbia, Canada, in which areas the parties acknowledge that
Glenayre has been in business prior to the Closing.
(b) The Equityholder agrees that during the Restricted Period he will
not either directly or indirectly:
(1) engage in any Competition in any Restricted Territory; or
(2) be or become an employee, officer, director, shareholder,
partner, agent or consultant of, or acquire or have any proprietary or
other equity interest in either (i) any Business conducted by Motorola,
NEC, Ericsson, Philips or Panasonic or (ii) any Person who engages in
any Competition in any Restricted Territory; provided, that the
Equityholder may own, directly or indirectly, solely as a passive
investment, (a) securities issued by such Person if such securities are
publicly traded and do not constitute more than 2% in the aggregate of
the outstanding equity securities of such Person or (b) an interest in
a fund (such as a venture capital fund) which owns shares of such a
Person where the Equityholder has no management authority or direction
over such fund.
Provided, however, that the restrictions of this Section 1(b) shall immediately
terminate if the Equityholder's employment by Wireless is terminated by Glenayre
or Wireless without Cause.
(c) The Equityholder agrees that during the Restricted Period and in
the Restricted Territory he will not, directly or indirectly through or on
behalf of any other Person, solicit or enter into any transaction with any
Customer for the purpose of any sale or license to such Customer of products,
processes, goods or services the sale or license of which would constitute
Competition. Provided, however, that the restrictions of this Section 1(c) shall
immediately terminate if the Equityholder's employment by Wireless is terminated
by Glenayre or Wireless without Cause.
(d) The Equityholder agrees that during the Restricted Period he will
not without Glenayre's consent (which consent shall be in Glenayre's sole
discretion), directly or indirectly through or on behalf of any other Person,
solicit or attempt to solicit any Employee to leave his or her employment with
Glenayre, Wireless or any affiliate of Glenayre.
3
(e) The Proprietary Information and Inventions Agreement attached
hereto as Exhibit 1 is hereby incorporated herein as if fully set forth herein
and shall for all purposes be deemed to be part of this Agreement.
(f) The Equityholder acknowledges that, in view of the nature of the
Business and the business objectives of Glenayre in entering into this Agreement
and the Acquisition Agreement, the restrictions contained in this Section 1 are
reasonably necessary to protect the legitimate business interests of Glenayre,
and that any violation of such restrictions will result in irreparable injury to
Glenayre for which damages will not be an adequate remedy. The Equityholder,
therefore, acknowledges that, if he violates any such restrictions, Glenayre
shall be entitled to preliminary and permanent injunctive relief as well as to
an equitable accounting of earnings, profits and other benefits arising from
such violation.
(g) If any of the provisions contained in this Section 1 shall for any
reason be held to be overly broad as to duration, scope, activity or subject,
any such provision shall be construed by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable law or the
determination by a court of competent jurisdiction.
(h) The rights and remedies of Glenayre hereunder are not exclusive of
or limited by or in limitation of any other rights or remedies which it may
have, whether at law, in equity, by contract or otherwise, all of which shall be
cumulative.
2. Severability. Should any provision of this Agreement or part thereof
be held under any circumstances in any jurisdiction to be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of any other provision or other part of such provision, or of
such provision or part thereof under any other circumstances or in any other
jurisdiction.
3. Miscellaneous. The construction, validity and enforceability of this
Agreement shall be governed by the laws of the State of California, without
regard to its conflict of laws provisions. No failure or delay of Glenayre in
enforcing any of its rights hereunder at any time shall constitute or evidence
any waiver of such rights. This Agreement and the Acquisition Agreement
constitute the sole and entire agreement and understanding between the parties
hereto as to the subject matter hereof, and supersedes all prior discussions,
agreements and understandings of every kind and nature between them as to such
subject matter. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and assigns. The captions of this Agreement are for convenience of
reference only and shall
4
not affect in any manner any of the terms, covenants or conditions hereof. Words
of the masculine gender shall mean and include correlative words of the feminine
and neuter genders and words importing the singular number shall mean and
include the plural number and vice versa. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
4. Effective Date. This Agreement shall not become effective unless and
until the Effective Time (as defined in the Acquisition Agreement) occurs and
then shall automatically become effective without any further action on the part
of Glenayre or the Equityholder. This Agreement shall automatically terminate
upon the termination of the Acquisition Agreement for any reason prior to the
Effective Time.
IN WITNESS WHEREOF, this Agreement has been duly executed by Glenayre
and the Equityholder as of the day and year first above written.
GLENAYRE TECHNOLOGIES, INC.
By: __________________________
Name: ________________________
Title: _______________________
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
5