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EXHIBIT 2.3
SECOND AMENDMENT TO
STOCK PURCHASE AGREEMENT
SECOND AMENDMENT, dated as of November 14, 1997, to that
certain Stock Purchase Agreement, dated as of November 20, 1996, by and among
Ameritech Services, Inc., a Delaware corporation ("Ameritech"), ▇▇▇▇ Atlantic
NSI Holdings, Inc., a Delaware corporation ("▇▇▇▇ Atlantic"), BellSouth
Telecommunications, Inc., a Georgia corporation ("BellSouth"), Pacific ▇▇▇▇, a
California corporation ("Pacific ▇▇▇▇"), Southwestern ▇▇▇▇ Telephone Company, a
Missouri corporation ("Southwestern ▇▇▇▇"), Telesector Resources Group, Inc., a
Delaware corporation ("Telesector") and U S WEST Communications, Inc., a
Colorado corporation ("U S WEST" and, together with Ameritech, ▇▇▇▇ Atlantic,
BellSouth, Pacific ▇▇▇▇, Southwestern ▇▇▇▇ and Telesector, the "Sellers", and
each, individually, a "Seller"), ▇▇▇▇ Communications Research, Inc., a Delaware
corporation (the "Company") and Science Applications International Corporation,
a Delaware corporation ("Purchaser"), as amended by Consent and First Amendment
to Stock Purchase Agreement, dated as of April 20, 1997 (as so amended, the
"Agreement"). Capitalized terms used herein and not otherwise defined are used
herein as defined in the Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to Section 8.1 of the Agreement, the Closing
shall take place on the fifth business day following the date on which each of
the conditions specified in Article VII of the Agreement has been fulfilled (or
waived by the party or parties entitled to waive such condition); and
WHEREAS, pursuant to Section 2.3 of the Agreement, Purchaser
is required to pay to Sellers the Positive Adjustment Amount (defined as the
amount, if any, by which the sum of Interim Period Net Income and Interim
Period Capital Contributions exceeds the Interim Period Dividends), and Sellers
are required to pay to Purchaser the Negative Adjustment Amount (defined as the
amount, if any, by which Interim Period Dividends exceed the sum of Interim
Period Net Income and Interim Period Capital Contributions); and
WHEREAS, pursuant to Section 12.1(b) of the Agreement, as used
in the Agreement (i) the term "Interim Period Net Income" means the net income
of the Company and its Subsidiaries for the Interim Period, (ii) the term
"Interim Period Capital Contributions" means the aggregate amount contributed
by Sellers to the capital of the Company (and not taken into account in
computing Interim Period Net
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Income) during the Interim Period, and (iii) the term "Interim Period
Dividends" means the aggregate amount of dividends paid by the Company to
Sellers during the Interim Period (excluding any distribution of transfer of
Excluded Assets to Sellers or their designees); and
WHEREAS, pursuant to Section 12.1(b), the term "Interim
Period", as used in the Agreement, is defined to mean the period beginning July
1, 1996 and ending at the close of business on the Closing Date; and
WHEREAS, pursuant to Section 2.2 of the Agreement, on the
Closing Date Purchaser is required to pay to each Seller an amount equal to
one-seventh of the Base Purchase Price plus or minus, as the case may be,
one-seventh of an amount equal to Seller's good faith estimate of the Positive
Adjustment Amount or the Negative Adjustment Amount; and
WHEREAS, the Closing Date is the date hereof; and
WHEREAS, the parties desire to amend certain terms of the
Agreement, as hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Closing Date.
(a) The parties hereby agree that the matters described in
that certain letter, dated November 5, 1997, from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ to ▇▇▇▇
▇▇▇▇▇ have been resolved as a result of the execution and delivery of this
Second Amendment.
(b) The first sentence of Section 8.1 of the Agreement is
hereby amended to read in its entirety as follows:
"The closing of the sale and purchase of the Shares provided
for in Section 1.1 hereof (the "Closing") shall take place at 10:00
a.m. (New York City time) at the offices of Weil, Gotshal & ▇▇▇▇▇▇
LLP, New York, New York on November 14, 1997."
2. Definition of Interim Period. The definition of "Interim
Period" set forth in Section 12.1(b) of the Agreement (and as used in Exhibit B
to the Agreement) is hereby amended to read in its entirety as follows:
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"Interim Period" means the period beginning July 1,
1996 and ending at the close of business on October 31, 1997, except
that, for purposes of the definition of "Purchaser Change of Control"
and paragraph (7) of Exhibit B, the Interim Period shall end at the
close of business on the Closing Date.
3. Amendment of Certain References to "Closing" and "Closing
Date".
(a) The first sentence of Section 6.20(c) is hereby amended
by deleting therefrom the phrase "the earlier of (i) the Closing Date, and (ii)
December 31, 1997" and substituting in lieu thereof the phrase "October 31,
1997".
(b) The third sentence of Section 6.20(c) is hereby amended by
deleting therefrom the phrase "following the Closing" and substituting in lieu
thereof the phrase "following October 31, 1997".
(c) The first sentence of Section 10.6 is hereby amended by
deleting therefrom the phrase "the Closing Date" and substituting in lieu
thereof the phrase "the last day of the Interim Period".
(d) The definition of "Allocable Formative/R&I Revenues" set
forth in Section 12.1(b) of the Agreement (and as used in Exhibit B to the
Agreement) is hereby amended by deleting therefrom the phrase "the Closing
Date" and substituting in lieu thereof the phrase "the end of the Formative/R&I
Period".
(e) The first sentence of paragraph 3(b) of Exhibit B to the
Agreement is hereby amended to read in its entirety as follows:
"(b) As of October 31, 1997, estimates to complete
shall be prepared for all fixed price contracts extending beyond
October 31, 1997 other than (i) OS/NS maintenance contracts, (ii)
contracts relating to DSMI services, other SMS/800 services, ▇▇▇▇/800
services and SCP Owner/Operator technology, (iii) Bellcore TEC
contracts, (iv) NTA contracts, and (v) any contract that does not
require aggregate payments to the Company in excess of $1 million
(collectively, the "Excluded Contracts"). Appropriate revenue
adjustments will be provided as of October 31, 1997 to record such
contracts on the percentage-of-completion basis, determined as
described in clause (a) above."
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(f) The second sentence of paragraph 6 of Exhibit B to the
Agreement is hereby amended by adding the phrase "prior to the Closing Date"
immediately after the phrase "the Company and its Subsidiaries."
(g) The first sentence of paragraph 7 of Exhibit B to the
Agreement is hereby amended by deleting therefrom the phrase "during the
Interim Period" and substituting in lieu thereof the phrase "prior to the
Closing Date".
(h) Paragraph 8 of Exhibit B to the Agreement is hereby
amended by deleting therefrom the phrase "the Closing Date" and substituting in
lieu thereof the phrase "October 31, 1997".
(i) The first sentence of Paragraph 10(b) of Exhibit B to the
Agreement is hereby amended by deleting therefrom the phrase "from the Closing"
and substituting in lieu thereof the phrase "from November 1, 1997".
4. Purchase Price. (a) The first sentence of Section 2.1 is
hereby amended to read in its entirety as follows:
"The aggregate purchase price for the Shares shall be
(a) $646 million minus (b) Net Third Party Indebtedness, minus (c) the
Formative Refund Amount, plus (d) an amount equal to $100,000 (the
"Daily Amount") multiplied by the number of calendar days from and
including November 1, 1997 to and including the Closing Date (the
"Base Purchase Price"), subject to adjustment as set forth in Sections
2.2 and 2.3 hereof (as adjusted, the "Purchase Price")."
(b) Section 2.2 is hereby amended by adding at the end
thereof the following new sentence:
"Payment of any amounts pursuant to this Section 2.2 shall not limit
or affect, or constitute a waiver of, any rights of any party hereto
under Section 2.3."
5. "True-Up" Calculation. The parties hereto acknowledge
that it is the Company's historical practice to balance revenues and fully
distributed cost by accruing in favor of Sellers a credit (which shall be
applied, in accordance with the Company's historical practices, against
accounts receivable) equal in the aggregate approximately to the amount by
which the Company's operating income exceeds the Company's "regulatory income"
(as such term customarily is used by the Company). Sellers have advised
Purchaser
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that, as of September 30, 1997, the Company's estimate of such "true-up" credit
was $115,000,000. Such credit will cease to accrue as of the close of business
on October 31, 1997. The parties hereto acknowledge that the actual amount of
such liability shall be determined pursuant to Section 2.3 of the Agreement,
and that such amount, as finally determined, will be satisfied by the Company
in accordance with its historical practices.
6. Seller Receivables. (a) As of October 31, 1997, certain
of the accounts receivable on the Company's books represented obligations of
the Sellers and their Affiliates (the "Seller Receivables"). Each Seller
agrees, severally and not jointly, that all such Seller Receivables
representing obligations of such Seller and its Affiliates will be paid in full
in accordance with their respective terms; provided, however, that the
foregoing agreement shall not (i) affect the rights of any Seller or any of its
Affiliates to make any bona fide warranty or breach of contract claim or to
dispute the accuracy of any invoice or (ii) apply to the CNUM Project (as
defined below).
(b) Reference is made to the Business Agreement for
Corporate-Wide License of Certain Software and Documentation, effective
immediately after the Closing (the "CNUM Agreement"), between the Company,
Pacific ▇▇▇▇ and Southwestern ▇▇▇▇ Telephone Company. The parties hereto agree
that, notwithstanding anything to the contrary contained in the Agreement, for
purposes of calculating Interim Period Net Income and/or the "true up"
liability, revenue in the amount of $13.8 million shall be recognized for the
CNUM Project (as defined below) and there shall be no bad debt reserve as of
October 31, 1997 (or any other date) in respect of Seller Receivable in respect
of the project known as "CNUM" (the "CNUM Project"). Notwithstanding any
provision of the Agreement or this Second Amendment to the contrary, in no
event shall any revenues attributable to any transaction contemplated by the
CNUM Agreement constitute "Formative/R&I Revenues" other than revenues
constituting the difference between CNUM revenues and CNUM costs (estimated at
a net $2.6 million). In addition, the Sellers agree that no such transaction
shall impose any obligation on the Company under, or give any rights to any
Seller under, Section 9 of the Master Agreement.
7. Section 6.3(a). The first sentence of Section 6.3(a) is
hereby amended by deleting the reference therein to "Section 6.3 of the
Sellers' Disclosure Schedule" and
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substituting in lieu thereof the words "Section 6.3 of the Company Disclosure
Schedule".
8. No Distributions. In addition to any restriction set
forth in any other provision of the Agreement, and regardless of any matter
referred to in the Company Disclosure Schedule or the Company's 1997 Budget,
from October 31, 1997 through the date hereof, the Company has not taken any of
the actions referred to in Section 6.2(b)(i) of the Agreement.
9. Amendment of Closing Documents. The parties hereby agree
that all references to the Agreement in the agreements, instruments and other
documents delivered by each Seller (or by all Sellers) at the Closing pursuant
to Article VII or Article VIII of the Agreement shall be deemed to be a
reference to the Agreement as previously amended and as amended hereby.
10. Legal Effect. Except as expressly amended and modified
hereby, the Agreement shall remain in full force and effect. To the extent any
provision of the Agreement is inconsistent with the provisions set forth
herein, this Second Amendment shall govern and control.
11. Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
12. Counterparts. This Second Amendment may be executed in
two or more counterparts, each of which shall be an original, and all of which
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Senior Vice President/
Chief Financial Officer
▇▇▇▇ COMMUNICATIONS RESEARCH, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
SELLERS:
AMERITECH SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President &
Secretary
▇▇▇▇ ATLANTIC NSI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Treasurer
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BELLSOUTH TELECOMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President - NSP&S
PACIFIC ▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President &
Chief Executive Officer
SOUTHWESTERN ▇▇▇▇ TELEPHONE
COMPANY
By: /s/ ▇. ▇. ▇▇▇▇▇
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Name: ▇. ▇. ▇▇▇▇▇
Title: President &
Chief Executive Officer
TELESECTOR RESOURCES GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Acting President &
Chief Executive Officer
U S WEST COMMUNICATIONS, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: VP - AT
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