Exhibit 2
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AGREEMENT AND PLAN OF MERGER
dated as of October 19, 1999
by and among
TELESCIENCES, INC.,
EDB BUSINESS PARTNER ASA
and
EDB 4TEL ACQUISITION CORP.
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TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER............................................................... 1
1.01 The Offer.................................................................... 1
1.02 Company Actions; Rights...................................................... 3
1.03 Board of Directors and Committees; Section 14(f)............................. 4
ARTICLE II THE MERGER............................................................. 6
2.01 The Merger................................................................... 6
2.02 Effective Time............................................................... 6
2.03 Effects of the Merger........................................................ 6
2.04 Certificate of Incorporation and By-Laws..................................... 6
2.05 Directors.................................................................... 6
2.06 Officers..................................................................... 6
2.07 Conversion of Shares......................................................... 6
2.08 Employee Stock Options....................................................... 7
2.09 Conversion of Purchaser Common Stock......................................... 7
2.10 Stockholders= Meeting........................................................ 7
2.11 Merger Without Meeting of Stockholders....................................... 8
2.12 Closing...................................................................... 8
ARTICLE III DISSENTING SHARES; EXCHANGE OF SHARES................................. 8
3.01 Dissenting Shares............................................................ 8
3.02 Exchange of Shares........................................................... 9
3.03. Lost Certificates............................................................ 10
3.04. Investment of Funds.......................................................... 10
3.05. No Liability................................................................. 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................... 11
4.01 Organization................................................................. 11
4.02 Capitalization; Subsidiaries................................................. 11
4.03 Authority Relative to this Agreement; Compliance with Laws and Court Orders.. 12
4.04 Absence of Certain Changes................................................... 12
4.05 No Undisclosed Liabilities................................................... 13
4.06 Reports...................................................................... 13
4.07 Offer Documents; Proxy Statements; Other Information......................... 14
4.08 Consents and Approvals; No Violation......................................... 15
4.09 Litigation, etc.............................................................. 15
4.10 Title to Properties; Encumbrances............................................ 15
4.11 Benefit Plans................................................................ 16
4.12 Compliance With Agreements; Law.............................................. 17
4.13 Patents, Trademarks, Trade Names, etc........................................ 18
4.14 Taxes........................................................................ 18
4.15 Antitakeover Statutes........................................................ 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.................. 19
5.01 Organization and Good Standing............................................... 19
5.02 Authority Relative to this Agreement......................................... 19
5.03 Consents and Approvals; No Violation......................................... 20
5.04 Offer Documents; Proxy Statement............................................. 20
5.05 Ownership of Shares.......................................................... 21
ARTICLE VI COVENANTS.............................................................. 21
6.01 Conduct of Business of the Company........................................... 21
6.02 No Solicitation, etc......................................................... 22
6.03 Access to Information........................................................ 23
6.04 Best Efforts................................................................. 24
6.05 Public Announcements......................................................... 24
6.06 Indemnification; Insurance................................................... 25
6.07 Employment Contracts, Benefits, etc.......................................... 26
6.08 Substitution of Letter of Credit............................................. 26
6.09 Purchase of Shares........................................................... 26
6.10. Further Assurances........................................................... 26
6.11 Notification of Certain Matters.............................................. 26
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER.............................. 27
7.01 Conditions to Each Party's Obligation to Effect the Merger................... 27
ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER...................................... 28
8.01 Termination.................................................................. 28
8.02 Effect of Termination........................................................ 30
8.03 Amendment.................................................................... 30
8.04 Extension; Waiver............................................................ 30
ARTICLE IX MISCELLANEOUS.......................................................... 31
9.01 Survival of Representations and Warranties................................... 31
9.02 Brokerage Fees and Commissions............................................... 31
9.03 Entire Agreement; Assignment................................................. 31
9.04 Validity..................................................................... 31
9.05 Notices...................................................................... 31
9.06 Governing Law................................................................ 33
9.07 Descriptive Headings......................................................... 33
9.08 Counterparts................................................................. 33
9.09 Expenses..................................................................... 33
9.10 Third Party Beneficiaries.................................................... 33
9.11 Certain Definitions.......................................................... 33
9.12 Consent to Jurisdiction...................................................... 34
9.13 Construction; Interpretation................................................. 34
Annex A - Conditions of the Offer
Annex B - Escrow Agreement
Annex C - Calculation of Deposit
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of October 19, 1999 (the
"Agreement"), by and among Telesciences, Inc., a Delaware corporation (the
"Company"), EDB Business Partner ASA, a Norwegian public limited company
("Parent"), and EDB 4Tel Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Purchaser").
W I T N E S S E T H :
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WHEREAS, the Boards of Directors of Parent, Purchaser and the Company deem
it advisable and in the best interests of the respective stockholders of such
corporations to effect the merger of the Purchaser with and into the Company
(the "Merger") upon the terms and subject to the conditions set forth herein;
and
WHEREAS, the respective Boards of Directors of Parent, Purchaser and the
Company have approved the acquisition of the Company by Parent and, in
furtherance of such acquisition, Parent proposes to cause Purchaser to make a
cash tender offer for all of the issued and outstanding shares of Common Stock,
par value $.04 per share (the "Common Stock"), of the Company, on the terms
specified herein and the Board of Directors of the Company has approved the
tender offer and intends to recommend that it be accepted by the stockholders of
the Company.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter contained and
intending to be bound hereby, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
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(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.01 and nothing shall have occurred that would
render any of the conditions set forth in Annex A hereto incapable of being
satisfied, as promptly as practicable (but in no event later that five (5)
business days after the date of this Agreement), Purchaser shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act") an offer to purchase for cash (the
"Offer") any and all of the issued and outstanding shares of Common Stock
(the "Shares") at a price of $8.79 per Share, net to the seller in cash,
without interest. For purposes of this Agreement, the term "Transaction
Consideration" shall mean $8.79 per Share in cash or any higher price as
shall be paid in respect of the Shares in the Offer. The obligations of
Purchaser to commence the Offer and to accept for payment and to pay for
any Shares
tendered shall be subject to only the conditions set forth in Annex A
hereto (any or all of which may, subject to the provisions hereof, be
waived by Parent or Purchaser, subject to applicable law). Without the
prior written consent of the Company, Purchaser shall not (i) decrease the
Transaction Consideration with respect to any Shares, (ii) decrease the
number of Shares to be purchased in the Offer, (iii) change the form of
consideration payable in the Offer, (iv) add to or change the conditions to
the Offer set forth in Annex A, (v) waive the Minimum Condition (as defined
in Annex A) or (vi) make any other change in the terms or conditions of the
Offer. Parent and Purchaser expressly reserve the right to waive any
condition (other than the Minimum Condition) specified in Annex A or to
increase the Transaction Consideration. Provided that this Agreement shall
not have been terminated in accordance with Article VIII hereof, if the
conditions set forth in Annex A are not satisfied or, to the extent
permitted hereby, waived by Purchaser as of the date the Offer would
otherwise have expired, then, except to the extent that such conditions are
incapable of being satisfied, Purchaser will extend the Offer from time to
time until the earlier of the consummation of the Offer or the date which
is twenty (20) business days from the original expiration date of the Offer
(such date, the "Final Date"). Purchaser shall, subject to the terms and
conditions of the Offer, accept for payment Shares validly tendered and not
withdrawn as soon as it is legally permitted to do so under applicable law;
provided, however, that Purchaser shall be entitled to extend the Offer one
or more times beyond the Final Date for an aggregate period of up to ten
(10) business days if on the Final Date the conditions to the Offer set
forth in Annex A have been satisfied or waived but there shall not have
been tendered that number of Shares which would equal at least ninety
percent (90%) of the issued and then outstanding Shares. Purchaser shall be
obligated to consummate the Offer immediately upon reaching such ninety
percent (90%) threshold. Such extended date shall then be the Final Date
for purposes of this Agreement. The Company agrees that it will not tender,
and will not permit any of its subsidiaries to tender, any Shares held by
it or any such subsidiary pursuant to the Offer.
(b) Purchaser shall deposit with First Union National Bank (the "Escrow
Agent") a sufficient amount of funds (the "Escrowed Funds") necessary to
(i) make the cash payments contemplated by Section 1.01(a) to purchase all
of the Shares tendered in the Offer, (ii) make the cash payments
contemplated by Section 2.08 with respect to the settlement of the Options
(as defined in Section 2.08), and (iii) redeem the outstanding shares of
Series A Preferred Stock of the Company (the "Series A Preferred Shares")
for cash in accordance with the terms of the Certificate of Designation of
Preferences and Rights of the Series A Preferred Stock (the "Certificate of
Designation"). A calculation of this amount is attached hereto as Annex C.
The Escrowed Funds shall be deposited with the Escrow Agent pursuant to,
and shall be held, applied, invested, reinvested, and disbursed in
accordance with, an escrow agreement among the Company, the Parent, the
Purchaser and the Escrow Agent substantially in the form of Annex B
attached hereto (the "Escrow Agreement"). Unless otherwise provided in the
Escrow Agreement, said deposit shall be made by wire transfer of
immediately available funds pursuant to wire transfer instructions set
forth in the Escrow Agreement. Purchaser shall use its reasonable efforts
to initiate such wire transfer on Tuesday, October 19, 1999 and
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complete such wire transfer as soon as practical thereafter, but in no
event later than Friday, October 22, 1999.
(c) Within five (5) business days after the public announcement of the
execution of this Agreement, Parent and Purchaser shall file with the
United States Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. ("NASD"), if applicable, a
Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto and including the exhibits thereto, the
"Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of
transmittal (collectively, the "Offer Documents"). Parent and Purchaser
agree that the Schedule 14D-1 and the Offer Documents will comply as to
form and content in all material respects with the applicable provisions of
the federal securities laws. The Company will cooperate fully in the
preparation of the Schedule 14D-1 prior to its being filed with the SEC.
The Company and its counsel shall be given an opportunity to review and
comment upon the Schedule 14D-1 and the Offer Documents and any amendment
or supplement thereto prior to the filing thereof with the SEC, and Parent
and Purchaser shall consider such comments in good faith. Parent and
Purchaser agree to provide to the Company and its counsel any comments
which Parent, Purchaser or their counsel may receive from the Staff of the
SEC promptly after receipt thereof, and any proposed responses thereto,
with respect to the Schedule 14D-1 or the Offer Documents and any amendment
or supplement thereto. Parent, Purchaser and the Company agree to correct
promptly any information provided by any of them for use in the
Schedule 14D-1 or the Offer Documents which shall have become false or
misleading in any material respect, and Parent and Purchaser further agree
to take all steps reasonably necessary to cause the Schedule 14D-1 as so
corrected to be filed with the SEC and to disseminate any revised Offer
Documents to the Company's stockholders, in each case as and to the extent
required by the applicable provisions of the federal securities laws.
(d) Contemporaneously with the purchase by Purchaser of at least a
majority of the Shares pursuant to the Offer (the "Completion of the
Offer"), Purchaser shall cause the Company to redeem the Series A Preferred
Shares for cash in accordance with the terms of the Certificate of
Designation, and shall cause the funds to be used for such redemption to be
transferred from the Escrowed Funds to the Company.
SECTION 1.02 Company Actions; Rights. The Company hereby consents to the
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Offer and represents that (a) its Board of Directors (at a meeting duly called
and held) has (i) determined that each of the Offer and the Merger is advisable
and fair to and in the best interests of the stockholders of the Company, (ii)
approved and adopted this Agreement and the transactions contemplated hereby,
including the Merger, and (iii) resolved to recommend acceptance of the Offer
and approval and adoption of this Agreement and the transactions contemplated
hereby, including the Merger, by the stockholders of the Company and (b) ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & Company, Inc. ("BHC") has delivered to the Company's Board of
Directors its oral opinion (to be confirmed in writing no later than the date of
the filing of the Schedule 14D-1, which opinion Parent and Purchaser shall be
entitled to include as an exhibit to the Schedule
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14D-1), that the cash consideration to be received by the holders of the Common
Stock in the Offer and the Merger is fair to such stockholders from a financial
point of view. The Company hereby agrees to file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
and shall use reasonable efforts to file the Schedule 14D-9 as soon as
practicable after the Offer is commenced but no later than ten (10) business
days after the date this Agreement is announced, which shall, subject to the
provisions of Section 6.02 of this Agreement, contain such recommendation.
The Parent, Purchaser and their counsel shall be given an opportunity to
review and comment upon the Schedule 14D-9 and any amendment or supplement
thereto prior to the filing thereof with the SEC, and the Company shall consider
such comments in good faith. The Company agrees to provide to the Parent,
Purchaser and their counsel any comments which the Company or its counsel may
receive from the staff of the SEC promptly after receipt thereof, and any
proposed responses thereto, with respect to the Schedule 14D-9 and any amendment
or supplement thereto. Parent, Purchaser and the Company agree to correct
promptly any information provided by any of them for use in the Schedule 14D-9
which shall have become false or misleading in any material respect, and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to disseminate any revised Schedule
14D-9 to the Company's stockholders, in each case as and to the extent required
by the applicable provisions of the federal securities laws. Company agrees to
make reasonable efforts to include Parent, Purchaser and their counsel in any
substantive oral communications with the SEC with respect to the Schedule 14D-9.
In connection with the Offer, provided that this Agreement shall not have been
terminated in accordance with Article VIII hereof, the Company will promptly
furnish Purchaser with mailing labels, security position listings and any
available listing or computer file containing the names and addresses of the
record holders of the Shares as of a recent date, and shall furnish Purchaser
with such information and assistance as Purchaser or its agents may reasonably
request in communicating the Offer to the stockholders of the Company. Subject
to the requirements of law, and except for such steps as are necessary to
disseminate the Schedule 14D-1, Parent and Purchaser shall hold in confidence
the information contained in any of such labels and lists and the additional
information referred to in the preceding sentence, will use such information
only in connection with the Offer and, if this Agreement is terminated, will
upon request deliver to the Company all copies of such information then in their
possession.
SECTION 1.03 Board of Directors and Committees; Section 14(f).
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(a) Subject to the requirements of applicable law, promptly upon the
purchase of not less than a majority of the outstanding shares by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, subject
to paragraph (c) of this Section 1.03, Purchaser shall be entitled to
designate up to such number of directors, rounded up to the next whole
number plus one, on the Board of Directors of the Company (the "Board") as
will give Purchaser representation on the Board equal to the product of the
total number of directors on the Board, after giving effect to such
representation, and the percentage
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that such number of Shares so purchased bears to the total number of issued
and outstanding Shares, and the Company shall use its reasonable efforts
to, upon request by Purchaser, promptly, at the Company's election, either
increase the size of the Board or secure the resignation of such number of
directors as is necessary to enable Purchaser's designees to be elected to
the Board and shall cause Purchaser's designees to be so elected, but in no
event less than a majority of directors. At such times the Company will use
its reasonable efforts to cause individuals designated by Purchaser to
constitute the same percentage as is on the Board of (i) each committee of
the Board (other than any committee of the Independent Directors), (ii)
each board of directors of each subsidiary of the Company designated by
Purchaser and (iii) each committee of each such board.
(b) The Company's obligations to appoint designees to the Board shall
be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all actions required pursuant
to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under
this Section 1.03 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required
under Section 14(f) and Rule 14f-1. Parent or Purchaser will supply to the
Company in writing and be solely responsible for any information with
respect to any of them and their nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) After the time that Purchaser's designees constitute at least a
majority of the Board and until the Effective Time, the Board shall always
have at least two members (the "Independent Directors") who are neither
officers of Parent nor designees, shareholders or affiliates of Parent or
Parent's affiliates. During such period, any (i) amendment or termination
of this Agreement, (ii) extension of time for the performance or waiver of
the obligations or other acts of Parent or Purchaser or waiver of the
Company's rights hereunder or (iii) action by the Company with respect to
this Agreement and the transactions contemplated hereby which adversely
affects the interests of the stockholders of the Company, shall require the
approval of a majority of the Independent Directors in addition to any
required approval thereof by the full Board. If the number of Independent
Directors shall be reduced below two for any reason whatsoever, any
remaining Independent Director shall be entitled to designate a person to
fill the vacancy, which designee shall not be a current or former officer
or affiliate of Parent or any of Parent's affiliates, or, if no Independent
Directors then remain, the other directors shall designate two persons to
fill such vacancies who shall not be current or former officers or
affiliates of Parent or any of Parent's affiliates, and such persons shall
be deemed to be Independent Directors for purposes of this Agreement. The
Board shall not delegate any matter set forth in this Section 1.03(c) to
any committee of the Board.
(d) Following the election or appointment of Purchaser's designees
pursuant to this Section 1.03 and prior to the Effective Time, any
amendment of this Agreement or the Amended and Restated Certificate of
Incorporation, as amended, or the Amended and Restated By-Laws of the
Company, any extension by the Company of the time for the performance of
any of the obligations or other acts of Parent or Purchaser or waiver of
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any of the Company's rights hereunder, will require the concurrence of a
majority of the directors of the Company then in office who are neither
designated by Purchaser, employees of the Company or any of its
subsidiaries nor otherwise affiliated with Purchaser.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
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hereof, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Purchaser shall be merged with and into the Company as
soon as practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII hereof. Following the Merger, the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of Purchaser shall cease.
SECTION 2.02 Effective Time. The Merger shall be consummated, as and when
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provided in Section 2.12 hereof, by filing with the Secretary of State of the
State of Delaware a certificate of merger in such form as is required by, and
executed in accordance with, the relevant provisions of the DGCL (the time of
such filing being the "Effective Time").
SECTION 2.03 Effects of the Merger. The Merger shall have the effects set
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forth in Section 259 of the DGCL and from and after the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities, liabilities
and duties of the Company and Purchaser. In particular, the Surviving
Corporation, as of the Effective Time, hereby expressly assumes any and all
financial obligations of the Company under the Credit Facility. As of the
Effective Time, the Company shall be a wholly owned subsidiary of Parent.
SECTION 2.04 Certificate of Incorporation and By-Laws. The Amended and
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Restated Certificate of Incorporation, as amended, and the Amended and Restated
By-Laws of the Purchaser shall be the Certificate of Incorporation and By-Laws
of the Surviving Corporation until thereafter changed or amended as provided
therein or by law.
SECTION 2.05 Directors. The directors of Purchaser immediately prior to
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the Effective Time shall constitute the Board of Directors of the Surviving
Corporation until their respective successors are duly elected and qualified.
SECTION 2.06 Officers. The officers of the Purchaser immediately prior to
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the Effective Time shall be the officers of the Surviving Corporation until
their respective successors are duly elected and qualified.
SECTION 2.07 Conversion of Shares. Each Share issued and outstanding
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immediately prior to the Effective Time (other than Shares held by Parent, the
Company or any subsidiary of Parent or of the Company, which shall be canceled,
and Dissenting Shares (as hereinafter defined)) shall, by virtue of the Merger
and without any action on the part of the holder thereof,
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be converted into the right to receive the Transaction Consideration in respect
of such Shares in cash, payable to the holder thereof, without interest thereon,
upon surrender of the certificate representing such Share.
SECTION 2.08 Employee Stock Options. On the latest of (i) the Completion
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of the Offer (ii) the first business day of January 2000 or (iii) the earlier of
(A) 30 days after termination notice is given in accordance with the terms of
the plan governing the Options (as defined herein) or (B) the date that the
Option holder agrees to the treatment provided in this Section 2.08, each holder
of then outstanding options to purchase Shares granted by the Company (whether
or not then currently exercisable) (the "Options") will be entitled to receive,
and shall receive, at the sole election of the holder of such Option in
settlement of each Option where the amount set forth in clause (i) below is
positive, a cash payment from the Company in an amount equal to the product of
(i) the Transaction Consideration minus the exercise price per Share of the
Option and (ii) the number of Shares covered by such Option. Such payment shall
be reduced by any applicable withholding taxes. If and to the extent required
by the terms of the plan governing such Options or pursuant to the terms of any
Option granted thereunder, each of Parent and the Company shall use its best
efforts to obtain the consent of each holder of outstanding Options to the
foregoing treatment of such Options, including without limitation, giving the
termination notice contemplated by the plan governing such Options. The
Company, acting through its Board of Directors or any committee thereof, shall
have the right at any time or from time to time following the execution hereof
to accelerate and vest, in full or in part, any and all Options not currently
exercisable in full. Effective as of the Effective Time, the Company, acting
through its Board or any committee thereof, shall terminate those Options with
an exercise price that is greater than the Transaction Consideration.
SECTION 2.09 Conversion of Purchaser Common Stock. Each share of common
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stock of Purchaser issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and exchangeable for one share of common stock
of the Surviving Corporation.
SECTION 2.10 Stockholders' Meeting. If required by applicable law, in
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order to consummate the Merger, the Company, acting through its Board, shall,
subject to the Board's fiduciary duties under applicable law, as advised by
counsel:
(a) duly call, give notice of, convene and hold a special meeting (the
"Special Meeting") of its stockholders as soon as practicable following the
Completion of the Offer (provided that, if a Form 15 is promptly filed with
the SEC after such completion, the Board shall be entitled to delay giving
notice until the registration of the Company's Common Stock under the
Exchange Act has been terminated, but not more than one hundred (100) days
after the Completion of the Offer) for the purpose of considering and
taking action upon this Agreement;
(b) prepare and file with the SEC the Proxy Statement in accordance
with all applicable requirements of the Exchange Act;
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(c) subject to its fiduciary duties under applicable law, include in
the Proxy Statement (as defined in Section 4.07) the recommendation of its
Board that stockholders of the Company vote in favor of the approval and
adoption of this Agreement and the Merger; and
(d) use its reasonable efforts to (i) obtain and furnish the
information required to be included by it in the Proxy Statement, and after
consultation with Parent, respond promptly to any comments made by the SEC
with respect to the Proxy Statement and any preliminary version thereof, if
filing with the SEC is required, and cause the Proxy Statement to be mailed
to its stockholders at the earliest practicable time following the
expiration or termination of the Offer and (ii) obtain the necessary
approval of this Agreement by its stockholders. Parent agrees that, at the
Special Meeting, all of the Shares then owned by Parent, Purchaser or any
other entity controlled by Parent will be voted in favor of approval and
adoption of this Agreement.
SECTION 2.11 Merger Without Meeting of Stockholders. Notwithstanding the
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foregoing, in the event that Purchaser, or any other direct or indirect
subsidiary of Parent or other entity controlled by Parent, shall acquire at
least ninety percent (90%) of the outstanding shares of the capital stock of the
Company, the parties hereto agree, at the request of Parent or Purchaser, to
take all necessary and appropriate action to cause the Merger to become
effective, as soon as practicable after the expiration of the Offer, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
SECTION 2.12 Closing. Upon the terms and subject to the conditions
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hereof, as soon as practicable after consummation of the Offer and after the
vote of the stockholders of the Company in favor of the approval of this
Agreement has been obtained, the Company shall execute in the manner required by
the DGCL and deliver to the Secretary of State of the State of Delaware a duly
executed and verified certificate of merger (or certificate of ownership and
merger) as required by the DGCL and the parties shall take such other and
further actions as may be required by law to make the Merger effective. Prior
to the filings referred to in this Section 2.12, a closing (the "Closing") will
be held at the offices of Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ (or such other place as the parties may
agree) for the purpose of confirming all of the foregoing.
ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES;
LOST CERTIFICATES; ETC.
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
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Agreement to the contrary, Shares which are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders who object to the
Merger and comply with all of the relevant provisions of Section 262 of the DGCL
(the "Dissenting Shares") shall not be converted into or be exchangeable for the
right to receive the consideration provided in Section 2.07 of this Agreement
but shall instead be entitled to receive payment of the appraised value of such
Shares in accordance with the relevant provisions of such Section 262, unless
and until such holders
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shall have failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal and payment under the DGCL. If any such holder shall have so
failed to perfect or shall have effectively withdrawn or lost such right, such
holder's Shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, at the Effective Time, the right to receive the
consideration provided in Section 2.07. The Company shall give Parent (i) prompt
notice of any written demand for appraisal, and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal. The
Company shall not, without the prior consent of Parent, voluntarily make any
payment, settle any demands or approve any withdrawals.
SECTION 3.02 Exchange of Shares.
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(a) Prior to the Effective Time, Parent shall designate a bank or
trust company or similar entity reasonably acceptable to the Company which
is authorized to exercise corporate trust or stock powers to act as
Exchange Agent in the Merger (the "Exchange Agent"). Prior to the Effective
Time, Parent will provide the Exchange Agent funds necessary to make the
cash payments contemplated by Section 2.07 (the "Payment Fund"). The
Exchange Agent shall cause the Payment Fund to be (i) held for the benefit
of the Shares and (ii) promptly applied to making the payments provided for
in Section 2.07. The Payment Fund shall not be used for any purpose that
is not provided for herein. The Payment Fund may be transferred from the
Escrowed Funds after the expiration of the Offer.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"), one or
more forms of a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent)
and instructions for use in effecting the surrender of the Certificate or
payment therefor. Upon surrender to the Exchange Agent of a Certificate,
together with such letter of transmittal duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor, and
Parent shall cause the Exchange Agent to promptly so pay, cash in an amount
equal to the product of the number of Shares represented by such
Certificate multiplied by the amount of the Transaction Consideration with
respect to the Shares, and such Certificate shall then be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of
any Certificate. If payment is to be made to a person other than the
person in whose name the Certificate surrendered is registered, it shall be
a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay transfer or other taxes required
by reason of the payment to a person other than the registered holder of
the Certificate surrendered or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.02, each
Certificate (other than Certificates representing
-9-
Shares held by Parent or any subsidiary of Parent or of the Company and
Dissenting Shares) shall represent for all purposes the right to receive
the Transaction Consideration in cash multiplied by the number of Shares
evidenced by such Certificate, without any interest thereon. Any funds
remaining with the Exchange Agent one year following the Effective Time
shall be returned to Parent after which time former stockholders of the
Company, subject to applicable law, shall look only to Parent for payment
of amounts due hereunder, without interest thereon.
(c) After the Effective Time there shall be no transfers on the stock
transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or
the Exchange Agent, they shall be canceled and exchanged for cash as
provided in Article II and this Article III.
SECTION 3.03. Lost Certificates. In the event that any Certificate shall
-----------------
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if reasonably required by Parent (which shall not exceed amounts generally
required by Parent from holders of Parent's capital stock under similar
circumstances), the granting of an indemnity reasonably satisfactory to Parent
against any claim that may be made against it, the Surviving Corporation or the
Exchange Agent, with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Transaction
Consideration with respect to such Certificate, to which such person is entitled
pursuant hereto.
SECTION 3.04. Withholding Rights. Each of the Surviving Corporation and
------------------
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.
SECTION 3.04. Investment of Funds. The Payment Fund shall be invested by
-------------------
the Exchange Agent in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-1 or P-l or better by ▇▇▇▇▇'▇
Investor Services or Standard & Poor's Corporation, respectively, in each case
with maturities not exceeding seven days or investments of comparable risk and
return. All earnings thereon shall inure to the benefit of Parent or the
Surviving Corporation.
SECTION 3.05. No Liability. None of Parent, Purchaser, the Company or the
------------
Exchange Agent shall be liable to any person in respect of any Transaction
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Transaction Consideration in respect of such
Certificate would
-10-
otherwise escheat to or become the property of any public official), any such
shares, cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered to Parent by the
Company prior to the execution of this Agreement, the Company represents and
warrants to Parent and Purchaser as follows:
SECTION 4.01 Organization. Each of the Company and its subsidiaries is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and each such corporation has all
requisite corporate power and corporate authority to own, operate and lease its
respective properties and to carry on its businesses substantially as they are
being conducted on the date of this Agreement, except for such failures to be so
organized or in good standing which would not individually or in the aggregate
be reasonable likely to have a Material Adverse Effect (as defined in Section
9.11 hereof). The Company and each of its subsidiaries is duly qualified and in
good standing in each jurisdiction in which the nature of the property owned,
leased or operated by it or the nature of the business conducted by it requires
such qualification except for such failures to be so qualified or in good
standing which are not reasonably likely to have a Material Adverse Effect. The
Company's Certificate of Incorporation, as amended, and Amended and Restated
Bylaws, as amended, are in the same form as previously provided to Parent and
Purchaser.
SECTION 4.02 Capitalization; Subsidiaries. The authorized capital stock
----------------------------
of the Company consists of 25,000,000 shares of Common Stock, par value $.04 per
share and 5,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"). As of October 15, 1999, there were 1,044,631 shares of
Common Stock and 3,476,900 Series A Preferred Shares issued and outstanding and
869,225 Shares were held in the Company's treasury. As of October 15, 1999,
except for the obligation of the Company to issue (a) 308,018 Shares pursuant to
Options currently outstanding (including the currently non-exercisable portions
thereof), and (b) Shares pursuant to an Employee Stock Purchase Plan, there are
not outstanding any options, warrants, calls, convertible securities,
subscriptions or other rights or other agreements or commitments obligating the
Company or any of its subsidiaries to issue, transfer or sell any shares of
capital stock of the Company or any of its subsidiaries. No Options have
exercise prices below the Transaction Consideration except as and to the extent
set forth on Exhibit C to the Disclosure Schedule. All issued and outstanding
Shares are validly issued, fully paid and nonassessable and are not subject to,
and were not issued in violation of, preemptive rights. There are no voting
trusts or other agreements or understandings to which the Company is a party
with respect to the voting of the capital stock of the Company or any of its
subsidiaries.
-11-
All of the outstanding shares of capital stock of the Company's
subsidiaries are owned, directly or indirectly, by the Company free and clear of
all liens, claims, options, charges, security interests or other legal and
equitable rights and encumbrances of whatsoever nature. All issued and
outstanding shares of capital stock of the Company's subsidiaries are validly
issued, fully paid and nonassessable and are not subject to, and were not issued
in violation of, preemptive rights.
SECTION 4.03 Authority Relative to this Agreement; Compliance with Laws
----------------------------------------------------------
and Court Orders. The Company has full corporate power and authority to execute
----------------
and deliver this Agreement and, subject to approval and adoption of this
Agreement by the holders of Shares representing a majority of the votes which
may be cast by holders of the Shares to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval of this Agreement by the holders of Shares
representing a majority of the votes which may be cast by holders of Shares).
This Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement has been duly authorized, executed and delivered by
each of Parent and Purchaser, this Agreement constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that (i) enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The Company and its subsidiaries are and
have been in compliance with, and to the knowledge of the Company are not under
investigation with respect to and have not been threatened to be charged with or
given notice of any violation of, any applicable law, statute, ordinance, rule,
regulation, judgment, injunction, order or decree, including, without
limitation, any Environmental Laws, except for (i) failures to comply or
violations that have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 4.04 Absence of Certain Changes. Since June 30, 1999 and prior to
--------------------------
the Board Transition Date, neither the Company nor any of its subsidiaries has
suffered any change or changes in the financial condition or business, results
of operations or assets which has resulted or reasonably would be expected to
result in a Material Adverse Effect. Since June 30, 1999, there has not been
(a) any declaration, setting aside or payment of any dividend or other
distribution in respect of the shares of capital stock of the Company, or any
redemption or other acquisition by the Company or any of its subsidiaries of any
shares of capital stock of the Company except for (i) the exchange by Securicor
Communications Limited, a company organized under the laws of England and Wales,
of 3,476,900 shares of Common Stock (prior to adjustment for the reverse stock
split referenced immediately below) for 3,476,900 shares of Series A Preferred
Stock of the Company on September 30, 1999; and (ii) the one-for-four reverse
stock split effected on October 15, 1999; (b) (i) any increase in the
compensation paid, payable or to become payable by the Company or any of its
subsidiaries (including the rate and
-12-
terms thereof) to its directors, officers, employees or consultants, except
increases which occur in the ordinary course of business in accordance with its
customary practices or (ii) any increase in the rate or terms of any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
to, for or with any such directors, officers or employees, except increases
occurring in the ordinary course of business in accordance with its customary
practices; (c) any entry into any agreement, commitment or transaction by the
Company or any of its subsidiaries, which is material to the Company and its
subsidiaries taken as a whole (except agreements, commitments or transactions in
the ordinary course of business in accordance with its customary practices); (d)
any material change by the Company or any of its subsidiaries in accounting
methods, principles or practices except as required by generally accepted
accounting principles; (e) except as contemplated by this Agreement, any
amendment of any material term of any outstanding security of the Company or any
of its subsidiaries; (f) any incurrence, assumption or guarantee by the Company
or any of its subsidiaries of any indebtedness for borrowed money (i) exceeding
$4,000,000 in the aggregate or (ii) having a term longer than one year in
duration; (g) any creation or other incurrence by the Company or any of its
subsidiaries of any lien on any asset other than in the ordinary course of
business consistent with past practices; (h) any damage, destruction or other
similar casualty loss (whether or not covered by insurance) affecting the
business or assets of the Company or any of its subsidiaries that has resulted,
or could reasonably be expected to result, in an aggregate amount in excess of
$1,000,000; (i) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its subsidiaries of any contract or
other right, in either case, material to the Company and its subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement; (j) any tax election, other than those consistent with past practice,
not required by law or any settlement or compromise of any tax liability in
either case that is material to the Company and its subsidiaries; (k) any grant
of any severance or termination pay to (or amendment to any existing arrangement
with) any director or officer of the Company or any of its subsidiaries; (l) to
the Company's knowledge, any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its subsidiaries,
which employees were not subject to a collective bargaining agreement at June
30, 1999, or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees.
SECTION 4.05 No Undisclosed Liabilities. Neither the Company nor any of
--------------------------
its subsidiaries has incurred any liabilities of any nature, whether or not
accrued, contingent or otherwise, which would be required to be included on a
balance sheet prepared in accordance with generally accepted accounting
principles, except for liabilities that are reflected on the Company's June 30,
1999 balance sheet or that would not have or could not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.06 Reports. The Company has timely filed all required forms,
-------
reports and documents (including all prospectuses and all registration
statements) with the SEC required to be filed by it with respect to all periods
commencing on or after October 1, 1997 pursuant to the
-13-
federal securities laws and the SEC rules and regulations thereunder, all of
which have complied in all material respects with all applicable requirements of
the Securities Act of 1933 (the "Securities Act") and the Exchange Act, and the
rules and regulations promulgated thereunder (the "Company Filings"). None of
such forms, reports or documents (excluding the financial statements included
therein, which are dealt with in the following paragraph), at the time filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
The consolidated balance sheets and the related consolidated statements of
income, retained earnings and changes in financial position (including the
related notes thereto) of the Company included in the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1998, and in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, present
fairly in all material respects the consolidated financial position of the
Company as of their respective dates, and the results of consolidated operations
and consolidated cash flows for the periods presented therein, all in conformity
with generally accepted accounting principles applied on a consistent basis,
except (i) as otherwise noted therein, (ii) in the case of quarterly financial
statements for year-end audit adjustments and (iii) in the case of the quarterly
financial statements to the extent they may not include footnotes or may be
condensed or summary financial statements.
The unaudited pro forma estimated consolidated balance sheet and related
consolidated unaudited pro forma estimated statements of income, retained
earnings and changes in financial position of the Company for the year ended
September 30, 1999 attached as Exhibit A to the Disclosure Schedule, to the
knowledge of the Company, present fairly in all material respects the
consolidated position of the Company, and the results of consolidated operations
and consolidated cash flows for the periods presented therein, all in conformity
with generally accepted accounting principles applied on a consistent basis,
except to the extent that they do not include footnotes and may be condensed or
summary financial statements and except that such statements do not reflect the
Series A Preferred Stock or any adjustments relative to expected lease
arrangements reflected in the Disclosure Schedule.
SECTION 4.07 Offer Documents; Proxy Statements; Other Information. None
----------------------------------------------------
of the information relating to the Company and its subsidiaries supplied in
writing by the Company specifically for inclusion in the Offer Documents,
including any amendments or supplements thereto will at the respective times the
Offer Documents or any amendments or supplements thereto are filed with the SEC,
to the knowledge of the Company, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Schedule 14D-9, will comply in all material
respects with the Exchange Act. If a Proxy Statement is required for the
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material respects with the Exchange Act, if applicable, except that no
representation is made by the Company with respect to information supplied in
writing by Parent or Purchaser specifically for inclusion in the Proxy
Statement. The letter to stockholders, notice of meeting, proxy statement and
form of proxy, or the information statement, as the case
-14-
may be, to be distributed to stockholders in connection with the Merger, or any
schedules required to be filed with the SEC in connection therewith are
collectively referred to herein as the "Proxy Statement".
SECTION 4.08 Consents and Approvals; No Violation. Neither the execution
------------------------------------
and delivery of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Amended and Restated Certificate of Incorporation, as
amended, or Amended and Restated By-Laws (or other similar governing documents)
of the Company, (ii) require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority or
body, except (A) in connection with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), if applicable, (B) pursuant to the
Exchange Act or the rules and requirements of NASD, (C) the filing of a
certificate of merger (or certificate of merger and ownership) pursuant to the
DGCL or (D) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not individually or in the
aggregate when taken together with all such other failures have a Material
Adverse Effect; (iii) result in a default (or give rise to any right of
termination, unilateral modification or amendment, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license, agreement
or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company, any of its subsidiaries or any
of their respective assets may be bound, except for such defaults (or rights of
termination, unilateral modification or amendment, cancellation or acceleration)
as to which requisite waivers or consents have been obtained prior to the date
Shares are first accepted for payment under the Offer or which in the aggregate
would not have a Material Adverse Effect; or (iv) violate any order, writ,
injunction, decree, judgment, ordinance, statute, rule or regulation applicable
to the Company, any of its subsidiaries or any of their respective properties or
businesses, except for violations (other than of orders, writs, injunctions or
decrees issued against the Company or any of its subsidiaries or naming the
Company or any of its subsidiaries as a party) which would not in the aggregate
have a Material Adverse Effect.
SECTION 4.09 Litigation, etc. As of the date of this Agreement, there is
----------------
no claim, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries or their respective
properties or businesses before any court or governmental or regulatory
authority or body acting in an adjudicative capacity with respect to which there
is a reasonable likelihood of an adverse determination which would have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries nor
any of their respective properties or businesses is subject to any outstanding
order, writ, judgment, stipulation, award, injunction or decree of any court
issued against the Company or any of its subsidiaries or naming the Company or
any of its subsidiaries as a party which has a Material Adverse Effect.
SECTION 4.10 Title to Properties; Encumbrances. The Company and each of
---------------------------------
its subsidiaries has good title to all properties, interests in properties and
assets (real and personal) reflected in the consolidated balance sheet of the
Company as at June 30, 1999 free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except liens for
-15-
current taxes not yet due and payable and except for such mortgages, liens,
pledges, charges or encumbrances which would not in the aggregate have a
Material Adverse Effect.
SECTION 4.11 Benefit Plans.
-------------
(a) The Company does not have any Company Benefit Plan (as defined
herein) except for the 1997 Stock Incentive Plan, the Employee Stock
Purchase Plan or as set forth on the Disclosure Schedule. With respect to
each employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and any
material bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization
or insurance (all of the foregoing being herein called the "Company Benefit
Plans"), maintained or contributed to by the Company or any of its
subsidiaries, the Company has made available, to the extent applicable, to
Parent a true and correct copy of (i) the most recent annual report (Form
5500) filed with the Internal Revenue Service, (ii) such Company Benefit
Plan, (iii) each trust agreement and group annuity contract, if any,
relating to such Company Benefit Plan and (iv) the most recent actuarial
report or valuation relating to a Company Benefit Plan subject to Title IV
of ERISA.
(b) With respect to the Company Benefit Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of the Company,
there exists no condition or set of circumstances in connection with which
the Company or any of its subsidiaries would be subject to any liability
that is reasonably likely to have a Material Adverse Effect (except
liability for benefit claims and funding obligations payable in the
ordinary course), under ERISA, the Code or any other applicable law.
(c) Each of the Company Benefit Plans has been operated and
administered in all material respects in accordance with its terms and
applicable laws, including, but not limited to, ERISA and the Code.
(d) Except as disclosed in the Company's Filings or as provided for in
this Agreement, as of the date of this Agreement, neither the Company nor
any of its subsidiaries is a party to any oral or written (i) consulting
agreement not terminable on 60 days' or less notice involving the payment
of more than $1,000,000 per annum, (ii) union or collective bargaining
agreement, (iii) agreement with any executive officer or other key employee
of the Company or any of its subsidiaries the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature
contemplated by this Agreement or agreement with respect to any executive
officer of the Company providing any term of employment or compensation
guarantee extending for a period longer than three years and for the
payment of in excess of $1,000,000 per annum, or (iv) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions
-16-
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement.
(e) Except as disclosed in the Disclosure Schedule, neither the
Company nor any of its subsidiaries currently contributes to or maintains
any plan subject to Title IV of ERISA, other than a "multiemployer plan" as
defined in Section 3 (37) of ERISA (a "Multiemployer Plan"). With respect
to any Multiemployer Plan or other plan subject to Title IV of ERISA which
the Company or any of its subsidiaries has contributed to or maintained
during the past five years, neither the Company nor any of its subsidiaries
has any contingent liability that (i) is reasonably likely to become a
liability of Parent or its subsidiaries after the Effective Time and (ii)
individually or in the aggregate, would have a Material Adverse Effect.
(f) Except as set forth in the Disclosure Schedule or as otherwise
contemplated by this Agreement, the consummation of the transactions
contemplated by this Agreement will not entitle any employee or independent
contractor of the Company or any of its subsidiaries to severance pay or
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation
pursuant to, any Company Benefit Plan.
(g) Except as otherwise contemplated by this Agreement, there has
been no amendment to, written interpretation or announcement (whether or
not written) by the Company or any of its subsidiaries relating to, or
change in employee participation or coverage under, any Company Benefit
Plan which would increase materially the expense of maintaining such
Company Benefit Plan above the level of the expense incurred in respect
thereof for the fiscal year ended September 30, 1999.
SECTION 4.12 Compliance With Agreements; Law. Neither the Company nor any
-------------------------------
of its subsidiaries is in default or violation of (i) any term, provision or
condition of (A) its Amended and Restated Certificate of Incorporation, as
amended, or Amended and Restated By-Laws (or similar charter documents) or (B)
any note, license, agreement or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company, any of
its subsidiaries or any of their respective assets may be bound ("agreement"),
or (ii) any judgment, order, writ, injunction, decree, stipulation, award, law,
ordinance, rule or regulation of any governmental or regulatory authority or
body (including, but not limited to, any law, ordinance, rule or regulation
relating to the protection of the environment), except for possible violations
in the case of clauses (i)(B) and (ii) which in the aggregate do not and,
insofar as reasonably can be foreseen, in the future will not have a Material
Adverse Effect. To the knowledge of the Company, no other party to any such
agreement is, or, based on existing facts and circumstances, with the passage of
time will be, in default or violation of any such agreement except for possible
violations of such agreements which will not have a Material Adverse Effect.
All licenses, permits and other governmental authorizations held by the Company
or any of its subsidiaries are valid and sufficient for all businesses conducted
by the Company and its
-17-
subsidiaries except where the failure to hold such licenses, permits and other
governmental authorizations would not in the aggregate have a Material Adverse
Effect.
SECTION 4.13 Patents, Trademarks, Trade Names, etc. The Company or one of
--------------------------------------
its subsidiaries owns, or is licensed or otherwise entitled to use, all patents,
trademarks, trade names, service marks, copyrights, trade secrets, proprietary
rights, applications for any of the foregoing, together with all other
technology, know-how, tangible or intangible proprietary information or material
and formulae in the countries to which such apply, that are in any material
respect necessary to the business of the Company and its subsidiaries as
currently conducted (the "Company Intellectual Property"). No claims have been
asserted or, to the knowledge of the Company, threatened by any person (i) to
the effect that the sale or use of any product or process as now used or offered
by the Company or any subsidiary infringes on any patents, (ii) against the use
by the Company or any of its subsidiaries of any trademarks, trade names,
technology, know-how or processes necessary for the operation of the business of
the Company and its subsidiaries as currently conducted or presently
contemplated or (iii) challenging or questioning the validity or effectiveness
of any of the Company Intellectual Property.
SECTION 4.14 Taxes.
-----
(a) The Company and each of its subsidiaries on or prior to the date
of this Agreement has filed or has had filed on its behalf, and will file
or will have filed on its behalf prior to the Effective Time, in a timely
manner (within any applicable extension periods) with the appropriate
governmental entity all income and other material Tax Returns (as defined
herein) required to be filed prior to the Effective Time with respect to
Taxes (as defined herein) of the Company and each of its subsidiaries, and
such Tax Returns are true, correct and complete in all material respects.
(b) All material Taxes with respect to the Company and its
subsidiaries have been paid in full to the extent required to be so paid as
of the date of this Agreement or have been provided for in accordance with
generally accepted accounting principles on the Company's most recent
balance sheet (as of the date of such balance sheet) which is part of the
Company Filings.
(c) There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or
with respect to the Company and its subsidiaries.
(d) No deficiency, delinquency or default for any Tax has been
claimed, proposed or assessed against the Company or any of its
subsidiaries which has not been abated or paid in full or which is being
contested in good faith by the Company, and to the Company's knowledge,
neither the Company nor any subsidiary of the Company has received written
notice of any such deficiency, delinquency or default nor does the Company
otherwise have knowledge of any threat of any governmental entity to assert
-18-
such deficiency, delinquency or default or any facts or circumstances that
would form a basis of such threat.
(e) There are no liens for Taxes upon the assets of the Company or
any of its subsidiaries except statutory liens for current Taxes not yet
due.
(f) Neither the Company nor any of its subsidiaries is currently the
subject of any audit with respect to any Tax Return nor has the Company or
any subsidiary been notified that the Company or any subsidiary will become
the subject of any such audit.
(g) Neither the Company nor any of its subsidiaries is a party to or
bound by or has any obligation under any written or unwritten tax sharing
or similar agreement or arrangement.
(h) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
government fee, charges, fees, levies or other assessments of any kind,
including, without limitation, income, gross receipts, sales, use, ad
valorem, goods and services, capital, transfer, franchise, profits,
license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes, customs
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority and (ii) ATax Return" shall mean any
report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
SECTION 4.15 Antitakeover Statutes. The Board has taken the necessary
---------------------
action to render Section 203 of the Delaware General Corporation Law, and any
other potentially applicable antitakeover or similar statute or regulation
inapplicable to this Agreement, the Merger and the Offer and the transactions
contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
SECTION 5.01 Organization and Good Standing. Each of Parent and Purchaser
------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation.
SECTION 5.02 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Purchaser has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by Parent and
Purchaser, and Parent as the sole stockholder of Purchaser, and no other
corporate
-19-
proceedings on the part of Parent or Purchaser are necessary to authorize this
Agreement, or commence the Offer or to consummate the transactions contemplated
by this Agreement (including the Offer). This Agreement has been duly and
validly executed and delivered by each of Parent and Purchaser and, assuming
this Agreement has been duly authorized, executed and delivered by the Company,
this Agreement constitutes a valid and binding agreement of each of Parent and
Purchaser, enforceable against each of Parent and Purchaser in accordance with
its terms, except that (i) enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 5.03 Consents and Approvals; No Violation. Neither the execution
------------------------------------
and delivery of this Agreement by Parent and Purchaser nor the consummation of
the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision or the respective Certificate of Incorporation or
By-Laws (or other similar governing documents) of Parent or any of its
subsidiaries, (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority or
body, except those set forth in clauses (A) through (E) of Section 4.08 hereof;
(iii) result in a default (or give rise to any right of termination, unilateral
modification or amendment, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, license, agreement or other instrument or
obligation to which the Parent or any of its subsidiaries is a party; or (iv)
violate any order, writ, injunction, decree, judgment, ordinance, statute, rule
or regulation applicable to Parent, any of its subsidiaries or any of their
respective properties or businesses.
SECTION 5.04 Offer Documents; Proxy Statement. The Schedule 14D-1,
--------------------------------
including the Offer Documents and any amendments or supplements thereto, and the
Offer will comply in all material respects with the Exchange Act. None of the
information contained in the Offer Documents, including any amendments or
supplements thereto, will at the respective times the Offer Documents or any
amendments or supplements thereto, are filed with the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by Parent with respect to information supplied by the
Company specifically for inclusion in the Offer Documents. None of the
information supplied by Parent and its affiliates specifically for inclusion in
the Proxy Statement will, at the time the Proxy Statement is mailed, or, at the
time of the Special Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
SECTION 5.05 Ownership of Shares. As of the date hereof, neither Parent
--------------------
nor Purchaser nor any subsidiary or affiliate of Parent has beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of any Shares.
-20-
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company.
----------------------------------
(a) Except as contemplated by this Agreement, during the period from
the date of this Agreement to such time at which directors of the Company
affiliated with or designated by Parent or Purchaser shall constitute a
majority of the Board (such time, the "Board Transition Date"), the Company
and its subsidiaries will each conduct its operations according to its
ordinary and usual course of business, substantially consistent with past
practice. Without limiting the generality of the foregoing, and except as
otherwise contemplated by this Agreement, neither the Company nor any of
its subsidiaries will, prior to the Board Transition Date, without the
prior written consent of Parent (i) issue, sell or pledge, or authorize or
propose the issuance, sale or pledge of (A) additional shares of capital
stock of any class of the Company, or securities convertible into any such
shares, or any rights, warrants or options to acquire any such shares or
other convertible securities, other than such issuance of Shares pursuant
to the exercise of Options outstanding on the date hereof, and other than
the issuance of Shares in connection with the Company's employee stock
purchase plan, or (B) any other securities in respect of, in lieu of or in
substitution for, Shares outstanding on the date hereof, (ii) purchase or
otherwise acquire, or propose to purchase or otherwise acquire, any
outstanding Shares, (iii) declare or pay any dividend or distribution on
any shares of its capital stock, (iv) propose or adopt any amendments to
its Amended and Restated Certificate of Incorporation, as amended, or
Amended and Restated By-Laws, (v) agree in writing or otherwise to take any
of the foregoing actions or any action which would prevent the conditions
to Purchaser's obligation to purchase Shares under the Offer or Parent's
and Purchaser's obligation to consummate the Merger from being satisfied;
provided, however, that the Company shall be permitted to accelerate the
vesting schedule of all outstanding Options. The Company shall, through
its Board or any committee thereof, terminate the Company's Employee Stock
Purchase Plan so that no Shares shall be issued thereunder subsequent to
the date of this Agreement.
(b) Except as set forth on the Disclosure Schedule or contemplated by
this Agreement, from the date of this Agreement to the Board Transition
Date, (i) the Company will not, and will not permit any of its subsidiaries
to, merge or consolidate with any other person or acquire a material amount
of stock or assets of any other person; (ii) the Company will not, and will
not permit any of its subsidiaries to, sell, lease, license or otherwise
dispose of any material subsidiary or material amount of assets, securities
or property except (A) pursuant to existing contracts or commitments and
(B) in the ordinary course consistent of business with past practice; (iii)
the Company will (and will cause its subsidiaries to) use reasonable
efforts not to, (A) take any action that (x) would make any representation
and warranty of the Company hereunder that is qualified by materiality or
Material Adverse Effect inaccurate in any respect at, or as of any time
prior to, the Effective Time or (y) would make any representation or
warranty of the Company hereunder that is not so qualified to be inaccurate
in any material respect at, or as of any
-21-
time prior to, the Effective Time or (B) omit to take any action necessary
to prevent any such representation or warranty from being inaccurate in any
respect or material respect, as the case may be, at any such time; (iv) the
Company will not, and will not permit any of its subsidiaries to, sell,
transfer, license, sublicense or otherwise dispose of any material
intellectual property rights (other than in the ordinary course of business
consistent with past practice) or amend or modify any existing agreements
with respect to any material intellectual property rights or third party
intellectual property rights; (v) the Company will not, and will not permit
any of its subsidiaries to, (A) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse or otherwise
as an accommodation become responsible for, the obligations of any other
person (other than (x) for an amount not exceeding $4,000,000 in the
aggregate, or make any loans, advances, or capital contributions to, or
investments in, any other person, (B) enter into or amend any contract or
agreement other than in the ordinary course of business consistent with
past practice, (C) authorize or make any capital expenditures or purchases
of fixed assets that are not currently budgeted and that in the aggregate
exceeds $1,000,000, (D) terminate any material contract to which the
Company is a party or amend in any material respect any such material
contract or (E) enter into or amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited hereunder; (vi) the
Company will not, and will not permit any of its subsidiaries to, take any
action, other than as required by generally accepted accounting principles,
to change accounting policies or procedures or cash maintenance policies or
procedures (including, without limitation, procedures with respect to
revenue recognition, capitalization of development costs, payments of
accounts payable and collection of accounts receivable); (vii) the Company
will not, and will not permit any of its subsidiaries to, make any tax
election not required by law and inconsistent with past practice or settle
or compromise any tax liability, except to the extent the amount of any
such settlement or compromise has been reserved for on the consolidated
financial statements contained in the Company's filings with the SEC,
(viii) the Company will not, and will not permit any of its subsidiaries
to, pay, discharge, settle, or satisfy any lawsuits, claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice of liabilities
reflected or reserved against on the Company's September 30, 1999 pro forma
balance sheet which is attached to the Disclosure Schedule or incurred in
the ordinary course of business consistent with past practice or other
payments, discharges or satisfactions which in the aggregate do not exceed
$1,000,000 or waive the benefits of, or agree to modify in any manner, any
confidentiality or standstill agreement.
SECTION 6.02 No Solicitation, etc. From the date of this Agreement until
---------------------
the earlier of the Board Transition Date or the termination of this Agreement,
the Company will not (and it will use its best efforts to not permit any of its
officers, directors, agents, affiliates, investment bankers, accountants or
attorneys to) directly or indirectly (i) solicit, engage in discussions or
negotiate with any person (whether such discussions or negotiations are
initiated by the Company or otherwise) or take any other action intended or
designed to facilitate the efforts of any person (other than Parent) relating to
the possible acquisition of the Company (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise) or any material portion
-22-
of its capital stock or assets (with any such efforts by any such person,
including a firm proposal to make such an acquisition, to be referred to as an
"Alternative Acquisition"), (ii) provide information with respect to the Company
to any person, other than Parent, relating to a possible Alternative Acquisition
by any person, other than Parent, (iii) enter into an agreement with any person,
other than Parent, providing for a possible Alternative Acquisition, or (iv)
make or authorize any statement, recommendation or solicitation in support of
any possible Alternative Acquisition by any person, other than by Parent. The
Company shall and shall cause its representatives to cease immediately and cause
to be terminated all activities, discussions and negotiations, if any, conducted
prior to the date hereof with respect to any Alternative Acquisition.
Notwithstanding anything to the contrary contained in Section 6.02 or elsewhere
in this Agreement, prior to the consummation of the Offer, the Company may
participate in discussions or negotiations with, and furnish non-public
information, and afford access to the properties, books, records, officers,
employees and representatives of the Company to any person, entity or group if
such person, entity or group has delivered unsolicited to the Company, prior to
the consummation of the Offer, and in writing, a proposal for an Alternative
Acquisition which is not subject to any financing contingency, which the Board
by a majority vote in its good faith judgment (after consultation with its
independent financial advisor) determines that such proposal is reasonably
likely to be consummated and if consummated would be more favorable, from a
financial point of view, to the Company's stockholders than the transactions
contemplated by this Agreement and the Company's Board determines in good faith
that it is necessary to furnish such information and negotiate in order to
comply with its fiduciary obligations to its stockholders (a "Superior
Proposal"). In the event the Company receives a Superior Proposal, nothing
contained in this Agreement (but subject to the terms of this paragraph (b))
will prevent the Board from executing or entering into an agreement relating to
such Superior Proposal and recommending such Superior Proposal to its
stockholders; in such case, the Board may withdraw, modify or refrain from
making its recommendation of the Offer and the Merger; provided, however that
the Company (i) shall have promptly notified Parent, and in any event within 24
hours, of any proposal for an Alternative Acquisition received by, any such
information requested from, or any such negotiations or discussions sought to be
initiated or recommenced with, the Company or any of its subsidiaries,
indicating, in connection with such notice, the name of the person making the
proposal for an Alternative Acquisition or taking such action and, in reasonable
detail, the significant terms of any such proposal for an Alternative
Acquisition and including with such notice any documentation relating to such
Alternative Acquisition, (ii) shall provide Parent at least two business days
prior written notice of the Company's intention to execute or enter into an
agreement relating to such Superior Proposal and (iii) may only terminate this
Agreement by written notice to Parent provided no sooner than two business days
after Parent's receipt of a copy of such Superior Proposal (or a detailed
description of the significant terms and conditions thereof).
SECTION 6.03 Access to Information.
---------------------
(a) Subject to any confidentiality requirements of any agreement to
which the Company or any of its subsidiaries is a party, any regulatory
obligations to maintain the confidentiality of information or any
confidentiality privileges applicable to communications between the Company
or any of its subsidiaries and its respective
-23-
attorneys or accountants, between the date of this Agreement and the
Effective Time, upon reasonable prior notice to the Company, the Company
will give Parent and its authorized representatives reasonable access
during normal business hours to the plants, offices, warehouses and other
facilities and to the books and records of it and its subsidiaries, will
permit Parent to make such reasonable inspections during normal business
hours as it may reasonably request and will cause its officers and those of
its subsidiaries to furnish Parent with such financial and operating data
and other information with respect to the business and properties of the
Company and its subsidiaries as Parent may from time to time reasonably
request; provided, however, that all such access and inspections shall be
coordinated by Parent with a designee of the Company and shall be conducted
in such manner so as not to unduly interfere with the normal business
operations of the Company or any of its subsidiaries.
(b) All information received by Parent and its representatives
pursuant to this Section 6.03 will be subject to the confidentiality
agreement between Parent or an affiliate thereof and the Company.
SECTION 6.04 Best Efforts. Subject to the terms and conditions herein
------------
provided, each of the parties hereto agrees to promptly effect all necessary
filings under the HSR Act, if any, and use its best efforts to secure all
government clearances (including by taking all reasonable steps to avoid or set
aside any preliminary or permanent injunction or other order of any federal or
state court of competent jurisdiction or other governmental authority). Each of
the parties hereto further agrees to use its reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all other things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In particular, Parent and the Company will use their respective reasonable
efforts to obtain all other consents, authorizations, orders and approvals
required in connection with, and waivers of any violations, breaches and
defaults that may be caused by, the consummation of the Merger or the other
transactions contemplated by this Agreement, other than consents,
authorizations, orders, approvals and waivers the failure to obtain which would
not (A) be material to the consummation of the Merger or the other transactions
contemplated by this Agreement or (B) have a Material Adverse Effect. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall take all such necessary action, including,
without limitation, providing for the sale or other disposition or the holding
separate (through the establishment of a trust or otherwise) of particular
assets or categories of assets, or businesses, of the Company or any of its
subsidiaries.
SECTION 6.05 Public Announcements. Parent and the Company will consult
--------------------
with each other before issuing any press release or otherwise making any public
statements with respect to the Offer or the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchanges or The Nasdaq Stock Market.
-24-
SECTION 6.06 Indemnification; Insurance.
--------------------------
(a) Notwithstanding anything to the contrary in Section 2.04, Parent
and Purchaser agree that all rights to indemnification existing in favor,
and all limitations on the personal liability of, each present and former
director, officer, employee or agent of the Company or any of its
subsidiaries or a director, officer, employee, agent or trustee of any
employee benefit plan for employees of the Company or any of its
subsidiaries, and each person who is or was then serving in any such
capacity (or any person who is or was then serving any other corporation or
entity in any such capacity at the request of the Company) (individually,
an "Indemnified Party" and collectively, the "Indemnified Parties")
provided for in the Company's Amended and Restated Certificate of
Incorporation, as amended, or Amended and Restated By-Laws or similar
organizational documents of any Company subsidiary as in effect on the date
of this Agreement with respect to matters occurring prior to the Effective
Time shall survive the Merger and shall continue in full force and effect
for a period of not less than six (6) years from the Effective Time;
provided, however, that all rights to indemnification in respect of any
claim for indemnification for losses, damages or liabilities of any kind or
nature incurred (an "Indemnifiable Claim") which is asserted or made within
such period shall continue until the final disposition of such claim.
Parent hereby agrees that it shall indemnify any Indemnified Party in
respect of any Indemnifiable Claim to the extent that the Company does not
promptly indemnify such party for an Indemnifiable Claim.
(b) Parent and the Surviving Corporation shall cause to be put into
effect by the Completion of the Offer, with a carrier satisfactory to the
Board of the Company on the date of this Agreement, directors' and
officers' liability insurance covering each Indemnified Party who is
currently covered by the Company's directors' and officers' liability
insurance with respect to claims arising from facts or events which
occurred at or prior to the Effective Time, which insurance shall remain in
effect for a period of at least six (6) years after the Effective Time and
which shall be no less favorable than such insurance maintained in effect
by the Company on the date hereof in terms of coverage and amounts;
provided that, in no event shall the Surviving Company be required to make
annual premium payments for such insurance in excess of $150,000.
(c) This Section 6.06 shall survive the closing of the transactions
contemplated hereby, is intended to benefit the Company, the Surviving
Corporation and each of the Indemnified Parties (each of whom shall be
entitled to enforce this Section 6.06 against Parent or the Surviving
Corporation, as the case may be) and shall be binding on all successors and
assigns of Parent and the Surviving Corporation.
(d) In the event the Surviving Corporation or Parent or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in
each such case, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may be, assume
the obligations set forth
-25-
in this Section 6.06.
SECTION 6.07 Employment Contracts, Benefits, etc.
------------------------------------
(a) Parent agrees that following the Board Transition Date it will
cause the Company or the Surviving Corporation, as the case may be, to
comply with the applicable terms and provisions of the employment,
retirement, termination, severance and similar agreements and arrangements
with officers or other employees of the Company and its subsidiaries which
are in effect on the Board Transition Date. The Company will not enter into
any such agreement after the date hereof without Parent's prior written
consent, except that the Company may, without Parent's prior written
consent, amend any employment contract as provided in the Disclosure
Schedule.
(b) Parent agrees that following the Effective Time, it will, or will
cause the Surviving Corporation and its subsidiaries to, continue to
maintain the employee benefit plans for employees and former employees of
the Company and its subsidiaries which are in effect on the Board
Transition Date, or other plans that, in the aggregate, provide benefits
that are no less favorable to such employees than the benefits currently in
effect with respect to such employees for a period of six months.
SECTION 6.08 Substitution of Letter of Credit. Parent agrees that prior
--------------------------------
to the Completion of the Offer it shall either (a) provide a letter of credit
securing the Company's obligations under its bank credit facility with Silicon
Valley Bank (the "Credit Facility") on substantially similar terms as the letter
of credit provided by Securicor Communications Limited or an affiliate thereof
to Silicon Valley Bank, which letter of credit shall remain in effect until the
earlier of (i) the Closing of the Merger or (ii) December 31, 2000, or (b)
provide substitute financing in amounts and on terms at least as favorable to
the Company as the Credit Facility.
SECTION 6.09 Purchase of Shares. Prior to the Completion of the Offer or
------------------
the termination of this Agreement, except pursuant to the Offer, neither Parent
nor Purchaser nor any subsidiary or affiliate of Parent shall acquire beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of any
Shares without the prior written consent of the Company.
SECTION 6.10 Further Assurances. At and after the Effective Time, the
------------------
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Purchaser, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Purchaser, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
SECTION 6.11 Notification of Certain Matters.
-------------------------------
(a) The Company shall give prompt notice to Parent, and Parent and
-26-
Purchaser shall give prompt notice to the Company, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would
be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time, (ii) any material failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder, (iii) any notice or other communication from any
third party alleging that the consent of such third party is required in
connection with the transactions contemplated by this Agreement, or (iv)
any Material Adverse Effect or material adverse effect on the financial
condition, assets, liabilities, business or results of operations of Parent
and its subsidiaries taken as a whole.
(b) The Company shall confer on a regular and frequent basis with
Parent with respect to the Company's and its subsidiaries' business and
operations and other matters relevant to the Merger, and Parent and the
Company shall promptly advise the other, orally and in writing, of any
change or event, including, without limitation, any complaint,
investigation or hearing by any governmental entity (or communication
indicating the same may be contemplated) or the institution or threat of
litigation, having, or which, insofar as can be reasonably foreseen, would
have, a Material Adverse Effect or a material adverse effect on the
financial condition, assets, liabilities, business or results of operations
of Parent and its subsidiaries taken as a whole.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time of the
following conditions:
(a) This Agreement shall have been adopted by the affirmative vote of
the stockholders of the Company at the Special Meeting by the requisite
vote in accordance with applicable law, if such vote is required by
applicable law;
(b) All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force
and effect and all statutory waiting periods in respect thereof shall have
expired;
(c) No statute, rule or regulation shall have been enacted or
promulgated by any governmental authority which prohibits the consummation
of the Merger;
(d) There shall be no order or injunction of a United States Federal
or state court of competent jurisdiction (each party agreeing to use its
reasonable efforts to have any such order reversed or injunction lifted) in
effect precluding consummation of the Merger; and
-27-
(e) Purchaser shall have purchased the Shares pursuant to the Offer;
provided, however, that this condition shall be deemed satisfied with
respect to Parent and Purchaser if Purchaser's failure to purchase Shares
pursuant to the Offer results from a breach of the Parent's or Purchaser's
obligations hereunder.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective Time:
(a) by mutual consent of Parent and the Company;
(b) by Parent or Purchaser if an occurrence or circumstance (except
where Parent's or Purchaser's failure to fulfill any of their respective
obligations under this Agreement is the cause of or resulted in such
occurrence or circumstance or except where there has been a material breach
of any representation or warranty on the part of Parent or Purchaser which
has not been cured) has rendered the conditions set forth in Annex A hereto
incapable of being satisfied, and (i) Purchaser shall have failed to
commence the Offer within the time required by Regulation 14D under the
Exchange Act, (ii) the Offer shall have been terminated or shall have
expired without Purchaser having purchased any Shares pursuant to the Offer
or (iii) Purchaser shall have failed to pay for Shares pursuant to the
Offer prior to the Final Date;
(c) by either Parent or the Company if any court of competent
jurisdiction or other governmental body within the United States shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
provided, however, that a termination of this Agreement by the Company
pursuant to this Section 8.01(c) after the Board Transition Date shall
require the affirmative vote of a majority of the Board and a majority of
the Independent Directors;
(d) by Parent or Purchaser prior to the purchase of Shares pursuant to
the Offer, if (i) Purchaser shall discover that any representation or
warranty made by the Company in this Agreement is untrue at the time such
representation or warranty was made or (except for those representations
and warranties made as of a particular date which need only be true and
correct as of such date) shall not be true and correct as of the date of
consummation of the Offer, except where the failure to be so true and
correct would not have a Material Adverse Effect, provided that if any such
failure to be so true and correct is capable of being cured prior to the
Final Date, then Parent and Purchaser may not terminate this Agreement
under this paragraph (d) until the Final Date, (ii) there shall have been a
breach of any covenant or agreement on the part of the Company under this
Agreement resulting in a Material Adverse Effect which shall not be capable
of being
-28-
cured prior to the Final Date, (iii) the Board (x) fails to recommend
-
approval and adoption of this Agreement and the Merger by the stockholders
of the Company or withdraws or amends or modifies in a manner adverse to
Parent and Purchaser its recommendation or approval in respect of this
Agreement, the Offer or the Merger, (y) makes any recommendation with
-
respect to an Alternative Acquisition other than a recommendation to reject
such Alternative Acquisition or (z) publicly announces its intention to
enter into an Alternative Acquisition or (iv) there shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer at
least a majority of the then outstanding Shares, and on or prior to such
date a person shall have made a written proposal to the Company and not
withdrawn such proposal for an Alternative Acquisition;
(e) by the Company, if (i) the Company shall discover that any
representation or warranty made by Parent or Purchaser in this Agreement is
untrue at the time such representation or warranty was made or (except for
those representations and warranties made as of a particular date which
need only be true and correct as of such date) shall not be true and
correct as of the date of consummation of the Offer, except where the
failure to be so true and correct would not materially adversely affect (or
materially delay) the consummation of the Offer or the Merger, provided
that if any such failure to be so true and correct is capable of being
cured prior to the Final Date, then the Company may not terminate this
Agreement under this paragraph (e) until the Final Date and unless at such
time the matter has not been cured or (ii) there shall have been a material
breach of any covenant or agreement in this Agreement on the part of Parent
or Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger which shall not be capable of being
cured prior to the Final Date, or (iii) prior to the acceptance of any
Shares pursuant to the Offer and the Company is in compliance with Section
6.02, such termination is necessary to allow the Company to enter into a
binding written agreement with respect to a proposal for an Alternative
Acquisition; provided, however, that a termination of this Agreement by the
Company pursuant to Section 8.01(e)(i) or (ii) after the Board Transition
Date shall require the affirmative vote of a majority of the Board and a
majority of the Independent Directors; or
(f) by the Company if there shall not have been a material breach of
any representation, warranty, covenant or agreement on the part of the
Company which has not been cured and (i) Purchaser shall have failed to
commence the Offer within the time required by Regulation 14D under the
Exchange Act, (ii) the Offer shall have been terminated or shall have
expired without the Purchaser having purchased any Shares pursuant to the
Offer or (iii) Purchaser shall have failed to pay for Shares pursuant to
the Offer prior to the Final Date.
-29-
SECTION 8.02 Effect of Termination.
---------------------
(a) In the event of the termination and abandonment of this Agreement
pursuant to Section 8.01 hereof, this Agreement shall forthwith become
void, without liability on the part of any party hereto except as provided
in this Section 8.02 and Sections 6.03(b) and 9.09 and the last sentence of
Section 1.02, and except that nothing herein shall relieve any party from
liability for any breach of this Agreement. Notwithstanding the foregoing,
neither Parent or Purchaser, on the one hand, nor the Company, on the other
hand, shall have any rights with respect to the recovery of expenses,
except as provided for in Sections 8.02(b)(i) and 8.02(b)(ii),
respectively.
(b)(i) If Parent or Purchaser shall have terminated this Agreement
pursuant to Section 8.01(d)(i) or 8.01(d)(ii), then the Company shall
promptly reimburse Parent for all out-of-pocket expenses of Parent and its
subsidiaries, up to an amount of $100,000 (which $100,000 limit shall not
apply in the event of a breach by the Company of this Agreement), incurred
in connection with the transactions contemplated hereby.
(ii) If the Company shall have terminated this Agreement pursuant to
Section 8.01(e)(i), 8.01(e)(ii) or 8.01(f)(i), then Parent shall promptly
reimburse the Company for all out-of-pocket expenses of Company and its
subsidiaries, up to an amount of $100,000, incurred in connection with the
transactions contemplated hereby. Nothing herein shall limit the Company's
right under Section 8.02(a) to pursue remedies for breach of this
Agreement.
(iii) If Parent or Purchaser shall have terminated this Agreement
pursuant to Section 8.01(d)(iii) or the Company shall have terminated this
Agreement pursuant to Section 8.01(e)(iii), then in any such case the
Company shall promptly, but in no event later than two business days after
the date of such termination, pay Parent a termination fee of $400,000 and
shall have no obligation to pay any amounts under Section 8.02(b)(i).
(iv) Notwithstanding any other provision hereof, no fee or expense
reimbursement shall be paid pursuant to this Section 8.02(b) to any party
who shall be in material breach of its obligations hereunder. For purposes
of this clause (iv), Parent and Purchaser shall be deemed a single party.
SECTION 8.03 Amendment. This Agreement may be amended by action taken by
---------
or on behalf of the Boards of Directors of the Company (excluding any
representative of Parent or any subsidiary of Parent), Parent and Purchaser at
any time before or after adoption of this Agreement by the stockholders of the
Company but, after any such approval, no amendment shall be made which decreases
the Transaction Consideration or otherwise adversely affects such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties.
SECTION 8.04 Extension; Waiver. Subject to Section 1.01 hereof, at any
-----------------
time prior to the Effective Time, the parties hereto, by action taken by or on
behalf of the respective Boards of
-30-
Directors of the Company (excluding any representative of Parent or any
subsidiary of Parent), Parent and Purchaser, may (i) extend the time for the
performance of any of the obligations or other acts of any other applicable
party hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements of any other applicable party or
with any conditions to its own obligations. Any agreement on the part of any
other applicable party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties made in this Agreement shall not survive beyond
the Board Transition Date. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto, which by its terms contemplates performance
after the Effective Time.
SECTION 9.02 Brokerage Fees and Commissions. Except for BHC, the Company
------------------------------
hereby represents and warrants to Parent with respect to the Company, and Parent
hereby represents and warrants to the Company with respect to Parent and
Purchaser, that no person is entitled to receive from the Company or Parent,
respectively, or any of their respective subsidiaries or affiliates, any
investment banking, brokerage or finder's fee or fees for financial consulting
or advisory services in connection with this Agreement or the transactions
contemplated hereby.
SECTION 9.03 Entire Agreement; Assignment. This Agreement (a) constitutes
----------------------------
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral (other than the agreement referred to in Section 6.03(b) hereof), among the
parties or any of them with respect to the subject matter hereof, (b) shall be
binding upon the parties hereto and their successors and permitted assigns and
(c) shall not be assigned by operation of law or otherwise, provided that Parent
or Purchaser may assign its respective rights and obligations to any wholly
owned, direct or indirect, subsidiary of Parent, but no such assignment shall
relieve Parent of its obligations hereunder. It is understood and agreed that
either Parent, Purchaser or any other direct wholly owned subsidiary of Parent
may commence the Offer or purchase Shares thereunder (in which event, references
herein to (and similar to) Purchaser purchasing Shares shall be deemed
appropriately modified).
SECTION 9.04 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.05 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given when
-31-
delivered in person or by next-day courier, or by facsimile transmission with
confirmation of receipt to the respective parties as follows:
If to Parent or Purchaser:
EDB Business Partner ASA
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇,
▇-▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: 011 47 22 94 40 44
with a copy to:
Atlas ▇▇▇▇▇▇▇▇ Trop & Borkson, P.A.
New River Center, Suite 1900
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Telesciences, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof). Any such notice shall be effective upon receipt, if personally
delivered or sent by facsimile transmission, or one day after delivery to a
courier for next-day delivery. Nothing in this Section 9.05 shall be deemed to
constitute consent to the manner and address for service of process in
connection with any legal proceeding (including litigation arising out of or in
connection with this Agreement), which service shall be effected as required by
applicable law.
-32-
SECTION 9.06 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.07 Descriptive Headings. The descriptive headings herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning of interpretation of this Agreement.
SECTION 9.08 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.09 Expenses. Subject to Section 8.02(b), all costs and expenses
--------
incurred in connection with the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
SECTION 9.10 Third Party Beneficiaries. Except for Sections 2.08, 6.06
-------------------------
and 6.07 which are intended to confer third party beneficiary rights on the
persons referred to therein, this Agreement is not intended to, and does not,
create any rights or benefits of any person other than the parties hereto.
SECTION 9.11 Certain Definitions.
-------------------
(a) "Related Entities" shall mean any company, partnership, trust or
limited liability company of which the Company, directly or indirectly,
owns 25% or more of the equity or can elect a majority of the directors or
partners or the Company is otherwise deemed to control.
(b) "subsidiary" shall mean, when used with reference to an entity,
any corporation or other entity, a majority of the outstanding voting
securities of which are owned directly or indirectly by such entity.
(c) "Material Adverse Effect" shall mean any adverse change in the
financial condition, assets, liabilities, business or results of operations
of the Company and its subsidiaries which is material to the Company and
its subsidiaries taken as a whole, excluding any changes relating to (i)
public or industry knowledge relating to the transactions contemplated by
this Agreement (including, without limitation, actions or inactions of
employees, customers or vendors) or (ii) past, existing or prospective
general economic or regulatory conditions affecting at any time the Company
or any of its subsidiaries or the industry or industries in which any of
them operate. Notwithstanding the foregoing, the Company may, at its
option, include in the Disclosure Schedules items which would not have a
Material Adverse Effect within the meaning of the previous sentence, and
such inclusion shall not be deemed to be an acknowledgment by the Company
that such items would have a Material Adverse Effect or further define the
meaning of such term for purposes of this Agreement.
-33-
(d) "person" shall include individuals, corporations, partnerships,
trusts, other entities and groups.
(e) "knowledge of the Company" shall be deemed to include only the
actual knowledge of the directors and executive officers of the Company.
(f) "Environmental Laws" shall mean any and all foreign, federal,
state and local laws (including, without limitation, common law), statutes,
ordinances, rules, regulations, permits, licenses or other governmental
requirements relating to health, pollution, the environment (including,
without limitation, ambient air, surface water, groundwater, and surface or
subsurface strata), the release or threatened release, discharge, emission,
of any Hazardous Materials or materials containing Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use
treatment, storage, disposal, transport or handling of Hazardous Materials
or the pollution of the environment.
(g) "Hazardous Materials" shall mean asbestos, petroleum products and
all other materials on the date hereof defined as "hazardous substances",
"hazardous wastes", "toxic substances", "solid wasters" or otherwise on or
prior to the date hereof listed or regulated pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S. C. (S) 9601 et seq. and any amendments thereto; the
Hazardous Materials Transportation Act, 49 U.S.C. (S)(s) 1801 et. seq.; the
Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act; the
Federal Insecticide, Fungicide, and Rodenticide Act, the Clean Air Act; or
any other similar foreign, federal, state or local statute, regulation or
ordinance or any other law of common law theory of any foreign, state or
federal court, laws now in effect, relating to, or imposing liability or
standards of conduct concerning any hazardous or toxic waste, substance or
material.
SECTION 9.12 Consent to Jurisdiction. Each of Parent, Purchaser and the
-----------------------
Company irrevocably submits to the exclusive jurisdiction of any Delaware State
court, or any Federal court of the United States of America, sitting in
Delaware, and any appellate court from any thereof for the purposes of any suit,
action or other proceeding arising out of this Agreement or any transaction
contemplated hereby. Parent and Purchaser irrevocably designate, appoint and
empower the registered agent of Purchaser in the State of Delaware as set forth
on Purchaser's Certificate of Incorporation and the Company hereby irrevocably
designates, appoints and empowers Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP, in
each case as its true and lawful agent and attorney-in-fact in its name, place
and stead to receive and accept on its behalf service of process in any action,
suit or proceeding in Delaware with respect to any matters as to which it has
submitted to jurisdiction as set forth in the immediately preceding sentence.
SECTION 9.13 Construction; Interpretation. The parties hereby agree that
----------------------------
any rule of law or any legal decision that would require interpretation of any
claimed ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.
-34-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed under seal on its behalf by its officers thereunto duly authorized, all
as of the day and year first above written.
EDB BUSINESS PARTNER ASA
[SEAL]
By: /s/ Eivind Kinck
---------------------------------
Name: Eivind Kinck
Title: Executive Vice President
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title:
EDB 4TEL ACQUISITION CORP.
[SEAL]
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
ATTEST:
/s/ Eivind Kinck
--------------------------
Name: Eivind Kinck
Title:
TELESCIENCES, INC.
[SEAL]
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer and President
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President of Finance
and Secretary
-35-
ANNEX A
-------
to
Agreement and Plan of Merger/*/
-------------------------------
Conditions of the Offer. Notwithstanding any other provisions of the
-----------------------
Offer, and in addition to (and not in limitation of) Purchaser's rights to
extend and amend the Offer at any time in its sole discretion (subject to the
terms of the Merger Agreement), Purchaser shall not be required to accept for
payment (whether or not the Shares have theretofore been accepted for payment),
or pay for, and may delay the acceptance for payment of, or the payment for, any
tendered Shares, and may terminate the Offer and not accept for payment any
Shares if (i) there are not validly tendered and not withdrawn prior to the
expiration date of the Offer a number of Shares which when added to the Shares
then beneficially owned by Parent represent at least a majority of the total
number of then outstanding Shares (the "Minimum Condition"), (ii) all regulatory
approvals required to consummate the Offer and the Merger shall have been
obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired; or (iii) on or after date of this
Agreement, and prior to the payment of Shares any of the following conditions
exist:
(a) there shall be pending any action, investigation, proceeding,
claim or counterclaim by any governmental authority or agency which seeks
to (i) prohibit the making or consummation of the Offer or the Merger or
(ii) restrain or prohibit the performance of the Merger Agreement; (iii)
seeks to impose limitations on the ability of Purchaser or to render
Purchaser unable to accept payment, pay for or purchase some or all of the
Shares pursuant to the Offer or Merger; (iv) seeking to restrain or
prohibit Parent's ownership or operation of all or any portion of the
business and assets of the Company and its subsidiaries, or to compel
Parent or its affiliates to dispose of or hold all or any portion of the
business or assets of the Company and its subsidiaries; (iv) seeking to
impose limitations on the ability of Parent and its affiliates to exercise
full voting rights or ownership of the Shares or (v) that otherwise is
reasonably likely to have a Material Adverse Effect; or
(b) there is in effect any order, decree or injunction (whether
preliminary, final or appealable, other than a temporary restraining order)
issued by a court or governmental authority of competent jurisdiction which
prohibits consummation of the Offer or the Merger or requires Parent or
Purchaser to hold separate any material portion of the stock or assets of
the Company or its subsidiaries; or
______________________
/*/ Capitalized terms not defined herein shall have the meanings given them in
the Agreement and Plan of Merger (the "Merger Agreement").
A-1
(c) there shall have been any statute, rule, regulation, injunction,
order or decree proposed, enacted or promulgated or any similar action
taken or deemed applicable to the Offer or the Merger which prohibits
consummation of the Offer or the Merger; or
(d) there shall be in effect a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory); or
(e) Purchaser shall discover that any representation or warranty made
by the Company in the Merger Agreement is untrue at the time such
representation or warranty was made or shall not be true and correct as of
the date of consummation of the Offer (except for those representations and
warranties made as of a particular date which need only be true and correct
as of such date), except where the failure to be so true and correct would
not have a Material Adverse Effect; or
(f) there shall have been a breach in any material respect by the
Company of any of its covenants or agreements contained in the Merger
Agreement, except for any such breaches that would not have a Material
Adverse Effect; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) any person shall have entered into a definitive agreement or an
agreement in principal with the Company regarding an Alternative
Acquisition; or
(i) the Company's Board of Directors will have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger, will have recommended to the Company's
stockholders another offer or will have adopted any resolution to effect
any of the foregoing which, in the sole judgment of Purchaser in any such
case, and regardless of the circumstances (including any action or omission
by Purchaser) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance or payment.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to such
condition or may be waived by Purchaser in whole or in part at any time and from
time to time in its sole discretion, subject in each case to the terms of the
Merger Agreement. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time.
A-2
Annex B
-------
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into this 19th day of October, 1999,
by and among, Telesciences, Inc., a Delaware corporation (the "Company"), EDB
Business Partner ASA, a Norwegian public limited company ("Parent"), EDB 4Tel
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser") and First Union National Bank (the "Escrow Agent").
BACKGROUND
A. Pursuant to an Agreement and Plan of Merger dated October 19, 1999
("Agreement and Plan of Merger"), Parent has agreed to cause Purchaser to make a
cash tender offer (the "Offer") for all of the issued and outstanding shares of
Common Stock of the Company (the "Shares") and thereafter to cause Purchaser to
merge with and into the Company.
B. Pursuant to the Agreement and Plan of Merger, Purchaser has agreed to
deposit in escrow a sufficient amount of funds (the "Deposit") necessary to (i)
make the cash payments contemplated by Section 1.01(a) of the Agreement and Plan
of Merger to purchase all of the Shares tendered in the Offer (the "Tender
Payment"), (ii) make the cash payments contemplated by Section 2.08 of the
Agreement and Plan of Merger with respect to the settlement of the options to
purchase Shares granted by the Company, and (iii) redeem the outstanding shares
of Series A Preferred Stock of the Company for cash in accordance with the terms
of the Certificate of Designation of Preferences and Rights of the Series A
Preferred Stock (the "Preferred Stock Redemption").
C. Company, Parent, Purchaser and Escrow Agent wish to provide for the
appointment of an escrow agent to hold the Deposit, and to set forth the terms
and conditions under which the Deposit shall be disbursed.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. DEFINITIONS.
-----------
Capitalized terms not otherwise defined herein which are defined in
the Agreement and Plan of Merger shall have the meanings given in the Agreement
and Plan of Merger, a complete and correct copy of which has been delivered to
the Escrow Agent by the Company, Parent and Purchaser.
2. CREATION OF ESCROW.
------------------
2.1 Escrow. Company, Parent and Purchaser hereby designate and appoint
------
First Union National Bank as Escrow Agent to serve in accordance with the terms
and conditions of this Escrow Agreement, and First Union National Bank agrees to
act as such Escrow Agent upon the terms and conditions of this Escrow Agreement.
2.2 Escrowed Funds. Purchaser agrees to deliver to Escrow Agent, in
--------------
accordance with Section 1.01(b) of the Agreement and Plan of Merger, the Deposit
in the amount of Thirteen Million Six Hundred and Fifty-Five Thousand Four
Hundred and Forty-Five Dollars ($13,655,445). Such funds plus all interest
earned thereon, less the fees and expenses of Escrow Agent chargeable thereto
under Section 4.2 hereof, are hereinafter collectively called the "Escrowed
--------
Funds." Until released as set forth herein, Escrow Agent shall hold the
-----
Escrowed Funds in escrow hereunder.
2.3 Investment of Escrowed Funds. Pending release from escrow, the Escrow
----------------------------
Funds shall be invested and reinvested by Escrow Agent in any money market fund
substantially all of which is invested in the following investment categories,
including any money market fund managed by Escrow Agent and any of its
affiliates: direct obligations of the United States of America or obligations
the principal interest of and the interest on which are unconditionally
guaranteed by the United States of America; certificates of deposit issued by
any bank, bank and trust company, or national banking association (including
Escrow Agent and its affiliates), which certificates of deposit are insured by
the Federal Deposit Insurance Corporation or similar governmental agency; or
repurchase agreements with any bank, trust company, or national banking
association (including Escrow Agent and its affiliates); or in such other
investments as are approved by Company and Purchaser.
2.4 Statement of Accounts. From time to time upon the written request of
---------------------
Company, Parent or Purchaser, and upon termination of this Escrow Agreement,
Escrow Agent shall furnish to Company, Parent and Purchaser a statement of
account of the Escrowed Funds.
3. RELEASE OF ESCROWED FUNDS.
-------------------------
3.1 Release of Escrowed Funds in Accordance with Joint Instructions. From
---------------------------------------------------------------
time to time, ▇▇▇▇▇▇▇ ▇▇▇▇ or such other person as shall be designated by
▇▇▇▇▇▇▇ ▇▇▇▇, on behalf of Purchaser ("Purchaser's Representative"), and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ or such other person as shall be designated by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, on behalf
of Company ("Company's Representative"), may jointly deliver signed written
instructions to Escrow Agent specifying that all or a designated portion of the
Escrowed Funds shall be released from escrow in the manner and to the persons
specified in such instructions. No portion of the Escrowed Funds shall be paid
to any person except as directed by such joint written instructions or by a
court of competent jurisdiction. If Shares are accepted for payment in the
Offer in accordance with the terms thereof, the Purchaser and Company shall give
joint written instructions to the Escrow Agent to pay over (i) to the paying
agent identified on the letter of transmittal sent to Company's stockholders in
connection with the Offer, promptly after Shares are accepted for payment in the
Offer, the amount of the
-2-
Tender Payment (ii) to Company, promptly after Shares are accepted for payment
in the Offer, the amount necessary to effectuate the Preferred Stock Redemption
and (iii) to the Exchange Agent, no later than one business day prior to the
Effective Time, the balance of the Escrowed Funds to be held in the Payment
Fund. If the Agreement and Plan of Merger is terminated in accordance with its
terms without any Shares having been accepted for purchase in the Offer, and
neither the Purchaser nor Parent is in breach of the Agreement and Plan of
Merger, promptly thereafter, the Purchaser and Company shall give joint written
instructions to the Escrow Agent to pay over the Escrowed Funds to Parent.
3.2 Release of Escrowed Funds - Termination. This Escrow Agreement shall
---------------------------------------
terminate upon release of all of the Escrowed Funds pursuant to Section 3.1
above. Upon the release of all of the Escrowed Funds, Escrow Agent shall be
released and forever discharged of any liabilities and duties hereunder.
3.3 Liquidation of Investment; Payment. Escrow Agent shall, as necessary,
----------------------------------
liquidate investments and release amounts from the Escrowed Funds as expressly
provided in this Escrow Agreement. Payments by Escrow Agent shall be made by
delivery of bank check, or, at the option of the recipient, by wire transfer of
immediately available funds to a bank account designated by the recipient.
3.4 Taxes. Purchaser is entitled to the interest earned on the Escrowed
-----
Funds and for federal, state and local tax purposes shall include the income or
interest earned or payable on the Escrowed Funds in its gross income. The
employer identification number of Purchaser is ______________.
4. ESCROW AGENT.
------------
4.1 Limitation of Liability. Escrow Agent will not be bound by the
-----------------------
Agreement and Plan of Merger or by any other agreement between the parties
hereto, to which Escrow Agent is not a party, whether or not it has knowledge
thereof, and will be required only to retain, invest, collect and disburse
income from and deliver the Escrowed Funds, as herein provided. Escrow Agent
will not in any way be required to determine whether or not the terms and
conditions of the Agreement and Plan of Merger have been complied with by the
parties. Escrow Agent's duties are only such as are specifically provided
herein and are administrative, not discretionary. Escrow Agent shall incur no
liability whatsoever to Company, Parent or Purchaser except for gross negligence
or wilful misconduct. Escrow Agent shall have no responsibility hereunder other
than to follow faithfully the instructions herein contained or such further
supplemental instructions as Company and Purchaser may collectively provide.
Escrow Agent shall not be subject to liability with respect to losses suffered
from investment of funds in the Escrowed Funds, except for the safekeeping of
the securities in which said funds are invested and collection of interest
thereon. Escrow Agent may consult with counsel and shall be fully protected in
any action taken in good faith in accordance with such advice. Escrow Agent
shall be fully protected in acting in accordance with any written instructions
given to it hereunder and reasonably believed by it to have been executed by the
proper parties. Escrow Agent shall not be liable for interest on the Escrowed
Funds except as provided herein.
-3-
4.2 Fees and Expenses. The Escrow Agent shall charge a fee for its
-----------------
services hereunder as set forth in Schedule I hereto, Parent and Purchaser
----------
jointly and severally agree to pay all reasonable expenses of Escrow Agent,
including its attorney's fees and expenses, which it may incur in connection
with the performance of its duties under this Escrow Agreement or under the
indemnity provided in Section 4.7. To the extent not otherwise so paid, such
fees and expenses will be chargeable to the Escrowed Funds in existence when the
fees are earned or the expense incurred. Escrow Agent shall notify Company and
Purchaser of the amount to be chargeable pursuant to the preceding sentence, but
shall not be required to collect such amount from Parent or Purchaser; provided
that the failure of Escrow Agent to collect such amount shall not relieve Parent
or Purchaser of their obligations to pay such amounts, which obligations may be
enforced by Company.
4.3 Successor Escrow Agent. Escrow Agent may resign at any time by giving
----------------------
written notice thereof to Company and Purchaser and may be removed at any time
by Company and Purchaser giving joint written notice thereof to Escrow Agent;
provided, however, that any such resignation or removal shall not become
-------- -------
effective until a successor escrow agent shall have been appointed as provided
herein and shall have accepted such appointment in writing upon the resignation
or removal of Escrow Agent. A successor Escrow Agent will be appointed by joint
agreement of Company and Purchaser; provided, however, that in the event no
-------- -------
successor Escrow Agent is appointed by mutual agreement of Company and Purchaser
within ten days after such resignation or removal, Company shall promptly
appoint the successor Escrow Agent, which successor shall be a bank or trust
company organized under the laws of the United States having reported capital
and surplus of not less than $100,000,000. Any such successor escrow agent
shall deliver to Escrow Agent, Company and Purchaser a written instrument
accepting such appointment hereunder, and thereupon it shall succeed to all of
the rights, powers and duties of Escrow Agent hereunder and shall be entitled to
receive and hold all of the then remaining amounts held in escrow hereunder.
Pending the appointment of the successor Escrow Agent, Escrow Agent shall only
be responsible for continuing to hold and invest the Escrowed Funds pursuant to
the terms of this Escrow Agreement. If an instrument of acceptance by a
successor escrow agent shall not have been delivered to Escrow Agent within 30
days after the giving of such notice of resignation, the resigning Escrow Agent
or Company or Purchaser, may at the expense of Company and Purchaser, petition
any court of competent jurisdiction for the appointment of a successor escrow
agent.
4.4 Disputes. It is understood and agreed that, should any dispute arise
--------
with respect to the payment and/or ownership or right of possession of the
Escrowed Funds, Escrow Agent is authorized and directed to retain in its
possession, without liability to anyone, all or any part of the Escrowed Funds
until such dispute shall have been settled either by mutual agreement by the
parties concerned or by the final order, decree or judgment of a court or other
tribunal of competent jurisdiction in the United States of America and time for
appeal has expired and no appeal has been perfected as so certified by the
parties. Escrow Agent shall be under no duty whatsoever to institute or defend
any such proceedings.
4.5 Escrow Agent Not Required to Institute Action. Escrow Agent shall not
---------------------------------------------
be required to institute or defend, except in the case of Escrow Agent's wilful
misconduct or gross
-4-
negligence, any action or legal process involving any matter referred to herein
which in any manner affects it or its duties or liabilities hereunder. In the
event Escrow Agent shall institute or defend any such action or legal process,
it shall do so only upon receiving full indemnity in an amount and of such
character as it shall require, against any and all claims, liabilities,
judgments, attorneys' fees and other expenses of every kind in relation thereto,
except in the case of its own wilful misconduct or gross negligence.
4.6 Interpleader. If any two parties, whether or not they are parties to
------------
this Escrow Agreement, shall be in disagreement about the interpretation of this
Escrow Agreement, or about the rights and obligations, or the propriety, of any
action contemplated by Escrow Agent hereunder, or if any other dispute shall
arise hereunder, or if Escrow Agent otherwise has any doubts as to the proper
disposition of funds or any execution of any of its duties hereunder, Escrow
Agent may, at its sole discretion, file an action in interpleader to resolve
such disagreement in any Delaware State court, or any Federal Court of the
United States of America, sitting in Delaware. Escrow Agent shall be
indemnified for all costs, including reasonable attorneys' fees and expenses,
and shall be fully protected in suspending all or part of its activities under
this Escrow Agreement until a final judgment in the interpleader action is
received.
4.7 Indemnification. Company, Parent and Purchaser, jointly and
---------------
severally, shall hold Escrow Agent harmless and indemnify Escrow Agent against
any loss, liability, expenses (including attorney's fees and expenses), claim or
demand arising out of or in connection with the performance of its obligations
in accordance with the provisions of this Escrow Agreement, except for gross
negligence or wilful misconduct of Escrow Agent; provided, however, that Company
-------- -------
shall have no liability for any payments which are due to Escrow Agent pursuant
to Section 4.2 hereof. The foregoing indemnities in this paragraph shall
survive the resignation or removal of Escrow Agent or the termination of this
Escrow Agreement.
5. NOTICES.
-------
All notices, requests, demands, claims and other communications
hereunder shall (i) be in writing; (ii) be delivered personally or by confirmed
courier delivery; (iii) be deemed to have been duly given on the date received;
and (iv) be addressed to the intended recipient as set forth below:
If to the Escrow Agent:
First Union National Bank
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-5-
If to the Parent or Purchaser:
EDB Business Partner ASA
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇,
▇-▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: 011 47 22 94 40 44
with a copy to:
Atlas ▇▇▇▇▇▇▇▇ Trop & Borkson, P.A.
New River Center, Suite 1900
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Company:
Telesciences, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which notices, requests, demands, claims, or
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
6. MISCELLANEOUS.
-------------
6.1 Assignment. Subject to Section 4.3, this Escrow Agreement and
----------
the rights of the parties hereunder may not be assigned by any party without the
consent of Company, Parent and Purchaser.
-6-
6.2 Successors and Assigns. This Escrow Agreement and all action
----------------------
taken hereunder in accordance with its terms shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
permitted assigns.
6.3 GOVERNING LAW. THIS ESCROW AGREEMENT WILL BE GOVERNED BY,
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
6.4 Amendment. This Escrow Agreement may be amended or canceled by
---------
and upon written notice to Escrow Agent at any time given by Company, Parent and
Purchaser but the duties, responsibilities or compensation of Escrow Agent may
not be altered without the consent of Escrow Agent.
6.5 Headings. The section headings contained in this Escrow
--------
Agreement are for convenient references only and shall not in any way affect the
meaning or interpretation of this Escrow Agreement.
6.6 Waiver. Waiver of any term or condition of this Escrow Agreement
------
by any party shall not be construed as a waiver of a subsequent breach or
failure of the same term or condition, or waiver of any other term or condition
of this Escrow Agreement.
6.7 Counterparts. This Escrow Agreement may be executed
------------
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
6.8 Further Assurances. Upon delivery by Escrow Agent of any portion
------------------
of the Escrowed Funds to any party hereto, such party shall deliver or cause to
be delivered to Escrow Agent any tax form or other document required by any
governmental authority to be obtained by Escrow Agent from such party.
-7-
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day, month and year first above written.
EDB BUSINESS PARTNER ASA
By: /s/ Eivind Kinck
----------------------------------
Name: Eivind Kinck
Title:
EDB 4TEL ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
TELESCIENCES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
-8-
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Before Split After Split
-----------------------------------------------------------------------------------------------------------------------------------
Shares Option Shares Price Option Payment
-----------------------------------------------------------------------------------------------------------------------------------
Price Price
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Common Shares outstanding 4178524 1044631 $ 8.790000000 $ 9,182,306.49
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Share options in the money
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(using 10.18.99 as strike date and
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leavers within 3 months getting
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only those options that were exercisable
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at date of leaving)
-----------------------------------------------------------------------------------------------------------------------------------
Granted 12.15.98 73784 $ 1.75 18446 $ 8.790000000 $7.000 $ 33,018.34
-----------------------------------------------------------------------------------------------------------------------------------
Granted 03.23.99 35000 $1.34375 8750 $ 8.790000000 $5.375 $ 29,881.25
-----------------------------------------------------------------------------------------------------------------------------------
Granted 06.22.99 468250 $ 0.9375 117062.5 $ 8.790000000 $3.750 $ 589,995.00 $652.894.59
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Securicor Preferred Shares 3476900 869225 $ 4.▇▇▇▇▇▇▇▇▇▇ $ 3,820,243.88
-----------------------------------------------------------------------------------------------------------------------------------
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Old Share Price basis $2.19750000000 $13,655,444.96
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