<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JULY 31, 1997
---------------------------------------------
TRANSCRYPT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-21681 47-0801192
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
4800 NW FIRST STREET, LINCOLN, NEBRASKA 68521
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code: (402) 474-4800
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On July 31, 1997, Transcrypt International, Inc. ("Transcrypt" or the
"Company") consummated the acquisition (the "Acquisition") of all of the
outstanding shares of capital stock and certain indebtedness of E.F. Johnson
Company, a Minnesota corporation ("EF Johnson"). The Company entered into and
consummated the following definitive agreements as of July 31, 1997: (i) a Stock
Purchase Agreement by and among EFJ Partners, EF Johnson, William Weksel and the
Company (the "Common Stock Purchase Agreement"); (ii) a Preferred Stock Purchase
Agreement between NorAm Energy Corp. ("NorAm") and the Company (the "Preferred
Stock Purchase Agreement"); (iii) a Series B Preferred Stock and Warrant
Purchase Agreement between Securicor Radiocoms Limited ("Securicor") and the
Company (the "Series B Preferred Stock Purchase Agreement"); and (iv) a
Registration Rights Agreement by and among NorAm, Intek Diversified Corporation
("Intek") (the parent of Securicor) and the Company (the "Registration Rights
Agreement"). The Company had previously announced, on June 12, 1997, a letter of
intent to acquire EF Johnson dated June 6, 1997, as amended on June 11, 1997
(the "Letter of Intent").
Pursuant to the Common Stock Purchase Agreement, the Company acquired
from EFJ Partners all of the outstanding shares of Common Stock, $.01 par value,
of EF Johnson. At the closing, the Company discharged certain indebtedness of EF
Johnson, pursuant to the Common Stock Purchase Agreement, representing total
cash consideration of $436,000. Pursuant to the Preferred Stock Purchase
Agreement, the Company acquired from NorAm all of the outstanding shares of
Preferred Stock, $100 par value, of EF Johnson (together with the right to all
accrued and unpaid dividends thereon) in exchange for 457,856 newly issued
shares of Common Stock, $.01 par value, of the Company issued to NorAm with an
approximate market value of $5.5 million. In addition, NorAm agreed to cancel a
9.79% Senior Subordinated Note due July 31, 1997 of EF Johnson with a principal
amount of $10,000,000, and any accrued and unpaid interest thereon. Pursuant to
the Series B Preferred Stock Purchase Agreement, the Company acquired from
Securicor (i) all of the outstanding shares of Series I Class B Preferred Stock,
$.01 par value, of EF Johnson (together with the right to all accrued and unpaid
dividends thereon) and (ii) a warrant to purchase up to an aggregate of 291,790
shares of Common Stock of EF Johnson for an exercise price equal to the fair
market value of such Common Stock on the date the warrant is exercised, all in
exchange for 374,609 newly issued shares of Common Stock of the Company issued
to Intek with an approximate market value of $4.5 million. In addition, pursuant
to the Letter of Intent, the Company had previously delivered letters of credit
in the aggregate amount of $2,000,000 to support a surety bond issued by one
of EF Johnson's bonding companies and to provide additional collateral under
certain indebtedness of EF Johnson.
The shares of Common Stock of the Company issued to NorAm and Intek
were exempt from registration under the Securities Act of 1933 in reliance upon
Section 4(2) of such Act as transactions by an issuer not involving any public
offering. Pursuant to the Registration Rights Agreement, the Company granted
certain piggyback and demand registration rights to NorAm and Intek with respect
to the aggregate 832,465 shares of Common Stock issued to such entities in
connection with the Acquisition (the "New Shares"). Under the piggyback
registration rights provisions, if the Company proposes to register any of its
securities under the Securities Act of 1933 (except for a registration on Forms
S-4 or S-8 or involving an issuance related to an exchange offer or offering
solely to existing
1
<PAGE> 3
stockholders or employees of the Company), either for its own account or the
account of other securityholders, the holders of the New Shares will be entitled
to notice of such proposed registration and will be entitled to include their
shares therein; provided, however, among other conditions, that the underwriters
of such offering will have the right, subject to certain limitations, to limit
the number of such shares included in any such registration. Such piggyback
registration rights are effective immediately as to 416,232 of the New Shares
and are effective as to the remaining 416,233 of the New Shares beginning 180
days after the date of effectiveness of the Registration Rights Agreement, or
January 27, 1998. In addition, the holders of at least 66 2/3% of the New Shares
will be entitled to one demand registration by the Company beginning 180 days
after the date of effectiveness of the Registration Rights Agreement, subject
to, among other things, the right of the Company, under certain conditions, to
defer such registration. The holders of the New Shares have also agreed not to
dispose of any of the New Shares for a period of 180 days after the date of
effectiveness of the Registration Rights Agreement, except pursuant to a sale in
connection with the aforementioned registration rights.
The cash consideration used by the Company in the Acquisition was
obtained from the proceeds of the Company's initial public offering in January
1997. Other than as described above, at the time of the Acquisition there were
no material relationships between any of the stockholders of EF Johnson and the
Company, any of the Company's affiliates, any director or officer of the Company
or any associate of any such director or officer. The Acquisition will be
accounted for under the purchase method of accounting.
EF Johnson develops and manufactures wireless communications products
and systems for the land mobile radio market. The Company intends to continue
operating the business of EF Johnson and has announced a restructuring program
for EF Johnson, including a 25% reduction in EF Johnson's workforce, the
phase-out of low margin products and services, the consolidation of EF Johnson's
corporate headquarters with that of the Company, the elimination of duplicative
sales, marketing and personnel expenses with the Company and the implementation
of cash management policies and expense controls consistent with the Company's
standards.
The foregoing descriptions of the terms of Common Stock Purchase
Agreement, Preferred Stock Purchase Agreement, Series B Preferred Stock Purchase
Agreement and Registration Rights Agreement do not purport to be complete
statements of the parties' rights and obligations thereunder, and are qualified
in their entirety by reference to the definitive agreements, copies of which are
attached as exhibits hereto and the contents of which are incorporated herein by
reference. Certain additional matters relating to the proposed transaction are
more fully described in the Company's press releases dated July 31, 1997 and
August 6, 1997, which are attached as exhibits hereto and the contents of which
are also hereby incorporated herein by reference.
Statements made in this report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, and as such, may involve risks and uncertainties. These forward-looking
statements relate to, among other things, forecasts and projections regarding
the anticipated benefits of the restructuring and the future performance of the
Company and its EF Johnson subsidiary,
2
<PAGE> 4
expectations of the business environment in which the Company operates,
perceived opportunities in the market and statements regarding the Company's
mission and vision. The Company's actual results, performance and achievements
may differ materially from the results, performance and achievements expressed
or implied in such forward-looking statements and from historical results. Some
of the risks and uncertainties that might cause such a difference include: the
timing of the full implementation of the Company's restructuring program for EF
Johnson, the effects of the restructuring program on the customers, vendors and
employees of the Company and EF Johnson, business conditions generally, the
state of the overall economy, development of the markets for the Company's
products, including the domestic digital land mobile radio market, availability
of third-party compatible products, other competitive factors, and the risks and
uncertainties discussed in the Company's reports filed with the Securities and
Exchange Commission, including under the caption "Risk Factors" in the Company's
Prospectus dated January 22, 1997 and under the caption "Item 1. Business --
Summary of Business Considerations and Certain Factors that may Affect Future
Results of Operations and/or Stock Price" contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
3
<PAGE> 5
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired.
The financial statements required to be filed by Item 7(a) of this Form
8-K will be filed by the Company no later than 60 days after the date that this
Form 8-K is filed with the Securities and Exchange Commission.
(b) Pro forma financial information.
The pro forma financial information required to be filed by Item 7(b)
of this Form 8-K will be filed by the Company no later than 60 days after the
date that this Form 8-K is filed with the Securities and Exchange Commission.
(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of July 31, 1997,
by and among EFJ Partners, E.F. Johnson Company,
William Weksel and the Company.
2.2 Preferred Stock Purchase Agreement, dated as of July
31, 1997, between NorAm Energy Corp. and the Company.
2.3 Series B Preferred Stock and Warrant Purchase
Agreement, dated as of July 31, 1997, between
Securicor Radiocoms Limited and the Company.
4.1 Registration Rights Agreement, dated as of July 31,
1997, by and among NorAm Energy Corp., Intek
Diversified Corporation and the Company.
99.1 Press Release issued on July 31, 1997 by the Company.
99.2 Press Release issued on August 6, 1997 by the
Company.
4
<PAGE> 6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
TRANSCRYPT INTERNATIONAL, INC.
Date: August 13, 1997 By: /s/ JOHN T. CONNOR
-----------------------------------
John T. Connor
Chairman of the Board of Directors
5
<PAGE> 1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into
this 31st day of July, 1997, by and among EFJ Partners, a New York general
partnership ("Seller"), Transcrypt International, Inc., a Delaware corporation
("Buyer"), with respect to Article III hereof only, E.F. Johnson Company, a
Minnesota corporation (the "Company"), and with respect to Section 9.10 hereof
only, William Weksel.
BACKGROUND
WHEREAS, Seller owns all of the issued and outstanding shares of
common stock (the "Shares") of the Company;
WHEREAS, the Company, together with its subsidiaries, is engaged in
the business of designing and manufacturing two-way land radio communications
equipment for distribution and sale (the "Business");
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Seller, and subject to the terms and conditions
contained in this Agreement, Buyer wishes to purchase and acquire the Shares
from Seller;
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Buyer, and subject to the terms and conditions
contained in this Agreement, Seller wishes to sell and transfer the Shares to
Buyer;
WHEREAS, Seller and Buyer wish to provide for the above-described
sale and transfer of the Shares; and
WHEREAS, the Buyer is concurrently herewith entering into preferred
stock purchase agreements with NorAm Energy Corp. and Securicor Radiocoms Ltd.
providing for the purchase of all outstanding shares of the Company's preferred
stock for newly-issued securities of Buyer valued at Ten Million Dollars
($10,000,000) in the aggregate which, together with the Four Hundred and
Thirty-Six Thousand Dollars ($436,000) provided for in Section 2 hereof and the
Two Million Dollars ($2,000,000) in aggregate letters of credit paid to date
pursuant to Section 4 of the Letter of Intent, constitutes the aggregate
purchase price of Twelve Million Four Hundred and Thirty-Six Thousand Dollars
($12,436,000) being paid for the Shares by Buyer.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth below, the parties hereto hereby agree as
follows:
1. SALE AND PURCHASE OF SHARES. Subject to the terms and conditions
set forth in this Agreement and in reliance on the representations and
agreements contained herein, at the
1
<PAGE> 2
Closing (as defined in Section 5.1 hereof) Seller shall sell and transfer the
Shares to Buyer, and Buyer shall purchase and acquire the Shares from Seller.
2. CONSIDERATION. The total cash consideration to be paid for the
Shares pursuant hereto is Four Hundred and Thirty-Six Thousand ($436,000), which
consideration, subject to the terms and conditions of this Agreement, shall be
payable by Buyer to Seller at the Closing for Seller to distribute in accordance
with Section 7.11 herein.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller and the Company
represent and warrant to Buyer as follows:
3.1. CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 10,000,000 shares of common stock, $.01 par value per share ("Common
Stock"), and 2,080,000 shares of preferred stock of which 80,000 shares are
designated as "Preferred Stock" having a par value of $100.00 per share
("Preferred Stock") and 2,000,000 shares are designated as Class B Preferred
Shares having a par value of $.01 per share ("Class B Preferred Stock"). There
are 3,800,000 shares of Common Stock issued and outstanding, 80,000 shares of
Preferred Stock issued and outstanding and 925,850 shares of Class B Preferred
Stock, designated as Series I Class B Preferred Stock, issued and outstanding.
Seller is the sole record and beneficial holder of all the issued and
outstanding shares of Common Stock. Such shares are owned by Seller free and
clear of any and all liens, claims or encumbrances of any nature whatsoever
(whether absolute, accrued, contingent or otherwise). All of the issued and
outstanding shares of Common Stock, Preferred Stock and Class B Preferred Stock
are validly issued, fully paid and nonassessable.
(b) (i) Except as set forth on Schedule 3.1 hereto, there is no
outstanding right, subscription, warrant, call, option or other agreement or
arrangement of any kind (collectively, "Rights") to purchase or otherwise to
receive from the Company any of the outstanding, authorized but unissued or
treasury shares of the capital stock or any other security of the Company, (ii)
there is no outstanding security of any kind convertible into or exchangeable
for such capital stock and (iii) there is no voting trust or other agreement or
understanding to which the Company is a party or is bound with respect to the
voting of the capital stock of the Company, including without limitation any
options granted pursuant to any written plan or otherwise.
3.2. CORPORATE ORGANIZATION OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Minnesota, and has the requisite corporate power and authority to own, lease
or otherwise hold the properties and assets owned, leased and held by it and to
carry on the Business as currently conducted by it. The Company is duly
qualified to conduct business as a foreign corporation in every state of the
United States in which its ownership or lease of property or conduct of the
Business makes such qualification necessary, except for such states in which the
Company's failure to be so qualified would not have a material adverse effect on
the business, financial condition or results of operations of the Company and
the Subsidiaries, as hereinafter defined, taken as a whole (a "Material Adverse
Effect").
3.3 SUBSIDIARIES. All of the Company's subsidiaries are as set forth
on Schedule 3.3 hereto (the "Subsidiaries"). Except for the Subsidiaries, the
Company does not directly or indirectly own any capital stock or other equity
interest in any entity.
2
<PAGE> 3
3.4 AUTHORIZATION AND EFFECT OF AGREEMENT. Seller has the requisite
partnership power to execute and deliver this Agreement and to perform the
transactions contemplated hereby to be performed by Seller. The execution and
delivery by Seller of this Agreement and the performance by Seller of the
transactions contemplated hereby to be performed by Seller have been duly
authorized by all necessary partnership action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and, assuming the due
execution and delivery of this Agreement by Buyer, constitutes a valid and
binding obligation of Seller, enforceable in accordance with its terms.
3.5 ABSENCE OF CONFLICTS. Except as set forth on Schedule 3.5
hereto, the execution and delivery of this Agreement by Seller does not, and the
performance by Seller of the transactions contemplated hereby to be performed by
Seller will not, conflict with, or result in any violation of, or constitute a
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, (i) any provision of the General Partnership
Agreement of EFJ Partners dated as of July 31, 1992 between William Weksel and
Robert Davies (the "Partnership Agreement"), the articles of incorporation, as
amended, or bylaws of the Company or any contract to which Seller or the Company
is a party or by which either the Seller or the Company is bound, (ii) any
license, permit or approval ("Permit") of any domestic or foreign court,
government, governmental agency, authority or instrumentality ("Governmental
Authority"), (iii) any domestic or foreign statute, law, ordinance, rule,
regulation, order or common law obligation ("Law") of any Governmental Authority
issued or applicable to Seller , the Company, or to any of their respective
properties or assets, other than any such conflicts, violations, defaults,
terminations, cancellations, accelerations or losses which would not have a
Material Adverse Effect; provided, however, that Seller makes no representation
or warranty herein with respect to the effects of the performance of the
transactions contemplated hereby under any antitrust, trade regulation or
similar Law. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by or with respect to Seller or the Company in connection with
the execution and delivery of this Agreement by Seller or the performance by
Seller of the transactions contemplated hereby to be performed by it, except (i)
as set forth on Schedule 3.5 hereto or (ii) such consents, approvals, orders or
authorizations which, if not obtained, or such registrations or filings which,
if not obtained or made, would not have a Material Adverse Effect.
3.6 BALANCE SHEET AND RELATED MATTERS. (a) Set forth on Schedule
3.6(a)(1) hereto are the audited financial statements of the Company as of, and
for the years ended, December 31, 1996, 1995 and 1994. Set forth on Schedule
3.6(a)(2) hereto are the unaudited financial statements of Seller (including the
balance sheet (the "Interim Balance Sheet") of the Company) as of, and for the
six-month period ended June 29, 1997. All such financial statements present
fairly, in all material respects, the financial position of the Company as of
such dates and the results of operations of the Company for the periods then
ended, all in accordance with generally accepted accounting principles,
consistently applied.
(b) Except as set forth on Schedule 3.6(b) hereto, and except
for such transactions as are provided for in this Agreement, since June 29, 1997
(the "Interim Balance Sheet Date"), the Company has conducted the Business in
the ordinary course and there has been no material adverse change in the
Business, or the financial position or results of operations of the Company.
3
<PAGE> 4
3.7 COMPLIANCE WITH LAWS. To the knowledge of Seller and the
Company, the Business is not being operated in violation of any applicable Law
of any Governmental Authority or in violation of any Permit or other specific
authorization issued by a Governmental Authority to the Company, other than
violations which do not have a Material Adverse Effect.
3.8 LEGAL PROCEEDINGS. Except (i) as set forth on Schedule 3.8
hereto, (ii) for routine claims for employee benefits, (iii) for claims for
money damages alone of less than $50,000 singly, or $100,000 in the aggregate,
and (iv) for warranty or similar claims not exceeding the aggregate amounts
reserved therefor in the Interim Balance Sheet, there are no lawsuits or other
legal proceedings pending against the Company or otherwise relating to the
conduct of the Business or, to the knowledge of Seller, threatened in writing
against the Company.
3.9 ASSETS. (a) Except for assets since sold in the ordinary course
of business, and assets valued on the books of the Company at less than $10,000,
the Company owns all assets reflected on the Interim Balance Sheet as owned by
the Company, free and clear of all liens, claims or encumbrances of any nature
whatsoever (collectively, "Liens") other than (A) Liens set forth on Schedule
3.9(a) hereto, (B) mechanics', carriers', workmen's, repairmen's or other like
Liens arising or incurred in the ordinary course of business, (C) Liens for
taxes, assessments and other governmental charges which are not due and payable
or which may thereafter be paid without penalty or which are being contested in
good faith, (D) other imperfections of title or encumbrances, if any, which do
not materially affect the marketability of the property subject thereto and do
not materially impair the use in the Business of the property subject thereto,
and (E) restrictions arising as a matter of any Law of any Governmental
Authority. (The items referred to in the exceptions to the immediately preceding
sentence are hereinafter referred to as "Permitted Liens".)
(b) The Company has good title to or, in the case of leases
and licenses, valid and subsisting leasehold interests or licenses in, all of
its material properties and assets, including without limitation all property
reflected on the Interim Balance Sheet, except as since sold or otherwise
disposed of in the ordinary course of business. All material equipment owned,
leased or used by the Company are maintained and kept in good condition, repair
and working order, except for normal wear and tear.
(c) Set forth on Schedule 3.9(c) hereto is a complete and
correct list of all material real property (including buildings and structures)
owned or leased by the Company (including a brief description of the property,
the record title holder, the location and the material buildings and structures
thereon). No condemnation or other proceeding is pending or, to the knowledge of
Seller, threatened, which would materially affect the use of any such property
by the Company.
3.10 ACCOUNTS RECEIVABLE. Set forth on Schedule 3.10 hereto is an
aged list of the Company's accounts receivable as of the Interim Balance Sheet
Date. The accounts receivable, except to the extent of reserves appropriately
created and except as set forth on Schedule 3.10(a) hereto, have arisen from
bona fide transactions in the ordinary and normal course of the Business of the
Company for goods or services delivered or rendered.
3.11 INVENTORIES. All inventory of the Company, except to the extent
of the reserves appropriately created or except as set forth on Schedule 3.11
hereto, (i) are in a marketable
4
<PAGE> 5
condition, (ii) do not include any items which are obsolete or damaged, (iii)
are of a quantity and quality usable or saleable in the normal and ordinary
course of the Business, at current applicable prices, and (iv) are adequate to
support the continued operation of the Business as currently conducted in the
normal and ordinary course. Finished goods in inventory substantially conform to
specifications including, without limitation, all applicable governmental
regulations, and are substantially free from defects.
3.12 INTELLECTUAL PROPERTY. Except as set forth on Schedule 3.12
hereto, the Company owns or possesses the right to use all patents, trademarks,
trade names, service marks, registered copyrights and applications therefor
(collectively, "Intellectual Property Rights") used in the Business as of the
date hereof. Except as set forth on Schedule 3.12(a) hereto, Seller is not aware
of any claim asserting against the Company a material conflict with the
Intellectual Property Rights of others in connection with the conduct of the
Business that has not been satisfied, withdrawn or abandoned.
3.13 MATERIAL CONTRACTS. Except as set forth on Schedule 3.13
hereto, the Company is not party to any written (i) contract of employment, (ii)
contract with any labor union,(iii) single contract for the purchase by the
Company of goods or services in excess of $100,000 (iv) lease as lessee of, or
other contract for the use of any real or personal property having in any
individual case annual rental or payment obligations of the Company in excess of
$10,000, (v) conditional sale agreement, chattel mortgage or other security
agreement in excess of $100,000 in any one case, (vi) contract for the
production, supply or servicing by the Company of any type of goods, parts or
components, or for the provision by the Company of services of any type,
involving more than $100,000 in any one case, (vii) lease of any real or
personal property as lessor, or (viii) agreement or indenture relating to the
borrowing of money, or material licenses, whether as licensee or licensor.
Except as set forth on Schedule 3.13(a) hereto(i) the Company has (and to the
knowledge of Seller, the other parties thereto have) complied in all material
respects with the contracts, leases, agreements, mortgages and the like listed
on Schedule 3.13 hereto (the "Scheduled Contracts") all of which, to the
knowledge of Seller, are valid and enforceable and (ii) the Scheduled Contracts
are in full force and effect and there exists no event or condition which with
or without notice or lapse of time would be a material default thereunder, give
rise to a right to accelerate or terminate any provision thereof or give rise to
any Lien on any material Assets.
3.14 EMPLOYEE RELATIONS. Except as set forth on Schedule 3.14
hereto, there are no material organized labor controversies pending or, to the
knowledge of Seller, threatened against the Company.
3.15 EMPLOYEE PLANS. (a) For purposes of this Agreement, the term
"Employee Plan" means such employee benefit plans as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by the Company or to which the Company is a participating employer or
is otherwise obligated to contribute and under which any person employed by the
Company (an "Employee") or formerly employed by the Company or their
predecessors (a "Former Employee") participates or has accrued any rights or
under which the Company is liable in respect of an Employee or Former Employee.
Set forth on Schedule 3.15 hereto are lists of all Employee Plans and other
employee benefit plans (other than de minimis arrangements).
5
<PAGE> 6
(b) Each Employee Plan has been maintained in all material
respects in accordance with its terms and with applicable Law, except that
certain Employee Plans may not yet have been amended to comply with the Tax
Reform Act of 1986 and subsequent laws and regulations.
3.16 TAXES. Except as set forth on Schedule 3.16 hereto, all tax
returns and reports which are required to be filed (subject to any extensions
appropriately obtained) by or on behalf of the Company have been duly filed or
caused to be filed with the appropriate Governmental Authorities. Payment has
been made or provided for as to all federal, state and local taxes, interest,
penalties, assessments or deficiencies of the Company shown to be due on such
tax returns and reports or assessed by and due to any such Governmental
Authority. Except as set forth on Schedule 3.16 hereto, there are no outstanding
waivers or extensions of time with respect to the assessment or audit of any tax
or tax return of the Company, or claims now pending or matters under discussion
with any taxing authority in respect of any tax of the Company.
3.17 CERTAIN LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Seller
is a sophisticated person that was advised by knowledgeable counsel and other
advisors in connection with this Agreement. (i) Seller has not relied nor will
it rely upon any document or written or oral information previously furnished to
or discovered by it or its representatives, other than this Agreement, including
the schedules and exhibits attached hereto, (ii) there are no representations or
warranties by or on behalf of Buyer hereto or any of its Affiliates or
representatives other than those expressly set forth in this Agreement,
including the schedules and exhibits attached hereto, and (iii) the parties'
rights and obligations with respect to all of the foregoing matters will be
solely as set forth in Article 9 hereof. "Affiliate" means, with respect to any
person, any person in control of, controlled by, or under common control with,
such person, and the term "person" means any individual, corporation,
partnership, limited liability company, trust or other legal entity.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
4.1 CORPORATE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold the assets owned, leased or held by it and to carry on its business as
currently conducted. Buyer is duly qualified to conduct business as a foreign
corporation in every state of the United States in which its ownership or lease
of property or conduct of its business makes such qualification necessary except
for such states in which Buyer's failure to be so qualified would not have a
material adverse effect on the business, financial condition or results of
operations of the Buyer.
4.2 AUTHORIZATION AND EFFECT OF AGREEMENT. Buyer has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform the transactions contemplated hereby to be performed by it. The
execution and delivery by Buyer of this Agreement and the performance by it of
the transactions contemplated hereby to be performed by it have been duly
authorized by all necessary corporate action on the part of Buyer. Buyer has the
requisite legal capacity to purchase, own and hold the Assets and to carry on
the Business upon the completion of the transactions contemplated by this
Agreement. This Agreement and each of the other documents and instruments
contemplated hereby have been duly executed and delivered by Buyer and,
6
<PAGE> 7
assuming the due execution and delivery of this Agreement by Seller, constitutes
a valid and binding obligation of Buyer, enforceable in accordance with their
terms.
4.3 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement by Buyer does not, and the performance by Buyer of the transactions
contemplated hereby to be performed by it will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, (i) any
provision of the [Certificate of Incorporation or Bylaws] of Buyer, or (ii) any
contract to which Buyer is a party or any Permit or Law issued or applicable to
Buyer or to any of its properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to Buyer in
connection with the execution and delivery of this Agreement by it or the
performance by it of the transactions contemplated hereby to be performed by it,
except any filings required under the HSR Act.
4.4 FINANCIAL RESOURCES AND BUYER COMMON STOCK. (a) Buyer has made
application to obtain credit facilities sufficient to make the cash payments to
be made in accordance with Sections 2 and 7.11 hereof and (b) Buyer has a
sufficient number of authorized but unissued shares of Buyer Common Stock to
make the payments in Buyer Common Stock to be made in accordance with Section
7.9 hereof.
4.5 CERTAIN LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Buyer is
a sophisticated person that was advised by knowledgeable counsel and other
advisors in connection with this Agreement. Buyer (i) has not relied nor will it
rely upon any document or written or oral information previously furnished to or
discovered by it or its representatives, other than this Agreement, including
the schedules and exhibits attached hereto, (ii) there are no representations or
warranties by or on behalf of Seller or any of its Affiliates or representatives
other than those expressly set forth in this Agreement, including the schedules
and exhibits attached hereto, and (iii) Buyer's rights and obligations with
respect to all of the foregoing matters will be solely as set forth in Article 9
hereof.
5. CLOSING.
5.1 DATE OF CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place at 10:00 a.m. local time at the offices
of Proskauer Rose LLP ("Proskauer"), 1585 Broadway, New York, New York on the
first business day following the fulfillment or waiver of the conditions
precedent set forth in Sections 6 and 7 hereof or at such other time and place
as the parties hereto may mutually agree. The date on which the Closing occurs
is hereinafter referred to as the "Closing Date." The following transactions
shall take place at the Closing, all of which shall be deemed to have occurred
simultaneously and none of which shall be deemed completed unless and until all
of them shall have been completed (or waived in writing by the parties entitled
to performance):
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) one or more stock certificates representing the
Shares, duly endorsed for transfer to Buyer or accompanied by stock powers
executed in blank; and
7
<PAGE> 8
(ii) certificates of a general partner of Seller, in
form and substance reasonably satisfactory to Buyer, certifying Seller's valid
existence, the due authorization of the transactions contemplated hereby, and
the matters referred to in Section 6.1 hereof; and
(iii) the opinion of counsel for Seller, substantially
in the form appended hereto as Exhibit 5.1(b)(iii).
(c) At the Closing, Buyer shall deliver to Seller the
following:
(i) the payment provided for in Section 2 hereof; and
(ii) certificates of the chief executive officer of
Buyer, in form and substance reasonably satisfactory to Seller, certifying
Buyer's Certificate of Incorporation and Bylaws, Buyer's valid existence and
good standing in the state of its incorporation, the incumbency of officers or
others acting in a representative capacity, the due authorization of the
transactions contemplated hereby, and the matters referred to in Section 7.1
hereof.
6. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
following conditions, except to the extent waived by Buyer in writing at the
Closing:
6.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of Seller contained in this Agreement shall be
accurate in all material respects as of the Closing Date with the same effect as
if made on and as of such date, except to the extent that any of such
representations and warranties refers specifically to a date other than the
Closing Date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such date. As of the Closing,
Seller shall have performed and complied in all material respects with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by it at or before such time.
6.2 SELLER'S DELIVERIES. Seller shall have delivered to Buyer the
documents set forth in Section 5.1(b) hereof.
6.3 LEGAL ACTION. There shall not have been instituted or threatened
any legal proceeding (a) relating to, or seeking to prohibit or otherwise
challenge this Agreement or the consummation of the transactions contemplated by
this Agreement, or seeking to obtain substantial damages with respect thereto,
or (b) which Buyer shall reasonably determine could have a material adverse
effect on the Business.
6.4 NO GOVERNMENTAL ACTION. There shall not have been any action
taken, or any law, rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement, by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Buyer: (a) makes any of the transactions contemplated by this
Agreement illegal or (b) imposes material limitations on the ability of Buyer to
operate the Business or to exercise full rights of ownership of the Assets.
8
<PAGE> 9
6.5 STOCK LEDGER. Seller shall have delivered to Buyer a
reconciliation of the Company's stock ledger indicating that the capital stock
of the Company (including options and warrants therefor) issued and outstanding
is as represented by Seller in Section 3.1 hereof.
6.6 OTHER CLOSING DOCUMENTS. Seller shall have delivered to Buyer,
at or prior to the Closing, such other documents as Buyer may reasonably request
to carry out the provisions of and the transactions contemplated by this
Agreement in form and substance reasonably satisfactory to Buyer.
7. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the following conditions, except to the extent waived by Seller in writing at
the Closing:
7.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of Buyer contained in this Agreement shall be
accurate in all material respects as of the Closing Date with the same effect as
if made on and as of such date except to the extent that any of such
representations and warranties refers specifically to a date other than the
Closing Date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such date. As of the Closing,
Buyer shall have performed and complied in all material respects with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by Buyer at or before such time.
7.2 BUYER'S DELIVERIES. Buyer shall have delivered to Seller the
funds and documents set forth in Section 5.1(c) hereto.
7.3 [Intentionally Omitted.]
7.4 LEGAL ACTION. There shall not have been instituted or threatened
any legal proceeding (a) relating to, or seeking to prohibit or otherwise
challenge this Agreement or the consummation of the transactions contemplated by
this Agreement, or to obtain substantial damages with respect thereto, or (b)
which Seller shall reasonably determine could have a material adverse effect on
the business, assets, liabilities, condition (financial or otherwise) or
prospects of Buyer (without giving effect to the transactions contemplated
hereby).
7.5 NO GOVERNMENTAL OR LEGAL ACTION. There shall not have been any
action taken, or any law, rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement, by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Seller: (a) makes any of the transactions contemplated by this
Agreement illegal or (b) otherwise prohibits, restricts, or delays consummation
of the transactions contemplated by this Agreement or impairs the contemplated
benefits to Seller of any of the transactions contemplated by this Agreement.
7.6 OTHER CLOSING DOCUMENTS. Buyer shall have delivered to Seller,
at or prior to the Closing, such other documents as Seller may reasonably
request to carry out the provisions of, and the transactions contemplated by,
this Agreement, in form and substance reasonably satisfactory to Seller.
9
<PAGE> 10
7.7 RELEASES OF CERTAIN GUARANTIES. William Weksel, Deanna Weksel
and Robert H. Davies shall have been released from any and all guaranties of the
obligations of the Company to Congress Financial Corporation ("Congress") and
Acstar Insurance Company. In addition, William Weksel shall have received an
executed undertaking by Buyer and the Company to secure the release of Mr.
Weksel from any and all other obligations of the Company to any other person
substantially in the form annexed hereto as Exhibit 7.7.
7.8 REQUIRED CONSENTS. Seller shall have obtained all consents of
third parties that are required by contract or law for the consummation of the
transactions contemplated hereby.
7.9 PURCHASE OF PREFERRED STOCK AND CANCELLATION OF SUBORDINATED
NOTE. Buyer shall have purchased (a) all of the issued and outstanding shares of
Class B Preferred Stock (together with accrued and unpaid dividends thereon) for
a total consideration in the amount of $4,500,000 in common stock of Buyer and
(b) all of the issued and outstanding shares of Preferred Stock (together with
accrued and unpaid dividends thereon), for a total consideration in the amount
of $5,500,000 in common stock of Buyer. In addition, the 9.795% Senior
Subordinated Note in the principal amount of $10,00,000 issued by the Company on
July 31, 1992 to Arkla, Inc. (together with accrued and unpaid interest thereon)
shall have been cancelled.
7.10 MANUFACTURING AGREEMENT AND TERMINATION AND RELEASE AGREEMENT.
As additional consideration for the purchase of all of the issued and
outstanding shares of Class B Preferred Stock, (a) Buyer shall have entered into
the Manufacturing Agreement with Intek Diversified Corporation in substantially
the form annexed hereto as Exhibit 7.10(a) hereto and (b) the Company shall have
entered into a Termination and Release agreement with Linear Modulation
Technology Limited in substantially the form annexed hereto as Exhibit 7.10(b)
providing for the termination of intellectual property rights of the Company in
and to certain linear modulation technology.
7.11 ACCRUED AND UNPAID FEES. Buyer shall have paid, or provided the
Company sufficient funds to pay, all accrued and unpaid (i) fees and
disbursements of counsel to the Company and Seller, and (ii) fees payable to
Arnhold and S. Bleichroeder, Inc.; provided, however, that the total of the
amounts described in (i) and (ii) shall be $436,000.
7.12 AMOUNTS DUE TO AND FROM SELLER'S AFFILIATES AND THE COMPANY.
All amounts categorized as receivables from related parties and liabilities due
to related parties on the Company's balance sheets shall have been cancelled.
8. FURTHER AGREEMENTS OF THE PARTIES.
8.1 PERFORMANCE OF COVENANTS. Seller covenants and agrees to perform
or cause to be performed the covenants of Seller under this Agreement. Buyer
covenants and agrees to perform or cause to be performed the covenants of Buyer
under this Agreement.
8.2 GENERAL.
(a) Seller will use all reasonable efforts and take all
reasonable steps, and will cooperate with Buyer to cause to be fulfilled, those
of the conditions set forth in this Agreement
10
<PAGE> 11
to the parties' respective obligations to consummate the transactions
contemplated by this Agreement that are dependent upon the actions or inactions
of Seller, and to execute and deliver such instruments and take such other
reasonable actions as may be necessary or appropriate in order to carry out the
intent of this Agreement and consummate the transactions contemplated hereby.
(b) Buyer will use all reasonable efforts and take all
reasonable steps, and will cooperate with the Seller to cause to be fulfilled,
those of the conditions set forth in this Agreement to the parties' respective
obligations to consummate the transactions contemplated by this Agreement that
are dependent upon the actions or inactions of Buyer, and to execute and deliver
such instruments and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement and consummate
the transactions contemplated hereby.
8.3 OTHER AGREEMENTS. Until the Closing Date, Seller will:
(a) use all reasonable efforts to cause all representations
and warranties made by Seller hereunder to be true and correct in all material
respects as of the Closing Date as if made on the Closing Date; and
(b) use all reasonable efforts to cause the Company to
preserve intact the business organization and operations of the Company, to keep
available the services of their present officers and employees, to preserve in
full force and effect their Contracts and to preserve the present business
relationships and goodwill of its officers, employees, suppliers, customers,
others having business relations with the Company and the Subsidiaries and
government regulators.
8.4 ACCESS PRIOR TO CLOSING. Between the date of this Agreement and
the Closing, Seller shall (i) cause the Company to give Buyer and its authorized
representatives full access to all offices and other facilities and properties
of the Company and to the books and records of the Company and the Subsidiaries
(and permit Buyer to make copies thereof), (ii) cause the Company to permit
Buyer to make inspections thereof, and (iii) cause the officers and advisers
(including, without limitation, their auditors, attorneys, financial advisors
and other consultants, agents and advisors) to the Company to furnish Buyer with
such financial and operating data and other information with respect to the
business and properties of the Company and the Subsidiaries, and to discuss with
Buyer and its authorized representatives the affairs of the Company and the
Subsidiaries, all as Buyer may from time to time reasonably request. Seller
shall also cause the Company to allow Buyer to meet with the Company's lenders,
banking institutions, primary suppliers and customers to evaluate their plans
for future business and intentions with respect to the Business with 48 hours
advance notice.
8.5 ORDINARY COURSE. Seller covenants and agrees that from the date
hereof until the Closing, Seller shall cause the Company to operate the Business
only in the ordinary course consistent with past practice.
8.6 LIENS. Prior to the Closing, Seller shall not cause, or permit,
the Company or any of the Subsidiaries to create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets (real or personal,
tangible or intangible) of the Company, whether now owned or hereafter acquired,
or sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of
11
<PAGE> 12
accounts receivable with recourse to Seller), or assign any right to receive
income or permit the filing of any financing statement under the Minnesota
Uniform Commercial Code or any other similar notice of Lien under any similar
recording or notice statute, or grant rights with respect to, or otherwise
encumber or create a security interest in, such property or assets or any
portion thereof or any other revenues therefrom or the proceeds payable upon the
sale, transfer or other disposition of such property or assets or any portion
thereof, or permit or suffer any such action to be taken, except Permitted
Liens.
8.7 NEW LINES OF BUSINESS. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to enter into any line of
business other than the Business, or make any material change in the scope or
nature of their business, purposes or operations, or undertake or participate in
activities other than the continuance of the Business.
8.8 FORGIVENESS OF DEBT. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to cancel or otherwise
forgive, release or waive any claim or indebtedness owed to it by any person or
rights of substantial value, except as contemplated by Section 7.12 hereto.
8.9 DIVIDENDS, ETC. Prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to declare, set aside or pay any
dividends or distributions in respect of any capital stock nor issue or redeem
any equity securities of the Company or any of the Subsidiaries nor pay any
management fees or debt guarantee fees or make any other payments to any Related
Parties.
8.10 ASSET DISPOSITIONS. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to purchase, sell, lease,
mortgage, pledge or otherwise acquire, dispose of or encumber any interest in
any of the properties or assets used in the Business, other than certain TCXO
equipment, automated insert line equipment, inventory in the ordinary course
consistent with past practices to the extent the proceeds are used to pay
Congress and such other assets the net proceeds of which are used exclusively to
reduce the outstanding indebtedness of the Company to Congress.
8.11 ACCOUNTING. Prior to the Closing, Seller shall not cause, or
permit, the Company to change any accounting principle or inventory practice of
the Company or any of its Subsidiaries without the consent of the Buyer.
8.12 FINANCIAL INFORMATION. Prior to the Closing, as soon as
available but in any event not later than twenty (20) days after the end of each
month (beginning with June 1997), Seller shall cause the Company to deliver to
Buyer a consolidated balance sheet and statement of income and cash flows for
the Company and the Subsidiaries for such month in such form as shall enable
Buyer to include such financial statements, if necessary, in any report required
by the Securities and Exchange Commission.
8.13 COMPENSATION INCREASES. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to increase the compensation
of any employee or grant any unusual or extraordinary bonuses, benefits or other
forms of direct or indirect compensation to
12
<PAGE> 13
any employee, officer, director or consultant except in amounts consistent with
past practices or written agreements in effect as of June 6, 1997.
8.14 CONTRACTS. Prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to cancel or terminate any agreement or
contract involving the payment by or to the Company or any Subsidiary of more
than $100,000 in any twelve month period.
8.15 EMPLOYEE BENEFIT PLAN. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to increase, terminate, amend
or otherwise modify any plan for the benefit of any employee other than as may
be required by law.
8.16 ARTICLES AND BYLAWS. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to amend their respective
articles or certificates of incorporation, by-laws or other comparable charter
or organizational documents.
8.17 INDEBTEDNESS. Prior to Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to (a) incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business consistent
with past practice, or (b) make any loans, advances or capital contributions to,
or investments in any other person.
8.18 ACQUISITIONS. Prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof except in the ordinary course of
business consistent with past practice, or (ii) any assets that are material,
individually or in the aggregate, to any of the Company or any of its
Subsidiaries, except purchases of inventory in the ordinary course of business
consistent with past practice and except capital assets, as contemplated by
Section 8.19 hereof.
8.19 CAPITAL EXPENDITURES. Prior to the Closing, Seller shall not
cause, or permit, the Company and the Subsidiaries to make or agree to make any
new capital expenditure or expenditures which, individually, is in excess of
$10,000, or, in the aggregate, are in excess of $100,000, without the consent of
the Buyer.
8.20 AFFILIATE TRANSACTIONS. Except for the transactions described
on Schedule 8.20 hereto, prior to the Closing, Seller shall not cause, or
permit, the Company and the Subsidiaries to enter into, be a party to, or
perform any transaction or arrangement with any Affiliate.
8.21 NO CONTRARY AGREEMENTS. Seller shall not cause, or permit, the
Company and the Subsidiaries to authorize, agree or otherwise commit, whether or
not in writing, to do anything which would not be permitted to be done under
this Agreement.
13
<PAGE> 14
8.22 EXPENSES. Except as otherwise provided in this Agreement, Buyer
and Seller shall bear their own respective expenses incurred by them in respect
of the transactions contemplated hereby.
8.23 SALES TAXES. Buyer shall pay any state or local sales, transfer
or use taxes or transfer taxes payable in connection with the sale of the Common
Stock to Buyer pursuant to this Agreement.
8.24 FURTHER ASSURANCES. At any time and from time to time after the
date hereof, each party hereto shall, without further consideration, execute and
deliver to the other such instruments of transfer and assumption, and shall take
such other action, as the other may reasonably request to carry out the
transactions contemplated by this Agreement.
8.25 SELLER'S ACCESS AFTER THE CLOSING. At any time, and from time
to time, after the Closing, Seller shall have the right to review and obtain
copies of any records, files, books, documents and other data relating to the
Company and the Subsidiaries and the Business with respect to any period prior
to the Closing that Seller may reasonably require for any lawful purpose,
including, without limitation, Seller's preparation of tax returns. Buyer shall
retain such records, files, books, documents and other data for a period of at
least six years after the Closing and, thereafter, shall give Seller at least 60
days' prior written notice of its intention to discard or destroy any such
records, files, books, documents or other data.
8.26 CERTAIN EMPLOYEE MATTERS. Seller shall use its best efforts to
assist Buyer in obtaining two-year employment commitments with Scott Bocklund,
Fred Hamer, Mike Gaul, Mark Allen, Dan Pritchett and Merv Grindahl.
8.27 REQUIRED FUNDING. At the Closing, (i) Buyer shall pay, or
provide the Company sufficient funds to pay, the amounts required to satisfy the
conditions set forth in Section 7.11 hereof and (ii) Buyer shall deliver the
number of shares of Buyer Common Stock required to satisfy the condition set
forth in Section 7.9 hereof.
9. SURVIVAL OF REPRESENTATIONS; INDEMNITIES.
9.1 SURVIVAL; REMEDIES. Except as otherwise hereinafter provided,
the representations and warranties of Seller and of Buyer, contained in this
Agreement shall not survive the consummation of the transactions contemplated
hereby. The representations and warranties set forth in Sections 3.1, 3.4, 3.5,
4.2 and 4.3 hereof, shall survive for the longest period of time permitted by
the applicable statute(s) of limitations, and all other representations and
warranties set forth in Sections 3 and 4 hereof shall survive for a period
ending on the first anniversary of the Closing Date.
9.2 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Buyer, and its Affiliates and the successors, assigns, officers,
directors, employees, partners and agents of any of them (the "Buyer Indemnified
Parties"), promptly upon demand at any time and from time to time, from and
against any and all actions, proceedings, demands and claims asserted against
any Buyer Indemnified Party, and shall reimburse Buyer Indemnified Parties for
any and all losses, liabilities (of every kind or nature, whether accrued,
absolute, contingent or otherwise and whether
14
<PAGE> 15
asserted or unasserted, known or unknown and whether due or to become due),
damages, charges, Liens, deficiencies or expenses of any nature, including,
without limitation, reasonable attorneys' fees and expenses (all of which shall
be recoverable hereunder, net of any tax benefit to any Buyer Indemnified Party)
(collectively, "Damages") incurred by or assessed against any Buyer Indemnified
Party, and arising out of or resulting from:
(i) the inaccuracy of any representation or warranty made by
Seller pursuant to Section 3 hereof; or
(ii) the failure by Seller to perform or observe any term or
provision of this Agreement or of any other document, Schedule or instrument
delivered in connection herewith.
9.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
harmless Seller and their Affiliates and the successors, assigns, stockholders,
officers, directors, employees, partners and agents of any of them ("Seller
Indemnified Parties"), promptly upon demand at any time and from time to time,
from and against any and all actions, proceedings, demands and claims asserted
against any Seller Indemnified Party, and shall reimburse the Seller Indemnified
Parties for any and all Damages incurred by or assessed against any Seller
Indemnified Party, and arising out of or resulting from:
(a) the inaccuracy of any representation or warranty made by
Buyer pursuant to Section 4 hereof;
(b) the failure by Buyer to perform or observe any term or
provision of this Agreement or of any other document, Schedule or instrument
delivered in connection herewith; or
(c) any liability of the Company or any of the Subsidiaries.
9.4 NOTICE OF CLAIM. If any legal proceedings, claims or demands are
instituted or asserted in respect of which any of Buyer Indemnified Parties or
Seller Indemnified Parties may seek indemnification from another party hereto
pursuant to the provisions hereof (such legal proceedings, claims or demands
being referred to individually as a "Claim" and collectively as the "Claims"),
the indemnified party (after receipt by it of written notice of the commencement
or assertion of such Claim) shall promptly cause a written notice of such Claim
to be made to the indemnifying party (but the failure to give such notice shall
not relieve the indemnifying party of its indemnification obligation hereunder,
except to the extent of losses actually caused by such failure).
9.5 ELECTION TO DEFEND CLAIM. Subject to the next sentence and
Section 9.6 hereof, the indemnifying party shall have the right, at its option
and expense, to assume the defense, settlement or other disposition
(collectively "Defense") of any Claim, provided that within ten (10) days of
receiving the notice with respect to such Claim pursuant to Section 9.4 hereof
(or within such shorter period of time as an answer or other responsive motion
may be required), the indemnifying party, by notice delivered to the indemnified
party, elects to assume such Defense and each indemnifying party acknowledges
its obligation hereunder to indemnify the indemnified party with respect to such
Claim. Notwithstanding the foregoing, the indemnifying party shall not have the
15
<PAGE> 16
right to assume the Defense of any Claim if (a) representation of both the
indemnified and indemnifying parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (b) the
indemnified party determines in good faith that there is a significant
possibility that such Claim may materially and adversely affect it or its
Affiliates other than as a result of monetary damages.
9.6 PROCEDURE FOR DEFENSE BY INDEMNIFYING PARTY. If the indemnifying
party has assumed the Defense of a Claim in accordance with Section 9.5 hereof,
then the following shall apply:
(a) the indemnified party shall have the right to participate
and assist in the Defense of such Claim and to employ its own counsel in
connection therewith;
(b) the indemnifying party shall not be liable to the
indemnified party for the fees or expenses of the indemnified party's counsel or
other expenses incurred by the indemnified party in connection with
participating in the Defense of such Claim, except that the indemnifying party
shall be liable for (i) any such fees and expenses incurred prior to the time
the indemnifying party assumed such Defense and (ii) the reasonable costs of
investigation and preparation incurred by the indemnified party;
(c) counsel used by the indemnifying party in connection with
the Defense of such Claim shall be reasonably satisfactory to the indemnified
party;
(d) the indemnified party shall not effect any compromise or
settlement of such Claim without the consent of the indemnifying party, which
consent shall not be unreasonably withheld; and
(e) the indemnifying party shall not effect any compromise or
settlement of such Claim without the consent of the indemnified party, which
consent shall not be unreasonably withheld.
9.7 DEFENSE BY INDEMNIFIED PARTY. If the indemnifying party does not
assume the Defense of a Claim (whether because it elects not to or has no right
to), the indemnifying party shall have the right, at its sole cost and expense,
to participate in the Defense of such Claim and to employ its own counsel in
connection therewith; provided, however, the indemnified party may effect any
compromise or settlement of such Claim without the consent of the indemnifying
party.
9.8 COOPERATION. The parties hereto shall cooperate to the fullest
extent possible in connection with any Claim in respect of which indemnification
is sought under this Agreement.
9.9 LIMITATIONS ON INDEMNITY. The obligations of Seller pursuant to
Section 9.2(i) hereof shall arise only if the aggregate claims thereunder are in
excess of $50,000 and shall be limited to a total of claims thereunder not
exceeding $1 million in the aggregate, and Seller shall have no obligations
pursuant to such Section 9.2(i) with respect to any claim thereunder asserted by
any Buyer Indemnified Party after the first anniversary of the Closing Date.
Notwithstanding anything to the contrary contained in this Agreement, Seller
shall have no obligation pursuant to Section 9.2(i) hereof with respect to any
matter as to which (a) the Company has taken a reserve in
16
<PAGE> 17
respect of the Interim Balance Sheet or since the date thereof, or (b) the
Company has changed its accounting principles or has applied accounting
principles in a manner inconsistent with the manner of application reflected in
the audited financial statements of the Company as of and for the years ended
December 31, 1996, 1995 and 1994, or (c) a reference is made on Schedule 9.9
hereto.
9.10 ESCROW. William Weksel shall, upon receipt thereof, deposit
with an escrow agent mutually acceptable to William Weksel and Buyer, pursuant
to the terms of an escrow agreement in form and substance reasonably acceptable
to William Weksel and Buyer, the proceeds, if any, of the junior participation
of William Weksel in the advances, loans and other financial accommodations of
Congress Financial Corporation to the Company, when, as and if such proceeds are
paid to William Weksel. Any Buyer Indemnified Party shall be entitled to payment
from such escrowed proceeds of any amount due such Buyer Indemnified Party
pursuant to this Article IX and William Weksel shall give the escrow agent all
such notices as shall be necessary to permit such payment from such escrowed
proceeds. Subject to any Buyer Indemnified Party demand hereunder that may be
pending at such time, William Weksel shall be entitled to payment of all amounts
held in such escrow upon the first anniversary of the Closing Date.
9.11 EXCLUSIVE REMEDY. Notwithstanding anything to the contrary
contained in this Agreement, the sole and exclusive remedy of Buyer and Seller,
or any other Buyer Indemnified Parties or Seller Indemnified Parties with
respect to any matter under or relating to this Agreement, including, without
limitation, any breach of any representation or warranty hereunder or pursuant
hereto shall be the remedy provided for in Sections 9.2 and 9.3 hereof, subject
to the limitations in Section 9.9 hereof.
10. TERMINATION.
10.1 BASES FOR TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time on or prior to the Closing
Date:
(a) by the mutual written consent of the parties hereto;
(b) by Buyer (i) if any representation or warranty of Seller
made in this Agreement was untrue in any material respect when made or is untrue
in any material respect on the Closing Date; or (ii) if Seller shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Seller's receipt of written notice from Buyer that such default
exists or has occurred; or (iii) if the conditions to Buyer's obligations to
consummate the transaction contemplated hereby are not or cannot be satisfied on
or before July 31, 1997 for any reason other than a breach by Buyer;
(c) by Seller (i) if any representation or warranty of Buyer
made in this Agreement was untrue in any material respect when made or is untrue
in any material respect on the Closing Date; or (ii) if Buyer shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Buyer's receipt of written notice from Seller that such default
exists or has occurred; or (iii)if the conditions to Seller's obligations to
consummate the transactions contemplated hereby are not or cannot be satisfied
on or before July 31, 1997 for any reason other than a breach by Seller.
17
<PAGE> 18
10.2 MANNER OF EXERCISE. In the event of the termination of this
Agreement prior to the Closing pursuant to Section 10.1, written notice thereof
shall forthwith be given to the non-terminating party, and this Agreement shall
terminate and the transactions contemplated hereunder shall be abandoned without
further action by any party hereto.
10.3 EFFECT OF TERMINATION. In the event of the termination of this
Agreement prior to the Closing pursuant to Section 10.1, all rights and
obligations of the parties hereunder shall terminate, except for the rights and
obligations of the parties under Section 8.22 hereof and the right of the
non-breaching party to seek damages from a breaching party.
11. MISCELLANEOUS.
11.1 FINDERS. Each party hereto represents and warrants that it has
not employed or utilized the services of any broker or finder in connection with
this Agreement or the transactions contemplated hereby, except for the persons
identified by Seller on Schedule 11.1(a) hereto and by Buyer on Schedule 11.1(b)
hereto.
11.2 ENTIRE AGREEMENT. This Agreement (together with the Schedules
and Exhibits hereto) contains, and is intended as, a complete statement of all
of the terms of the arrangements between the parties hereto with respect to the
matters provided for herein, and supersedes any previous agreements and
understandings between the parties hereto with respect to those matters. This
Agreement does not affect any of the agreements listed on Schedule 11.2 hereto
or the obligations and rights thereunder of the parties thereto.
11.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Minnesota without regard to
the conflicts of laws provisions thereof. THE PARTIES HERETO AGREE THAT ANY
DISPUTE RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION,
PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS
UNDER OR IN RESPECT OF THIS AGREEMENT, SHALL BE SUBMITTED TO, AND RESOLVED
EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH ARBITRATION
SHALL TAKE PLACE IN MINNEAPOLIS, MINNESOTA AND SHALL BE SUBJECT TO THE
SUBSTANTIVE LAW OF THE STATE OF MINNESOTA. DECISIONS PURSUANT TO SUCH
ARBITRATION SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE
CONCLUSION OF ARBITRATION, THE PARTIES MAY APPLY TO ANY COURT OF COMPETENT
JURISDICTION TO ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. THE PARTIES
HERETO WAIVE AND SHALL NOT SEEK JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM,
COUNTERCLAIM, DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS
AGREEMENT.
11.4 HEADINGS. The Section headings of this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
18
<PAGE> 19
11.5 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such other address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller, to it at:
c/o Weksel, Davies & Co., Inc.
One Meadowlands Plaza
Suite 1403
East Rutherford, NJ 07073
Attention: Mr. William Weksel
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Robert A. Cantone, Esq.
If to Buyer, to it at:
Transcrypt International, Inc.
4800 NW First Street
Lincoln, Nebraska 68521-9918
Attention: John T. Connor, Chairman
with a copy to:
Manatt, Phelps & Phillips, LLP
Trident Center, East Tower
11355 West Olympic Boulevard
Los Angeles, CA 90064
Attention: Alan E. Morelli, Esq.
11.6 SEPARABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
11.7 WAIVERS AND AMENDMENTS. No waiver of any provision hereof shall
be construed as a waiver of any other provision. Any waiver or amendment of this
Agreement must be in writing and signed by the party to be charged therewith.
19
<PAGE> 20
11.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement nor any
right or obligation hereunder may be assigned or transferred by Seller without
Buyer's written consent or by Buyer without Seller's written consent.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
[END OF TEXT. SIGNATURE PAGE FOLLOWS.]
20
<PAGE> 21
This Agreement has been duly executed on the date hereinabove set
forth.
EFJ PARTNERS
By: /s/ William Weksel
-----------------------------------
General Partner
TRANSCRYPT INTERNATIONAL, INC.
By: /s/ John T. Connor
-----------------------------------
Name: John T. Connor
Title: Chairman
With respect to Article III hereof only,
E. F. JOHNSON COMPANY
By: /s/ William Weksel
-----------------------------------
Name: William Weksel
Title: Chairman
With respect to Section 9.10 hereof only,
/s/ William Weksel
-----------------------------------
William Weksel
21
<PAGE> 1
EXHIBIT 2.2
PREFERRED STOCK
PURCHASE AGREEMENT
This Preferred Stock and Subordinated Note Purchase Agreement (this
"Agreement") is entered into this 31st day of July, 1997, by and among NorAm
Energy Corp., a Delaware corporation ("Seller"), and Transcrypt International,
Inc., a Delaware corporation ("Buyer").
BACKGROUND
WHEREAS, Seller owns 80,000 shares of the Preferred Stock, $100 par
value per share (the "Preferred Stock"), of E. F. Johnson Company, a Minnesota
corporation ("EFJ"), constituting all of the issued and outstanding shares of
such Preferred Stock (the "Shares");
WHEREAS, Seller is the payee and holder of EFJ's 9.79% Senior
Subordinated Note dated July 31, 1992 in the principal amount of $10,000,000
(the "Note");
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Seller, and subject to the terms and conditions
contained in this Agreement, Buyer wishes to purchase and acquire the Shares
from Seller;
WHEREAS, based upon the representations, covenants, agreements and
warranties herein made by Buyer, and subject to the terms and conditions
contained in this Agreement, Seller wishes to sell and transfer the Shares to
Buyer;
WHEREAS, Seller has previously agreed to cancel the Note and accrued
interest on all debt obligations to EFJ; and
WHEREAS, Seller and Buyer wish to provide for the above-described
sale and transfer of the Shares;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth below, the parties hereto hereby agree as
follows:
1. SALE AND PURCHASE OF SHARES. Subject to the terms and conditions
set forth in this Agreement, at the Closing (as defined in Section 5.1 hereof)
Seller shall sell and transfer to Buyer, and Buyer shall purchase and acquire
from Seller, the Shares (together with Seller's right to all accrued and unpaid
dividends thereon) and the Note (together with Seller's right to all accrued and
unpaid interest thereon).
2. CONSIDERATION. The total consideration to be paid for the Shares
(together with Seller's right to all accrued and unpaid dividends thereon)
pursuant hereto is a number of whole shares of the common stock, par value $.01
per share, of Buyer ("Transcrypt Common Stock"), equal to 457,856 shares,
determined by taking the quotient obtained by dividing (x) $5.5 million by (y)
the average of the per share closing prices for Transcrypt Common Stock on
NASDAQ for the ten
1
<PAGE> 2
consecutive trading days two days before the day of the Closing, provided that
any fractional shares of Transcrypt Common Stock resulting from such division
shall be rounded down to the nearest share, which consideration, subject to the
terms and conditions of this Agreement, shall be payable by Buyer to Seller at
the Closing as set forth in Section 5 hereof.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer as follows:
3.1. TITLE. Seller is the sole record and beneficial holder of all
the Shares and the sole owner of the Note, in each case, free and clear of any
and all liens, claims or encumbrances of any nature whatsoever (whether
absolute, accrued, contingent or otherwise).
3.2. CORPORATE ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has the requisite corporate power and authority to own,
lease or otherwise hold the assets owned, leased and held by it and to carry on
the business currently conducted by it.
3.3 AUTHORIZATION AND EFFECT OF AGREEMENT. Seller has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform the transactions contemplated hereby to be performed by Seller. The
execution and delivery by Seller of this Agreement and the performance by Seller
of the transactions contemplated hereby to be performed by Seller have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and, assuming the due
execution and delivery of this Agreement by Buyer, constitutes a valid and
binding obligation of Seller, enforceable in accordance with its terms.
3.4 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement by Seller does not, and the performance by Seller of the transactions
contemplated hereby to be performed by Seller will not, conflict with, or result
in any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, (i) any provision of the certificate of incorporation or
bylaws of Seller or any contract to which Seller is a party, (ii) any license,
permit or approval ("Permit") of any domestic or foreign court, government,
governmental agency, authority or instrumentality ("Governmental Authority"),
(iii) any domestic or foreign statute, law, ordinance, rule, regulation, order
or common law obligation ("Law") of any Governmental Authority issued or
applicable to Seller, or to any of its properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority is required to be obtained or made by or with
respect to Seller in connection with the execution and delivery of this
Agreement by Seller or the performance by Seller of the transactions
contemplated hereby to be performed by it.
3.5 CERTAIN LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Seller is
a sophisticated person that was advised by knowledgeable counsel in connection
with this Agreement. Seller (i) has not relied nor will it rely upon any
document or written or oral information previously furnished to or discovered by
it or its representatives, other than this Agreement, and (ii) there are no
representations or warranties by or on behalf of Buyer or any of its Affiliates
or representatives other than those set forth in this Agreement. As used in this
Agreement, the term "Affiliate" means, with respect to any person, any person in
control of, controlled by, or under common control with,
2
<PAGE> 3
such person, and the term "person" means any individual, corporation,
partnership, limited liability company, trust or other legal entity.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
4.1 CORPORATE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold the assets owned, leased or held by it and to carry on the business
currently conducted by it.
4.2 AUTHORIZATION AND EFFECT OF AGREEMENT. Buyer has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform the transactions contemplated hereby to be performed by it. The
execution and delivery by Buyer of this Agreement and the performance by it of
the transactions contemplated hereby to be performed by it have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and, assuming the due
execution and delivery of this Agreement by Seller, constitutes a valid and
binding obligation of Buyer, enforceable in accordance with its terms.
4.3 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement by Buyer does not, and the performance by Buyer of the transactions
contemplated hereby to be performed by it will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, (i) any provision of the certificate of incorporation or
bylaws of Buyer or any contract to which Buyer is a party, or (ii) any Permit of
any Governmental Authority, (iii) any Law of any Governmental Authority issued
or applicable to Buyer, or to any of its properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority is required to be obtained or made by or with
respect to Buyer in connection with the execution and delivery of this Agreement
by Buyer or the performance by Buyer of the transactions contemplated hereby to
be performed by it.
4.4 ABSENCE OF PAYMENTS. Except as provided in the Stock Purchase
Agreement, dated July 31, 1997, between EFJ Partners, a New York general
partnership ("EFJ Partners"), and Buyer (the "Stock Purchase Agreement"), there
are no agreements between Buyer or any of its Affiliates, on the one hand, and
EFJ, EFJ Partners or any of their respective Affiliates, on the other hand, that
provide for the payment of sums of money or any other form of consideration
including, but not limited to, Transcrypt Common Stock, from Buyer or any of its
Affiliates to EFJ, EFJ Partners or any of their respective Affiliates.
4.5 CERTAIN LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Buyer is
a sophisticated person that was advised by knowledgeable counsel and other
advisors in connection with this Agreement. Buyer (i) has not relied nor will it
rely upon any document or written or oral information previously furnished to it
or discovered by it or its representatives, other than this Agreement, and (ii)
there are no representations or warranties by or on behalf of Seller or any of
its Affiliates or representatives other than those expressly set forth in this
Agreement.
3
<PAGE> 4
5. CLOSING.
5.1 DATE OF CLOSING. (a) The closing of the transactions
contemplated hereby (the "Closing") shall take place at 10:00 a.m. local time at
the offices of Proskauer Rose LLP ("Proskauer"), 1585 Broadway, New York, New
York on the same day as the closing of the transactions contemplated by the
Stock Purchase Agreement, provided that there shall have occurred the
fulfillment or waiver of the conditions precedent set forth in Sections 6 and 7
hereof, or at such other time and place as the parties hereto may mutually
agree. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date." The following transactions shall take place at the Closing, all
of which shall be deemed to have occurred simultaneously and none of which shall
be deemed completed unless and until all of them shall have been completed (or
waived in writing by the parties entitled to performance):
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) one or more stock certificates representing the
Shares, duly endorsed for transfer to Buyer or accompanied by stock powers
executed in blank;
(ii) the cancelled Note;
(iii) certificates of an authorized officer of Seller,
in form and substance reasonably satisfactory to Buyer, certifying Seller's
valid existence and good standing in the state of its incorporation, the
incumbency of officers or others acting in a representative capacity, the due
authorization of the transactions contemplated hereby, and the matters referred
to in Section 6.1 hereof; and
(iv) agreements of even date herewith between EFJ and
Seller providing for mutual releases.
(c) At the Closing, Buyer shall deliver to Seller the
following:
(i) the number of whole shares of Transcrypt Common
Stock which Seller has the right to receive pursuant to Section 2 hereof; and;
(ii) certificates of an authorized officer of Buyer, in
form and substance reasonably satisfactory to Seller, certifying Buyer's
certificate of incorporation and bylaws, Buyer's valid existence and good
standing in the state of its incorporation, the incumbency of officers or others
acting in a representative capacity, the due authorization of the transactions
contemplated hereby, and the matters referred to in Section 7.1 hereof;
6. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
following conditions, except to the extent waived by Buyer in writing at the
Closing:
6.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of Seller contained in this Agreement shall be
accurate in all material respects as of the Closing Date with the same effect as
if made on and as of such date, except to the
4
<PAGE> 5
extent that any of such representations and warranties refers specifically to a
date other than the Closing Date, in which case such representations and
warranties shall be true and correct in all material respects on and as of such
date. As of the Closing, Seller shall have performed and complied in all
material respects with all covenants and agreements and satisfied all conditions
required to be performed and complied with by it at or before such time.
6.2 SELLER'S DELIVERIES. Seller shall have delivered to Buyer the
documents set forth in Section 5.1(b) hereof.
6.3 LEGAL ACTION. There shall not have been instituted or threatened
any legal proceeding (a) relating to, or seeking to prohibit or otherwise
challenge this Agreement or the consummation of the transactions contemplated by
this Agreement, or seeking to obtain substantial damages with respect thereto,
or (b) which Buyer shall reasonably determine could have a material adverse
effect on it or its business.
6.4 NO GOVERNMENTAL ACTION. There shall not have been any action
taken, or any law, rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement, by any Governmental Authority or
other tribunal, including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of Buyer makes any of the transactions
contemplated by this Agreement illegal.
6.5 CLOSING WITH EFJ PARTNERS. Buyer shall have completed the
purchase and acquisition of all of the issued and outstanding shares of Common
Stock of EFJ (the "EFJ Common Stock") from EFJ Partners pursuant to the terms of
the Stock Purchase Agreement.
6.6 OTHER CLOSING DOCUMENTS. Seller shall have delivered to Buyer,
at or prior to the Closing, such other documents as Buyer may reasonably request
to carry out the provisions of and the transactions contemplated by this
Agreement in form and substance reasonably satisfactory to Buyer.
7. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the following conditions, except to the extent waived by Seller in writing at
the Closing:
7.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of Buyer contained in this Agreement shall be
accurate in all material respects as of the Closing Date with the same effect as
if made on and as of such date except to the extent that any of such
representations and warranties refers specifically to a date other than the
Closing Date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such date. As of the Closing,
Buyer shall have performed and complied in all material respects with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by Buyer at or before such time.
7.2 BUYER'S DELIVERIES. Buyer shall have delivered to Seller the
Transcrypt Common Stock and the documents set forth in Section 5.1(c) hereto.
5
<PAGE> 6
7.3 LEGAL ACTION. There shall not have been instituted or threatened
any legal proceeding (a) relating to, or seeking to prohibit or otherwise
challenge this Agreement or the consummation of the transactions contemplated by
this Agreement, or to obtain substantial damages with respect thereto, or (b)
which Seller shall reasonably determine could have a material adverse effect on
it or its business.
7.4 NO GOVERNMENTAL OR LEGAL ACTION. There shall not have been any
action taken, or any law, rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement, by any Governmental Authority or
other tribunal, including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of Seller makes any of the transactions
contemplated by this Agreement illegal.
7.5 REGISTRATION RIGHTS AGREEMENT. Seller and Buyer shall have
entered into a registration rights agreement in the form attached as Exhibit A
with respect to the shares of Transcrypt Common Stock to be received pursuant
hereto.
8. FURTHER AGREEMENTS OF THE PARTIES.
8.1 PERFORMANCE OF COVENANTS. Seller shall perform or cause to be
performed the covenants of Seller under this Agreement. Buyer shall perform or
cause to be performed the covenants of Buyer under this Agreement.
8.2 GENERAL.
(a) Seller shall use all reasonable efforts and take all
reasonable steps, and shall cooperate with Buyer to cause to be fulfilled, those
of the conditions set forth in this Agreement to the parties' respective
obligations to consummate the transactions contemplated by this Agreement that
are dependent upon the actions or inactions of Seller, and to execute and
deliver such instruments and take such other reasonable actions as may be
necessary or appropriate in order to carry out the intent of this Agreement and
consummate the transactions contemplated hereby.
(b) Buyer shall use all reasonable efforts and take all
reasonable steps, and shall cooperate with the Seller to cause to be fulfilled,
those of the conditions set forth in this Agreement to the parties' respective
obligations to consummate the transactions contemplated by this Agreement that
are dependent upon the actions or inactions of Buyer, and to execute and deliver
such instruments and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement and consummate
the transactions contemplated hereby.
8.3 EXPENSES. Buyer and Seller shall bear their own respective
expenses incurred by them in respect of the transactions contemplated hereby.
8.4 FURTHER ASSURANCES. At any time and from time to time after the
date hereof, each party hereto shall, without further consideration, execute and
deliver to the other such instruments of transfer and assumption, and shall take
such other action, as the other may reasonably request to carry out the
transactions contemplated by this Agreement.
6
<PAGE> 7
9. SURVIVAL OF REPRESENTATIONS. The representations and warranties
of Seller and of Buyer contained in this Agreement shall survive the
consummation of the transactions contemplated hereby for the longest period of
time permitted by the applicable statute(s) of limitations.
10. TERMINATION.
10.1 BASES FOR TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time on or prior to the Closing
Date:
(a) by the mutual written consent of the parties hereto;
(b) by Buyer (i) if any representation or warranty of Seller
made in this Agreement was untrue in any material respect when made or is untrue
in any material respect on the Closing Date; or (ii) if Seller shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Seller's receipt of written notice from Buyer that such default
exists or has occurred; or (iii) if the conditions to Buyer's obligations to
consummate the transactions contemplated hereby are not or cannot be satisfied
on or before July 31, 1997 for any reason other than a breach by Buyer;
(c) by Seller (i) if any representation or warranty of Buyer
made in this Agreement was untrue in any material respect when made or is untrue
in any material respect on the Closing Date; or (ii) if Buyer shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Buyer's receipt of written notice from Seller that such default
exists or has occurred; or (iii) if the conditions to Seller's obligations to
consummate the transactions contemplated hereby are not or cannot be satisfied
on or before July 31, 1997 for any reason other than a breach by Seller.
10.2 MANNER OF EXERCISE. In the event of the termination of this
Agreement prior to the Closing pursuant to Section 10.1, written notice thereof
(with a reasonable description of the reasons for such termination) shall
forthwith be given to the non-terminating party, and this Agreement shall
terminate and the transactions contemplated hereunder shall be abandoned without
further action by any party hereto.
10.3 EFFECT OF TERMINATION. In the event of the termination of this
Agreement prior to the Closing pursuant to Section 10.1, all rights and
obligations of the parties hereunder shall terminate, except for the rights and
obligations of the parties under Section 8.3 hereof and the right of the
non-breaching party to seek damages from a breaching party.
11. MISCELLANEOUS.
11.1 FINDERS. Each party hereto represents and warrants that it has
not employed or utilized the services of any broker or finder in connection with
this Agreement or the transactions contemplated hereby, except for the persons
identified by Seller on Schedule 11.1(a) hereto and by Buyer on Schedule 11.1(b)
hereto.
7
<PAGE> 8
11.2 ENTIRE AGREEMENT. This Agreement (together with the Schedules
and Exhibit A hereto) contains, and is intended as, a complete statement of all
of the terms of the arrangements between the parties hereto with respect to the
matters provided for herein, and supersedes any previous agreements and
understandings between the parties hereto with respect to those matters.
11.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of Texas without regard to the
conflicts of laws provisions thereof.
11.4 HEADINGS. The Section headings of this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
11.5 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such other address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Buyer, to it at:
Transcrypt International, Inc.
4800 NW First Street
Lincoln, NE 68521-9918
Telecopy No.: (402) 479-8477
Attention: Mr. John Connor
with a copy to:
Manatt, Phelps & Phillips, LLP
Trident Center, East Tower
11355 West Olympic Boulevard
Los Angeles, CA 90064
Telecopy No.: (310) 312-4224
Attention: Alan E. Morelli, Esq.
If to Seller, to it at:
NorAm Energy Corp.
1600 Smith Street
Houston, TX 77002
Telecopy No.: (713) 654-7522
Attention: Mr. Michael A. Creel
8
<PAGE> 9
with a copy to:
Jones, Day, Reavis & Pogue
2300 Trammel Crow Center
2001 Ross Avenue
Dallas, TX 75201
Telecopy No.: (214) 969-5100
Attention: Kathleen M. McLaurin, Esq.
11.6 SEPARABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
11.7 WAIVERS AND AMENDMENTS. No waiver of any provision hereof shall
be construed as a waiver of any other provision. Any waiver or amendment of this
Agreement must be in writing and signed by the party to be charged therewith.
11.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any right or
obligation hereunder may be assigned or transferred by Seller without Buyer's
written consent or by Buyer without Seller's written consent; provided, however,
that Buyer may, without Seller's consent, assign its rights and delegate its
obligations under this Agreement to any Affiliate of Buyer; provided, however,
that as a condition to any such assignment and delegation, such Affiliate of
Buyer shall expressly assume such obligations pursuant to a written instrument
of assumption. Notwithstanding any such assignment or delegation, Buyer shall
remain liable for the failure, if any, of its Affiliate to perform Buyer's
obligations hereunder.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
[END OF TEXT. SIGNATURE PAGE FOLLOWS.]
9
<PAGE> 10
This Agreement has been duly executed as of the date hereinabove set
forth.
NORAM ENERGY CORP.
By: /s/ W. Randall Fowler
-------------------------------------
Authorized Officer
TRANSCRYPT INTERNATIONAL, INC.
By: /s/ John T. Connor
-------------------------------------
Authorized Officer
10
<PAGE> 11
SCHEDULE 11.1(a)
BROKER OR FINDER RETAINED BY SELLER
NONE
11
<PAGE> 12
SCHEDULE 11.1(b)
BROKER OR FINDER RETAINED BY BUYER
Furman Selz
12
<PAGE> 13
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
[See Exhibit 4.1 to this Report on Form 8-K.]
13
<PAGE> 1
EXHIBIT 2.3
SERIES B PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
This Series B Preferred Stock and Warrant Purchase Agreement
(this "Agreement") is entered into this 31st day of July, 1997, by and between
Securicor Radiocoms Limited, a corporation formed under the laws of England and
Wales ("Seller"), and Transcrypt International, Inc., a Delaware corporation
("Buyer").
BACKGROUND
WHEREAS, Seller owns (i) 925,850 shares of Series I Class B
Preferred Stock, $.01 par value per share (the "Shares"), of E.F. Johnson
Company, a Minnesota corporation (the "Company"), constituting all of the issued
and outstanding shares of such Preferred Stock, and (ii) a warrant to purchase
up to an aggregate 291,790 shares of Common Stock, $.01 par value per share, of
the Company (the "Warrant"), issued pursuant to the Warrant Purchase Agreement,
dated as of March 14, 1995, among the Company, Securicor Communications Inc. and
the other parties thereto (the "Warrant Purchase Agreement");
WHEREAS, Buyer wishes to purchase and acquire the Shares and the
Warrant from Seller; and
WHEREAS, Seller wishes to sell and transfer the Shares and the
Warrant to Buyer;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth below, the parties hereto hereby agree as
follows:
1. SALE AND PURCHASE OF SHARES AND WARRANT. Subject to the terms
and condi tions set forth in this Agreement, at the Closing (as defined in
Section 5.1 hereof) Seller shall (a) sell and transfer to Buyer, and Buyer shall
purchase and acquire from Seller, the Shares (together with Seller's right to
all accrued and unpaid dividends thereon) and the Warrant, and (b) assign to
Buyer all of Seller's rights in and to the Warrant Purchase Agreement.
2. CONSIDERATION. The total consideration to be paid for the
Shares (together with Seller's right to all accrued and unpaid dividends
thereon) and the Warrant pursuant hereto is a number of whole shares of the
common stock, no par value, of Buyer ("Buyer Common Stock"), equal to the
quotient obtained by dividing (x) $4.5 million by (y) the average of the per
share closing prices for Buyer Common Stock on NASDAQ for the five consecutive
trading days at least one trading day immediately preceding the day of the
Closing, provided that any fractional shares of Buyer Common Stock resulting
from such division shall be rounded up to the nearest share, which
consideration, subject to the terms and conditions of this Agreement, shall be
payable by Buyer to Seller at the Closing as set forth in Section 5 hereof.
1
<PAGE> 2
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer as follows:
3.1. TITLE. Seller is the sole record and beneficial holder of
all the Shares and the Warrant free and clear of any and all liens, claims or
encumbrances of any nature whatsoever (whether absolute, accrued, contingent or
otherwise).
3.2. CORPORATE ORGANIZATION OF SELLER. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has the requisite corporate power and
authority to own, lease or otherwise hold the assets owned, leased and held by
it and to carry on the business currently conducted by it.
3.3 AUTHORIZATION AND EFFECT OF AGREEMENT. Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform the transactions contemplated hereby to be performed by Seller.
The execution and delivery by Seller of this Agreement and the performance by
Seller of the transactions contemplated hereby to be performed by Seller have
been duly authorized by all necessary corporate action on the part of Seller.
This Agreement has been duly executed and delivered by Seller and, assuming the
due execution and delivery of this Agreement by Buyer, constitutes a valid and
binding obligation of Seller, enforceable in accordance with its terms.
3.4 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement by Seller does not, and the performance by Seller of the transactions
contemplated hereby to be performed by Seller will not, conflict with, or result
in any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, (i) any provision of the organizational documents of
Seller or any contract to which Seller is a party, or (ii) (A) any license,
permit or approval ("Permit") of any domestic or foreign court, government,
governmental agency, authority or instrumentality ("Governmental Authority") or
(B) any domestic or foreign statute, law, ordinance, rule, regulation, order or
common law obligation ("Law") of any Governmental Authority, issued or
applicable to Seller, or to any of its properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Authority is required to be obtained or made by or with
respect to Seller in connection with the execution and delivery of this
Agreement by Seller or the performance by Seller of the transactions
contemplated hereby to be performed by it.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
4.1 CORPORATE ORGANIZATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease or
otherwise hold the assets owned, leased or held by it and to carry on the
business currently conducted by it.
4.2 AUTHORIZATION AND EFFECT OF AGREEMENT. Buyer has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform the transactions contemplated hereby to be performed by it. The
execution and delivery by Buyer of this Agreement and the performance by it of
the transactions contemplated hereby to be performed by it have been
2
<PAGE> 3
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and, assuming the due
execution and delivery of this Agreement by Seller, constitutes a valid and
binding obligation of Buyer, enforceable in accordance with its terms.
4.3 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement by Buyer does not, and the performance by Buyer of the transactions
contemplated hereby to be performed by it will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, (i) any provision of the Articles of Incorporation or
Bylaws of Buyer or any contract to which Buyer is a party, or (ii) (A) any
Permit of any Governmental Authority or (B) any Law of any Governmental
Authority, issued or applicable to Buyer, or to any of its properties or assets.
No consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority is required to be obtained or made by or
with respect to Buyer in connection with the execution and delivery of this
Agreement by Buyer or the performance by Buyer of the transactions contemplated
hereby to be performed by it.
4.4 OTHER TRANSACTIONS. Buyer has provided to Seller true,
correct and complete copies of all agreements, instruments and documents between
Buyer or any of its Affiliates and (i) the Company or any of its Affiliates,
including the Stock Purchase Agreement (the "Stock Purchase Agreement"), dated
July 31, 1997, between Buyer and EFJ Partners (collectively, the "Company
Agreements") or (ii) NorAm Energy Corp. ("NorAm"), including the Preferred Stock
Purchase Agreement, dated July 31, 1997, between NorAm and Buyer (collectively,
the "NorAm Agreements"). Buyer represents that there are no agreements,
arrangements or understandings of any nature whatsoever between Buyer or any of
its Affiliates and EFJ Partners or any of its Affiliates pursuant to which EFJ
Partners or any of its Affiliates may receive, directly or indirectly, any
compensation or consideration, now or in the future, in connection with or
following the Closing under the Company Agreements, except as expressly provided
in the Company Agreements. Buyer covenants and agrees that NorAm will receive no
more than $5.5 million in Buyer Common Stock as total consideration for the
80,000 shares of Preferred Stock of the Company, and that the transactions
contemplated by the NorAm Agreements will not be effected on terms more
favorable to NorAm than are set forth in the NorAm Agreements. As used in this
Agreement, the term "Affiliate" means, with respect to any person, any person in
control of, controlled by, or under common control with, such person, and the
term "person" means any individual, corporation, partnership, limited liability
company, trust or other legal entity.
5. CLOSING.
5.1 DATE OF CLOSING. (a) The closing of the transactions
contemplated hereby (the "Closing") shall take place simultaneously with and at
the same location as the closing under the Stock Purchase Agreement, subject to
the fulfillment or waiver of the conditions precedent set forth in Sections 6
and 7 hereof, or at such other time and place as the parties hereto may mutually
agree. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date." The following transactions shall take place at the Closing, all
of which shall be deemed to have occurred simultaneously and none of which shall
be deemed completed unless and until all of them shall have been completed (or
waived in writing by the parties entitled to performance):
3
<PAGE> 4
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) one or more stock certificates representing the
Shares and the Warrant, duly endorsed for transfer to Buyer or accompanied by
stock powers executed in blank;
(ii) the General Release in the form appended hereto as
Exhibit 5.1(b)(ii); and
(iii) certificates of an authorized officer of Seller,
in form and substance reasonably satisfactory to Buyer, certifying the
incumbency of officers or others acting in a representative capacity,
resolutions with respect to the due authorization of the transactions
contemplated hereby, and the matters referred to in Section 6.1 hereof;
(c) At the Closing, Buyer shall deliver to Seller the
following:
(i) the number of whole shares of Buyer Common Stock
which Seller has the right to receive pursuant to Section 2;
(ii) the General Release in the form appended hereto as
Exhibit 5.1(c)(ii); and
(iii) certificates of an authorized officer of Buyer, in
form and substance reasonably satisfactory to Seller, certifying Buyer's
Articles of Incorporation and By-laws, Buyer's valid existence and good standing
in the state of its incorporation, the incumbency of officers or others acting
in a representative capacity, resolutions with respect to the due authorization
of the transactions contemplated hereby, and the matters referred to in Section
7.1 hereof.
6. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer
to consummate the transactions contemplated by this Agreement are subject to the
following conditions, except to the extent waived by Buyer in writing at the
Closing:
6.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS.
All representations and warranties of Seller contained in this Agreement shall
be accurate in all material respects as of the Closing Date with the same effect
as if made on and as of such date, except to the extent that any of such
representations and warranties refers specifically to a date other than the
Closing Date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such date. As of the Closing,
Seller shall have performed and complied in all material respects with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by it at or before such time.
6.2 SELLER'S DELIVERIES. Seller shall have delivered to Buyer the
documents set forth in Section 5.1(b) hereof.
6.3 CLOSING WITH BUYER. Buyer shall have completed the purchase
and acquisition of all of the issued and outstanding shares of Common Stock of
the Company (the
4
<PAGE> 5
"Company Common Stock") from EFJ Partners pursuant to the terms of the Stock
Purchase Agreement.
6.4 OTHER CLOSING DOCUMENTS. Seller shall have delivered to
Buyer, at or prior to the Closing, such other documents as Buyer may reasonably
request to carry out the provisions of and the transactions contemplated by this
Agreement in form and substance reasonably satisfactory to Buyer.
7. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the following conditions, except to the extent waived by Seller in writing at
the Closing:
7.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS.
All representations and warranties of Buyer contained in this Agreement shall be
accurate in all material respects as of the Closing Date with the same effect as
if made on and as of such date except to the extent that any of such
representations and warranties refers specifically to a date other than the
Closing Date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such date. As of the Closing,
Buyer shall have performed and complied in all material respects with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by Buyer at or before such time.
7.2 BUYER'S DELIVERIES. Buyer shall have delivered to Seller the
Buyer Common Stock and documents set forth in Section 5.1(c) hereto.
7.3 CLOSINGS WITH EFJ PARTNERS AND NORAM. Buyer shall have
simultaneously (with the Closing) completed the purchase and acquisition of the
Company Common Stock pursuant to and in accordance with the terms of the Stock
Purchase Agreement and the other Company Agreements and NorAm shall have
simultaneously (with the Closing) completed the transactions contemplated by the
NorAm Agreements in accordance with the terms thereof.
7.4 BUYER MANUFACTURING AGREEMENT. Buyer and Seller shall have
entered into a Manufacturing Agreement, substantially in the form of Exhibit A
attached hereto and incorporated herein by reference, whereby Buyer, at the
option of Seller, will manufacture up to 50,000 radios utilizing linear
modulation technology during 1998 and 1999.
7.5 LMT AGREEMENTS. The Amended and Restated Nonexclusive
Manufacturing License Agreement dated July 14, 1994 and amended on March 14,
1995 (the "Manufacturing License Agreement") by and between the Company and
Linear Modulation Technology Limited ("LMT") and the Nonexclusive Technology
Transfer License Agreement dated March 14, 1995 by and between the Company and
LMT shall be terminated on such terms and conditions as satisfactory to Seller,
in its sole discretion.
7.6 RECEIVABLES. On or before the Closing Date, the $300,000
outstanding balance due pursuant to Article V of the Manufacturing License
Agreement shall be deemed fully settled.
5
<PAGE> 6
7.7 OTHER CLOSING DOCUMENTS. Buyer shall have delivered to
Seller, at or prior to the Closing, such other documents as Seller may
reasonably request to carry out the provisions of and the transactions
contemplated by this Agreement in form and substance reasonably satisfactory to
Seller.
7.8 REGISTRATION RIGHTS AGREEMENT. Seller and Buyer shall have
entered into a registration rights agreement with respect to the shares of Buyer
Common Stock to be received by Seller pursuant hereto in form and substance
reasonably satisfactory to Seller and Buyer.
8. FURTHER AGREEMENTS OF THE PARTIES.
8.1 GENERAL.
(a) Seller will use all reasonable efforts and take all
reasonable steps, and will cooperate with Buyer to cause to be fulfilled, those
of the conditions set forth in this Agreement to the parties' respective
obligations to consummate the transactions contemplated by this Agreement that
are dependent upon the actions or inactions of Seller, and will execute and
deliver such instruments and take such other reasonable actions as may be
necessary or appropriate in order to carry out the intent of this Agreement and
consummate the transactions contemplated hereby.
(b) Buyer will use all reasonable efforts and take all
reasonable steps, and will cooperate with the Seller to cause to be fulfilled,
those of the conditions set forth in this Agreement to the parties' respective
obligations to consummate the transactions contemplated by this Agreement that
are dependent upon the actions or inactions of Buyer, and will execute and
deliver such instruments and take such other reasonable actions as may be
necessary or appropriate in order to carry out the intent of this Agreement and
consummate the transactions contemplated hereby.
8.2 EXPENSES. Except as otherwise provided in this Agreement,
Buyer and Seller shall bear their own respective expenses incurred by them in
respect of the transactions contemplated hereby.
8.3 FURTHER ASSURANCES. At any time and from time to time after
the date hereof, each party hereto shall, without further consideration, execute
and deliver to the other such instruments of transfer and assumption, and shall
take such other action, as the other may reasonably request to carry out the
transactions contemplated by this Agreement.
9. SURVIVAL OF REPRESENTATIONS; INDEMNITIES.
9.1 SURVIVAL; REMEDIES. The representations and warranties of
Seller and of Buyer contained in this Agreement shall survive the consummation
of the transactions contemplated hereby for the longest period of time permitted
by the applicable statute(s) of limitations.
9.2 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Buyer and its Affiliates and the successors, assigns, officers,
directors, employees, partners and agents of any of them (the "Buyer Indemnified
Parties"), promptly upon demand at any time and from time to time, from and
against any and all actions, proceedings, demands and claims asserted against
any
6
<PAGE> 7
Buyer Indemnified Party, and shall reimburse Buyer Indemnified Parties for any
and all losses, liabilities (of every kind or nature, whether accrued, absolute,
contingent or otherwise and whether asserted or unasserted, known or unknown and
whether due or to become due), damages, charges, liens, deficiencies or expenses
of any nature, including, without limitation, reasonable attorneys' fees and
expenses (all of which shall be recoverable hereunder, net of any tax benefit to
any Buyer Indemnified Party) (collectively, "Damages") incurred by or assessed
against any Buyer Indemnified Party, and arising out of or resulting from:
(i) the inaccuracy of any representation or warranty
made by Seller pursuant to this Agreement; or
(ii) the failure by Seller to perform or observe any
term or provision of this Agreement or of any other document or instrument
delivered in connection herewith.
9.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
harmless Seller and its Affiliates and the successors, assigns, stockholders,
officers, directors, employees, partners and agents of any of them ("Seller
Indemnified Parties"), promptly upon demand at any time and from time to time,
from and against any and all actions, proceedings, demands and claims asserted
against any Seller Indemnified Party, and shall reimburse the Seller Indemnified
Parties for any and all Damages incurred by or assessed against any Seller
Indemnified Party, and arising out of or resulting from:
(a) the inaccuracy of any representation or warranty
made by Buyer pursuant to this Agreement; or
(b) the failure by Buyer to perform or observe any
term or provision of this Agreement or of any other document or instrument
delivered in connection herewith.
9.4 NOTICE OF CLAIM. If any legal proceedings, claims or demands
are instituted or asserted in respect of which any of the Buyer Indemnified
Parties or the Seller Indemnified Parties may seek indemnification from a party
hereto pursuant to the provisions hereof (such legal proceedings, claims or
demands being referred to individually as a "Claim" and collectively as the
"Claims"), the indemnified party (after receipt by it of written notice of the
commencement or assertion of such Claim) shall promptly cause a written notice
of such Claim to be made to the indemnifying party (but the failure to give such
notice shall not relieve the indemnifying party of its indemnification
obligation hereunder, except to the extent of losses actually caused by such
failure).
9.5 ELECTION TO DEFEND CLAIM. Subject to the next sentence, and
Section 9.6 hereof, the indemnifying party shall have the right, at its option
and expense, to assume the defense, settlement or other disposition
(collectively "Defense") of any Claim, provided that within ten (10) days of
receiving the notice with respect to such Claim pursuant to Section 9.4 hereof
(or within such shorter period of time as an answer or other responsive motion
may be required), the indemnifying party, by notice delivered to the indemnified
party, elects to assume such Defense. Notwithstanding the foregoing, the
indemnifying party shall not have the right to assume the Defense of any Claim
if the indemnified party determines in good faith that there is a significant
possibility that such Claim may materially and adversely affect it or its
Affiliates other than as a result of monetary damages.
7
<PAGE> 8
9.6 PROCEDURE FOR DEFENSE BY INDEMNIFYING PARTY. If the
indemnifying party has assumed the Defense of a Claim in accordance with Section
9.5 hereof, then the following shall apply:
(a) the indemnified party shall have the right to
participate and assist in the Defense of such Claim and to employ its own
counsel in connection therewith;
(b) the indemnifying party shall not be liable to the
indemnified party for the fees or expenses of the indemnified party's counsel or
other expenses incurred by the indemnified party in connection with
participating in the Defense of such Claim, except that the indemnifying party
shall be liable for (i) any such fees and expenses incurred prior to the time
the indemnifying party assumed such Defense and (ii) the reasonable costs of
investigation and preparation incurred by the indemnified party;
(c) counsel used by the indemnifying party in connection
with the Defense of such Claim shall be reasonably satisfactory to the
indemnified party;
(d) the indemnified party shall not effect any
compromise or settlement of such Claim without the consent of the indemnifying
party; and
(e) the indemnifying party shall not effect any
compromise or settlement of such Claim without the consent of the indemnified
party if the compromise or settlement involves matters other than the payment by
the indemnifying party of money damages, in which event such consent shall not
be unreasonably withheld.
9.7 DEFENSE BY INDEMNIFIED PARTY. If the indemnifying party does
not assume the Defense of a Claim (whether because it elects not to or has no
right to), the indemnifying party shall have the right, at its sole cost and
expense, to participate in the Defense of such Claim and to employ its own
counsel in connection therewith; provided, however, the indemnified party may
not effect any compromise or settlement of such Claim without the consent of the
indemnifying party, which consent shall not be unreasonably withheld.
9.8 COOPERATION. The parties hereto shall cooperate to the
fullest extent possible in connection with any Claim in respect of which
indemnification is sought under this Agreement.
9.9 EXCLUSIVE REMEDY. Notwithstanding anything to the contrary
contained in this Agreement, the sole and exclusive remedy of Buyer, or any
other Buyer Indemnified Parties with respect to any matter under or relating to
this Agreement, including, without limitation, any breach of any representation
or warranty hereunder or pursuant hereto shall be the remedy provided for in
Sections 9.2 and 9.3 hereof.
10. TERMINATION.
10.1 BASES FOR TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time on or prior to the Closing
Date:
(a) by the mutual written consent of the parties hereto;
8
<PAGE> 9
(b) by Buyer (i) if any representation or warranty of
Seller made in this Agreement was untrue in any material respect when made or is
untrue in any material respect on the Closing Date, or (ii) if Seller shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Seller's receipt of written notice from Buyer that such default
exists or has occurred;
(c) by Seller (i) if any representation or warranty of
Buyer made in this Agreement was untrue in any material respect when made or is
untrue in any material respect on the Closing Date; or (ii) if Buyer shall have
defaulted in any material respect in the performance of any covenant, agreement
or obligation under this Agreement, and such default is not cured within ten
days after Buyer's receipt of written notice from Seller that such default
exists or has occurred.
10.2 MANNER OF EXERCISE. In the event of the termination of this
Agreement prior to the Closing pursuant to Section 10.1, written notice thereof
shall forthwith be given to the non-terminating party, and this Agreement shall
terminate and the transactions contemplated hereunder shall be abandoned without
further action by any party hereto.
10.3 EFFECT OF TERMINATION. In the event of the termination of
this Agreement prior to the Closing pursuant to Section 10.1, all rights and
obligations of the parties hereunder shall terminate, except for the rights and
obligations of the parties under Section 8.3 hereof and the right of the
non-breaching party to seek damages from a breaching party.
11. MISCELLANEOUS.
11.1 FINDERS. Each party hereto represents and warrants that it
has not employed or utilized the services of any broker or finder in connection
with this Agreement or the transactions contemplated hereby, except for the
persons identified by Seller on Schedule 11.1(a) hereto and by Buyer on Schedule
11.1(b) hereto.
11.2 ENTIRE AGREEMENT. This Agreement (together with Exhibits
5.1(b)(ii) and 5.1(c)(ii) hereto) contains, and is intended as, a complete
statement of all of the terms of the arrangements between the parties hereto
with respect to the matters provided for herein, and supersedes any previous
agreements and understandings between the parties hereto with respect to those
matters.
11.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of New York without regard to
the conflicts of laws provisions thereof.
11.4 HEADINGS. The Section headings of this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
11.5 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such other address as a party may have
specified by notice given to the other party pursuant to this provision):
9
<PAGE> 10
If to Buyer, to it at:
Transcrypt International, Inc.
4800 NW First Street
Lincoln, Nebraska 68521
Attention: Mr. John T. Connor, Chairman
with a copy to:
Manatt, Phelps & Phillips LLP
11355 West Olympic Boulevard
Los Angeles, CA 90064
Attention: Alan E. Morelli
If to Seller, to it at:
Securicor Radiocoms Limited
351 New Albany Road
Moorestown, NJ 08075-1177
Attention:
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Howard Chatzinoff, Esq.
11.6 SEPARABILITY. If any provision of this Agreement is invalid
or unenforceable, the balance of this Agreement shall remain in effect.
11.7 WAIVERS AND AMENDMENTS. No waiver of any provision hereof
shall be construed as a waiver of any other provision. Any waiver or amendment
of this Agreement must be in writing and signed by the party to be charged
therewith.
11.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any right or
obligation hereunder may be assigned or transferred by Seller without Buyer's
written consent or by Buyer without Seller's written consent.
10
<PAGE> 11
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
[END OF TEXT. SIGNATURE PAGE FOLLOWS.]
11
<PAGE> 12
This Agreement has been duly executed on the date herein above
set forth.
SECURICOR RADIOCOMS LTD.
By: /s/ Tom Little
------------------------------------
Authorized Officer
TRANSCRYPT INTERNATIONAL, INC.
By: /s/ John T. Connor
------------------------------------
Authorized Officer
12
<PAGE> 13
The undersigned, as holder of all of the issued and outstanding
common stock of E.F. Johnson Company (the "Company") hereby covenants and agrees
with Securicor Radiocoms Limited that the undersigned will not consummate the
transactions contemplated by the Company Agreements (as defined in the foregoing
Agreement) unless the closing under the foregoing Agreement occurs substantially
concurrently therewith.
EFJ PARTNERS
By: /s/ William Weksel
------------------------------------
13
<PAGE> 14
In order to induce Buyer and Seller to enter into this
Agreement, EFJ Partners, Weksel, Davies & Co., Inc., William Weksel and Robert
Davies each hereby represents and warrants to Seller that, except as provided in
the Stock Purchase Agreement, there are no agreements between Buyer or any of
its Affiliates, on the one hand, and the Company, EFJ Partners, Weksel, Davies &
Co., Inc., William Weksel, Robert Davies or any of their Affiliates, on the
other hand, that provide for the payment of any sum of money or other
consideration from Buyer or any of its Affiliates to the Company, EFJ Partners,
Weksel, Davies & Co., Inc., William Weksel, Robert Davies or any of their
Affiliates, and there are no agreements between the Company or any of its
Affiliates, on the one hand, and EFJ Partners, Weksel, Davies & Co., Inc.,
William Weksel, Robert Davies or any of their Affiliates, on the other hand,
that provide for the payment of any sum of money or any other consideration from
the Company or any of its Affiliates to EFJ Partners, Weksel, Davies & Co.,
Inc., William Weksel, Robert Davies or any of their respective Affiliates.
E.F. JOHNSON COMPANY
By: /s/ William Weksel
------------------------------------
EFJ PARTNERS
By: /s/ William Weksel
------------------------------------
WEKSEL, DAVIES & CO., INC.
By: /s/ William Weksel
------------------------------------
/s/ William Weksel
---------------------------------------
WILLIAM WEKSEL
/s/ Robert Davies
---------------------------------------
ROBERT DAVIES
14
<PAGE> 15
Exhibit 5.1(b)(ii)
GENERAL RELEASE
Securicor Radiocoms Limited (the "Stockholder"), on behalf of itself and any
person or entity claiming through it, including, but not limited to its
predecessors, successors and assigns, hereby releases and agrees not to sue E.F.
Johnson Company, a Minnesota corporation ("EFJ") or any of its subsidiaries or
Affiliates (as defined below), or the officers, directors, agents, attorneys or
representatives of any of them, or the predecessors, successors or assigns of
any of them (hereinafter jointly referred to as the "Released Parties"), with
respect to any and all known or unknown claims which the Stockholder now has,
ever had, or may in the future have, against any Released Party for or related
in any way to anything occurring from the beginning of time up to and including
the date hereof. The Stockholder expressly represents and warrants that it has
not transferred or assigned any rights or causes of action of the nature
referred to in this General Release that it might have against any of the
Released Parties. As used herein, the term "Affiliate" means, with respect to
any person, any person in control of, controlled by, or under common control
with, such person, and the term "person" means any individual, corporation,
partnership, limited liability company, trust or other legal entity.
Dated: July 31, 1997
SECURICOR RADIOCOMS LIMITED
By: /s/ Tom Little
------------------------------------
Authorized Officer
15
<PAGE> 16
Exhibit 5.1(c)(ii)
GENERAL RELEASE
E.F. Johnson Company , a Minnesota corporation (the "Company"), on behalf of
itself and any person or entity claiming through it, including, but not limited
to EFJ Partners, a general partnership formed under the laws of the State of New
York, Weksel, Davies & Co., Inc., William Weksel and Robert Davies, its
predecessors, successors and assigns, (including Transcrypt International, Inc.,
a Delaware corporation,) hereby releases and agrees not to sue Securicor
Radiocoms Limited, a corporation formed under the laws of England and Wales
("Securicor") or any of its subsidiaries or Affiliates (as defined below), or
the officers, directors, agents, attorneys or representatives of any of them, or
the predecessors, successors or assigns of any of them (including Dr. Edmund
Hough, individually, in his capacity as a director of the Company or in any
other capacity) (hereinafter jointly referred to as the "Released Parties"),
with respect to any and all known or unknown claims which the Company now has,
ever had, or may in the future have, against any Released Party for or related
in any way to anything occurring from the beginning of time up to and including
the date hereof, including without limitation with respect to any payables under
agreements with Securicor and its Affiliates. The Company expressly represents
and warrants that it has not transferred or assigned any rights or causes of
action of the nature referred to in this General Release that it might have
against any of the Released Parties. As used herein, the term "Affiliate" means,
with respect to any person, any person in control of, controlled by, or under
common control with, such person, and the term "person" means any individual,
corporation, partnership, limited liability company, trust or other legal
entity.
Dated: July 31, 1997
E.F. JOHNSON COMPANY
By: /s/ William Weksel
------------------------------------
Authorized Officer
EFJ PARTNERS
By: /s/ William Weksel
------------------------------------
/s/ William Weksel WEKSEL, DAVIES & CO., INC.
- ----------------------------
WILLIAM WEKSEL
By: /s/ William Weksel
------------------------------------
/s/ Robert Davies
- ----------------------------
ROBERT DAVIES TRANSCRYPT INTERNATIONAL, INC.
By: /s/ John T. Connor
------------------------------------
16
<PAGE> 1
EXHIBIT 4.1
TRANSCRYPT INTERNATIONAL, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of July 31, 1997, by and
among TRANSCRYPT INTERNATIONAL, INC., a Delaware corporation (the "Company"),
NORAM ENERGY CORP., a Delaware corporation ("NorAm"), and INTEK DIVERSIFIED
CORPORATION, a Delaware corporation ("Intek") (each of NorAm and Intek are
referred to herein individually as a "Stockholder" and collectively as
"Stockholders").
R E C I T A L S:
A. Pursuant to the Preferred Stock Purchase Agreement dated July 31,
1997 (the "NorAm Purchase Agreement"), between the Company and NorAm, the
Company has agreed to purchase from NorAm 80,000 shares of preferred stock, par
value $100 per share of E.F. Johnson Company, a Minnesota corporation ("EFJ")
(constituting all of the issued and outstanding shares of such preferred stock),
and in exchange therefor will issue to NorAm 457,856 shares of common stock par
value $.01 per share of the Company; and
B. Prior to consummating the transactions contemplated by the NorAm
Purchase Agreement, the Company will confirm the cancellation by NorAm of EFJ's
9.79% Senior Subordinated Note dated July 31, 1992.
C. Pursuant to the Series B Preferred Stock Purchase and Warrant
Agreement, dated July 31, 1997 (the "Intek Purchase Agreement"), between the
Company and Securicor Radiocoms Limited ("Radiocoms"), a corporation formed
under the laws of England and Wales and a wholly owned subsidiary of Intek, the
Company has agreed to purchase from Radiocoms 925,850 shares of Series I Class B
Preferred Stock, par value $.01 per share of EFJ (constituting all of the issued
and outstanding shares of such preferred stock) and a warrant to purchase up to
an aggregate of 291,790 shares of common stock, par value $.01 per share, of
EFJ, and in exchange therefor will issue to Intek 374,609 shares of common stock
par value $.01 per share of the Company; and
D. Pursuant to the NorAm Purchase Agreement and the Intek Purchase
Agreement (together, the "Purchase Agreements"), the Company has agreed to enter
into this Agreement to provide certain registration rights to Stockholders with
respect to the shares of Company common stock issued to the Stockholders under
the Purchase Agreements (the "Common Stock").
NOW, THEREFORE, in consideration of the above and of the mutual
promises set forth herein, subject to the closing of the Purchase Agreements, it
is hereby agreed as follows:
1
<PAGE> 2
1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Purchase
Agreements. For purposes of this Agreement, the following terms shall have the
following meanings:
"Affiliate" has the meaning specified in Rule 12b-2 under the
Exchange Act.
"Blackout Period" has the meaning specified in Section 7(a).
"Business Day" means a day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or in the case of
determining a date on which any payment is due, a day other than Saturday,
Sunday or any day on which banks located in New York City are authorized or
obligated by law to close.
"Counsel to Stockholders" means the law firms from time to time
representing the Stockholders.
"Effective Period" means a period commencing 180 days following
the date of this Agreement and ending on the first date as of which all
Registrable Securities cease to be Registrable Securities in accordance with
Section 2 hereof; provided, however, that with respect to the Tranche B Shares
and a request by Stockholders to include the Tranche B Shares in a registration
statement filed by the Company pursuant to the Securities Act relating to the
public offering of Common Stock for the Company's own account in accordance with
the provisions of Section 4 hereof, the Effective Period shall also include the
180 days immediately following the date hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations promulgated
thereunder.
"Inspectors" has the meaning specified in Section 8(l).
"NASD" means the National Association of Securities Dealers, Inc.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Records" has the meaning specified in Section 8(l).
"Registrable Securities" means, collectively, (i) the shares of
Common Stock issued to Stockholders pursuant to the Purchase Agreements
(collectively, the "Shares") and (ii) any securities paid, issued or distributed
in respect of any Shares by way of stock dividend or distribution or stock split
or in connection with a combination of shares, recapitalization, reorganization,
merger,
2
<PAGE> 3
consolidation or similar event. Securities will cease to be Registrable
Securities in accordance with Section 2 hereof.
"Registration Expenses" means any and all reasonable
out-of-pocket expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, (i) all SEC, NASD and
securities exchange registration and filing fees, (ii) all reasonable fees and
expenses of complying with state securities or blue sky laws (including
reasonable fees and disbursements of counsel for any underwriters in connection
with blue sky qualifications of the Registrable Securities), (iii) all
reasonable printing, messenger and delivery expenses, (iv) all reasonable fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or automated quotation system pursuant to
Section 8(h), (v) the reasonable fees and disbursements of counsel for the
Company and of its independent public accountants, (vi) the reasonable fees and
expenses of any special experts retained by the Company in connection with the
requested registration, and (vii) reasonable out-of-pocket expenses of
underwriters customarily paid by the issuer to the extent provided for in any
underwriting agreement, but excluding (x) underwriting discounts and
commissions, transfer taxes, if any, and documentary stamp taxes, if any, and
(y) any fees or disbursements of Counsel to Stockholders.
"Registration Statement" means any registration statement of the
Company referred to in Section 4 or 5, including any Prospectus, amendments and
supplements to any such registration statement, including post-effective
amendments, and all exhibits and all material incorporated by referenced in any
such registration statement.
"Registration Hold Period" means a Section 8(e) Period or a
Section 8(m) Period.
"Related Securities" means any securities of the Company similar
or identical to any of the Registrable Securities, including, without
limitation, Common Stock and all options, warrants, rights and other securities
convertible into, or exchangeable or exercisable for, Common Stock.
"Requesting Stockholder" has the meaning specified in Section
5(a).
"SEC" means the Securities and Exchange Commission.
"Section 8(e) Period" has the meaning specified in Section 8(e).
"Section 8(m) Period" has the meaning specified in Section 8(m).
"Securities Act" means the Securities act of 1933, as amended,
and any successor thereto, and the rules and regulations thereunder.
"Stockholders" means NorAm Energy Corp., Intek Diversified
Corporation, or their respective successors and assigns.
3
<PAGE> 4
"Shelf Registration" means a "shelf" registration statement on an
appropriate form pursuant to Rule 415 under the Securities Act (or any successor
rule that may be adopted by the SEC).
"Tranche A Shares" means the 416,233 shares of Common Stock
(equaling one-half of the Registrable Securities) issued to Stockholders
pursuant to the Purchase Agreements.
"Tranche B Shares" means the 416,232 shares of Common Stock
(equaling the remaining one-half of the Registrable Securities) issued to
Stockholders pursuant to the Purchase Agreements.
"Underwritten Registration or Underwritten Offering" shall mean
an underwritten offering in which securities of the Company are sold to an
underwriter for reoffering to the public.
2. Securities Subject to This Agreement. The securities entitled
to the benefits of this Agreement are the Registrable Securities. For the
purposes of this Agreement, any particular Registrable Securities will cease to
be Registrable Securities when and to the extent that (i) a Registration
Statement covering such Registrable Securities has been declared effective under
the Securities Act and such Registerable Securities have been disposed of
pursuant to such effective Registration Statement, (ii) such Registrable
Securities are distributed to the public pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act, (iii) such Registrable
Securities shall have been otherwise transferred or disposed of, new
certificates therefor not bearing a legend restricting further transfer shall
have been delivered by the Company and, at such time, subsequent transfer or
disposition of such securities shall not require registration or qualification
of such securities under the Securities Act or any similar state law then in
force or (iv) such Registrable Securities have ceased to be outstanding.
3. Lock-up; Rights of Tranche A Shares and Tranche B Shares.
Except as provided herein with respect to the Tranche B Shares, Stockholders may
not dispose of any of the Registrable Securities for the 180 days immediately
following the date hereof. Thereafter, the Tranche A Shares and the Tranche B
Shares may be included in the Registration Statement described in Section 4
hereof pursuant to the provisions of such Section 4 and the Registration
Statement described in Section 5 hereof pursuant to the provisions of such
Section 5. In addition, for the one year immediately following the date hereof,
the Company shall give written notice to each Stockholder at least 20 Business
Days prior to the filing of any registration statement relating to the public
offering of Common Stock for the Company's own account and, if requested by
Stockholders, will use its best efforts to include the Tranche B Shares among
the securities covered by such registration statement in accordance with the
provisions of Section 4 hereof. The Tranche B Shares shall receive priority (in
being included in a registration statement) over the shares owned by any officer
or director of the Company.
4. Piggy-Back Registration Rights. a. Whenever during the
Effective Period the Company shall propose to file a Registration Statement
under the Securities Act relating to the
4
<PAGE> 5
public offering of Common Stock for the Company's own account (other than
pursuant to a registration statement on Form S-4 or Form S-8 or any successor
forms, or filed in connection with an exchange offer or an offering of
securities solely to existing stockholders or employees of the Company) or for
the account of any holder of Common Stock and on a form and in a manner that
would permit registration of Registrable Securities for sale to the public under
the Securities Act, the Company shall (i) give written notice at least 20
Business Days prior to the filing thereof to Stockholders, specifying the
approximate date on which the Company proposes to file such Registration
Statement, the number and class of securities so proposed to be registered, any
proposed means of distribution of such securities, and a good faith estimate by
the Company of the proposed maximum offering price thereof, as such price is
proposed to appear on the facing page of such Registration Statement, and
advising Stockholders of its right to request that any or all of the Registrable
Securities then held by Stockholders included among the securities to be covered
thereby and (ii) at the written request of Stockholders given to the Company
within 15 calendar days after the Stockholders' receipt of written notice from
the Company, include among the securities covered by such registration statement
the number of Registrable Securities which Stockholders shall have requested to
be so included (subject, however, to reduction in accordance with paragraph (b)
of this Section).
b. If a Stockholder desires to participate in an offering
pursuant to Section 4(a), it may include Registrable Securities in any
Registration Statement relating to such offering to the extent that the
inclusion of such Registrable Securities shall not reduce the number of shares
of Company Common Stock to be offered and sold by the Company. If the lead
managing underwriter selected by the Company for an underwritten offering
pursuant to Section 4(a) determines that marketing factors require a limitation
on the number of shares of Registrable Securities to be offered and sold by a
Stockholder in such offering, there shall be included in the offering only that
number of shares of Registrable Securities, if any, that such lead managing
underwriter reasonably in good faith believes will not jeopardize the success of
the offering of all the shares of Company Common Stock that the Company desires
to sell for its own account. In such event and provided the lead managing
underwriter has so notified the Company in writing, the shares of Company Common
Stock to be included in such offering shall consist of (i) first, the securities
the Company proposes to sell, and (ii) second, the number, if any, of
Registrable Securities requested to be included in such registration that, in
the opinion of such lead managing underwriter can be sold without jeopardizing
the success of the offering of all the securities that the Company desires to
sell for its own account. To facilitate the allocation of shares in accordance
with this provision, the Company or the underwriters may round the number of
shares allocated to a Stockholder to the nearest 100 shares.
c. Nothing in this Section 4 shall create any liability on
the part of the Company to Stockholders if the Company for any reason should
decide not to file a registration statement proposed to be filed under Section
4(a) or to withdraw such registration statement subsequent to its filing,
regardless of any action whatsoever that Stockholders may have taken, whether as
a result of the issuance by the Company of any notice hereunder or otherwise.
5
<PAGE> 6
d. A request by a Stockholder to include Registrable
Securities in a proposed underwritten offering pursuant to Section 4(a) shall
not be deemed to be a request for a demand registration pursuant to Section 5.
5. Demand Registration Rights. a. Upon the written request of a
Stockholder (the "Requesting Stockholder") during the Effective Period that the
Company effect the registration with the SEC under and in accordance with the
provisions of the Securities Act of not less than 662/3% of such Requesting
Stockholder's Registrable Securities (which written request shall specify the
aggregate number of shares of Registrable Securities requested to be registered
and the means of distribution), the Company will use its best efforts to file a
Registration Statement covering Requesting Stockholder's Registrable Securities
requested to be registered as soon as practicable after receipt of such request;
provided, however, that the Company shall not be required to take any action
pursuant to this Section 5:
(1) if prior to the date of such request the Company shall
have effected one registration pursuant to this Section 5 for such
stockholder;
(2) if the Company shall at the time have effective a
Shelf Registration pursuant to which the Requesting Stockholder could
effect the disposition of such Requesting Stockholder's Registrable
Securities in the manner requested;
(3) during the pendency of any Blackout Period;
(4) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the
Company is already subject to service in such jurisdiction and except as
may be required by the Securities Act; or
(5) if the Company shall furnish to such Requesting
Stockholder a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its stockholders for a
Registration Statement to be filed in the near future, then the
Company's obligation to use its best efforts to register, qualify or
comply under this Section 5 shall be deferred for a period not to exceed
ninety (90) days from the date of receipt of the original written
request from the Requesting Stockholder;
provided, however, that the Company shall be permitted to satisfy its
obligations under this Section 5(a) by amending (to the extent permitted by
applicable law) within 30 Business Days after a written request for
registration, any Registration Statement previously filed by the Company under
the Securities Act so that such Registration Statement (as amended) shall permit
the disposition (in accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable Securities for which a demand
for registration has been made under this Section 5(a). If the
6
<PAGE> 7
Company shall so amend a previously filed Registration Statement, it shall be
deemed to have effected a registration for purposes of this Section 5.
b. Requesting Stockholder may distribute the Registrable
Securities covered by such request by means of an underwritten offering or any
other means, as determined by such Requesting Stockholder.
c. Except for a Registration Statement subject to Section
5(d), a registration requested pursuant to this Section 5 shall not be deemed to
be effected for purposes of this Section 5 if it has not been declared effective
by the SEC or become effective in accordance with the Securities Act and the
rules and regulations thereunder.
d. Requesting Stockholder may, at any time prior to the
effective date of the Registration Statement relating to such registration,
revoke such request by providing a written notice to the Company revoking such
request. If a Registration Statement is so revoked, the Requesting Stockholder
shall reimburse the Company for all its out-of-pocket expenses and fees incurred
in the preparation, filing and processing of the Registration Statement.
e. Without the prior written consent of Stockholders, the
Company will not include any securities which are not Registrable Securities in
any Registration Statement filed pursuant to a demand made under this Section 5.
6. Underwriting. In the event that a registration pursuant to
Section 5 is for a registered public offering involving an underwriting, the
Company shall so advise the Stockholders. In such event, the right of
Stockholders to participate in such registration shall be conditioned upon
Stockholders' participating in the underwriting arrangements required by this
Section 6, and the inclusion of such Stockholders' Registrable Securities in the
underwriting to the extent requested shall be limited to the extent provided
herein.
The Company shall (together with all holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriters selected
for such underwriting by the Company.
If a Stockholder disapproves of the terms of the underwriting,
such Stockholder may elect to withdraw therefrom by written notice to the
Company and the managing underwriter and such registration shall not be deemed
to be a registration pursuant to Section 5 hereof. The Registrable Securities,
and/or other securities so withdrawn shall also be withdrawn from registration,
and such securities shall not be transferred in a public distribution prior to
one hundred eighty (180) days after the effective date of such registration, or
such other shorter period of time as the underwriters may require.
7. Blackout Periods; Holdback. a. If the Company determines in
good faith that the registration and distribution of Registrable Securities (i)
would materially impede, delay,
7
<PAGE> 8
interfere with or otherwise adversely affect any pending financing, registration
of securities, acquisition, corporate reorganization or other significant
transaction involving the Company or (ii) would require disclosure of non-public
material information that the Company has a bona fide business purpose for
preserving as confidential, as determined by the Board of Directors of the
Company in good faith, the Company shall promptly give Stockholders notice of
such determination and shall be entitled to postpone the filing or effectiveness
of a Registration Statement for the shortest period of time reasonably required,
but in any event not to exceed 180 days with respect to matters covered by
clause (i) above, and not to exceed 90 days with respect to matters covered by
clause (ii) above (a "Blackout Period"); provided, that a Blackout Period with
respect to a registration of securities proposed by the Company may, at the
election of the Company, commence on the date that is 30 calendar days prior to
the date the Company in good faith estimates will be the date of filing of, and
end no later than the date, following the effective date of such registration,
specified in the form of underwriting agreement relating to such registration
during which the Company shall be prohibited from selling, offering or otherwise
disposing of Common Stock, but in no event to exceed 180 days; provided further,
that the Company shall not obtain any deferral under this Section 7(a) more than
twice in any twelve-month period, other than normal deferrals required prior to
the public release of quarterly financial results of the Company. The Company
shall promptly notify Stockholders of the expiration or earlier termination of a
Blackout Period.
b. Each Stockholder agrees by acquisition of the
Registrable Securities, if so requested in writing by the Company or any
managing underwriter, not to effect any public sale or distribution, make any
short sale of, loan, grant any option for the purchase of or otherwise dispose
of any of such securities or Related Securities during the seven days prior to
and the 180 days after the effective time of any underwritten registration by
the Company (either for its own account, or for the benefit of a Stockholder, in
each case as to which a Stockholder is entitled to request to be included
pursuant to Section 4) has become effective or such period of time shorter than
180 days that is sufficient and appropriate, in the prior written opinion of the
Company or the managing underwriter, in order to complete the sale and
distribution of securities included in such registration.
8. Registration Procedures. If and whenever the Company is
required to use reasonable best efforts to effect or cause the registration of
any Registrable Securities under the Securities Act as provided in this
Agreement, the Company will:
a. prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate, and
which form shall be available for the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof (including, if so
requested by a Stockholder, distributions under Rule 415 under the Securities
Act pursuant to a Shelf Registration Statement), and use its reasonable best
efforts to cause such Registration Statement to become and remain effective;
8
<PAGE> 9
b. prepare and file with the SEC amendments and
post-effective amendments to such Registration Statement (including any Shelf
Registration referred to in Section 5(a)) and such amendments and supplements to
the Prospectus used in connection therewith as may be necessary to maintain the
effectiveness of such registration or as may be required by the rules,
regulations or instructions applicable to the registration form utilized by the
Company or by the Securities Act or rules and regulations thereunder necessary
to keep such Registration Statement effective (i) in the case of a firm
commitment underwritten public offering, until each underwriter has completed
the distribution of all securities purchased by it and (ii) in the case of any
other registration, for up to 90 days (or longer period in the event of a
Registration Hold Period during such offering, as provided in this Section 8)
and cause the Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act, and to otherwise comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement until the earlier of (x) such 90th day (or longer period)
and (y) until the distribution described in the Registration Statement has been
completed;
c. furnish to Stockholders such reasonable number of
copies of such Registration Statement and of each amendment and post-effective
amendment thereto, any Prospectus or Prospectus supplement and such other
documents as Stockholders may reasonably request in writing in order to
facilitate the disposition of the Registrable Securities by Stockholder (the
Company hereby consenting to the use (subject to the limitations set forth in
the last paragraph of this Section 8) of the Prospectus or any amendment or
supplement thereto in connection with such disposition);
d. use its best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as Stockholder shall
reasonably request in writing;
e. notify Stockholders, at any time when a Prospectus
relating to any Registrable Securities is required to be delivered under the
Securities Act within the appropriate period mentioned in Section 8(b), of the
Company's becoming aware that the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing (the period during which Stockholder is required to refrain from
effecting public sales or distributions in such case being referred to as a
"Section 8(e) Period"), and prepare and furnish to Stockholders a reasonable
number of copies of an amendment to such Registration Statement or related
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and the time during which such
Registration Statement shall remain effective pursuant to Section 8(b) shall be
extended by the number of days in the Section 8(e) Period;
9
<PAGE> 10
f. notify Stockholders or Stockholders' counsel (if
Registrable Securities are covered by such Registration Statement) at any time,
(1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment,
when the same has become effective;
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information;
(3) of the issuance by the SEC of any stop order of
which the Company or its counsel is aware or should be aware suspending
the effectiveness of the Registration Statement or any order preventing
the use of a related Prospectus, or the initiation or any threats of any
proceedings for such purposes; and
(4) of the receipt by the Company of any written
notification of the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
any threats of any proceeding for that purpose.
g. otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
stockholders an earnings statement which shall satisfy the provisions of Section
11(a) of the Securities Act, provided that the Company shall be deemed to have
complied with this paragraph if it has complied with Rule 158 under the
Securities Act;
h. use its reasonable best efforts to cause all such
Registrable Securities to be listed on any securities exchange or automated
quotation system on which the Common Stock is then listed, if such Registrable
Securities are not already so listed and if such listing is then permitted under
the rules of such exchange or automated quotation system, and to provide a
transfer agent and registrar for such Registrable Securities covered by such
Registration Statement no later than the effective date of such Registration
Statement;
i. cooperate with Stockholders (if Registrable Securities
are covered by such Registration Statement) and the managing underwriter or
underwriters or agents, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing the
securities to be sold under such Registration Statement, and enable such
securities to be in such denominations and registered in such names as the
managing underwriter or underwriters or agents, if any, or Stockholder may
request;
j. if reasonably requested by the managing underwriter or
underwriters (if Registrable Securities are being sold in connection with an
underwritten offering), incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters agree should be included
therein relating to the plan of distribution with respect to such
10
<PAGE> 11
Registrable Securities, including, without limitation, information with respect
to the principal amount of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering and make all required filings of such
Prospectus supplement or post-effective amendment as promptly as practicable
upon being notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
k. provide Stockholders (if Registrable Securities are
included in such Registration Statement), any underwriter participating in any
disposition pursuant to such Registration Statement and any attorney, accountant
or other agent retained by Stockholder or underwriter (collectively, the
"Inspectors") with reasonable access during normal business hours to appropriate
officers of the Company and the Company's subsidiaries to ask questions and to
obtain information reasonably requested by any such Inspector and make available
for inspection all financial and other records and other information, pertinent
corporation documents and properties of any of the Company and its subsidiaries
and affiliates (collectively, the "Records"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibility; provided,
however, that the Records that the Company determines, in good faith, to be
confidential and which it notifies the Inspectors in writing are confidential
shall not be disclosed to any Inspector unless such Inspector signs or is
otherwise bound by a confidentiality agreement reasonably satisfactory to the
Company; and
l. in the event of the issuance of any stop order of which
the Company or its counsel is aware or should be aware suspending the
effectiveness of the Registration Statement or of any order suspending or
preventing the use of any related Prospectus or suspending the qualification of
any Registrable Securities included in the Registration Statement for sale in
any jurisdiction, the Company will use its best efforts promptly to obtain its
withdrawal; and the period for which the Registration Statement shall be kept
effective shall be extended by a number of days equal to the number of days
between the issuance and withdrawal of any stop orders (a "Section 8(m)
Period").
The Company may require Stockholders (with respect to Registrable
Securities as to which any registration is being effected) to furnish the
Company with such information regarding Stockholders and pertinent to the
disclosure requirements relating to the registration and the distribution of
such securities as the Company may from time to time reasonably request and as
shall be required by law or by the SEC in connection with any registration.
Stockholders shall, upon receipt of any notice from the Company
of the happening of any event of the kind described in Sections 8(e) or 8(m),
forthwith discontinue disposition of Registrable Securities pursuant to the
Prospectus or Registration Statement covering such Registrable Securities until
Stockholders' receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 8(e) or the withdrawal of any stop order contemplated by
Section 8(m), and, if so directed by the Company, Stockholders will deliver to
the Company all
11
<PAGE> 12
copies, other than permanent file copies then in Stockholders' possession, of
the Prospectus covering such Registrable Securities at the time of receipt of
such notice.
9. Registration Expenses. The Company will pay all Registration
Expenses incurred in connection with all registrations of registrable Securities
pursuant to Sections 4 and 5, and Stockholders shall pay (x) any fees or
disbursements of Counsel to Stockholder and (y) all underwriting discounts and
commissions and transfer taxes, if any, and documentary stamp taxes, if any,
relating to the sale or disposition of Stockholders' Registrable Securities
pursuant to the Registration Statement.
10. Reports Under the Exchange Act. The Company shall:
a. use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Exchange Act; and
b. furnish to Stockholders, during the Effective Period,
forthwith upon written request (i) a written statement by the Company that it
has complied with the current public information and reporting requirements of
Rule 144 under the Securities Act and the Exchange Act and (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company with the SEC under the Exchange Act.
11. Indemnification; Contribution.
a. Indemnification by the Company. The Company shall
indemnify and hold harmless Stockholders, their respective officers, directors,
agents, trustees, stockholders and each Person who controls Stockholder (within
the meaning of Section 15 of the Securities act or Section 20 of the Exchange
Act), against all losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees, disbursements and expenses, as incurred) incurred by
such party pursuant to any actual or threatened action, suit, proceeding or
investigation arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or preliminary Prospectus, or any amendment or supplement to any of
the foregoing or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
(in the case of a Prospectus, or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, except in each case insofar as the
same arise out of or are based upon any such untrue statement or omission made
in reliance on and in conformity with information with respect to such
indemnified party furnished in writing to the Company by such indemnified party
or its counsel expressly for use therein. In connection with an underwritten
offering, the Company will indemnify the underwriters thereof, their officers,
directors, agents, trustees, stockholders and each Person who controls such
underwriters (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) to the same extent as provided above with respect to the
indemnification of Stockholder. Notwithstanding the foregoing provisions of this
Section 11(a), the Company will not be liable to any Person who participates as
an underwriter in the offering or sale of Registrable Securities or any other
Person,
12
<PAGE> 13
if any, who controls such underwriter (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), under the indemnity agreement
in this Section 11(a) for any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense that arises out of such Person's
failure to send or deliver a copy of the final Prospectus to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of the Registrable
Securities to such Person if such statement or omission was corrected in such
final Prospectus and the Company has previously furnished copies thereof to
Stockholder or other Person in accordance with this Agreement.
b. Indemnification by Stockholders. In connection with any
Registration Statement filed pursuant hereto, each Stockholder will furnish to
the Company in writing such information with respect to such Stockholder,
including the name, address and the amount of Registrable Securities held by
such Stockholder, as the Company reasonably requests, and as shall be required
by law or by the SEC in connection with any registration, for use in such
Registration Statement or the related Prospectus and indemnify and hold harmless
the Company, or any underwriter, as the case may be, and their respective
directors, officers, agents, trustees, stockholders and controlling Persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees, disbursements and expenses, as incurred),
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in, or any omission or alleged
omission or a material fact required to be stated in such Registration
Statement, Prospectus or preliminary Prospectus or any amendment or supplement
to any of the foregoing or necessary to make the statements therein (in case of
Prospectus or preliminary Prospectus, in the light of the circumstances then
existing) not misleading, but only to the extent that any such untrue statement
or omission is made in reliance on and in conformity with information with
respect to such Stockholder furnished in writing to the Company by such
Stockholder or its counsel specifically for inclusion therein or preparation
thereby; provided, however, that the liability of such Stockholder hereunder
shall be limited to the proportion of any such loss, claim, damage, liability or
expense that is equal to the proportion that the gross proceeds from the sale of
shares sold by such Stockholder under such registration statement bears to the
total gross proceeds from the sale of all securities sold thereunder, but not in
any event to exceed the gross proceeds received by such Stockholder from the
sale of Registrable Securities covered by such Registration Statement, unless
such liability arises out of or is based on willful misconduct of such
Stockholder.
c. Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder shall give prompt written notice to the
indemnifying party after the receipt by such indemnified party of any written
notice of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such indemnified party may claim
indemnification or contribution pursuant to this Agreement (provided that
failure to give such notification shall not affect the obligations of the
indemnifying party pursuant to this Section 11 except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure). If any such action shall be brought against any indemnified party and
it shall promptly
13
<PAGE> 14
notify in writing the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after prompt written notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under these indemnification provisions for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation, unless in the reasonable judgment of any indemnified party a
conflict of interest is likely to exist, based on the written opinion of
counsel, between such indemnified party and any other of such indemnified
parties with respect to such claim, in which event the indemnifying party shall
not be liable for the fees and expenses of (i) more than one counsel for
Stockholder, (ii) more than one counsel for the underwriters or (iii) more than
one counsel for the Company in connection with any one action or separate but
similar or related actions. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claims, unless in the reasonable
judgment of any indemnified party based on the written opinion of counsel a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. No indemnifying party, in defense of any such
action, suit, proceeding or investigation, shall, except with the written
consent of each indemnified party, consent to the entry of any judgment or entry
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such action, suit, proceeding or investigation to
the extent the same is covered by the indemnity obligation set forth in this
Section 11. No indemnified party shall consent to entry of any judgment or enter
into any settlement without the written consent of each indemnifying party.
d. Contribution. If the indemnification from the
indemnifying party provided for in this Section 11 is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the actions which resulted in such losses, claims, damages, liabilities and
expenses, as well as any other relevant equitable considerations; provided,
however, that the liability of each Stockholder hereunder shall be limited to
the proportion of any such loss, claim, damage, liability or expense that is
equal to the proportion that the gross proceeds from the sale of shares sold by
such Stockholder under such Registration Statement bears to the total gross
proceeds from the sale of all securities sold thereunder, but not in any event
to exceed the net proceeds received by Stockholder from the sale of Registrable
Securities covered by such Registration Statement. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement
14
<PAGE> 15
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 11(c), any legal and other fees and expenses
reasonably incurred by such indemnified party in connection with any
investigation or proceeding.
No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 11, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 11(a) or (b), as the case may be, without regard to the
relative fault of said indemnifying parties or indemnified party or any other
equitable consideration provided for in this Section 11(d).
e. The provisions of this Section 11 shall be in addition
to any liability which any indemnifying party may have to any indemnified party
and shall survive the termination of this Agreement.
12. Participation in Underwritten Offerings. Neither Stockholder
may participate in any underwritten offering pursuant to Section 4 hereunder
unless Stockholders (i) agree to sell Stockholders' securities on the basis
provided in any underwriting arrangements approved by the Company in its
reasonable discretion and (ii) completes and executes all questionnaires, powers
of attorney, custody agreements, indemnities, underwriting agreements and other
documents reasonably required and customary under the terms of such underwriting
arrangements.
13. Transfer of Registration Rights. The rights to cause the
Company to register securities granted herein to Stockholders may be assigned to
a transferee or assignee in connection with any transfer or assignment of
Registrable Securities by a Stockholder provided that: (i) the Company is given
written notice by such Stockholder at the time of the proposed transfer or
assignment, stating the name and address of the proposed transferee or assignee
and identifying the securities with respect to which such registration rights
are proposed to be transferred, and the Company consents in writing to the
proposed transfer, which consent shall not be unreasonably withheld, (ii) such
transfer may otherwise be effected in accordance with applicable securities
laws, (iii) such assignee or transferee acquires at least 220,000 shares of
Registrable Securities (appropriately adjusted for stock splits,
reorganizations, recapitalizations and the like) and (iv) the transferee or
assignee is not, in the reasonable discretion of the Company, a competitor of
the Company.
14. Termination. All registration rights granted pursuant to this
Agreement shall terminate with respect to Stockholder one year from the date of
this Agreement.
15
<PAGE> 16
15. Miscellaneous. a. Arbitration. Any dispute or controversy
arising out of or relating to any interpretation, construction, performance or
breach of this Agreement shall be settled by mediation or arbitration conducted
by the American Association of Arbitration ("AAA"), in accordance with the rules
then in effect of AAA. Such proceeding shall be conducted at the offices of the
Company in Lincoln, Nebraska, before a single arbitrator/mediator to be agreed
upon by the parties. The decision of the arbitrator/mediator shall be final,
conclusive and binding on the parties. Judgment may be entered on the
arbitrator's mediator's decision in any court having jurisdiction. The
prevailing party in any such proceeding shall be entitled to reasonable costs
and attorneys fees.
b. Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and Stockholders have agreed in writing to
any such amendment, modification supplement, waiver or consent to departure from
the provisions hereof.
c. Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by facsimile transmission and by
courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
(i) if to NorAm Energy Corp.:
NorAm Energy Corp.
1600 Smith Street
Houston, Texas 77002
Attn: Michael A. Creel
Telecopy: (713) 654-7522
with a copy to:
Kathleen R. McLaurin, Esq.
Jones, Day, Reavis & Pogue
2001 Ross Avenue, Suite 2300
Dallas, Texas 75201
Telecopy: (214) 969-5100
(ii) if to Intek Diversified Corporation to:
Intek Diversified Corporation
351 New Albany Road
Morristown, New Jersey 08057
Attn: Lee Montellaro
16
<PAGE> 17
Telecopy: 609-866-0185
with a copy to:
Howard Chatzinoff, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Telecopy: 212-310-8007
(iii) if to the Company to:
Transcrypt International, Inc.
4800 NW First Street
Lincoln, Nebraska 68521-9918
Attention: John T. Connor
Telecopy: 402-479-8477
with a copy to:
Alan E. Morelli, Esq.
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
Telecopy: 310-312-4224
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
d. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and any successors
thereof.
e. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
f. Descriptive Headings. The descriptive heading used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
17
<PAGE> 18
g. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
h. Severability. If any term of this Agreement or the
application thereof to any party or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such term to the other parties or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by applicable law,
provided that in such event the parties shall negotiate in good faith in an
attempt to agree to another provision (in lieu of the term or application held
to be invalid or unenforceable) that will be valid and enforceable and will
carry out the parties' intentions hereunder.
i. Entire Agreement. This Agreement constitutes the entire
agreement and understanding among the parties relating to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. There are no representations, warranties or covenants by the
parties hereto relating to such subject matter other than those expressly set
forth in this Agreement.
18
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
TRANSCRYPT INTERNATIONAL, INC.
By: /s/ John T. Connor
---------------------------------
Name: /s/ John T. Connor
Title: Chairman
NORAM ENERGY CORP.
By: /s/ W. Randall Fowler
---------------------------------
Name: W. Randall Fowler
Title: Assistant Treasurer
INTEK DIVERSIFIED CORPORATION
By: /s/ Lee R. Montellaro
---------------------------------
Name: Lee R. Montellaro
Title: Chief Financial Officer
19
<PAGE> 1
EXHIBIT 99.1
HEADLINE: Transcrypt International Announces Consummation of Agreement to
Acquire E.F. Johnson. Jeff Fuller to Become President and CEO of Transcrypt.
DATELINE: LINCOLN, Neb., July 31
BODY:
Transcrypt International, Inc., (Nasdaq: TRII) today announced that it
has consummated a definitive agreement to acquire all of the outstanding shares
of Waseca, Minnesota based E.F. Johnson Company (EFJ). Johnson develops and
manufactures wireless communications products and systems to the land mobile
radio (LMR) market. EFJ has incurred losses and encountered cash flow
difficulties recently. The privately-held company had 1996 revenues of $79.3
million and losses of $26.5 million including a $13.5 million non recurring
charge. EFJ's unaudited financials through June 30, 1997 showed revenues of
$35.9 million and losses of $5.3 million for the six month period. Transcrypt
has prepared a restructuring plan for EFJ which includes a working capital
infusion, corporate restructuring and the introduction of a complete line of
APCO 25 digital radio products including; mobiles, base stations, portables and
infrastructure. Transcrypt cannot, however, give any assurances on how quickly
it can implement these changes.
Consideration for the purchase of preferred stock totaled approximately
$12.4 million, consisting of 832,465 shares of Transcrypt Common Stock, valued
at $10 million, $436,000 and a $2 million Letter of Credit that was previously
provided to EFJ. Transcrypt further assumed EFJ bank debt of approximately $13
million. The definitive agreement reflects a significant decrease in the
purchase price since the June 6, 1997 Letter of Intent based upon, among other
things, the losses described above.
Transcrypt also announced a new management structure for merger
integration whereby Jeff Fuller, Transcrypt's current President and Chief
Operating Officer will become the President and Chief Executive Officer upon
completion of the deal.
According to John Connor, Transcrypt's Chairman, "This acquisition,
following Transcrypt's January IPO, is in step with our long-term strategy to
provide secure wireless communication products worldwide. E.F. Johnson brings
over 75 years of experience in the LMR market and a client base which is well
serviced in both domestic and international markets by over 800
distributorships. EFJ's strong South American presence complements Transcrypt's
existing penetration in overseas markets." Connor will continue as Chairman and
will focus on capital markets, mergers and acquisitions and Board activities.
Fuller commented, "This vertical acquisition enhances our existing
products by adding the design and manufacturing of Radio Frequency and trunking
systems to TRII while broadening our current markets and distribution. As the
former VP of Marketing and Sales at E.F. Johnson, I am well acquainted with
Johnson's products, manufacturing strengths and corporate culture. I am very
pleased to have Scott and Fred join the new company and I look forward to once
again
<PAGE> 2
working with E.F. Johnson's talented work force."
Fuller's management team includes two former executives from EFJ. Mr.
Scott Bocklund, EFJ's former COO moves up to become TRII's Senior Vice President
of Finance and CFO. In addition, Mr. Fred Hamer, EFJ's former Vice President of
Sales becomes TRII's Vice President International. Fuller's team will also
include Eric Baumann as Vice President of North American, Bill Fox, a recent
addition as Senior Vice President of Sales and Business Development, Rebecca
Schultz as Corporate Secretary and Treasurer, Mike Wallace as Vice President of
Operations and Joel Young, as Vice President of Engineering and Marketing. "We
believe this acquisition, which was closed on July 31, 1997, will enhance
Transcrypt's ability to continue its growth and provide long-term returns to its
shareholders," according to Connor.
Transcrypt International, Inc., based in Lincoln, Nebraska designs and
manufactures specialized scrambling and encryption devices which prevent the
unauthorized interception of sensitive voice and data communications for both
analog and digital transmissions. Transcrypt has recently launched a new line of
digital APCO 25 radios for public safety use that are also compatible with
existing analog systems. Transcrypt provides land mobile radio, telephony
(including cellular and wireless telephone) and data security products to
government agencies and corporations in 108 countries and all 50 states.
Statements made in this press release may constitute forward-looking
statements, and as such, may involve risks and uncertainties. These forward-
looking statements relate to, among other things, expectations of the business
environment in which the company operates, projections of future performance,
perceived opportunities in the market and statements regarding the Company's
mission and vision. The Company's actual results, performance and achievements
may differ materially from the results, performance and achievements expressed
or implied in such forward looking statements. For a discussion of some factors
that might cause such a difference, please refer to the Company's reports filed
with the Securities and Exchange Commission, including its Prospectus, dated
January 22, 1997 and 1996 10-K filings.
CONTACT: John T. Connor, Chairman of the Board, or Jeffery L. Fuller, President,
of Transcrypt, 402-474-4800
<PAGE> 1
EXHIBIT 99.2
HEADLINE: Transcrypt International Announces E.F. Johnson Company Restructuring
Plan
DATELINE: LINCOLN, Neb., Aug. 6
BODY:
Transcrypt International, Inc., (Nasdaq: TRII) today announced a
restructuring plan involving its new subsidiary, E.F. Johnson Company (EFJ)
which it acquired on July 31, 1997, which has recently incurred operating losses
and cash flow difficulties. EFJ develops and manufactures wireless
communications products and systems for the land mobile radio (LMR) market.
Jeff Fuller, President and CEO said that the restructuring program will
be implemented immediately and will include: a 25% reduction of EFJ workforce,
the phase-out of low margin products and services, the consolidation of
corporate headquarters, the elimination of duplicative sales, marketing and
personnel expenses and the implementation of cash management policies and
expense controls consistent with Transcrypt standards. Mr. Fuller stated,
"Transcrypt is focused on restructuring EFJ for current and future levels of
business, and we are confident that our plan will yield immediate results."
The Company announced that approximately 25% of the 550 EFJ employees
in Burnsville and Waseca, Minnesota have received notices that their jobs are
being eliminated. These terminations were made effective today and included
severance payments under the EFJ Severance Policy Program.
Scott Bocklund, Senior Vice President of Finance and CFO, stated
"Transcrypt has invested $6 million into EFJ to fund severance programs,
cancellation payments for duplicative expenses and to reduce accounts payable.
These programs will allow EFJ to resume shipping on a timely schedule and reduce
operating losses."
EFJ's corporate offices will be consolidated at Transcrypt's Lincoln,
Nebraska headquarters. The company will continue to have a sales office in
Minnesota along with a product manufacturing and engineering facility in Waseca.
During the next few months personnel moves will be made between all locations to
improve efficiencies and focus on target markets. In closing Mr. Fuller stated,
"I am pleased with the quick progress we have made and the positive customer
response to our acquisition of EFJ."
Transcrypt International, Inc., is a leading provider of information
security and wireless communication products. Transcrypt's information security
products prevent the unauthorized interception of sensitive voice and data
communications and its new EF Johnson subsidiary is the third largest
manufacturer of land mobile radios in the U.S. EFJ and Transcrypt have over 800
dealers and distributors in 108 countries world wide. Transcrypt International
is headquartered in Lincoln, Nebraska.
<PAGE> 2
Statements made in this press release may constitute forward-looking
statements and, as such, may involve risks and uncertainties. These forward-
looking statements relate to among other things, forecasts and projections
regarding the anticipated benefits of the restructuring and the future
performance of the Company and the EFJ subsidiary, expectations of the business
environment in which the Company operates, perceived opportunities in the market
and statements regarding the Company's mission and vision. The Company's actual
results, performance and achievements may differ materially from the results,
performance and achievements expressed or implied in such forward-looking
statements. Some of the risks and uncertainties that might cause such a
difference include the timing of the full implementation of the Company's
restructuring program, the effects of the restructuring program on the Company's
customers, vendors and employees, and the risks and uncertainties discussed in
the company's reports filed with the Securities and Exchange Commission,
including its Prospectus dated January 22, 1997 and its 1996 Annual Report on
Form 10-K.
CONTACT: John T. Conner, Chairman of the Board, or Jeffery L. Fuller, President
& CEO, of Transcrypt International, 402-474-4800
