<PAGE> 1
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):
November 15, 1994
DSC COMMUNICATIONS CORPORATION
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(Exact name of registrant as specified in its character)
DELAWARE 0-10018 54-1025763
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(State or other (Commission File No.) (IRS Employer
jurisdiction Identification No.)
of incorporation)
1000 Coit Road
Plano, Texas 75075
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(Address of principal executive offices) (zip code)
(214) 519-3000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 15, 1994 (the "Closing Date"), DSC Communications Corporation, a
Delaware corporation ("DSC"), completed the acquisition of NKT Elektronik A/S,
a corporation organized and existing under the laws of the Kingdom of Denmark
("NKTE"), pursuant to a Stock Purchase Agreement, as amended, (the "Agreement")
with NKT Holdings A/S, a corporation organized and existing under the laws of
the Kingdom of Denmark (the "Seller"). The Agreement provided for DSC to
purchase all of the outstanding capital stock of NKTE from the Seller for
$146,900,000 (the "Purchase Price") in cash. The amount of consideration paid
to the Seller was determined through arm's length negotiations between DSC and
the Seller and was funded using DSC's existing cash and proceeds from
short-term borrowings secured by DSC's existing marketable securities. In
connection with DSC's purchase of NKTE, DSC entered into a five year
Noncompetition Agreement with the Seller pursuant to which the Seller agreed
not to compete with NKTE in the fiber optical telecommunications equipment
business. In addition, seven percent of the Purchase Price was escrowed to
secure the Seller's indemnification obligations under the Agreement in
accordance with the terms of the Escrow Agreement.
NKTE, located in Copenhagen, Denmark, designs, develops, manufactures, sells
and services a family of optical line transmission systems and is a supplier of
Synchronous Digital Hierarchy (SDH) optical transmission equipment. NKTE also
develops and manufactures optical fiber amplifiers and advanced network
management systems, featuring Telecommunication Management Network (TMN)
capabilities. DSC intends to continue the operation of the business of NKTE as
conducted prior to the Closing Date.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired. It is impracticable to
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file the financial statements required by this Item 7(a) at this time because
such statements are not available. DSC will file such statements as soon as
practicable, but not later than January 29, 1995.
(b) Pro Forma Financial Information. It is impracticable to file the pro
-------------------------------
forma financial information required by this Item 7(b) at this time because
such information is not available. DSC will file such information as soon as
practicable, but not later than January 29, 1995.
(c) Exhibits.
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2.0 Stock Purchase Agreement By and Among DSC Communications Corporation, NKT
Holding A/S, and NKT Elektronik A/S dated as of October 20, 1994
incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1994
2.1 Amendment No. 1 to Exhibit 2.0
2
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10.0 Noncompetition Agreement
10.1 Escrow Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
DSC COMMUNICATIONS CORPORATION
Dated: November 30, 1994 By: /s/ KENNETH R. VINES
-----------------------------
Kenneth R. Vines
Vice President and Controller,
duly authorized officer and
principal accounting officer
3
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<S> <C> <C>
2.0 Stock Purchase Agreement By and Among DSC Communications Corporation, NKT
Holding A/S, and NKT Elektronik A/S dated as of October 20, 1994
incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1994
2.1 Amendment No. 1 to Exhibit 2.0
10.0 Noncompetition Agreement
10.1 Escrow Agreement
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT (the "Amendment") amends that
certain Stock Purchase Agreement dated as of October 20, 1994 by and among DSC
COMMUNICATIONS CORPORATION, a Delaware corporation, NKT HOLDING A/S, a
corporation organized and existing under the laws of the Kingdom of Denmark,
and NKT ELEKTRONIK A/S, a corporation organized and existing under the laws of
the Kingdom of Denmark (as amended by this Amendment, the "Agreement"). The
rights of Acquiror under the Agreement have been assigned to P.P.H.S.G. 205
ApS, a private limited company organized and existing under the laws of the
Kingdom of Denmark ("Acquiror Sub").
RECITALS
A. The text of the Agreement, as executed, contained a number of
handwritten changes.
B. The parties wish to amend the Agreement in certain respects, as
hereinafter set out, and to confirm the final form of the Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties agree as follows:
1. All capitalized terms not defined in this Amendment are used with the
meanings ascribed to them in the Agreement.
2. Attached hereto as Exhibit A is a transcription of the Agreement,
which incorporates (a) the various handwritten changes and riders in
the text of the Agreement which was originally signed by the parties,
and (b) corrections of various typographical, grammatical and
technical drafting errors. The parties agree that the original
signature pages shall be appended to copies of the text of the
Agreement in the form attached hereto, which shall thereafter
constitute the final form of the Agreement.
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3. Attached hereto as Exhibit B is an update of the Company Disclosure
Schedule, as contemplated by Section 5.03 of the Agreement. The
matters disclosed in the Supplemental Disclosure Schedule shall be
treated as though contained in the Company Disclosure Schedule
originally attached to the Agreement.
4. The term "Submarine Liabilities", as defined in Section 6.01(a) of the
Agreement, shall not include liabilities and obligations (a) for
products which are not cables, or (b) for services which were not
related to cable installation or servicing of cables.
5. The definition of "Excluded Businesses" at Section 9.03(h) of the
Agreement is hereby amended by the addition of the following sentence:
"Notwithstanding the foregoing, transmission equipment sales,
installation or services shall not be deemed part of the
Excluded Businesses even where conducted in connection with,
or included within contracts for the sale, installation or
servicing of, copper cables or fiber optics".
6. The parties acknowledge that when the Company commenced operations in
1991, Seller assigned to the Company the existing obligations to
customers of the businesses that were thereafter to be conducted by
the Company, and the Company assumed such obligations (the "Opening
Customer Obligations"). The Opening Customer Obligations (other than
the Assumed Obligations) which remain to be performed will be
performed by the Company and indemnified by Seller as and to the
extent provided for under Article VI of the Agreement.
7. Section 6.01(a) of the Agreement is hereby amended to add the
following additional clauses prior to the period ending the final
sentence thereof:
", (v) the claim made by Cable & Wireless for approximately
GBP 200,000 arising out of the Lanis project, (vi) relating to
approximately 600 metres of fiber cables supplied to SEAS as
part of the Kontek project, (vii) any import duties relating
to the importation into India in 1990 of approximately 326
kilometres of replacement cable in connection with the Indian
Railway project, (viii) the Teltec litigation presently
pending before the Estre Landsret and any related claims by
Teltec arising from the same incident, and (ix) any breaches
by the Company or the Continuing Subsidiaries of any
representation or warranty contained in the agreements and
instruments pursuant to which the Excluded Businesses and
Excluded Assets are transferred pursuant to Section 5.04
hereof (and any Indemnified Costs relating to the matters
described in this clause (ix) shall be treated as Assumed
Obligations)."
8. Section 6.01(e) of the Agreement is hereby amended to add the
following sentence at the close thereof:
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"Each Party shall use reasonable commercial efforts to collect
under any insurance policy or bond that provides coverage of
matters that might otherwise become Indemnified Costs."
9. A new Section 6.01(h) is hereby added to the Agreement as follows:
"(h) Claims for indemnity with respect to the matters
described in Section 6.01(a) at Clauses v through
viii shall be reduced by the amount of any reserves
recorded in the Company's books of account as of
September 30, 1994 which have been set aside for the
projects out of which such claims arose."
10. Each Party shall retain in its archives contracts, documents and all
other material (a) relevant to the Agreement or (b) relevant to the
tax obligations of any Party, in either case for so long as any other
Party can reasonably be expected to have an interest therein. In
particular, the Parties shall ensure that all information relating to
contracts (including such contracts and their appendices, all
correspondence, reports, certificates and minutes of meetings relating
thereto) with respect to which a Party may be entitled to claim
indemnification from another Party shall be kept on file for as long
as any Party may be obligated to indemnify another Party for claims
with respect thereto. Each Party shall be allowed full access to, and
shall have a right to copy, all such documents when pertinent to an
indemnification or tax question, and shall be permitted to interview
employees of the Company or any member of the NKT Group in connection
therewith.
11. Attached hereto as Exhibit C is a memorandum listing the foreign
exchange agreements in effect between Seller and the Company as of the
Closing Date. For the convenience of the Company and Acquiror, Seller
will permit the Company to roll forward the maturity dates of such
agreements in accordance with the Company's prior practices, provided,
however, that no revised maturity dates shall extend beyond June 30,
1995. Acquiror and Acquiror Sub shall cause the Company to fulfil its
obligations to the Seller under such agreements (and any replacement
agreements) on the maturity dates.
12. Acquiror has arranged for certain of the documents made available to
it for review prior to Closing (including the Company's contract
files) to be encoded on CD-ROM. Acquiror shall provide to Seller a
copy of the CD-ROM promptly after the encoding has been completed.
13. The upward adjustment of the Purchase Price pursuant to Section 1.04
of the Agreement in the amount of U.S. Dollar 1,235,000.00 less the
U.S. Dollar 100,000.00 adjustment described below, shall be payable
by delivery of Acquiror's promissory note for U.S. Dollars
1,135,000.00 payable the day after the Closing Date. The parties have
agreed to a downward adjustment of the Purchase Price by U.S. Dollars
100,000.00 in settlement of the following matters:
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a) Acquiror's objection to the treatment of the Company's Polish
subsidiary as though it was jointly taxed with the Company for the
nine months ending September 30, 1994; and
b) Seller's agreement to contribute towards the payment of the
Company's management incentive plan for 1994.
No further claim shall be made against Seller with respect to the
Company's obligations for 1994 on its management incentive plan or on
account of bonuses payable to the Company's management conditioned on
the occurrence of the Closing under employment agreements described
at Article X, items 1-8 of the updated Disclosure Schedule attached as
Exhibit B hereto.
14. Except as explicitly amended pursuant to this Amendment, the Agreement
remains in full force and effect.
WITNESS the following signatures this 15th date of November, 1994.
DSC Communications Corporation
By: /s/ James L. Donald
James L. Donald, Chairman,
President and Chief Executive Officer
P.P.H.S.G. 205 ApS
By: /s/ James L. Donald
James L. Donald
Chairman of the Board
According to Power of Attorney
NKT Holding A/S
By: /s/ Gerhardt Albrechtsen
Gerhardt Albrechtsen
Chief Executive Officer and President
By: /s/ Knud Rasmussen
Knud Rasmussen
Member of Executive Board
NKT Elektronik A/S
By: /s/ Poul Friis
Poul Friis
Chief Executive Officer and President
EXHIBITS
EXHIBIT A See Exhibit 2.0 to the Current Report on Form 8-K of DSC
Communications Corporation dated November 30, 1994
EXHIBIT B Not included
EXHIBIT C Not included
<PAGE> 1
EXHIBIT 10.0
NONCOMPETITION AGREEMENT
This Noncompetition Agreement is entered into as of November 15, 1994,
by and between DSC Communications Corporation, a Delaware corporation
("Acquiror'), P.P.H.S.G. 205 ApS, a private limited liability company organized
and existing under the laws of the Kingdom of Denmark ("Acquiror Sub"), and NKT
Holding A/S, a corporation organized and existing under the laws of the Kingdom
of Denmark (the" Seller').
RECITALS
A. NKT Elektronik A/S, a corporation organized and existing under
the laws of the Kingdom of Denmark (the "Company"), is engaged in the business
of sale, marketing, development, design, manufacture, and service of fiber
optical telecommunications transmission equipment and the design, installation
and system integration of submarine cable (the "Business");
B. Seller has agreed to sell, transfer, and convey, and
concurrently herewith is selling, transferring, and conveying, to Acquiror Sub,
all of the outstanding capital stock of the Company, pursuant to that certain
Stock Purchase Agreement (the "Purchase Agreement") dated as of October 20,
1994, by and among Acquiror, Seller and the Company;
C. Acquiror has assigned its rights and obligations under the
Purchase Agreement to Acquiror Sub;
D. Seller possesses valuable knowledge about the Business and
operations of the Company; and
E. Acquiror has requested that Seller enter into this Agreement
as an inducement to Acquiror to enter into and consummate the transactions
contemplated by the Purchase Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Agreement Not to Compete. In order to protect the goodwill
and business interests of the Company, Seller shall not, during the five (5)
year period beginning on the date hereof (the "Term of Noncompetition"),
directly or indirectly own, engage in, manage, operate, join, or control or
participate in the management, operation, or control of, or be connected as a
stockholder, director, officer, employee, agent, partner, joint venturer, or
otherwise with any business or organization which in any way competes with the
Company in the Business; provided, however, that (a) nothing herein shall
prohibit Seller from owning or participating in the ownership of or being
connected as a stockholder, partner, joint venturer or with any other type of
ownership of an equity interest in any entity constituting five per cent (5%)
or less of all outstanding ownership interests in such entity, and (b) nothing
herein shall restrict Seller in the
<PAGE> 2
conduct of any business that is included within the Business but that ceases to
be actively conducted by the Company or its subsidiaries during the Term of
Noncompetition.
2. Confidential Information.
(a) Seller acknowledges that except as provided below, the
confidential information, observations, and data obtained or possessed by them
concerning the Business of the Company will be the property of the Company and
not Seller following the Closing. Therefore, Seller agrees that it will not
disclose to any person or use for its own account any of such information,
observations, or data unless and to the extent that such information,
observations, or data become generally known to and available for use by the
public otherwise than as a result of Seller's act or omission to act. Seller
agrees to deliver to the Company, at any time the Company may request in
writing, all memoranda, notes, plans, records, reports, and other documents
(and copies thereof) relating to the Business which it may then possess or have
under its control.
(b) Notwithstanding the foregoing, the parties acknowledge and
agree that Seller shall be entitled to disclose, use and retain copies of the
information described in subparagraph (a) above in connection with: (i) the
conduct of the Excluded Business and the businesses related to the Excluded
Assets, (ii) obligations of Seller under certain contracts and agreements
relating both to the business of Seller and the Business, (iii) claims against
Seller under the Escrow Agreement, (iv) claims by or against the Seller under
Article VI of the Purchase Agreement, and (v) requirements of legal process,
law, regulation or policy of any governmental authority or order of a court of
competent jurisdiction.
3. Amendments. This Agreement may be amended or modified from
time to time, but only by a written instrument executed by all of the parties
hereto.
4. Notices. Any notices required or permitted hereunder shall be
in writing and shall be deemed given when personally delivered or when sent by
registered or certified mail, return receipt requested, addressed to the other
party at its, his or her address set forth below, or at such other address as
it or he may specify in writing:
(a) If to DSC or Acquiror Sub:
DSC Communications Corporation
1000 Coit Road
Plano, TX 75075-5813
Attention: Pete Waal
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With a copy (which shall not constitute notice) to:
Baker & McKenzie
2001 Ross Avenue
Suite 4500
Dallas, TX 75201
Telecopier No.: 214/ 978-3099
Attention: John Kendrick, Esq.
Mogens Gaarden
Pontoppidan, Philip & Partners
Vognmagergade 7
DK-1120
Copenhagen, Denmark
Telecopier: 45 33 13 56 43
(b) If to Seller:
NKT Holding A/S
NKT Alle 1.
DK-2605 Bronby
Denmark
Telecopier No.: 45 43 96 18 20
Attention:
With a copy (which shall not constitute notice) to:
Jan Schans Christensen
Bech-Bruun & Trolle
Nerre Farimagsgade 3
1364 Copenhagen
Denmark
Telecopier: 45 33 15 25 55
Willcox & Savage, P.C.
1800 NationsBank Center
One Commercial Place
Norfolk Virginia 23510
Telecopier No.: (804) 628-5566
Attention: Keith C. Cuthrell, Jr.
5. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements, discussions,
understandings or undertakings, both written or oral, with respect to the
subject matter hereof.
E-3
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6. Assignment: Parties Bound. The Company may assign its rights
and obligations hereunder to any party succeeding to substantially all of the
business and assets of the Business. Seller may not assign any of their
obligations hereunder. Any assignment in violation of the foregoing shall be
null and void. Subject to the foregoing, this Agreement shall be binding upon
the parties hereto and shall inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, legal representatives,
successors, and assigns.
7. Governing Law. This Agreement shall be governed by and be
enforceable under the laws of the Kingdom of Denmark, (regardless of the laws
that might otherwise govern under applicable principles of conflicts of law).
8. Non-waiver of Breach. A waiver by any party hereto of a
particular breach or default in connection with any provision of this Agreement
shall not be deemed a waiver of any subsequent default or breach of the same or
any other provision of this Agreement.
9. Invalid Provision. If any provision of this Agreement
(including, without limitation, any provision relating to the activities covers
by the time period of, or geographic scope of the noncompetition covenants in
Section 1 hereof) is held to be illegal, invalid, or unenforceable under
present or future laws, such provision shall be severable, and this Agreement
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part of this Agreement, and the remaining
provisions of this Agreement shall remain in full force and effect and shall
not be affected by such illegal, invalid, or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable, and the parties hereto hereby request the court or any arbitrator
to whom disputes relating to this Agreement are submitted to reform the
otherwise enforceable covenant in accordance with the preceding covenant.
10. Headings. The headings in this Agreement are for purposes of
reference only and shall not be considered in construing this Agreement.
11. Attorneys' Fees. If any party hereto brings any action, at
law or in equity, to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to recover from the other party hereto
reasonable attorneys' fees in addition to any other relief to which such party
may be entitled.
12. Enforcement of Covenants. Seller agrees that a violation on
its part of any covenant contained herein shall cause irreparable damage to the
Company and, consequently, Seller further agrees that the Company shall be
entitled, as a matter of right, to an injunction out of any court of competent
jurisdiction restraining any further violation of such covenant by Seller. Such
right to an injunction shall be cumulative and in addition to any other
remedies the Company may have at law or in equity, including, but not limited
to, recovery of damages or the right to bring an action for specific
performance of any covenant contained herein.
E-4
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13. Defined Terms. All capitalized terms in this Agreement and
not otherwise defined herein shall have the meaning given them in the Purchase
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DSC COMMUNICATIONS C0RP0RATI0N
By: /s/ James L. Donald
Name: James L. Donald
Title: Chairman of the Board
President and Chief
Executive Officer
P.P.H.S.G. 205 ApS
By: /s/ James L. Donald
Name: James L. Donald
Title: Chairman of the Board
According to Power of Attorney
NKT HOLDING A/S
By: /s/ Gerhard Albrechtsen
Name: Gerhard Albrechtsen
Title: President and Chief
Executive Officer
By: /s/ Knud Rasmussen
Name: Knud Rasmussen
Title: Member of Executive Board
E-5
<PAGE> 1
EXHIBIT 10.1
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is entered into as of
November 15, 1994, by and among DSC Communications Corporation, a Delaware
corporation ("DSC"), NKT Holding A/S, a corporation organized and existing
under the laws of the Kingdom of Denmark ("Seller"), and Den Danske Bank (the
"Escrow Agent").
RECITALS
A. DSC and NKT Elektronik A/S, a corporation organized and
existing under the laws of the Kingdom of Denmark (the "Company"), and Seller
have entered into that certain Stock Purchase Agreement dated October 20, 1994
(the "Purchase Agreement"), a copy of which has been delivered to the Escrow
Agent, pursuant to which, among other things, (a) DSC shall acquire all of the
outstanding capital stock of the Company from Seller in exchange for
US$145,000,000.00 less the amount of any adjustment provided in Section 1.04 of
the Purchase Agreement (the "Purchase Price"), (b) Seller has made certain
agreements, covenants, representations, and warranties to DSC, and (c) Seller,
has agreed to indemnify, defend, and hold harmless DSC, its respective
affiliates and the directors, officers and employees (collectively, the
"Indemnified Parties") from and against certain "Indemnified Costs" as
specified in the Purchase Agreement.
B. Pursuant to the terms of the Purchase Agreement, the parties
hereto have agreed to enter into this Agreement.
C. DSC and Seller desire to appoint the Escrow Agent to act as
such pursuant to the terms and conditions set forth herein and the Escrow Agent
desires to accept such appointment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ESCROW AGENT
ARTICLE I
1.1 Appointment. The Escrow Agent is hereby appointed depositary
and escrow agent for the Indemnified Parties and Seller with respect to the
Escrow Fund (as hereinafter defined).
1.2 The Escrow Fund. Seller hereby directs DSC to deposit with
the Escrow Agent on the Closing Date (as defined in the Purchase Agreement),
the amount equal to seven percent (7%) of the Purchase Price (the "Escrow
Amount"). Any interest paid on the investments contemplated by Section 5.1
hereof are hereinafter referred to as the "Earned Proceeds." Seller hereby
directs that the Escrow Amount and the Earned Proceeds be held and disposed of
by the Escrow Agent as herein provided. The Escrow Amount and the Earned
Proceeds shall constitute the Escrow Fund hereunder (the "Escrow Fund"), which
shall be held and distributed by the Escrow Agent in accordance with the terms
and conditions of this Agreement.
<PAGE> 2
1.3 Binding Obligations. Except for this Agreement, the Escrow
Agent is not a party to, nor is it bound by nor need it give any consideration
to the terms or provisions of, any agreement among the Indemnified Parties and
Seller. The only duties and responsibilities of the Escrow Agent hereunder
shall be to hold the Escrow Fund as Escrow Agent according to the terms and
provisions of this Agreement and to dispose of and deliver the Escrow Fund as
provided in this Agreement.
1.4 Acts of Escrow Agent. The Escrow Agent may in good faith act
or refrain from acting hereunder with respect to any matter referred to herein
in full reliance upon and by and with the advice of counsel selected by the
Escrow Agent and shall be fully protected in so acting or in refraining from so
acting upon the advice of such counsel. The Escrow Agent may rely upon any
documents that may be submitted to it in connection with its duties hereunder
and that it reasonably believes to be genuine and to have been signed or
presented by the proper party or parties. DSC and Seller jointly and severally
agree to indemnify the Escrow Agent against any expenses (including reasonable
attorneys' fees) or liabilities incurred by the Escrow Agent as a result of
acts taken or omitted in good faith by the Escrow Agent pursuant to the terms
and conditions hereof. DSC and the Seller will provide the Escrow Agent with
documentation covering authorised signatures.
1.5 Disputes. In the event a dispute arises from conflicting
demands by the Indemnitees and Seller being made upon the Escrow Fund or any
property held by the Escrow Agent hereunder, the Escrow Agent shall have, in
addition to all other remedies which it may have at law or in equity, the right
to refuse to comply with any such demand without liability for such refusal,
until the matter in dispute has been settled by agreement of the parties or
settled or resolved in the manner described in Section 4.3 hereof and it has
received evidence thereof satisfactory to it. In the event a dispute among the
parties hereto cannot be resolved by agreement among them, the Escrow Agent may
institute a proceeding or an interpleader action with respect to the amount of
the Escrow Fund in dispute.
1.6 Litigation. The Escrow Agent shall not be required to
institute legal proceedings of any kind. In the event proceedings are
instituted by the Indemnified Parties against Seller or by Seller against the
Indemnitees that (a) require additional duties of the Escrow Agent, (b) require
court or other appearances by or on behalf of the Escrow Agent, or (c) require
the Escrow Agent to incur expenses or make disbursements in the resolution of
contested claims against the Escrow Fund, then the Escrow Agent shall be
entitled to reimbursement for any reasonable expenses or disbursements, and
such reimbursements shall include but not be limited to the reasonable cost of
legal services if the Escrow Agent deems it necessary to retain an attorney.
The party to this Agreement who is not successful after final resolution of
such dispute shall reimburse the Escrow Agent for the expenses and
disbursements described in this Section 1.6, or those incurred by the Escrow
Agent in connection with any interpleader action described in Section 1.5
hereof, or those fees, expenses, or liabilities for which the Escrow Agent is
entitled to Indemnification under Section 1.4 above which arise solely as a
result of such dispute.
A-2
<PAGE> 3
1.7 Fees. The fees of the Escrow Agent shall be comprised of (a)
a one time acceptance fee of $ 5,000 and (b) an annual fee of $ 1,000 for each
full year during which the Escrow Agent holds the Escrow Fund or any part
thereof hereunder. Such fees shall be paid by DSC; provided, however, that any
fees charged by the Escrow Agent as transaction fees with respect to investment
of the cash in the Escrow Fund at the direction of the Seller as provided in
Section 5.1(b) hereof shall be paid by Seller. Notwithstanding the foregoing
(but subject to the proviso in the immediately preceding sentence), DSC and
Seller shall be jointly and severally liable to the Escrow Agent for any fees
or expenses of the Escrow Agent (including, without limitation, reasonable
attorneys' fees and court costs) required to be paid, reimbursed, or
indemnified hereunder that either the Indemnified Parties or Seller are
required to, but do not, pay.
ARTICLE II
DELIVERY OF ESCROW AMOUNT
The Escrow Agent hereby acknowledges that it will receive the Escrow
Amount and Earned Proceeds from DSC and that it will provide to Seller written
notification of receipt of the Escrow Amount and Earned Proceeds on the date of
receipt. The Escrow Agent further acknowledges its acceptance of the
authorization herein conferred and agrees to carry out and perform its duties
contained herein pursuant to the provisions of this Agreement.
ARTICLE III
RELEASE OF ESCROW FUND
3.1 Release of Escrow Amount. On the first anniversary of the
Closing Date (the "Release Date"), Seller shall be entitled to receive from the
Escrow Fund the amount equal to the Escrow Fund then held in escrow less the
aggregate amount of all Pending Claim Amounts (as defined herein).
3.2 Procedure for Release. On or after the day that is 16
business days prior to the Release Date, the Seller shall submit to DSC and the
Escrow Agent a proposed letter of instruction (the "Release Instruction")
addressed to the Escrow Agent. The Release Instruction shall set forth the
amount of the Escrow Fund then held in escrow that Seller believes that Seller
is entitled to receive under Section 3.1 hereof, together with the calculations
by which such amounts were determined. If DSC executes the Release Instruction
by written notice to Seller and the Escrow Agent actually received on or before
the 14th business day following delivery to DSC of the Release Instruction, the
amounts stated in the Release Instruction shall promptly be delivered and
released by the Escrow Agent to Seller on the date that is the later of (a) the
Release Date, or (b) the date on which DSC executes the Release Instruction.
3.3 Objection. If DSC believes the calculations or amounts
contained in the Release Instruction are incorrect, it may object to the
Release Instruction by delivering written notice to Seller and the Escrow Agent
by written notice to Seller and the Escrow Agent actually received on or before
the 14th business day following the date on which the Release Instruction is
delivered to DSC, which notice shall set forth the amount of the Escrow Fund,
if any, to which DSC
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believes Seller is entitled, which amount shall thereupon be promptly delivered
and released by the Escrow Agent to Seller. In the event DSC makes an
objection to the Release Instruction as provided herein, the difference between
the amount of the Escrow Fund to which Seller believes that Seller is entitled
and the amount of the Escrow Fund to which DSC believes Seller is entitled
shall continue to be held in escrow until such dispute is resolved by a written
agreement among them or pursuant to Article IV hereof, and in either such case,
the amount provided in such written agreement or decision from a proceeding to
be paid to Seller shall be promptly paid to Seller by the Escrow Agent
following submission of such agreement or decision from a proceeding to the
Escrow Agent.
3.4 Access to Information. The Escrow Agent shall, upon request
by the Indemnified Parties or Seller, make available to the requesting party
access to any books and records or other information in its possession
concerning the Escrow Fund.
3.5 Form of Release. The release of the Escrow Fund as provided
in the foregoing sections of this Article III shall be made by delivery of such
amounts to Seller. From and after such delivery, the Escrow Agent shall be
discharged from any further liability or responsibility for such amounts.
ARTICLE IV
CLAIMS AGAINST ESCROW FUND
4.1 Claim Procedures. Any claim by the Indemnified Parties for
Indemnified costs ("Claim") shall be subject to the procedural requirements set
forth in Article VI of the Purchase Agreement. On or prior to the Release
Date, DSC shall concurrently deliver to the Escrow Agent a copy of any notice
to Seller regarding any Claim (a "Claim Notice") provided, however, that the
failure of DSC to so promptly notify the Escrow Agent shall not prevent any
Indemnified Party from being indemnified or reimbursed for any Indemnified
costs arising out of any such Claim except to the extent that the failure to so
promptly notify materially damages Seller. Each Claim Notice shall describe in
reasonable detail the basis of the Claim and shall indicate the estimated
amount of the Indemnified costs that have been or which may be suffered by DSC
or any other Indemnified Party, which estimate may be revised from time to time
(a "Pending Claim Amount"). The Escrow Agent shall disregard any Claim Notice
not actually received on or prior to the Release Date.
4.2 Determination of Claims.
The "Determination" of a Claim shall be made as follows:
(a) Seller shall have a period of 10 days from the
receipt of any Claim Notice to dispute in whole or in part any Claim made in
the aforesaid Claim Notice in accordance with the Purchase Agreement by
delivering to DSC and the Escrow Agent within such 10 day period a written
notice (the "Dispute Notice") describing in reasonable detail the basis for the
objection.
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(b) (i) If the Claim Notice does not involve a third
party action (as defined in the Purchase
Agreement) then:
(A) if Seller does not dispute in whole
or in part any Claim within the time
herein provided, such Claim or the
portion thereof which is not
disputed shall be deemed to have
resulted in a Determination in favor
of the applicable Indemnified Party
and Seller will be entitled to be
paid an amount out of the Escrow
Fund equal to the amount of such
Claim as estimated by such
Indemnified Party in the Claim
Notice as such Claim Notice may be
revised from time to time in
accordance herewith or the portion
thereof which is not disputed and
the earnings thereon from the date
such Claim Notice was delivered to
Seller; and
(B) if Seller does dispute any Claim,
within the time period herein
provided, such Claim or portion
thereof which Is disputed shall be
resolved in accordance with the
Purchase Agreement, which resolution
shall constitute a Determination.
(ii) If the Claim Notice involves a third party
action, then:
(A) if Seller does not dispute any third
party action within the time herein
provided, such third party action
shall be deemed to have resulted in
a Determination in favor of the
applicable Indemnified Party, and
the applicable Indemnified Party
will be entitled to be paid and/or
direct that the third party
asserting such third party action be
paid, an amount out of the Escrow
Fund equal to the amount of
Indemnified costs actually incurred
by the Indemnified Party in
connection with such third party
action and the earnings thereon from
the date the applicable Claim Notice
was delivered to Seller; and
(B) if Seller does dispute the third
party action within the time herein
provided, such dispute shall be
limited to the issue of whether such
third party action is indemnifiable
under Article VI of the Purchase
Agreement, and shall be resolved in
accordance with the provisions
thereof. If such resolution is that
the third party action is not
indemnifiable, such resolution shall
constitute a Determination. If such
resolution is that the third party
action is indemnifiable, the
determination shall be derived from
the outcome of such third party
action.
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(c) From time to time after a Determination of a Claim
pursuant to Section 4.2(b), DSC may deliver to the Escrow Agent and Seller a
certificate of an officer of DSC to the effect that (i) there has been a
previous Determination with respect to such Claim, and (ii) as a result of such
Determination the applicable Indemnified Party and/or third party is entitled
to be paid a specified amount. Such certificate shall attach a copy of the
invoice or other documentation supporting the amount of Indemnified costs to be
paid. On the third business day after receipt of the notice from DSC, the
Escrow Agent shall deliver to DSC, such other lndemnified Party and/or any
person designated by DSC, an amount of Indemnified costs, if any, relating to
such Claim payable to DSC or such other Indemnified Party pursuant to such
notice or certificate plus an amount equal to the earnings thereon accrued from
and after the date of the delivery of the Notice of Claim with respect to such
Claim. Any payments out of the Escrow Fund, however, has to be confirmed and
signed by the Seller.
4.3 Claims Pending on Release Date.
If there are pending Claims as of the Release Date, the Escrow Agent
shall continue to hold in escrow amounts equal to the aggregate of all Pending
Claim Amounts and Interest thereon until the earlier of (a) the Escrow Agent
has actually received a written notice from DSC that there exist no further
Indemnified costs in respect of such Claims or (b) Seller provides to DSC and
the Escrow Agent a notice containing evidence that it is satisfactory to the
Escrow Agent in its sole discretion that the Claim has been resolved (and
describing the resolution) or the payment of all obligations of Seller for
Indemnified Amounts with respect to any resolved claim.
DSC covenants and agrees to provide prompt notice to the Escrow Agent
once it has a reasonable basis to believe there exist no further Indemnified
costs in respect of a Claim.
ARTICLE V
INVESTMENT AND VOTING MATTERS
5.1 Investments.
(a) Interest of any kind on or with respect to the assets
comprising the Escrow Fund shall be payable to the Escrow Agent, to be held in
escrow pursuant to this Agreement.
(b) At the direction of Seller pursuant to this Section
5.1(b), the Escrow Agent may invest cash within the Escrow Fund in one or more
of the following: interest bearing current account in USD or DKK and/or time
deposits in USD or DKK with Den Danske Bank.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon actual receipt, if delivered personally or by
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courier, mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like changes of address) or sent
by electronic transmission to the telecopier number specified below. Account
statements covering the Escrow Fund (account) will be submitted monthly from
the Escrow Agent to the parties specified below:
(a) If to DSC:
DSC Communications Corporation
1000 Coit Road
Plano, TX 75075-5813
Attention: Pete Waal
With a copy (which shall not constitute notice) to:
Baker & McKenzie
2001 Ross Avenue
Suite 4500
Dallas, TX 75201
Telecopier No.: 214/978-3099
Attention: John Kendrick, Esq.
Mogens Gaarden
Pontoppidan, Philip & Partners
Vognmagergade 7
DK-1120
Copenhagen, Denmark
Telecopier: 45 33 13 56 43
(b) If to the Seller:
NKT Holding A/S
NKT Alle 1.
DK-2605 Brondby
Denmark
Telecopier No.: 45 43 96 18 20
Attention: President and Chief Executive Officer
With copies to (which shall not constitute notice):
Jan Schans Christensen
Bech-Bruun & Trolle
Nerre Farimagsgade 3
1364 Copenhagen
Denmark
Telecopier: 45 33 15 25 55
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<PAGE> 8
Willcox & Savage, P.C.
1800 NationsBank Center
One Commercial Place
Norfolk Virginia 23510
Telecopier No.: (804) 628-5566
Attention: Keith C. Cuthrell, Jr.
(c) If to the Company:
NKT Elektronik A/S
NKT Alle 85
DK-2605 Brondby
Denmark
Telecopier No.: 45 43 63 13 20
Attention: President and Chief Executive Officer
With copies to, if such notice is prior to the
Closing (which shall not constitute notice) to:
Jan Schans Christensen
Bech-Bruun & Trolle
Nerre Farimagsgade 3
1364 Copenhagen
Denmark
Telecopier 45 33 15 25 55
Willcox & Savage, P.C.
1800 NationsBank Center
One Commercial Place
Norfolk Virginia 23510
Telecopier No.: (804) 628-5566
Attention: Keith C. Cuthrell, Jr.
(d) If to the Escrow Agent:
Den Danske Bank
Holmens Kanal Branch
Corporate Services
Holmens Kanal 2 -12
1092 Copenhagen K
Denmark
or to such other address as any party may have furnished in writing the other
parties in the manner provided above.
6.2 Parties Bound. The provisions of this Agreement shall apply
to, inure to the benefit of, and be binding upon the parties hereto and their
respective heirs, successors, assigns,
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<PAGE> 9
administrators, executors, and other legal Sellers. In no event may Seller
assign any of its rights, privileges, duties, or obligations hereunder. Any
assignment in violation of the foregoing shall be null and void.
6.3 Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which shall be deemed collectively one agreement, but, in making proof hereof,
it shall never be necessary to exhibit more than one such counterpart.
6.4 Resignation and Termination. The Escrow Agent may resign as
such by delivering written notice to such effect at least 30 days prior to the
effective date of such resignation to Seller and DSC. Seller and DSC, acting
jointly, may terminate the Escrow Agent from its position as such by delivering
written notice to the Escrow Agent to such effect executed by Seller and DSC at
least 30 days prior to the effective date of such termination (unless such
termination is as a result of the Escrow Agent's breach of its obligations
hereunder, in which case the effective date of such termination shall be any
date specified in such notice by Seller and DSC). In the event of such
resignation by or termination of the Escrow Agent, a successor Escrow Agent
shall be appointed by mutual agreement between Seller and DSC and the Escrow
Agent which has been so terminated or has so resigned shall promptly deliver to
the successor Escrow Agent the entire Escrow Fund (together with copies of all
records pertaining thereto) upon presentation of evidence reasonably
satisfactory to it of the appointment and authorization of such successor
Escrow Agent by Seller and DSC. From and after the appointment of a successor
Escrow Agent pursuant to this Section 6.4, all references herein to the Escrow
Agent shall be deemed to be to such successor Escrow Agent.
6.5 Entire Agreement; Modifications. This Agreement and the
Purchase Agreement constitute the final, exclusive, and complete understanding
of the parties with respect to the subject matter hereof and supersede any and
all prior agreements, understandings, and discussions with respect thereto.
This Agreement may be amended with the written agreement of the Escrow Agent,
DSC, and Seller.
6.6 Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
6.7 Governing Law. This Agreement shall be governed by and
enforceable under, and construed in accordance with, the Laws of Denmark,
regardless of the Laws that might otherwise govern under applicable principles
of conflicts of law.
6.8 Third Party Beneficiaries. Other than the Indemnified
Parties, no individual, firm, corporation, partnership, or other entity shall
be a third-party beneficiary of this Agreement.
6.9 Remedies Cumulative. The remedies of the parties under this
Agreement are cumulative and will not exclude any other remedies to which any
party may be lawfully entitled.
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<PAGE> 10
6.10 Severability. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by such illegal, invalid, or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable.
6.11 Waiver. The waiver by Seller of a breach of this Agreement by
the Escrow Agent shall not constitute a waiver of any right or remedy Seller
may have with respect to DSC under the Purchase Agreement, or hereunder. The
waiver by DSC of a breach of this Agreement by the Escrow Agent shall not
constitute a waiver of any right or remedy it may have with respect to Seller
under the Purchase Agreement, or hereunder. No delay or failure on the part of
any party hereto in exercising any right, power, or privilege under this
Agreement or under any other agreement or instrument given or entered into in
connection with or pursuant to this Agreement shall impair any such right,
power, or privilege or be construed as a waiver of any event of default
hereunder or any acquiescence therein. No single or partial exercise of any
such right, power, or privilege shall preclude the further exercise of such
right, power, or privilege, or the exercise of any other right, power, or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first above written.
DSC COMMUNICATIONS CORPORATION
By: /s/ James L. Donald
Name: James L. Donald
Title: Chairman of the Board, President
and Chief Executive Officer
NKT HOLDING A/S
By: /s/ Knud Rasmussen/Gerhard Albrechtsen
Name: Knud Rasmussen/Gerhard Albrechtsen
Title: Executive Director/Managing Director
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NKT ELEKTRONIK A/S
By: /s/ Poul Friis/Gerhard Albrechtsen
Name: Poul Friis/Gerhard Albrechtsen
Title: Managing Director/
Chairman of the Board
DEN DANSKE BANK
11.11.1994
By: /s/ Allen Nedergaard/Torben With
Name: Allen Nedergaard/Torben With
Title:
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