EXHIBIT 1.00(A)
STOCKHOLDERS PROXY AGREEMENT
STOCKHOLDERS PROXY AGREEMENT (this "Agreement"), dated as of June 4,
1998, among WAXS INC., a Delaware corporation ("Parent"), and each other
person and entity listed on the signature pages hereof (each, a
"Stockholder").
W I T N E S S E T H:
WHEREAS, as of the date hereof each Stockholder owns (either
beneficially or of record) the number of shares of common stock, par value
$0.01 per share ("Company Common Stock"), of Telco Systems, Inc., a
Delaware corporation (the "Company"), set forth opposite such Stockholder's
name on Exhibit A hereto (all such shares of Company Capital Stock owned by
the Stockholders and any shares of Company Capital Stock hereafter acquired
by the Stockholders prior to the termination of this Agreement being
referred to herein as the "Shares");
WHEREAS, (i) Kopp Investment Advisors, Inc. ("Kopp") has "investment
power" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended ("Rule 13d-3")) with respect to 3,614,569 Shares owned by
clients who have the right to terminate their advisory agreements with Kopp
("Client Shares"), and (ii) Kopp has "voting power" (as defined in Rule
13d-3) with respect to 415,600 Client Shares ("Client Voting Shares") (the
Client Shares that are not Client Voting Shares are referred to herein as
"Client Advisory Shares");
WHEREAS, Parent and the Company, among others, propose to enter into
an Agreement and Plan of Merger and Reorganization, dated as of the date
hereof (as the same may be amended from time to time, the "Merger
Agreement"; capitalized terms herein not otherwise defined herein shall
have the meanings ascribed thereto in the Merger Agreement), which
provides, upon the terms and subject to the conditions thereof, for the
merger of a subsidiary of Parent with and into the Company (the "Merger");
and
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has requested that each Stockholder agree, and, in
order to induce Parent to enter into the Merger Agreement, each Stockholder
has agreed, to grant Parent proxies to vote such Stockholder's Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
TRANSFER AND VOTING OF SHARES
SECTION 1.01. TRANSFER OF SHARES. During the term of this Agreement,
and except as otherwise provided herein, each Stockholder (other than Kopp
with respect to the Client Shares) shall not (a) sell, pledge or otherwise
dispose of any of its Shares if such transaction would result in the
Stockholder no longer having the power to vote or cause to be voted the
Shares, (b) deposit its Shares into a voting trust or enter into a voting
agreement or arrangement with respect to such Shares or grant any proxy
with respect thereto or (c) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect
acquisition or sale, assignment, transfer or other disposition of any of
the Company Capital Stock if such transaction would result in the
Stockholder no longer having the power to vote or cause to be voted the
Shares.
SECTION 1.02. VOTING OF SHARES; FURTHER ASSURANCES. (a) Each
Stockholder, by this Agreement, with respect to those Shares that it owns
of record, does hereby constitute and appoint Parent, or any nominee of
Parent, with full power of substitution, during and for the term of this
Agreement, as its true and lawful attorney and proxy, for and in its name,
place and stead, to vote each of such Shares as its proxy, at every annual,
special or adjourned meeting of the stockholders of the Company (including
the right to sign its name (as stockholder) to any consent, certificate or
other document relating to the Company that the law of the State of
Delaware may permit or require) (i) in favor of the adoption of the Merger
Agreement and approval of the Merger and the other transactions
contemplated by the Merger Agreement, (ii) against any proposal for any
recapitalization, merger, sale of assets or other business combination
between the Company and any person or entity (other than the Merger) or any
other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or which could result in any of the
conditions to the Company's obligations under the Merger Agreement not
being fulfilled, and (iii) in favor of any other matter relating to
consummation of the transactions contemplated by the Merger Agreement.
Each Stockholder further agrees to cause the Shares owned by it
beneficially to be voted in accordance with the foregoing. Each
Stockholder acknowledges receipt and review of a copy of the Merger
Agreement. Notwithstanding anything in this Section 1.02(a) to the
contrary, the Client Advisory Shares shall not be subject to this Section
1.02(a) and the Client Voting Shares shall cease to be subject to this
Section 1.02(a) if and when the owner of such Client Voting Shares
terminates its advisory agreement with Kopp.
(b) Each Stockholder shall perform such further acts and execute
such further documents and instruments as may reasonably be required to
vest in Parent the power to carry out the provisions of this Agreement.
(c) Nothing contained in this Agreement shall be deemed to
restrict a Stockholder who is also a director of the Company from taking
actions in his capacity as a director as may be permitted under the Merger
Agreement.
SECTION 1.03. TERM OF AGREEMENT. This Agreement shall be effective
as of the date hereof and shall expire on the earlier of (a) the Effective
Time and (b) the date of the termination of the Merger Agreement pursuant
to its terms.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants to Parent as follows:
SECTION 2.01. DUE ORGANIZATION, ETC. Such Stockholder (if it is a
corporation, partnership or other legal entity) is duly organized and
validly existing under the laws of the jurisdiction of its organization.
Such Stockholder has full power and authority (corporate or otherwise) to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary action (corporate or otherwise) on the part of
such Stockholder. This Agreement has been duly executed and delivered by
or on behalf of such Stockholder and, assuming its due authorization,
execution and delivery by Parent, constitutes a legal, valid and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to
the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 2.02. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by such Stockholder do not, and
the performance of this Agreement by such Stockholder will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws or
similar organizational documents of such Stockholder (in the case of a
Stockholder that is a corporation, partnership or other legal entity), (ii)
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to such Stockholder or by which it or any of its
properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any of the property or assets of such Stockholder or
(if such Stockholder is a corporation) any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such
Stockholder is a party or by which such Stockholder or any of its
properties is bound or affected, except for any such breaches, defaults or
other occurrences that would not cause or create a material risk of non-
performance or delayed performance by such Stockholder of its obligations
under this Agreement.
(b) The execution and delivery of this Agreement by such
Stockholder do not, and the performance of this Agreement by such
Stockholder will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Exchange Act, and the HSR Act and (ii) where
the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay the
performance by such Stockholder of its obligations under this Agreement.
SECTION 2.03. TITLE TO SHARES. Other than with respect to Kopp to
the extent described in its Schedule 13D dated May 13, 1998 and in Exhibit
A hereto, such Stockholder is the record or beneficial owner of its Shares
free and clear of any proxy or voting restriction other than pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to each Stockholder as follows:
SECTION 3.01. DUE ORGANIZATION, ETC. Parent is a corporation duly
organized and validly existing under the laws of the State of Delaware.
Parent has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby by Parent have been duly authorized
by all necessary corporate action on the part of Parent. This Agreement
has been duly executed and delivered by Parent and, assuming its due
authorization, execution and delivery by the Stockholders, constitutes a
legal, valid and binding obligation of Parent, enforceable against Parent
in accordance with its terms.
SECTION 3.02. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent do not, and the
performance of this Agreement by Parent will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws of Parent, (ii)
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or by which Parent or any of its properties is
bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Parent pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent is a
party or by which it or any of its properties is bound or affected, except
for any such breaches, defaults or other occurrences that would not cause
or create a material risk of non-performance or delayed performance by
Parent of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent do
not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange
Act and the HSR Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by Parent of its
obligations under this Agreement.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.01. NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and
shall be effective upon receipt, if delivered personally, mailed by
registered or certified mail (postage prepaid, return receipt requested) to
the parties at the following addresses (or at such other address for a
party as shall be specified by like changes of address) or sent by
electronic transmission to the telecopier number specified below:
(a) If to Parent
WAXS INC.
945 E. Paces Ferry Road, Suite 2240
Atlanta, Georgia 30326
Attention: Chief Executive Officer
Telecopier No.: (404) 365-9847
with a copy to:
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Steven E. Fox
Telecopier No.: (404) 525-2224
(b) If to a Stockholder, to such Stockholder's address set forth
on Exhibit A.
SECTION 4.02. HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 4.03. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 4.04. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them,
with respect to the subject matter hereof.
SECTION 4.05. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise; provided, however, that Parent may assign
its rights, interests and obligations hereunder to any successor or parent
entity of Parent whose shares are registered under Section 12 of the
Exchange Act (or will be so registered at the Closing).
SECTION 4.06. PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 4.07. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition
to any other remedy at law or in equity.
SECTION 4.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN THAT
STATE. PARENT AND EACH OF THE STOCKHOLDERS EACH HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY DELAWARE STATE OR FEDERAL COURT SITTING IN THE
CITY OF WILMINGTON, DELAWARE, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND PARENT AND EACH OF THE STOCKHOLDERS HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH DELAWARE STATE COURT OR SUCH FEDERAL
COURT. PARENT AND EACH OF THE STOCKHOLDERS EACH HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
SECTION 4.09. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
WAXS INC.
By: /s/
------------------------------------
Name: Steven A. Odom
Title: Chairman and Chief Executive
Officer
STOCKHOLDERS:
/s/
---------------------------------------
DEAN C. CAMPBELL
/s/
---------------------------------------
STEWARD A. FLASCHEN
/s/
---------------------------------------
EDWARD J. FONTENOT
/s/
---------------------------------------
SHELDON HORING
/s/
---------------------------------------
WILLIAM B. SMITH
/s/
---------------------------------------
WILLIAM J. STUART
/s/
---------------------------------------
RICHARD J. NARDONE
/s/
---------------------------------------
PHILIP D. WILSON
/s/
---------------------------------------
DAVID A. LEBEAU
[Signatures continued on next page]
/s/
---------------------------------------
LeRoy C. Kopp
/s/
---------------------------------------
LeRoy C. Kopp Individual Retirement
Account
Kopp Investment Advisors, Inc. Profit
Sharing Trust
By: /s/
------------------------------------
LeRoy C. Kopp as Trustee
Kopp Family Foundation
By: /s/
------------------------------------
LeRoy C. Kopp, Director
Kopp Investment Advisors, Inc., for
itself and as attorney-in-fact for
certain of its clients
By: /s/
------------------------------------
LeRoy C. Kopp, President
EXHIBIT A
LIST OF STOCKHOLDERS
Number of Shares of Company
Common Stock Owned Beneficially
Name and Address of Stockholder and of Record
------------------------------- -------------------------------
LeRoy C. Kopp 100,000
c/o Kopp Investment Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
LeRoy C. Kopp IRA 130,000
c/o Kopp Investment Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
Kopp Investment Advisors, Inc. 7,000
Profit Sharing Trust
c/o Kopp Investment Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
Kopp Family Foundation 30,000
c/o Kopp Investment Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
Kopp Investment Advisors, Inc. 200,000
7701 France Avenue South
Suite 500
Edina, MN 55435
Kopp Investment Advisors, Inc. 3,614,569
as attorney-in-fact*
c/o Kopp Investment Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
Dean C. Campbell 0
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
Dr. Steward A. Flaschen 51,458**
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
Edward J. Fontenot 0
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
Dr. Sheldon Horing 0
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
Dr. William B. Smith, President & CEO 10,422
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
William J. Stuart, VP & CFO 400
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
Richard J. Nardone 1,838
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
Philip D. Wilson 0
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
David A. LeBeau 1,022
Telco Systems, Inc.
63 Nahatan Street
Norwood, MA 02062
(781) 551-0300
-------------------
* Kopp disclaims beneficial ownership of all Client Shares as they are
managed on behalf of clients under agreements terminable at will. Except
for this Agreement, Kopp has no agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any Shares in the
Company.
** Includes 29,958 shares held indirectly by Dr. Flaschen in the Steward
S. Flaschen Revocable Investment Trust, 16,042 shares held indirectly by
Dr. Flaschen in the Joyce D. Flaschen Revocable Investment Trust and 5,458
shares held indirectly by Dr. Flaschen in the Steward S. Flaschen Defined
Benefit Pension Plan.
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