<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
BBN CORPORATION
(NAME OF SUBJECT COMPANY)
GTE MASSACHUSETTS INCORPORATED
GTE CORPORATION
(BIDDERS)
COMMON STOCK, $1.00 PAR VALUE
(INCLUDING THE ASSOCIATED RIGHTS)
(TITLE OF CLASS OF SECURITIES)
055283105
(CUSIP NUMBER OF CLASS OF SECURITIES)
WILLIAM P. BARR, ESQ.
GTE CORPORATION
ONE STAMFORD FORUM
STAMFORD, CONNECTICUT 06904
(203) 965-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
JEFFREY J. ROSEN, ESQ. O'MELVENY & MYERS LLP
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
212-326-2000
MAY 12, 1997
CALCULATION OF FILING FEE
TRANSACTION VALUATION* $615,672,813
AMOUNT OF FILING FEE $123,135
* Estimated for purposes of calculating the amount of the filing fee only.
The amount assumes the purchase of 21,230,097 shares of common stock, $1.00
par value, of BBN Corporation (the "Company") (including the associated
common stock purchase rights) (collectively, the "Shares") at a price per
Share of $29.00 in cash (the "Offer Price"). Such number of shares
represents all the Shares outstanding as of May 5, 1997. Such number does
not include any Shares issuable pursuant to the Company's employee stock
purchase plan, upon exercise of employee stock options or upon conversion
of any of the Company's 6% Convertible Subordinated Notes due 2012.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid: none
Form or registration no.: n/a
Filing party: n/a
Date filed: n/a
(Continued on following pages)
(Exhibit Index is located on Page II-5)
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<PAGE>
SCHEDULE 14D-1 AND 13D
CUSIP NO. 055283105
1.
Name of Reporting Persons S.S. or I.R.S.
Identification No. of Above Persons
GTE Corporation 13-1678633
- --------------------------------------------------------------------------------
2.
Check the Appropriate Box if a Member of a Group (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3.
SEC Use Only
- --------------------------------------------------------------------------------
4.
Source of Funds WC,OO
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5.
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[_]
- --------------------------------------------------------------------------------
6.
Citizenship or Place of Organization
New York
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person*
None
- --------------------------------------------------------------------------------
8.
Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
[_]
- --------------------------------------------------------------------------------
9.
Percent of Class Represented by Amount in Row (7)*
None
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10.
Type of Reporting Person
CO
* Effective on May 5, 1997, GTE Corporation ("Parent") entered into a Stock
Option Agreement (the "Option Agreement") (annexed hereto as Exhibit (c)(2)
with BBN Corporation (the "Company") and, on the same date, Parent and
Parent's wholly owned subsidiary, GTE Massachusetts Incorporated
("Purchaser"), and the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") annexed hereto as Exhibit (c)(1). The Merger
Agreement provides, among other things, that following the satisfaction or
waiver of certain conditions, including the purchase of shares of common
stock, $1.00 par value per share (including the associated common stock
purchase rights), of the Company (the "Shares") pursuant to Purchaser's Offer
to Purchase, annexed hereto as Exhibit (a)(1), in a cash tender offer for all
outstanding Shares at a purchase price of $29 net per share, Purchaser will
be merged with and into the Company, with the Company as the surviving
corporation. Pursuant to the Option Agreement, the Company granted Parent an
irrevocable option (the "Option") to purchase up to 4,225,000 Shares (subject
to adjustment, as set forth in the Option Agreement). The Option is
exercisable upon the occurrence of any event as a result of which Parent is
entitled to receive the Termination Fee pursuant to Section 8.2(b) of the
Merger Agreement and terminates upon the earliest of the events set forth in
Section 2(a) of the Option Agreement. In the event that Parent wishes to
exercise the Option, it will send to the Company a written notice to that
effect. The Merger Agreement and the Option Agreement are described more
fully in Section 11 of the Offer to Purchase dated May 12, 1997 annexed
hereto as Exhibit (a)(1).
<PAGE>
SCHEDULE 14D-1 AND 13D
CUSIP NO. 055283105
1.
Name of Reporting Persons S.S. or I.R.S.
Identification No. of Above Persons
GTE Massachusetts Incorporated 06-1483073
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2.
Check the Appropriate Box if a Member of a Group (a) [_]
(b) [_]
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3.
SEC Use Only
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4.
Source of Funds AF
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5.
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[_]
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6.
Citizenship or Place of Organization
Massachusetts
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person*
None
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8.
Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
[_]
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9.
Percent of Class Represented by Amount in Row (7)*
None
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10.
Type of Reporting Person
CO
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by GTE
Massachusetts Incorporated, a Massachusetts corporation ("Purchaser"), to
purchase all outstanding shares of common stock, par value $1.00 per share
(including the associated common stock purchase rights) (collectively, the
"Shares"), of BBN Corporation, a Massachusetts corporation, at $29.00 per
Share, net to the seller in cash, on the terms and subject to the conditions
set forth in the Offer to Purchase dated May 12, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively (which, as amended
or supplemented from time to time, together constitute the "Offer"). This
Tender Offer Statement on Schedule 14D-1 also constitutes a Statement on
Schedule 13D with respect to the acquisition by Purchaser of a beneficial
ownership of the Shares subject to the Merger Agreement. The item numbers and
responses thereto below are in accordance with the requirements of Schedule
14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is BBN Corporation, a Massachusetts
corporation (the "Company"). The address of the Company's principal executive
offices is 150 CambridgePark Drive, Cambridge, Massachusetts 02140.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6--"Price Range of Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by Purchaser and GTE Corporation, a New
York corporation ("Parent"). The information set forth in the Introduction, in
Section 8--"Certain Information Concerning Purchaser and Parent" and in
Schedule I of the Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither Parent nor Purchaser nor, to
their knowledge, any of the persons listed in Schedule I (Directors and
Executive Officers) to the Offer to Purchase, (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of,
or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)-(b) The information set forth in Section 8--"Certain Information
Concerning Purchaser and Parent," Section 10--"Background of the Offer;
Contacts with the Company" and Section 11--"The Offer and Merger; Merger
Agreement; Stock Option Agreement" of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 9--"Sources and Amounts of
Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
II-1
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a)-(g) The information set forth in the Introduction, in Section 11--"The
Offer and Merger; Merger Agreement; Stock Option Agreement," in Section 12--
"Purpose of the Offer and the Merger; Plans for the Company" and in Section
13--"Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations" of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) Pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of 1934,
the information set forth in Section 8--"Certain Information Concerning
Purchaser and Parent," in Section 11--"The Offer and Merger; Merger Agreement;
Stock Option Agreement" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, in Section 8--"Certain
Information Concerning Purchaser and Parent," in Section 10--"Background of
the Offer; Contacts with the Company," Section 11--"The Offer and Merger;
Merger Agreement; Stock Option Agreement" and in Section 12--"Purpose of the
Offer and the Merger; Plans for the Company" and in Section 15--"Extension of
Tender Period; Amendment; Termination" of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Introduction, in Section 18--"Fees and
Expenses" and in Section 19--"Miscellaneous" of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 8--"Certain Information Concerning
Purchaser and Parent" of the Offer to Purchase, including the financial
statements and related notes thereto incorporated by reference in Section 8,
is incorporated herein by reference. The incorporation by reference herein of
the above-referenced financial information does not constitute an admission
that such information is material to a decision by a stockholder of the
Company whether to sell, tender or hold shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in the Introduction, in Section 8--"Certain
Information Concerning Purchaser and Parent," in Section 10--"Background of
the Offer; Contacts with the Company," Section 11--"The Offer and Merger;
Merger Agreement; Stock Option Agreement" and in Section 12--"Purpose of the
Offer and the Merger; Plans for the Company" of the Offer to Purchase is
incorporated herein by reference.
(b)-(c) The information set forth in Section 12--"Purpose of the Offer and
the Merger; Plans for the Company" and in Section 17--"Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 13--"Effect of the Offer on the
Market for the Shares; Exchange Act Registration; Margin Regulations" and in
Section 17--"Certain Legal Matters; Regulatory Approvals" of the Offer to
Purchase is incorporated herein by reference.
(e) Not applicable.
II-2
<PAGE>
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated May 12, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated May 12, 1997.
(a)(8) Text of Press Release, dated May 6, 1997.
(a)(9) Text of Press Release, dated May 12, 1997.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of May 5, 1997 by and among
Parent, Purchaser and the Company.
(c)(2) Stock Option Agreement dated as of May 5, 1997, by and between
Parent and the Company.
(c)(3) Confidentiality Agreement dated April 26, 1997 by and between
Parent and the Company.
(d) None.
(e) Not applicable.
(f) None.
II-3
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, the undersigned
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 12, 1997
GTE Corporation
/s/ Lawrence W. Whitman
By:__________________________________
Name: Lawrence W. Whitman
Title: Vice President and
Controller
GTE Massachusetts Incorporated
/s/ Robert C. Calafell
By:__________________________________
Name: Robert C. Calafell
Title: President
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
(a)(1) Offer to Purchase, dated May 12, 1997
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9
(a)(7) Form of Summary Advertisement, dated May 12, 1997
(a)(8) Text of Press Release, dated May 6, 1997
(a)(9) Text of Press Release, dated May 12, 1997
(b) None
(c)(1) Agreement and Plan of Merger dated as of May 5, 1997 by and
among Parent, Purchaser and the Company
(c)(2) Stock Option Agreement dated as of May 5, 1997, by and between
Parent and the Company
(c)(3) Confidentiality Agreement dated April 26, 1997 by and between
Parent and the Company
(d) None
(e) Not applicable
(f) None
</TABLE>
II-5
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BBN CORPORATION
AT
$29 NET PER SHARE
BY
GTE MASSACHUSETTS INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
GTE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JUNE 9, 1997, UNLESS EXTENDED.
THE BOARD OF DIRECTORS OF BBN CORPORATION (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS
OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS ACCEPTANCE OF THE OFFER AND
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER BY THE
STOCKHOLDERS OF THE COMPANY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES OF
COMMON STOCK, $1.00 PAR VALUE PER SHARE (INCLUDING THE ASSOCIATED RIGHTS)
(COLLECTIVELY, THE "SHARES"), WHICH, WHEN ADDED TO THE SHARES THEN
BENEFICIALLY OWNED BY GTE CORPORATION ("PARENT") CONSTITUTES AT LEAST TWO-
THIRDS OF THE TOTAL NUMBER OF SHARES OUTSTANDING (THE "MINIMUM CONDITION").
THE MINIMUM CONDITION MAY BE WAIVED BY GTE MASSACHUSETTS INCORPORATED
("PURCHASER"). SEE SECTION 16.
----------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such holder's
Shares (as defined herein) should either (a) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal and mail or deliver it together with the
certificate(s) evidencing the tendered Shares and all other required documents
to the Depositary, or tender such Shares pursuant to the procedure for book-
entry transfer set forth in Section 3 of this Offer to Purchase or (b) request
such stockholder's broker, dealer, commercial bank, trust company or other
nominee to effect the transaction for such stockholder. A stockholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if such stockholder desires to tender such
Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such
Shares by following the procedures for guaranteed delivery set forth in
Section 3 of this Offer to Purchase.
Questions and requests for assistance and for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and the other tender offer materials may also be obtained from
brokers, dealers, commercial banks or trust companies.
----------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
----------------
The date of this Offer to Purchase is May 12, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.............................................................. 3
1. Terms of the Offer.................................................... 5
2. Acceptance for Payment and Payment.................................... 6
3. Procedures for Tendering Shares....................................... 7
4. Withdrawal Rights..................................................... 9
5. Certain Tax Considerations............................................ 10
6. Price Range of Shares; Dividends...................................... 11
7. Certain Information Concerning the Company............................ 11
8. Certain Information Concerning Purchaser and Parent................... 15
9. Sources and Amounts of Funds.......................................... 17
10. Background of the Offer; Contacts with the Company.................... 18
11. The Offer and Merger; Merger Agreement; Stock Option Agreement........ 19
12. Purpose of the Offer and the Merger; Plans for the Company............ 33
13. Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations...................................... 33
14. Dividends and Distributions........................................... 34
15. Extension of Tender Period; Amendment; Termination.................... 35
16. Conditions to the Offer............................................... 36
17. Certain Legal Matters; Regulatory Approvals........................... 37
18. Fees and Expenses..................................................... 40
19. Miscellaneous......................................................... 40
</TABLE>
Schedule I Directors and Executive Officers of Parent and Purchaser
2
<PAGE>
To the Holders of Common Stock of
BBN Corporation:
INTRODUCTION
GTE Massachusetts Incorporated, a Massachusetts corporation ("Purchaser")
and a wholly owned subsidiary of GTE Corporation, a New York corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
$1.00 par value per share (the "Company Common Stock") and the associated
common stock purchase rights (the "Rights," and together with the Company
Common Stock, "Shares"), of BBN Corporation, a Massachusetts corporation (the
"Company"), at $29.00 per Share, net to the seller in cash (the "Offer
Price"), upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser will pay all charges and expenses of Goldman,
Sachs & Co., which are acting as the Dealer Managers (in such capacity, the
"Dealer Manager"), The First National Bank of Boston (the "Depositary"), and
D.F. King & Co., Inc. (the "Information Agent"), incurred in connection with
the Offer in accordance with the terms of agreements entered into between
Purchaser and such persons. See Section 18. For purposes of this Offer to
Purchase, references to "Section" are references to a section of this Offer to
Purchaser, unless the context otherwise requires.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES
WHICH, WHEN ADDED TO THE SHARES THEN BENEFICIALLY OWNED BY PARENT, CONSTITUTES
AT LEAST TWO-THIRDS OF THE TOTAL NUMBER OF SHARES OUTSTANDING. THE MINIMUM
CONDITION MAY BE WAIVED BY PURCHASER. SEE SECTION 16.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 5, 1997 (the "Merger Agreement"), by and among the Company, Parent
and Purchaser. The Merger Agreement provides, among other things, that as
promptly as practicable following the completion of the Offer and the
satisfaction or waiver of certain conditions, including the purchase of Shares
pursuant to the Offer (sometimes referred to herein as the "consummation" of
the Offer) and the approval and adoption of the Merger Agreement by the
stockholders of the Company, if required by applicable law, Purchaser will be
merged with and into the Company (the "Merger"), with the Company as the
surviving corporation (the "Surviving Corporation"). In the Merger, each
issued and outstanding Share (other than Dissenting Shares (as hereinafter
defined)) not owned by Parent, Purchaser, the Company or any of their wholly
owned subsidiaries will be converted into and represent the right to receive
$29.00 in cash or any higher price that may be paid per Share in the Offer,
without interest (the "Merger Price"). See Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD" OR "BOARD OF DIRECTORS")
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER,
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS
OF THE STOCKHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS ACCEPTANCE OF
THE OFFER AND APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER BY
THE STOCKHOLDERS OF THE COMPANY.
Alex. Brown & Sons Incorporated (the "Company's Financial Advisor"),
financial advisor to the Company, has delivered to the Board a written opinion
dated May 6, 1997 to the effect that, as of such
3
<PAGE>
date and based upon and subject to certain matters stated in such opinion, the
cash consideration to be received by the holders of Shares (other than Parent
and its affiliates) in the Offer and the Merger is fair to such holders from a
financial point of view. A copy of such opinion is included with the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9"), which is being mailed to stockholders concurrently herewith, and should
be read carefully in its entirety for a description of the assumptions made,
matters considered and limitations on the review undertaken by the Company's
Financial Advisor.
The Merger Agreement provides that in the event that Purchaser acquires at
least a majority of the Shares outstanding pursuant to the Offer, Parent shall
be entitled to designate for appointment or election to the Board, upon
written notice to the Company, such number of persons so that the designees of
Parent constitute the same percentage (but in no event less than a majority)
of the Board (rounded up to the next whole number) as the percentage of Shares
acquired pursuant to the Offer. Prior to the consummation of the Offer, the
Company will increase the size of the Board or obtain the resignation of such
number of directors as is necessary to enable such number of Parent designees
to be so elected. In the Merger Agreement, the Company, Parent and Purchaser
have agreed to use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the
Effective Time (as defined in Section 11 hereof) be, Continuing Directors (as
defined below). Following the election or appointment of Purchaser's designees
as set forth above and prior to the Effective Time, any amendment of the
Merger Agreement or any amendment to the Articles of Organization or By-Laws
of the Company inconsistent with the Merger Agreement, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent or Purchaser
or any waiver of any of the Company's rights under the Merger Agreement will
require the concurrence of a majority of the Continuing Directors. For
purposes hereof, the term "Continuing Director" means (i) any member of the
Board as of the date of the Merger Agreement, (ii) any member of the Board who
is unaffiliated with, and not a designee or nominee of Parent or Purchaser, or
(iii) any successor of a Continuing Director who is (A) unaffiliated with, and
not a designee or nominee of, Parent or Purchaser, and (B) recommended to
succeed a Continuing Director by a majority of the Continuing Directors then
on the Board, and, in the case under clause (iii) who is not an employee of
the Company.
According to the Company, as of May 5, 1997, (i) 21,230,097 Shares were
validly issued and outstanding, (ii) 3,733,729 Shares would be issuable upon
exercise of outstanding Options (as defined in Section 11) (both vested and
unvested), (iii) 2,823,000 Shares would be issuable upon conversion of the
Company's 6% Convertible Subordinated Notes due 2012 (the "Subordinated
Notes"), (iv) under certain circumstances up to 120,000 Shares would be
issuable pursuant to the ESPP (as defined in Section 11) and (v) 4,225,000
Shares were reserved for issuance upon exercise of the Termination Option (as
defined in Section 11). Based upon the foregoing information and assuming (i)
none of the Options will be exercised for Shares and all such Options will
instead be cancelled or converted as provided in Section 11 hereof, (ii) no
Shares will be issued pursuant to the ESPP and instead all rights to acquire
Shares pursuant to the ESPP will be cancelled in exchange for a cash payment
as provided in Section 11 hereof, (iii) none of the Subordinated Notes will be
converted into Shares and (iv) none of the common stock purchase rights (the
"Rights") issued under the Rights Agreement dated as of June 23, 1988, between
the Company and The First National Bank of Boston, as Rights Agent (as
amended, the "Rights Agreement"), will be exercised for Shares, the Minimum
Condition would be satisfied if 14,153,398 Shares were validly tendered and
not withdrawn. Prior to the execution of the Merger Agreement, the Rights
Agreement was amended so that the transactions contemplated by the Merger
Agreement are exempt from certain provisions of the Rights Agreement.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
4
<PAGE>
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, Purchaser will
accept for payment and pay for all Shares which are validly tendered prior to
the Expiration Date and not withdrawn in accordance with Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Monday, June 9,
1997, unless and until Purchaser, subject to the terms of the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall refer to the latest time
and date at which the Offer, as so extended by Purchaser, shall expire.
Pursuant to the Merger Agreement, and subject to the terms and conditions of
the Offer, if all of the Conditions (as defined in Section 16) are not
satisfied on the initial Expiration Date, and the Merger Agreement has not
been terminated in accordance with its terms, Purchaser shall extend (and re-
extend) the Offer to provide time to satisfy such Conditions through the Final
Termination Date. The "Final Termination Date" shall initially be August 15,
1997, provided, however, if Purchaser shall extend the Offer pursuant to the
provisions of the last sentence of this paragraph beyond August 15, 1997, the
Final Termination Date shall be November 15, 1997. From and after the Final
Termination Date, if all of the Conditions have not been satisfied on any
Expiration Date of the Offer and the Merger Agreement has not been terminated
in accordance with its terms, Purchaser may but shall not be obligated to
extend and re-extend the Offer to provide time to satisfy such Conditions. In
addition, whether or not the Conditions have been satisfied, Purchaser may
extend and re-extend the Offer, from time to time, but in no event beyond
November 15, 1997 if it believes such extension is advisable in order to
facilitate the orderly transition of the business of the Company and to
preserve and maintain the Company's business relationships. Parent and
Purchaser do not expect to utilize this right to extend the Offer. See Section
15.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right to amend the terms and conditions of the Offer in any respect by
giving oral or written notice of such amendment to the Depositary. Without the
consent of the Company, however, no amendment may be made which (x) decreases
the price per Share or changes the form of consideration payable in the Offer,
(y) decreases the number of Shares sought, or (z) imposes additional
conditions to the Offer or amends any other term of the Offer in any manner
adverse to the holders of Shares.
The Offer is subject to certain Conditions set forth in Section 16,
including satisfaction of the Minimum Condition and the expiration or
termination of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). If any such Condition is
not satisfied prior to the expiration of the Offer, Purchaser may, subject to
the terms of the Merger Agreement, (i) terminate the Offer and return all
tendered Shares to tendering stockholders, (ii) extend the Offer and, subject
to withdrawal rights as set forth in Section 4, retain all such Shares until
the expiration of the Offer as so extended, (iii) waive such Condition and,
subject to any requirement to extend the period of time during which the Offer
is open, purchase all Shares validly tendered and not withdrawn by the
Expiration Date or (iv) delay acceptance for payment of (whether or not the
Shares have theretofore been accepted for payment), or payment for, any Shares
tendered and not withdrawn, subject to applicable law, until satisfaction or
waiver of the Conditions to the Offer. For a description of Purchaser's right
to extend the period of time during which the Offer is open, and to amend,
delay or terminate the Offer, see Section 15. Any extension, amendment or
termination will be followed as promptly as practicable by public announcement
thereof, the announcement in the case of an extension to be issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with Rules 14d-4(c), 14d-
6(d) and 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Without limiting the obligation of Purchaser under such rules
or the manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a release to the
Dow Jones News Service.
5
<PAGE>
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its purchase of or payment for
Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in Section 4. However, the ability of Purchaser
to delay the payment for Shares which Purchaser has accepted for payment is
limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder
pay the consideration offered or return the securities deposited by or on
behalf of holders of securities promptly after the termination or withdrawal
of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition), subject to the Merger Agreement, Purchaser
will disseminate additional tender offer materials and extend the Offer if and
to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act.
The minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the terms or information. With respect to a change in price or a change in
percentage of securities sought, a minimum ten business day period is required
to allow for adequate dissemination to stockholders and investor response. If,
prior to the Expiration Date, Purchaser should decide to increase the price
per Share being offered in the Offer, such increase will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer. As
used in this Offer to Purchase, "business day" means any day other than a
Saturday, Sunday or a federal holiday and consists of the time period from
12:01 AM through 12:00 midnight, New York City time, as computed in accordance
with Rule 14d-1 under the Exchange Act.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, banks and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the terms of the Merger Agreement and the
Conditions of the Offer, Purchaser will accept for payment and pay for all
Shares validly tendered and not withdrawn prior to the Expiration Date as soon
as practicable after the Expiration Date. For a description of Purchaser's
right to terminate the Offer and not accept for payment or pay for Shares or
to delay acceptance for payment or payment for Shares, see Section 15.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment tendered Shares if, as and when Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting such
payments to tendering stockholders. In all cases, payment for Shares accepted
for payment pursuant to the Offer will be made only after timely receipt by
the Depositary of (i) certificates evidencing such Shares ("Stock
Certificates") or confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Shares into the Depositary's account at one of the
Book-Entry Transfer Facilities (as defined in Section 3), (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), or
in the case of a book-entry transfer, an Agent's Message (as defined in
Section 3) and (iii) any other required documents. For a description of the
procedure for tendering Shares pursuant to the Offer, see Section
6
<PAGE>
3. Accordingly, payment may be made to tendering stockholders at different
times if delivery of the Shares and other required documents occur at
different times. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY PURCHASER ON
THE CONSIDERATION PAID FOR SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY
DELAY IN MAKING SUCH PAYMENT.
If Purchaser increases the consideration to be paid for Shares pursuant to
the Offer, Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights
of tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Stock Certificates are submitted for more Shares than are
tendered, Stock Certificates for Shares not purchased or tendered will be
returned (or, in the case of Shares tendered by book-entry transfer, such
Shares will be credited to an account maintained at one of the Book-Entry
Transfer Facilities (as defined in Section 3)), without expense to the
tendering stockholder, as promptly as practicable after the expiration or
termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDER. To tender Shares pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees or an Agent's Message (in the case of any
book-entry transfer), and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either (i) the Stock Certificates evidencing such Shares to be tendered
must be received by the Depositary along with the Letter of Transmittal or
(ii) such Shares must be delivered to the Depositary pursuant to the
procedures for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary including an Agent's Message,
in each case prior to the Expiration Date, or (b) the tendering stockholder
must comply with the guaranteed delivery procedures described below. The term
"Agent's Message" means a message transmitted by a Book-Entry Transfer
Facility to and received by the Depositary and forming a part of a Book-Entry
Confirmation, which states that such Book-Entry Transfer Facility has received
an express acknowledgement from the participant in such Book-Entry Transfer
Facility tendering the Shares which are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such
agreement against such participant.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each of The Depository Trust Company and the Philadelphia
Depository Trust Company (collectively referred to as the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in the system of any Book-Entry Transfer Facility may make book-entry delivery
of Shares by causing a Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account at a Book-Entry Transfer Facility in accordance
with the procedures of such Book-Entry Transfer Facility. However, although
delivery of Shares may be effected through book-entry transfer, the Letter of
Transmittal (or facsimile thereof) properly completed and duly executed,
together with any required signature guarantees and any other required
documents, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the guaranteed delivery procedures described below must be
complied with. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
7
<PAGE>
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a recognized member of a Medallion Signature Guarantee Program
or by any other "eligible guarantor institution" as defined in Rule 17Ad-15
under the Exchange Act (each of the foregoing, an "Eligible Institution").
Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter
of Transmittal is signed by the registered holder of the Shares tendered
therewith and such holder has not completed the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal or (b) if such Shares are tendered for the account of an
Eligible Institution.
If a Stock Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Stock
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Stock Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Stock
Certificate, with the signature(s) on such Stock Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Stock Certificates are not immediately
available or time will not permit all required documents to reach the
Depositary on or prior to the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary prior to the Expiration Date as provided below; and
(iii) the Stock Certificates for such Shares, in proper form for transfer
(or a Book-Entry Confirmation), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees (or in the case of a book-entry transfer, an Agent's
Message) and any other documents required by the Letter of Transmittal, are
received by the Depositary within three trading days after the date of
execution of the Notice of Guaranteed Delivery. A "trading day" is any day
on which the New York Stock Exchange (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, INCLUDING THROUGH BOOK-ENTRY TRANSFER FACILITIES, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
BACK-UP FEDERAL INCOME TAX WITHHOLDING. Under the federal income tax laws,
the Depositary will be required to withhold 31% of the amount of any payments
made to certain stockholders pursuant to the Offer. In order to avoid such
backup withholding, each tendering stockholder must provide the Depositary
with such stockholder's correct taxpayer identification number and certify
that such stockholder is not subject to back-up federal income tax withholding
by completing the Substitute Form W-9 included in the Letter of Transmittal
(see Instruction 10 of the Letter of Transmittal) or by filing a Form W-9 with
the Depositary prior to any such payments. If the stockholder is a nonresident
alien or
8
<PAGE>
foreign entity not subject to backup withholding, the stockholder must give
the Depositary a completed Form W-8 Certificate of Foreign Status prior to
receipt of any payments.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth above,
a tendering stockholder irrevocably appoints designees of Purchaser as the
stockholder's attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full
extent of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by Purchaser (and any and all other
Shares or other securities or property issued or issuable in respect of such
Shares on or after the date of the Merger Agreement). All such proxies and
powers of attorney shall be irrevocable and coupled with an interest in the
tendered Shares. Such appointment is effective only upon acceptance for
payment of the Shares by Purchaser. Upon such acceptance for payment, all
prior proxies and consents given by the stockholder with respect to such
Shares and other securities will, without further action, be revoked, and no
subsequent proxies may be given nor any subsequent written consent executed by
such stockholder (and, if given or executed, will not be deemed to be
effective) with respect thereto. The designees of Purchaser will, with respect
to the Shares and other securities, be empowered to exercise all voting and
other rights of such stockholder as they in their sole discretion may deem
proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent or otherwise. Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser is able to
exercise full voting and other rights with respect to such Shares (including
voting at any meeting of stockholders then scheduled or acting by written
consent without a meeting).
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that such stockholder has the full power and authority to tender
and assign the Shares tendered, as specified in the Letter of Transmittal.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tendered Shares will be determined by Purchaser in its sole discretion,
which determination shall be final and binding. Purchaser reserves the
absolute right to reject any or all tenders of any Shares determined by it not
to be in proper form or the acceptance for payment of, or payment for which
may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also
reserves the absolute right to waive any defect or irregularity in any tender
of Shares. No tender of Shares will be deemed to have been properly made until
all defects and irregularities relating thereto have been cured or waived.
Purchaser's interpretation of the terms and conditions of the Offer in this
regard (including the Letter of Transmittal and the Instructions thereto) will
be final and binding. None of Purchaser, Parent, the Depositary, the Dealer
Manager, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur
any liability for failure to give any such notification.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn at any time after July 11, 1997 if they have not
previously been accepted for payment as provided in this Offer to Purchase.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase.
9
<PAGE>
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder, if different from that of the person who tendered
such Shares. If Stock Certificates evidencing Shares to be withdrawn have been
delivered to the Depositary, a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution (except in the case of Shares tendered
by an Eligible Institution), must be submitted prior to the release of such
Shares. In addition, such notice must specify, in the case of Shares tendered
by delivery of Stock Certificates, the name of the registered holder (if
different from that of the tendering stockholder) and the serial numbers shown
on the particular Stock Certificates evidencing the Shares to be withdrawn,
or, in the case of Shares tendered by book-entry transfer, the name and number
of the account at one of the Book-Entry Transfer Facilities to be credited
with the withdrawn Shares.
Withdrawals may not be rescinded, and Shares withdrawn will thereafter be
deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Dealer Manager, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN TAX CONSIDERATIONS
The following summary addresses the material federal income tax consequences
to holders of Shares who sell their Shares in the Offer. The summary does not
address all aspects of federal income taxation that may be relevant to
particular holders of Shares and thus, for example, may not be applicable to
holders of Shares who are not citizens or residents of the United States, who
are employees and who acquired their Shares pursuant to the exercise of
compensatory stock options, or who are entities that are otherwise subject to
special tax treatment under the Internal Revenue Code of 1986, as amended (the
"Code") (such as insurance companies, tax-exempt entities and regulated
investment companies); nor does this summary address the effect of any
applicable foreign, state, local or other tax laws. The discussion assumes
that each holder of Shares holds such Shares as a capital asset within the
meaning of Section 1221 of the Code. The federal income tax discussion set
forth below is included for general information only and is based upon present
law. The precise tax consequences of the Offer (or the Merger) will depend on
the particular circumstances of the holder. STOCKHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX CONSEQUENCES TO THEM OF THE PROPOSED TRANSACTION.
The receipt of cash for Shares pursuant to the Offer (or the Merger) will be
a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a stockholder who receives cash for Shares pursuant to the Offer (or
the Merger) will recognize gain or loss for federal income tax purposes equal
to the difference between the amount of cash received in exchange for the
Shares sold and such stockholder's adjusted tax basis in such Shares. Such
gain or loss will be capital gain or loss, and will be long-term capital gain
or loss if the holder has held the Shares for more than one year at the time
of sale. Gain or loss will be calculated separately for each block of Shares
tendered pursuant to the Offer.
Under current law, the maximum federal tax rate applicable to long-term
capital gains recognized by an individual is 28%, and the maximum federal tax
rate applicable to ordinary income (including dividends and short-term capital
gains recognized by individuals) is 39.6%. The maximum federal tax rate
applicable to all capital gains and ordinary income recognized by a
corporation is 35%. It is possible that legislation may be enacted that would
reduce the maximum federal tax rate applicable to
10
<PAGE>
long-term capital gains, possibly with retroactive effect. It is not possible
to predict whether or in what form any such legislation may be enacted, or the
effective date of such legislation if enacted.
WITHHOLDING. Unless a stockholder complies with certain reporting and/or
certification procedures, or is an exempt recipient under applicable
provisions of the Code (and regulations promulgated thereunder), such
stockholder may be subject to a "backup" withholding tax of 31% with respect
to any payments received in the Offer, the Merger or as a result of the
exercise of the holder's dissenters' rights. Stockholders should contact their
brokers to ensure compliance with such procedures. Foreign stockholders should
consult with their tax advisors regarding U.S. withholding taxes in general.
DISSENTERS. A stockholder who does not sell Shares in the Offer or the
Merger and who exercises and perfects such stockholder's rights under the
Business Corporation Law of the Commonwealth of Massachusetts, as amended
("MBCL"), to demand fair value for such Shares will recognize capital gain or
loss (and may recognize an amount of interest income) attributable to any
payment received pursuant to the exercise of such rights based upon the
principles described above. See Section 17.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are traded under the symbol "BBN" primarily on the NYSE and to a
lesser extent on the Boston, Cincinnati, Midwest, Pacific and Philadelphia
exchanges. The following table sets forth, for the fiscal quarters indicated,
the high and low sales prices per Share on the NYSE.
<TABLE>
<CAPTION>
HIGH LOW
------- --------
<S> <C> <C>
Fiscal Year Ended June 30, 1995:
Quarter ended September 30, 1994....................... $18 3/4 $ 10
Quarter ended December 31, 1994........................ $20 7/8 $ 12 5/8
Quarter ended March 31, 1995........................... $22 1/4 $ 14 5/8
Quarter ended June 30, 1995............................ $30 $ 16 1/2
Fiscal Year Ended June 30, 1996:
Quarter ended September 30, 1995....................... $39 3/8 $ 27 1/4
Quarter ended December 31, 1995........................ $48 3/4 $ 28 1/4
Quarter ended March 31, 1996........................... $40 7/8 $ 24 1/8
Quarter ended June 30, 1996............................ $29 5/8 $ 20 1/4
Fiscal Year Ended June 30, 1997:
Quarter ended September 30, 1996....................... $22 1/4 $ 16 3/4
Quarter ended December 31, 1996........................ $24 3/8 $ 17
Quarter ended March 31, 1997........................... $27 1/2 $ 16 5/8
Quarter ended June 30, 1997 (through May 9, 1997)...... $28 7/8 $ 15 3/4
</TABLE>
No cash dividends have been declared or paid on the Shares since June 30,
1992. The Merger Agreement prohibits the Company from declaring or paying any
dividends until the effectiveness of the Merger.
On April 7, 1997, approximately one month prior to the public announcement
of the execution of the Merger Agreement, the closing sale price on the NYSE
was $17 5/8. On May 5, 1997, the last full trading day prior to the
announcement of the terms of the Merger Agreement, the last reported sales
price per Share on the NYSE was $22 5/8. On May 9, 1997, the last full trading
day prior to the commencement of the Offer, the last reported sales price per
Share on the NYSE was $28 5/8. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
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<PAGE>
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The following information concerning the Company has been taken from or
based upon publicly available documents on file with the Securities and
Exchange Commission (the "SEC"), other publicly available information and
information provided by the Company. Although neither Purchaser nor Parent has
any knowledge that would indicate that such information is untrue, neither
Purchaser nor Parent takes any responsibility for, or makes any representation
with respect to, the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information but which are
unknown to Purchaser or Parent.
GENERAL. The Company is a Massachusetts corporation with its principal
offices located at 150 CambridgePark Drive, Cambridge, Massachusetts 02140 and
is a leading provider of Internet and internetworking services and solutions
to businesses and other organizations, and a provider of contract research,
development, and consulting services to governmental and other organizations.
The Company operates through two principal business units: BBN Planet and BBN
Systems and Technologies. BBN Planet is responsible for the Company's Internet
offerings to business and other organizational customers, and includes the
Company's managed Internet access and value-added services and related network
operations and Internet dial-up access capabilities. BBN Systems and
Technologies focuses on providing networking solutions and contract research
and development, principally for the federal government, as well as creating
next generation technology for advanced Internet applications, and is
organized into three principal groups: Internetwork Technologies, Information
Systems and Technologies, and Physical Systems and Technologies. The Company's
commercial speech recognition activities are included in BBN Systems and
Technologies. The Company also has minority equity positions in a number of
ancillary ventures which in the aggregate are immaterial to the Company's
current financial condition.
AVAILABLE INFORMATION. The Company is subject to the information
requirements of the Exchange Act, and is required to file reports and other
information with the SEC relating to its business, financial condition and
other matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, options granted to them, the
principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be described in
periodic statements distributed to the Company's stockholders and filed with
the SEC. These reports, proxy statements, and other information, including the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996
(the "Company 10-K"), the Company's Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1996, December 31, 1996 and March 31, 1997 (to be
filed on or before May 15, 1997) and the Schedule 14D-9, should be available
for inspection and copying at the SEC's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located
at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of this material may also be obtained by mail, upon payment of the SEC's
customary fees, from the SEC's principal office. Such material should also be
available for inspection at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. The SEC also maintains an Internet site on the world
wide web at http://www.sec.gov that contains reports and other information.
A copy of this Offer to Purchase, and certain of the agreements referred to
herein, are attached to Purchaser's Tender Offer Statement on Schedule 14D-1,
dated May 12, 1997 (the "Schedule 14D-1"), which has been filed with the SEC.
The Schedule 14D-1 and the exhibits thereto, along with such other documents
as may be filed by Purchaser with the SEC, may be examined and copied from the
offices of the SEC in the manner set forth above.
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<PAGE>
CERTAIN FINANCIAL INFORMATION FOR THE COMPANY. The following table sets
forth certain summary consolidated financial information with respect to the
Company and its subsidiaries excerpted or derived from the audited financial
statements contained in the Company 10-K and the unaudited financial
information contained in the Company's Quarterly Reports on Form 10-Q for the
nine months ended March 31, 1996 and 1997 (to be filed on or before May 15,
1997). More comprehensive financial information is included in such reports
and other documents filed by the Company with the SEC, and the following
summary is qualified in its entirety by reference to such documents (which may
be inspected and obtained as described above), including the financial
statements and related notes contained therein. Neither Parent nor Purchaser
assumes any responsibility for the accuracy of the financial information set
forth below.
BBN CORPORATION
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31 FISCAL YEAR
(UNAUDITED) ENDED JUNE 30
------------------ ----------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenue.................. $254,145 $165,607 $234,339 $175,603 $160,711
Income (loss) from
continuing operations... (33,146) (38,653) (49,902) 67,102 (8,969)
Income (loss) from
discontinued operations
(net of taxes).......... 20,000 (7,029) (6,740) (2,258) 1,145
Net income (loss)........ (13,146) (45,682) (56,642) 64,844 (7,824)
BALANCE SHEET DATA (AT END OF
PERIOD)
Net current assets
(liabilities)............ 85,099 83,275 120,111 116,003 65,308
Total assets............. 272,107 177,836 249,337 203,964 122,712
Stockholders' equity..... 69,016 36,832 79,336 82,552 7,271
PER SHARE INFORMATION
Income (loss) per share:
Continuing operations... $ (1.54) $ (2.19) $ (2.80) $ 3.73 $ (0.55)
Discontinued operations. 0.93 (0.40) (0.38) (0.12) 0.07
-------- -------- -------- -------- --------
Net income (loss) per $ (0.61) $ (2.59) $ (3.18) $ 3.61 $ (0.48)
share................... ======== ======== ======== ======== ========
</TABLE>
13
<PAGE>
PROJECTED FINANCIAL INFORMATION. In connection with Parent's review of the
Company and in the course of the negotiations described in Section 10, the
Company and its representatives provided Parent with certain business and
financial information which Parent and Purchaser believe is not publicly
available. Following is a summary of the material forecast and financial model
information:
SUMMARY FINANCIAL OUTLOOK (AS OF FEBRUARY 7, 1997)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FORECAST FINANCIAL MODEL
FISCAL YEAR FISCAL YEAR
ENDING JUNE 30, ENDING JUNE 30,
1997 1998
--------------- ---------------
<S> <C> <C>
INCOME STATEMENT DATA
Revenue
BBN Planet................................... $180.8 $345.1
BBN System & Technologies.................... 186.3 215.0
Eliminations of interdivisional sales between
business units.............................. (2.7) (3.8)
------ ------
$364.4 $556.3
------ ------
Loss from operations
Planet....................................... $(48.5) $(22.2)
System & Technologies........................ 5.8 10.0
Unallocated corporate expenses, net.......... (3.1) (4.1)
------ ------
$(45.8) $(16.3)
------ ------
Interest expense, net.......................... $ (0.2) $ (4.0)
------ ------
Net loss....................................... $(46.0) $(20.3)
====== ======
Net loss per share............................. $(2.15) $(0.94)
====== ======
</TABLE>
According to the Company, the fiscal year 1998 financial model information
(i) reflects revenue from an Internet Services Agreement with AT&T Corp.
("AT&T"), but does not reflect the impact of certain material disagreements
between the Company and AT&T regarding the terms of such agreement and (ii)
assumes that the percentage of BBN Planet's revenue derived from the Company's
contract with America OnLine, Incorporated will be consistent with the
percentage of revenue derived from such contract reported for fiscal year
1997. The costs estimate was based on historical experience and the
achievement of certain operating efficiencies, as well as other estimates. The
model was prepared on a stand-alone basis and does not give effect to the
Offer or the Merger.
In reaching its decision to acquire the Company, Parent made certain
assumptions of its own with regard to revenues and operations of the Company's
businesses as a wholly-owned subsidiary, which assumptions are not reflected
in the above financial information.
FURTHER, THE COMPANY HAS ADVISED PARENT AND PURCHASER THAT THE FOREGOING
FORECAST AND FINANCIAL MODEL INFORMATION (THE "PROJECTIONS") WERE NOT PREPARED
WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES
OF THE SEC OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS. THE PROJECTIONS ARE
INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE THEY WERE PROVIDED TO PARENT.
NONE OF PARENT, PURCHASER, THE COMPANY OR ANY OF THEIR RESPECTIVE ADVISORS OR
ANY OTHER PARTY WHO RECEIVED SUCH INFORMATION ASSUMES ANY RESPONSIBILITY FOR
THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS.
ALTHOUGH PRESENTED WITH NUMERICAL SPECIFICITY, THE PROJECTIONS ARE BASED UPON
A VARIETY OF ASSUMPTIONS RELATING TO THE BUSINESSES OF THE COMPANY, INDUSTRY
PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS
14
<PAGE>
AND OTHER MATTERS, ALL OF WHICH MAY NOT BE REALIZED AND ARE SUBJECT TO
SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCE THAT THE PROJECTIONS SET
FORTH ABOVE WILL BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY FROM
THOSE SHOWN. THE PROJECTIONS HAVE NOT BEEN EXAMINED OR COMPILED BY THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS. FOR THESE REASONS, AS WELL AS THE
BASES ON WHICH SUCH PROJECTIONS WERE COMPILED, THERE CAN BE NO ASSURANCE THAT
ACTUAL RESULTS WILL NOT DIFFER MATERIALLY FROM THOSE ESTIMATED. THE INCLUSION
OF SUCH PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT
PARENT, PURCHASER, THE COMPANY, ANY OF THEIR RESPECTIVE ADVISORS OR ANY OTHER
PARTY WHO RECEIVED SUCH INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF
FUTURE EVENTS. PARENT DID AN INDEPENDENT ASSESSMENT OF THE COMPANY'S VALUE AND
DID NOT RELY TO ANY MATERIAL DEGREE UPON THE FOREGOING PROJECTIONS. NONE OF
THE COMPANY, PARENT, PURCHASER OR ANY OTHER PARTY INTENDS PUBLICLY TO UPDATE
OR OTHERWISE PUBLICLY REVISE THE PROJECTIONS SET FORTH ABOVE EVEN IF
EXPERIENCE OR FUTURE CHANGES MAKE IT CLEAR THAT SUCH PROJECTIONS WILL NOT BE
REALIZED.
THE PROJECTIONS SET FORTH ABOVE CONSTITUTE FORWARD-LOOKING INFORMATION. FOR
A DISCUSSION OF FACTORS REGARDING SUCH FORWARD-LOOKING INFORMATION SEE "--
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION."
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION. For purposes of
the Private Securities Litigation Reform Act of 1995, Parent and Purchaser
identify the following important factors which could cause the Company's
actual results to differ materially from the foregoing projections:
(a) the development and expansion of the market for Internet access
services and products and of the networks which comprise the Internet;
(b) the Company's ability to continue and expand its business
relationships, including relationships with existing major customers;
(c) the capacity, reliability, cost and security of the Company's network
infrastructure;
(d) the Company's ability to finance expansion of its network;
(e) the Company's ability to develop or acquire the rights to price
competitive products and services;
(f) competition from larger competitors with more resources;
(g) the Company's ability to attract and retain highly qualified
management, technical, marketing and sales personnel;
(h) the Company's ability to manage growth;
(i) the Company's ability to improve its operating margins; and
(j) effects of the Offer and Merger.
With respect to the factor described in clause (b) above, Parent and
Purchaser note that the Company and AT&T have initiated the dispute resolution
procedures provided in the Internet Services Agreement between the two
companies in order to resolve material disagreements regarding the terms of
such agreement.
Many of the foregoing factors have been discussed in more detail in the
Company's prior filings with the SEC. The foregoing review of factors pursuant
to the Private Litigation Securities Reform Act of 1995 should not be
construed as exhaustive.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
GENERAL. Purchaser is a newly formed Massachusetts corporation and a wholly
owned subsidiary of Parent. To date, Purchaser has not conducted any business
other than in connection with the Offer. Until immediately prior to the time
Purchaser purchases Shares pursuant to the Offer, it is not anticipated that
Purchaser will have any significant assets or liabilities or engage in
activities other than those incident to its formation and capitalization and
the transactions contemplated by the Offer. Because Purchaser is a newly
formed corporation and has minimal assets and capitalization, no meaningful
financial information regarding Purchaser is available.
15
<PAGE>
Parent is a New York corporation. Parent, together with its consolidated
subsidiaries, is one of the largest publicly held telecommunications companies
in the world. It is the largest U.S.-based local telephone company. Parent's
domestic and international operations serve 25.9 million access lines through
subsidiaries in the United States, Canada, and the Dominican Republic and an
affiliate in Venezuela. Parent is a leading mobile-cellular operator in the
United States, with the potential of serving 61.9 million cellular and
personal communications service customers. Outside the United States, Parent
operates mobile-cellular networks serving some 16.4 million POPs through
subsidiaries in Canada and the Dominican Republic and affiliates in Venezuela
and Argentina. Beginning in 1996, Parent became the first among its peers to
offer "one-stop shopping" for local, long-distance and Internet access
services. Parent is also a leader in government and defense communications
systems and equipment, aircraft-passenger telecommunications, directories and
telecommunications-based information services and systems. Parent also has
subsidiaries engaged in financing, insurance, leasing and other activities
offering financial and related services primarily to its operating companies.
One of these subsidiaries, GTE Service Corporation, furnishes, at cost,
advisory and consulting services related to administration, operations,
accounting methods and procedures, insurance, human resources, financing,
Federal and state taxes and other matters to operating companies of Parent.
Parent and its subsidiaries had approximately 102,000 employees at December
31, 1996.
The principal executive offices of Parent and Purchaser are located at One
Stamford Forum, Stamford, Connecticut 06904. The name, citizenship, business
address, present principal occupation or employment, and material positions
held during the past five years of each of the directors and executive
officers of Purchaser and of Parent are set forth in Schedule I to this Offer
to Purchase.
Except as set forth in this Offer to Purchase, neither Parent nor Purchaser,
or, to the best knowledge of Parent or Purchaser, any of the persons listed on
Schedule I, has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, neither Parent nor Purchaser, or, to the best
knowledge of Parent or Purchaser, any of the persons listed on Schedule I, has
had, since July 1, 1993, any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the SEC. Except as set forth in this
Offer to Purchase, since July 1, 1993, there have been no contacts,
negotiations or transactions between Parent or Purchaser, or their respective
subsidiaries or, to the best knowledge of any of Parent or Purchaser, any of
the persons listed on Schedule I, and the Company or its affiliates,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer
of a material amount of assets. Except, as set forth in this Offer to
Purchase, neither Parent nor Purchaser or, to the best knowledge of Parent or
Purchaser, any of the persons listed on Schedule I, or any majority-owned
subsidiary or associate of Parent or Purchaser or any person so listed
beneficially owns any Shares or has effected any transactions in the Shares in
the past 60 days. On November 16, 1995, the Company entered into a subcontract
to provide certain products and services to a subsidiary of Parent in
connection with the Mobile Subscriber Equipment Program awarded to such
subsidiary in 1985. The approximate value of the subcontract was $2.3 million.
16
<PAGE>
CERTAIN FINANCIAL INFORMATION FOR PARENT. Set forth below is a summary of
certain consolidated financial and operating data relating to Parent and its
consolidated subsidiaries excerpted or derived from the information contained
in or incorporated by reference into Parent's Annual Report on Form 10-K for
the year ended December 31, 1996 filed with the SEC (the "Parent 10-K"). More
comprehensive financial information is included in or incorporated by
reference into the Parent 10-K and other documents filed by Parent with the
SEC, and the financial information summary set forth below is qualified in its
entirety by reference to the Parent 10-K and such other documents and all the
financial information and related notes contained therein.
GTE CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED DECEMBER 31
------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
RESULTS OF OPERATIONS
Revenues and sales.................................... $21,339 $19,957 $19,528
Operating income...................................... 5,488 5,056 4,752
Net income (loss)
Before extraordinary charges....................... 2,798 2,538 2,441
Consolidated....................................... 2,798 (2,144) 2,441
ASSETS AND CAPITAL (AT END OF PERIOD)
Consolidated assets................................... 38,422 37,019 42,500
Long-term debt and redeemable preferred stock......... 13,210 12,744 12,236
Shareholders' equity.................................. 7,336 6,871 10,483
Net cash from operations.............................. 5,899 5,033 4,740
PER SHARE
Earnings (loss) per common share
Before extraordinary charges....................... 2.89 2.62 2.55
Consolidated....................................... 2.89 (2.21) 2.55
</TABLE>
AVAILABLE INFORMATION. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the SEC
relating to its business, financial condition and other matters. Information,
as of particular dates, concerning Parent's directors and officers, their
remuneration, stock options granted to them, the principal holders of Parent's
securities and any material interest of such persons in transactions with
Parent is required to be described in proxy statements distributed to Parent's
stockholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and should also be available for inspection at the
SEC's regional offices located at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may also be obtained by
mail, upon payment of the SEC's customary fees, by writing to its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The information
should also be available for inspection at the NYSE, 20 Broad Street, New
York, New York 10005.
9. SOURCES AND AMOUNTS OF FUNDS.
Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding, assuming that
no Options are exercised, no Subordinated
17
<PAGE>
Notes are converted, no Shares are issued pursuant to the ESPP and no Rights
are exercised, and to pay fees and expenses related to the Offer and the
Merger will be approximately $620 million. If all In the Money Options (as
defined in Section 11) are exercised and tendered, the total funds needed
would increase by approximately $27,000,000, if all Shares issuable pursuant
to the ESPP (as defined in Section 11) are issued and tendered, the total
funds needed would increase by $2,450,000 and if all Subordinated Notes are
converted and tendered, the total funds needed would increase by $70,731,000.
Purchaser plans to obtain all funds needed for the Offer through a capital
contribution, which will be made by Parent to Purchaser at the time Shares
tendered pursuant to the Offer are accepted for payment. Parent intends to
obtain the funds necessary to make this capital contribution from internally
generated funds and short-term borrowings at market interest rates. Parent
does not expect to make any borrowings under any of its existing credit
agreements to obtain funds needed for the Offer and the Merger. The short-term
borrowings will be repaid by Parent from time to time from internally
generated funds or from the proceeds of other borrowings. No final decisions
have been made by Parent concerning the specific source of funds to be used
for purchase of the Shares. However, the Offer is not conditioned on obtaining
financing.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In July, 1996, a representative of the Company's Financial Advisor contacted
Robert C. Calafell, Senior Vice President-Corporate Planning and Development
of Parent, regarding the possibility of a strategic opportunity involving
Parent and the Company. Thereafter, representatives of the Company had several
discussions with representatives of Parent regarding a variety of possible
strategic transactions between the Company and Parent.
On October 22, 1996, Charles R. Lee, Chairman and Chief Executive Officer of
Parent, and Mr. Calafell met with George H. Conrades, Chief Executive Officer
and President of the Company, and Roger D. Wellington, a director of the
Company and a former Senior Vice President of GTE International, Inc., an
affiliate of Parent, in Stamford, Connecticut. No firm proposals resulted from
this meeting. On November 26, 1996, Parent and the Company entered into a
mutual confidentiality agreement. Thereafter, Parent had several meetings with
various representatives of the Company to review the Company's business and
explore possible transactions.
On January 20, 1997, James A. Attwood, Vice President-Corporate Planning and
Development for GTE Service Corporation, an affiliate of Parent, and certain
other representatives of Parent met in Boston with Bruce Linton, a Vice
President of BBN Planet, and discussed, among other things, the Company's
strategic plans. Mr. Calafell and Mr. Attwood met with Mr. Linton on March 5,
1997 and indicated Parent's interest in exploring an acquisition of the
Company. The parties also discussed the possibility of a significant minority
investment by Parent in the Company and the possibility of joint ownership in
the Company's network. Detailed discussions were scheduled and Mr. Calafell
requested that Mr. Linton contact Parent if, as a result of other
opportunities available to the Company, Parent should move more quickly in its
review of a possible transaction.
On March 25, 1997, Mr. Kent B. Foster, President of Parent, met with Mr.
Conrades in Dallas, Texas to review the status of discussions between the
parties and to discuss the data telecommunications market generally.
Subsequently, Mr. Conrades telephoned Mr. Foster to advise him that a third
party had accelerated discussions regarding an acquisition of the Company and
had indicated that it would make a proposal shortly. Mr. Foster then agreed
that Parent would accelerate Parent's scheduled due diligence review.
Over the next two and one-half weeks, Parent continued its due diligence
review. On April 9, 1997, Mr. Calafell, Mr. Attwood and other representatives
of Parent met with Mr. Conrades, Ralph A. Goldwasser, Chief Financial Officer
of the Company, and other representatives of the Company to discuss issues
related to a possible acquisition of the Company by Parent, including issues
related to retention and motivation of employees.
18
<PAGE>
On April 11, 1997, Parent retained Goldman, Sachs & Co. ("Goldman Sachs") as
financial advisor in connection with a possible acquisition of the Company. On
April 26, 1997, Parent and the Company entered into the Confidentiality
Agreement referred to in Section 11, which included certain standstill and
employee solicitation provisions. From April 26, 1997 through April 29, 1997,
senior managers of Parent and the Company had various due diligence
discussions.
Early in the week of April 28, 1997, Parent delivered to the Company initial
drafts of a merger agreement that contemplated a cash tender offer by Parent
for all of the outstanding Shares of the Company, to be followed by a merger
of a subsidiary of Parent with and into the Company. No price was proposed in
the merger agreement.
On April 30, 1997, the Strategic Issues, Planning and Technology Committee
of Parent's Board of Directors met to review a possible acquisition by Parent
of the Company. The Committee agreed to recommend the acquisition to Parent's
Board of Directors.
On May 2, 1997, Parent's Board of Directors met to consider, among other
things, an acquisition of the Company. The Board approved the acquisition of
all of the Shares of the Company for cash within a determined price range,
subject to negotiation and execution of definitive agreements containing
provisions acceptable to Parent's executive officers. Goldman Sachs was
present at that meeting and delivered its oral opinion to Parent's Board of
Directors that the proposed acquisition of the Company for a price in the
determined range was fair from a financial point of view to Parent.
On Friday, May 2, 1997, Mr. Foster telephoned Mr. Conrades and made a
proposal pursuant to which Parent, through a subsidiary, would acquire the
Company for a per Share cash price of $27.00, subject to negotiation of
mutually acceptable terms and conditions.
Following the meeting of the Company's Board of Directors on May 2, 1997,
representatives of the Company's Financial Advisor reported to Goldman Sachs
that Parent's proposal had not been accepted by the Company, but that the
Company was interested in pursuing discussions if Parent were willing to raise
its offer. In a conversation early on May 3, 1997, Mr. Conrades confirmed to
Mr. Foster that Parent's proposal had not been accepted.
On May 4, 1997, Mr. Foster called Mr. Conrades and after discussion,
increased Parent's offer to $29.00 per Share in cash, provided the terms of
the merger agreement, including terms regarding the payment of a termination
fee and the terms of a stock option agreement, exercisable at any time that a
termination fee would become payable, could be finalized to Parent's
satisfaction.
From May 3, 1997 through May 6, 1997, representatives of Parent and the
Company negotiated the final terms of the Merger Agreement and the other
definitive documents for the transaction.
On Tuesday, May 6, 1997, the Company's Board of Directors approved the
Merger Agreement. Thereafter, on May 6, the definitive agreements were
executed and delivered, and the transaction was publicly announced.
On Monday, May 12, 1997, Parent commenced the Offer.
To the extent any of the foregoing information described events to which
neither Parent nor Purchaser or their advisors were a party, it is based on
information provided by the Company.
11. THE OFFER AND MERGER; MERGER AGREEMENT; STOCK OPTION AGREEMENT.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement, a
copy of which is filed with the SEC as an exhibit to the Schedule 14D-1 and
which is incorporated herein by reference. The following summary is qualified
in its entirety by reference to the Merger Agreement.
19
<PAGE>
THE OFFER. The Merger Agreement provides for the making of the Offer by
Purchaser. Subject to the Merger Agreement not having been terminated in
accordance with its terms, Purchaser has agreed to accept for payment and pay
for all the Shares validly tendered pursuant to the Offer prior to the
Expiration Date and not withdrawn, as promptly as practicable following the
Expiration Date. Pursuant to the Merger Agreement and subject to the
Conditions, if all of the Conditions are not satisfied on the initial
Expiration Date, and the Agreement has not been terminated in accordance with
its terms, Purchaser shall extend (and re-extend) the Offer to provide time to
satisfy such Conditions through the Final Termination Date. From and after the
Final Termination Date, if all of the Conditions have not been satisfied on
any Expiration Date of the Offer and the Merger Agreement has not been
terminated in accordance with its terms, Purchaser may but shall not be
obligated to extend and re-extend the Offer to provide time to satisfy such
Conditions. In addition, whether or not the Conditions have been satisfied,
Purchaser may extend and re-extend the Offer, from time to time, but in no
event beyond November 15, 1997, if it believes such extension is advisable in
order to facilitate the orderly transition of the business of the Company and
to preserve and maintain the Company's business relationships. Parent and
Purchaser do not expect to utilize this right to extend the Offer. See Section
15.
The obligation of Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to (i) the tender and non-withdrawal
of Shares which, when added to the Shares then beneficially owned by Parent,
constitutes two-thirds of the Shares outstanding and (ii) the satisfaction of
certain other Conditions described in Section 16. Subject to the terms of the
Merger Agreement, Purchaser reserves the right to amend the terms and
conditions of the Offer in any respect by giving oral or written notice of
such amendment to the Depositary. Purchaser has agreed that, without the
written consent of the Company, no amendment to the Offer may be made which
(i) decreases the price per Share or changes the form of consideration to be
paid in the Offer, (ii) decreases the number of Shares sought in the Offer, or
(iii) imposes additional conditions to the Offer other than those described in
Section 16 or amends any other term of the Offer in any manner adverse to
holders of Shares.
RECOMMENDATION. In the Merger Agreement, the Company states that the Board
has unanimously (i) determined that the Offer and the Merger are fair to and
in the best interests of the stockholders of the Company and (ii) resolved to
recommend acceptance of the Offer and approval and adoption of the Merger
Agreement and the Merger by the stockholders of the Company.
THE MERGER. The Merger Agreement provides that, as soon as practicable
following the purchase of Shares pursuant to the Offer, and the satisfaction
or waiver of the other conditions to the Merger, or on such other date as the
parties thereto may agree (such agreement to require the approval of the
majority of the Continuing Directors, if at that time there shall be any
Continuing Directors), Purchaser will be merged with and into the Company. The
Merger shall become effective by filing with the Secretary of State of
Massachusetts articles of merger (the "Articles of Merger") in accordance with
the relevant provisions of the MBCL at such time (the time the Merger becomes
effective being the "Effective Time").
At the Effective Time, (i) each Share issued and outstanding immediately
prior to the Effective Time (other than Shares described in clause (ii) below)
will be converted into the right to receive $29.00 in cash, or any higher
price paid per Share in the Offer, without interest thereon (the "Merger
Price"); (ii) (a) each Share held in the treasury of the Company or held by
any wholly owned subsidiary of the Company and each Share held by Parent or
any wholly owned subsidiary of Parent immediately prior to the Effective Time
will be cancelled and retired and cease to exist; (b) each Share held by any
holder who has perfected any dissenters' rights under the MBCL, as applicable
(the "Dissenting Shares"), will not be converted into or be exchangeable for
the right to receive the Merger Price; and (iii) each share of common stock of
Purchaser issued and outstanding immediately prior to the Effective Time will
be converted into and exchangeable for one share of common stock of the
Surviving Corporation.
The Merger Agreement provides that the Articles of Organization and By-laws
of the Company as in effect at the Effective Time (including such amendments
to the Articles of Organization as are
20
<PAGE>
effected by the Articles of Merger) will be the Articles of Organization and
By-laws of the Surviving Corporation until amended in accordance with
applicable law. The Merger Agreement also provides that (i) the directors of
Purchaser at the Effective Time will be the initial directors of the Surviving
Corporation, (ii) the officers of the Company at the Effective Time will be
the initial officers of the Surviving Corporation, and (iii) the initial
officers and directors of the Surviving Corporation will hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualify in the manner provided in the Articles of Organization and By-laws
of the Surviving Corporation, or as otherwise provided by applicable law.
TREATMENT OF OPTIONS AND CERTAIN OTHER STOCK PURCHASE RIGHTS. In the Merger
Agreement, the Company has agreed, with certain exceptions, that it will not
grant to any non-employees, including non-employee members of the Board of
Directors ("Directors"), and former employees (collectively "Non-Employees"),
or to any current employees any options to purchase Shares, stock appreciation
rights, restricted stock, restricted stock units or any other real or phantom
stock or stock equivalents on or after the date of this Agreement. Options to
acquire Shares which were outstanding as of the date of the Merger Agreement
and which were granted to employees or Non-Employees under any stock option
plan, program or similar arrangement of the Company or any of its subsidiaries
("Options"), other than Options which constitute Restricted Stock (as defined
below) and Options under the ESPP (as defined below) are treated in the Merger
Agreement as follows:
(i) Each current employee as of the date of the Merger Agreement whose
annual base salary is $80,000 or more ("Key Employee") and who is holding
Options which have an exercise price ("Exercise Price") less than the Offer
Price ("In the Money Options") and which are vested as of the date on which
the consummation of the Offer occurs (the "Closing Date") may make an
irrevocable election on a grant by grant basis to be effective immediately
following the Closing Date to receive in exchange for cancellation of each
such vested In the Money Option either (A) a credit to an individual
deferred compensation book account equal to the excess of the Offer Price
over the Exercise Price of such In the Money Option times the number of
Shares subject to such In the Money Option, such deferred compensation book
account to have the terms described below, or (B) an option to purchase a
number of shares of Parent common stock (a "Parent Option") equal to 150%
of the number of Shares subject to the Key Employee's In the Money Option;
provided that (x) the Parent Option received in the exchange will be fully
vested and have the same expiration date as the vested In the Money Option
exchanged therefor, (y) the Exercise Price of the Parent Option is equal to
the Fair Market Value (as defined below), and (z) the Parent Option is
governed by the provisions of the GTE Corporation 1997 Long-Term Incentive
Plan ("LTIP") and by applicable LTIP award agreements. For purposes of the
relevant portions of the Merger Agreement, the deferred compensation book
account is denominated in Parent phantom stock units, and dividend
equivalent payments will be credited to such deferred compensation book
account at such time and in such manner as dividends are paid on Parent
common stock. Before the third anniversary of the Closing Date, no
distribution may be made in respect of the deferred compensation book
account to a Key Employee who is employed by Parent or an affiliate of
Parent. The dividend equivalent payments on the deferred compensation book
account are subject to forfeiture in the event the Key Employee is not
employed by Parent or an affiliate of Parent on any date that precedes the
third anniversary of the Closing Date. Parent will determine administrative
procedures and provisions with regard to the deferred compensation book
account. In the event a Key Employee does not make such an irrevocable
election before the Closing Date, the Key Employee will be deemed to have
irrevocably elected the deferred compensation book account credit as
described in clause (A) of the first sentence of this paragraph (i), and
all In the Money Options will be canceled. "Fair Market Value" means the
average of the high and low sales price of the Parent common stock on the
composite tape of the New York Stock Exchange issues as of the Closing
Date, or, in the event that no trading occurs on such day, then the
applicable value will be determined on the last preceding day on which
trading took place.
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(ii) Each current employee whose annual base salary as of the date of the
Merger Agreement is less than $80,000 ("Employee") who is holding In the
Money Options which are vested as of the Closing Date may make an
irrevocable election on a grant by grant basis to be effective immediately
following the Closing Date to receive in exchange for cancellation of each
such vested In the Money Option either (A) a cash payment equal, for each
such In the Money Option, to the excess of the Offer Price of a Share over
the Exercise Price of such In the Money Option times the number of Shares
subject to such In the Money Option, or (B) a Parent Option to purchase a
number of shares of Parent common stock equal to 150% of the number of
Shares subject to the Employee's In the Money Option; provided that (x) the
Parent Option received in the exchange will be fully vested and have the
same expiration date as the vested In the Money Option exchanged therefor,
(y) the Exercise Price of the Parent Option will equal the Fair Market
Value, and (z) the Parent Option will be governed by the provisions of the
LTIP and by applicable LTIP award agreements. In the event an Employee does
not make such election before the Closing Date, the Employee will be deemed
to have irrevocably elected the cash payment described in clause (A) of the
preceding sentence, and all In the Money Options will be canceled.
(iii) Options of Key Employees or Employees which have an Exercise Price
equal to or in excess of the Offer Price ("Under-Water Options"),
regardless of whether such Under-Water Options are vested as of the Closing
Date, will immediately following the Closing Date be canceled and exchanged
for Parent Options to purchase a number of shares of Parent common stock
equal to 100% of the number of Shares subject to the Key Employee's or
Employee's Under-Water Options, provided that (x) the Parent Options
received in the exchange will have the same vesting schedule and expiration
date as the Under-Water Options exchanged therefor, (y) the Exercise Price
of the Parent Options will equal the Fair Market Value, and (z) the Parent
Options will be governed by the provisions of the LTIP and by applicable
LTIP award agreements. Notwithstanding the foregoing, if, on or after the
date of the Merger Agreement, a Key Employee exercises vested In the Money
Options that, on the date of the Merger Agreement, represent 50% or more of
the dollar value of the Key Employee's vested In the Money Options, all of
such Key Employee's Under-Water Options will be canceled immediately, the
exchange provisions of this paragraph (iii) will not apply to such Key
Employee, and such Key Employee will receive the sum of one dollar ($1.00)
as good and valuable consideration for all of such Key Employee's Under-
Water Options. For purposes of the immediately preceding sentence, the
dollar value of a vested In the Money Option will be equal to the excess of
the Offer Price over the Exercise Price of such In the Money Option times
the number of Shares subject to the vested In the Money Option.
(iv) In the Money Options of individuals who are Non-Employees as of the
date of the Merger Agreement, including Directors, which are vested as of
the Closing Date will, immediately following the Closing Date, be canceled
and exchanged for a cash payment equal, for each vested In the Money
Option, to the excess of the Offer Price of a Share over the Exercise Price
of such In the Money Option times the number of Shares subject to such In
the Money Option. All other Options of Non-Employees, including Directors,
will be canceled immediately as of the Closing Date and each such Non-
Employee will receive the sum of one dollar ($1.00) as good and valuable
consideration for all such Options.
(v) With respect to In the Money Options of Key Employees, Employees and
Non-Employees, including Directors, the Board of Directors or an
appropriate committee thereof, will provide for the full and immediate
vesting of such In the Money Options as of the Closing Date. Except as
provided in the immediately preceding sentence on or after the date of the
Merger Agreement, the Board of Directors will not make any other changes to
the terms and conditions of any outstanding Options, stock appreciation
rights, restricted stock, restricted stock units or any other real or
phantom stock or stock equivalents.
Pursuant to the Merger Agreement, on the Closing Date, employees of the
Company who hold Shares subject to a risk of forfeiture within the meaning of
Section 83(a) of the Code, or Options with
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an exercise price of zero dollars ($0.00) ("Restricted Stock") will receive in
exchange for such Restricted Stock a right to receive a number of Parent
phantom stock units pursuant to a phantom stock plan ("Phantom Stock Units")
determined by dividing (A) the product of (i) the number of shares of
Restricted Stock held by such employee on the Closing Date, and (ii) the Offer
Price, by (B) the Fair Market Value. Such Phantom Stock Units will be credited
with dividend equivalent units at such time and in such manner as dividends
are normally paid on Parent common stock, and the Phantom Stock Units and
dividend equivalent units will be subject to the same vesting schedule as the
Restricted Stock which was exchanged for the Phantom Stock Units. Upon the
Phantom Stock Units vesting, the employee will receive payment of the vested
amounts in cash (less applicable withholding taxes). Parent will determine
administrative procedures and provisions with regard to Phantom Stock Units.
The Merger Agreement also provides that immediately following the Closing
Date, Restricted Stock purchased by certain Key Employees and Directors
pursuant to the Company's 1996 Restricted Stock Plan will no longer be subject
to a risk of forfeiture within the meaning of Section 83(a) of the Code and
will be tendered to Purchaser in exchange for cash equal to the Offer Price
times the number of Shares so tendered. At the Closing Date, Company stock
units in the deferred compensation account of each Director who participates
in the Company's Deferred Compensation Plan for Directors (the "DCP") will be
converted into a number of Phantom Stock Units determined by dividing (A) the
product of (i) the number of Company stock units credited to the Director's
deferred compensation account under the DCP as of the Closing Date, and (ii)
the Offer Price, by (B) the Fair Market Value. Such Phantom Stock Units will
be credited with dividend equivalent units at such time and in such manner as
dividends are paid on Parent common stock. A cash payment equal to the Phantom
Stock Units will be made to the Directors as soon as practicable after January
1, 1998. Parent will determine administrative procedures and provisions with
regard to the Phantom Stock Units.
The Merger Agreement also provides that, prior to the Closing Date, the
Board of Directors, or an appropriate committee thereof, will cause written
notice of the Merger Agreement to be given to persons holding "options" (as
defined in the Company's Employee Stock Purchase Plan (the "ESPP")) to
purchase Shares ("Purchase Rights") under the ESPP. The Merger Agreement
provides that immediately following the Closing Date, all Purchase Rights will
be accelerated as if the Closing Date was the last day of the "option period"
(as defined in the ESPP), such Purchase Rights will be automatically canceled
and terminated on such day and the contributions to the ESPP during such
option period will be refunded to the holder of the Purchase Right (the
"Refund Amount"), and each holder of a Purchase Right will be entitled to
receive as soon as practicable thereafter from the Company in consideration
for such cancellation an amount in cash (less applicable withholding taxes,
but without interest) equal to (a) the product of (i) the number of Shares
(and fractions thereof) subject to such Purchase Right of such holder as of
the Closing Date, multiplied by (ii) the Offer Price, less (b) the Refund
Amount of such holder. The foregoing is subject to the right of an ESPP
participant to terminate the participant's payroll deduction authorization
under the ESPP and to cancel the participant's option and withdraw from the
ESPP at any time prior to the Closing Date.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains certain
representations and warranties of the parties including representations by the
Company as to organization, capitalization, authority relative to the Merger
Agreement, no defaults, consents and approvals, financial statements and SEC
reports, absence of certain changes concerning the Company's business,
litigation and compliance with law, environmental matters, governmental
authorizations, offer documents, brokers, employee agreements and benefits,
receipt of a fairness opinion, material agreements, title to properties and
encumbrances thereon, intellectual property, tax matters, interested party
transactions, governmental contracts and takeover statutes.
CERTAIN AGREEMENTS REGARDING THE BOARD. The Merger Agreement provides that
in the event that Purchaser acquires at least a majority of the Shares
outstanding pursuant to the Offer, Parent
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shall be entitled to designate for appointment or election to the Board, upon
written notice to the Company, such number of persons so that the designees of
Parent constitute the same percentage (but in no event less than a majority)
of the Board (rounded up to the next whole number) as the percentage of Shares
acquired pursuant to the Offer. Prior to the consummation of the Offer, the
Company will increase the size of the Board or obtain the resignation of such
number of directors as is necessary to enable such number of Parent designees
to be so elected. In the Merger Agreement, the Company, Parent and Purchaser
have agreed to use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the
Effective Time be, Continuing Directors.
Following the election or appointment of Purchaser's designees as set forth
above and prior to the Effective Time, any amendment of the Merger Agreement
or any amendment to the Articles of Organization or By-Laws of the Company
inconsistent with the Merger Agreement, any termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
any waiver of any of the Company's rights under the Merger Agreement will
require the concurrence of a majority of the Continuing Directors.
INTERIM OPERATIONS OF THE COMPANY. Except as contemplated by the Merger
Agreement, the Company has covenanted and agreed that, during the period from
the date of the Merger Agreement to the Effective Time, the Company and its
subsidiaries will each conduct its operations according to its ordinary course
of business, consistent with past practice, and will use its reasonable best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain satisfactory
relationships with all persons and entities with which the Company has
significant business relations. Without limiting the generality of the
foregoing, the Company has agreed that, except as otherwise provided in the
Merger Agreement, prior to the Effective Date, neither Company nor any of its
subsidiaries will, without the prior consent of Purchaser:
(i) amend or propose to amend its Articles of Organization or Bylaws (or
comparable governing instruments); (ii) authorize for issuance, issue,
grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or
dispose of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell any shares of, the
capital stock or other securities of the Company or any of its subsidiaries
including any securities convertible into or exchangeable for shares of
stock of any class of the Company or any of its subsidiaries, or enter into
any agreement, understanding or arrangement with respect to the purchase or
voting of shares of its capital stock, except for the issuance of Shares
pursuant to the exercise of Options or the conversion of the Subordinated
Notes outstanding on the date of the Merger Agreement, in accordance with
their present terms, and issuances of up to 120,000 Shares and options
under the ESPP to employees in the ordinary course of business; (iii)
split, combine or reclassify any shares of its capital stock, make any
other changes in its capital structure, or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to the Company or a subsidiary wholly owned by the
Company, or redeem, purchase or otherwise acquire or offer to acquire any
shares of its capital stock or other securities, except for the repurchase
of shares of common stock from employees, consultants or directors of the
Company upon termination of their relationship with the Company in
accordance with existing contractual rights or obligations of repurchase;
(iv) (A) except for debt (including, but not limited to, obligations in
respect of capital leases) not in excess of $7,000,000 per month or
$30,000,000 in the aggregate for all entities combined, create, incur or
assume any short-term debt, long-term debt or obligations in respect of
capital leases, (B) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, indirectly, contingently or otherwise)
for the obligations of any person or entity, except for obligations of the
Company or any wholly owned subsidiary of the Company in the ordinary
course of business consistent with past practice, (C) make any capital
expenditures other
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than in the ordinary course in amounts not to exceed $7,000,000 per month
or $30,000,000 in the aggregate, (D) or make any loans, advances or capital
contributions to, or investments in, any other person or entity (other than
customary relocation loans to employees made in the ordinary course of
business consistent with past practice), or (E) acquire the stock or
substantially all the assets of, or merge or consolidate with, any other
person or entity; (v) sell, transfer, mortgage, pledge or otherwise dispose
of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise
dispose of or encumber, any material assets or properties, real, personal
or mixed (except for (A) sales of assets in the ordinary course of business
and in a manner consistent with past practice, (B) disposition of obsolete
or worthless assets and (C) encumbrances on assets to secure purchase money
financings of equipment and capital improvements); (vi) (A) increase the
compensation of any of its or their directors, officers or key employees,
except pursuant to the terms of agreements or plans currently in effect,
(B) pay or agree to pay any pension, retirement or other employee benefit
provided in any existing plan, agreement or arrangement to any director,
officer or key employee except in the ordinary course and consistent with
past practice, (C) commit, other than pursuant to any existing collective
bargaining agreement, to any additional pension, profit sharing, bonus,
extra compensation, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay,
retirement or other employee benefit plan, agreement or arrangement, or to
any employment or consulting agreement with or for the benefit of any
director, officer or key employee, whether past or present, (D) amend, in
any material respect, any such plan, agreement or arrangement, or (E) enter
into, adopt or amend any employee benefit plans or employment or severance
agreement, or (except for normal increases in the ordinary and usual course
of business for employees with annual base cash compensation of less than
$80,000) increase in any manner the compensation of any employees; (vii)
settle or compromise any claims or litigation involving payments by the
Company or any of its subsidiaries of more than $250,000 in any single
instance or related instances, or that otherwise are material; (viii) make
any tax election or permit any insurance policy naming it as a beneficiary
or a loss payable payee to be canceled or terminated, except in the
ordinary and usual course of business consistent with past practices; (ix)
enter into any license with respect to intellectual property unless such
license is non-exclusive and entered into in the ordinary course consistent
with past practice or in accordance with existing contracts or other
agreements; (x) take any action or omit to take any action, which action or
omission would result in a breach of any of the covenants, representations
and warranties of the Company set forth in the Merger Agreement; (xi) enter
into any lease or amend any lease of real property other than in the
ordinary course of business consistent with past practice; (xii) change any
accounting practices, other than in the ordinary course and consistent with
past practice; (xiii) fail to use reasonable business efforts to keep in
full force and effect insurance comparable in amount and scope of coverage
to insurance now carried by it; (xiv) fail to pay all accounts payable and
other obligations, when they become due and payable, in the ordinary course
of business consistent with past practice and with the provisions of the
Merger Agreement, except if the same are contested in good faith, and, in
the case of the failure to pay any material accounts payable or other
obligations which are contested in good faith, only after consultation with
Purchaser; (xv) fail to comply in all material respects with all laws
applicable to it or any of its properties, assets or business and maintain
in full force and effect all permits necessary for, or otherwise material
to, such business; or (xvi) agree, commit or arrange to do the foregoing.
NO SOLICITATION. In the Merger Agreement, the Company agreed that the
Company and its subsidiaries will not and they will cause each of their
respective officers, directors, employees, investment bankers, attorneys and
other agents not to (i) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any Acquisition Proposal (as
defined below), (ii) except as described below, engage in negotiations or
discussions with, or furnish any information or data to any third party
relating to an Acquisition Proposal, (iii) except as described below, enter
into any agreement with respect to any Acquisition Proposal or approve or
resolve to approve any Acquisition Proposal or
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(iv) except as described below, participate in any discussions regarding, or
take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to any
Acquisition Proposal (other than the transactions contemplated by the Merger
Agreement). Notwithstanding the foregoing, in response to any unsolicited
Acquisition Proposal, the Company may (at any time prior to the consummation
of the Offer) furnish information concerning its business, properties or
assets to the person or group (a "Potential Acquiror") that was an unsolicited
Acquisition Proposal and participate in negotiations with the Potential
Acquiror if (x) the Board is advised by one or more of its independent
financial advisors that such Potential Acquiror has the financial wherewithal
to consummate without undue delay the transaction contemplated by the
Potential Acquiror's Acquisition Proposal, (y) the Board reasonably
determines, after receiving advice from the Company's financial advisor, that
such Potential Acquiror has submitted an Acquisition Proposal that involves
consideration to the Company's stockholders that is superior to the Offer and
the Merger, and (z) based upon advice of counsel to such effect, the Board
determines in good faith that it is necessary to so furnish information and/or
negotiate in order to comply with its fiduciary duty to stockholders of the
Company. In the event the Company determines to provide any information as
described above or receives any offer of the type referred above, it has
agreed in the Merger Agreement to (x) promptly inform Parent as to the fact
that such an offer has been received and/or information is to be provided, (y)
promptly provide Parent with a copy of any written offer or other materials
received by Company, its subsidiaries or their respective representatives in
connection therewith, and (z) if such offer is not in writing, promptly
furnish to Parent in writing the identity of the recipient of such information
and/or the proponent of such offer and the terms thereof. The Company has
agreed that any non-public information furnished to a Potential Acquiror will
be pursuant to a confidentiality agreement with confidential information and
no solicitation/no hire provisions substantially similar to those set forth in
the Confidentiality Agreement dated April 26, 1997 between the Company and
Parent set forth as an exhibit to the Schedule 14D-1. The Company has agreed
to keep Parent fully informed of the status and details, including amendments
or proposed amendments to any such Acquisition Proposal.
The Board has agreed in the Merger Agreement that it will not (x) withdraw
or modify or propose to withdraw or modify, in any manner adverse to Parent,
the approval or recommendation of the Board of the Merger Agreement, the Offer
or the Merger or (y) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal unless, in each case, in connection with a Superior
Offer (as defined below), the Board determines in good faith, based on advice
of outside legal counsel, that it is necessary to do so in order to comply
with the Board's fiduciary duties under applicable law.
For purposes of the Merger Agreement, "Acquisition Proposal" means any bona
fide proposal, whether in writing or otherwise, made by a third party to
acquire beneficial ownership (as defined under Rule 13(d) of the Exchange Act)
of all or a material portion of the assets of the Company or any of its
subsidiaries, or any material equity interest in the Company pursuant to a
merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar transaction
involving either the Company or any of its subsidiaries, including any single
or multi-step transaction or series of related transactions which is
structured to permit such third party to acquire beneficial ownership of any
material portion of the assets of, or any material equity interest in, the
Company and its subsidiaries. For purposes of the Merger Agreement, the term
"Superior Offer" means a bona fide offer to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, two-thirds or more of
the Shares then outstanding or all or substantially all the assets of the
Company, and otherwise on terms which the Board determines in its good faith
reasonable judgment to be more favorable to the Company's stockholders than
the Offer and the Merger (based on advice of the Company's independent
financial advisor that the value of the consideration provided for in such
proposal is superior to the value of the consideration provided for in the
Offer and the Merger), for which financing, to the extent required, is then
committed or which, in the good faith reasonable judgment of the Board, based
on advice from the Company's independent financial advisor, is
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reasonably capable of being financed by such third party and for which the
Board determines, in its good faith reasonable judgment, that such proposed
transaction is reasonably likely to be consummated without undue delay.
ACTIONS REGARDING THE RIGHTS. Prior to the execution of the Merger
Agreement, the Company, in accordance with the terms and provisions of the
Rights Agreement, amended the Rights Agreement so that the transactions
relating to and contemplated by the Merger Agreement are exempted from certain
provisions of the Rights Agreement and a "Common Stock Event" thereunder will
not occur as a result of such transactions. In the Merger Agreement the
Company has agreed that it will, with the consent of Parent, continue to take
all actions necessary to cause the transactions contemplated by the Merger
Agreement to remain exempted from such provisions of the Rights Agreement,
including, if desirable, entering into further amendments to the Rights
Agreement or causing the rights issued under the Rights Agreement to be
extinguished, canceled or redeemed.
MISCELLANEOUS UNDERTAKINGS. Pursuant to the Merger Agreement, if required by
applicable law in order to consummate the Merger, the Company, acting through
the Board, will, in accordance with applicable law, its Articles of
Organization and its By-laws, as soon as practicable: (i) duly call, give
notice of, convene and hold a special meeting of its stockholders as soon as
practicable following the consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement (the "Stockholders'
Meeting"); (ii) subject to its fiduciary duties under applicable laws as
advised as to legal matters by counsel, include in the proxy statement or
information statement prepared by the Company for distribution to stockholders
of the Company in advance of the Stockholders' Meeting in accordance with
Regulation 14A or Regulation 14C promulgated under the Exchange Act (the
"Proxy Statement") the recommendation of the Board referred to above; and
(iii) use its reasonable efforts to (A) obtain and furnish the information
required to be included by it in the Proxy Statement, and, after consultation
with Parent, respond promptly to any comments made by the SEC with respect to
the Proxy Statement and any preliminary version thereof and cause the Proxy
Statement to be mailed to its stockholders following the consummation of the
Offer and (B) obtain the necessary approvals of the Merger Agreement and the
Merger by its stockholders. Parent will provide the Company with the
information concerning Parent and Purchaser required to be included in the
Proxy Statement and will vote, or cause to be voted, all Shares owned by it or
its subsidiaries in favor of approval and adoption of the Merger Agreement and
the transactions contemplated thereby.
Pursuant to the Merger Agreement, each of Parent, Purchaser and the Company
have agreed to use their reasonable best efforts to obtain any permits
necessary for the consummation of the transactions contemplated by the Merger
Agreement, provided that the Company has agreed not to, without the consent of
Parent (which consent will not be unreasonably withheld), agree to any
amendment to any material instrument or agreement to which it is a party.
Parent, Purchaser and the Company have also agreed to cooperate with one
another (i) in promptly determining whether any filings are required to be
made or permits are required to be obtained under any law or otherwise
(including from other parties to material contracts) in connection with the
consummation of the Offer and the Merger and (ii) in promptly making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such permits. Each party has further agreed to use its
reasonable best efforts promptly to take, or cause to be taken, all actions
and promptly to do, or cause to be done, all things necessary, proper or
advisable under applicable laws to consummate and make effective the
transactions contemplated by the Merger Agreement; provided that no party
shall be required to proffer such party's willingness to accept any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) providing for divestiture of its assets or businesses which amount
to 7.5% or more of the Company's assets or earning power. The Company has also
agreed to take all actions reasonably requested by Parent to ensure the
orderly transition of the business of the Company and to preserve and maintain
the Company's business relationships. The Company has further agreed that upon
request it will assist Purchaser in any challenge of the applicability to the
Offer or the Merger of any state antitakeover statute.
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INDEMNIFICATION. In the Merger Agreement, Parent agrees that from and after
the consummation of the Offer, it will cause the Company, and from and after
the Effective Time it will cause the Surviving Corporation, to indemnify,
defend and hold harmless the present and former officers and directors of the
Company and its subsidiaries (each an "Indemnified Party"), against all
losses, claims, damages or liabilities arising out of actions or omissions in
their capacity as a director or officer of the Company or a subsidiary
occurring on or prior to the consummation of the Offer to the maximum extent
permitted or required under the MBCL and the Company's Bylaws in effect on the
date of the Merger Agreement, including provisions with respect to advances of
expenses incurred in the defense of any action or suit, provided that any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the MBCL and the
Company's Bylaws shall be made by independent legal counsel selected in good
faith by the Surviving Corporation. Parent further agreed in the Merger
Agreement that from and after consummation of the Offer it will cause the
Company or the Surviving Corporation to advance litigation costs reasonably
incurred by any Indemnified Party provided that such party undertakes to repay
amounts so advanced if it is ultimately determined that indemnification for
such expenses is not authorized under the Merger Agreement or otherwise.
Pursuant to the Merger Agreement, Parent agreed that from and after
consummation of the Offer it will cause the Company and from and after the
Effective Time it will cause the Surviving Corporation to maintain the
Company's existing directors' and officers' liability insurance ("D&O
Insurance") in full force and effect without reduction of coverage for a
period of three years after the Effective Time; provided that the Surviving
Corporation will not be required to pay an annual premium therefor in excess
of 200% of the last annual premium paid prior to the date of the Merger
Agreement (the "Current Premium"); and, provided, further, that if the
existing D&O Insurance expires, is terminated or cancelled during the 3-year
period, the Surviving Corporation will use reasonable efforts to obtain as
much D&O Insurance as can be obtained for the remainder of such period for a
premium on an annualized basis not in excess of 200% of the Current Premium.
The Company will maintain, through the Effective Time, the Company's existing
D&O Insurance in full force and effect without reduction of coverage.
The Merger Agreement also provides that if the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into any other
person or entity and shall not be the continuing or surviving corporation or
entity of such consolidation or merger and the continuing or surviving entity
does not assume the indemnification obligations of the Surviving Corporation,
or (ii) transfers all or substantially all of its properties and assets to any
person or entity, then, and in each such case, proper provision will be made
so that the successors and assigns of the Surviving Corporation assume the
indemnification obligations of the Surviving Corporation.
CONDITIONS TO MERGER. Pursuant to the Merger Agreement, the respective
obligations of each of Parent, Purchaser and the Company to consummate the
Merger are subject to the satisfaction at or prior to the Effective Time of
the following conditions: (a) the Merger Agreement shall have been adopted by
the affirmative vote of the stockholders of the Company by the requisite vote
in accordance with applicable law, if required by applicable law; and (b) the
consummation of the Merger shall not be precluded by any order, decree, ruling
or injunction of a court of competent jurisdiction and there shall not have
been any action taken or statute, rule or regulation enacted, promulgated or
deemed applicable to the Merger by any governmental entity that makes
consummation of the Merger illegal.
Unless Purchaser has accepted for payment and paid for Shares validly
tendered pursuant to the Offer, the obligations of the Company to effect the
Merger are further subject to the satisfaction at or prior to the Effective
Time of the following conditions: (a) each of Parent and Purchaser having
performed in all material respects its obligations under the Merger Agreement
required to be performed by it at or prior to the Effective Time; (b) the
representations and warranties of Parent and Purchaser contained in the Merger
Agreement being true and correct in all material respects on the date as of
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which made and on the Effective Time as though made on and as of such time;
and (c) Parent and Purchaser having delivered to the Company a certificate
with respect thereto.
Unless Purchaser has accepted for payment and paid for Shares validly
tendered pursuant to the Offer, the obligations of Parent and Purchaser to
effect the Merger are further subject to the satisfaction at or prior to the
Effective Time of the following conditions: (a) the Company having performed
in all material respects each of its obligations under the Merger Agreement
required to be performed by it at or prior to the Effective Time; (b) the
representations and warranties of the Company contained in the Merger
Agreement being true and correct in all material respects on the date as of
which made and on the Effective Time as if made at and as such time; (c) there
not having occurred after the completion of the Offer any material adverse
change in the business of the Company and its subsidiaries taken as a whole,
except for such changes that are caused by the Company's compliance with the
terms of the Merger Agreement and the Offer or that are contemplated by the
Merger Agreement; (d) no governmental or other action or proceeding having
been commenced after completion of the Offer that (i) in the opinion of
Parent's or Purchaser's counsel is more likely than not to be successful, and
(ii) either (A) seeks an injunction, a restraining order or any other Order
seeking to prohibit, restrain, invalidate or set aside consummation of the
Merger or (B) if successful, would have a Material Adverse Effect (as defined
below); and (e) the Company having delivered to Parent and Purchaser a
certificate with respect thereto.
TERMINATION. Pursuant to Section 8.1 of the Merger Agreement, the Merger
Agreement may be terminated and the Merger may be abandoned at any time
(whether before or after approval of the Merger by the stockholders of the
Company) prior to the Effective Time: (a) by mutual written consent of each of
Parent and the Company; (b) by either Parent and Purchaser or the Company, (1)
if the Shares have not been purchased pursuant to the Offer on or prior to the
Final Termination Date; provided, however, that such termination right will
not be available to any party whose failure to fulfill any obligation under
the Merger Agreement has been the cause of, or resulted in, the failure of
Purchaser to purchase the Shares pursuant to the Offer on or prior to such
date; or (2) if any governmental authority has issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other action
the parties will use their respective reasonable best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement or prohibiting Parent or
Purchaser from acquiring or holding or exercising rights of ownership of the
Shares except such prohibitions which would not reasonably be expected to have
a Material Adverse Effect or prevent the consummation of the Offer prior to
the Final Termination Date, and such order, decree, ruling or other action
shall have become final and non-appealable; (c) by the Company, (1) if, prior
to the purchase of Shares pursuant to the Offer the Board of Directors has
withdrawn, or modified or changed in a manner adverse to Parent or Purchaser
its approval or recommendation of the Offer, the Merger Agreement or the
Merger (or the Board of Directors resolves to do any of the foregoing) as a
result of a Superior Offer, and if concurrently with such termination the
Termination Fee (as defined hereinafter) is paid to Parent, (2) if Parent or
Purchaser has terminated the Offer, or the Offer has expired, without
Purchaser purchasing any Shares pursuant thereto; provided that the Company
will not have such right to terminate the Merger Agreement if the Company's
failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the termination of the Offer or the failure of
Purchaser to purchase any Shares pursuant to the Offer, (3) if due to an
occurrence that if occurring after the commencement of the Offer would result
in a failure to satisfy any of the conditions of the Offer, Parent, Purchaser
or any of their affiliates shall have failed to commence the Offer on or prior
to five business days following the date of the initial public announcement of
the Offer; provided that the Company will not have such right to terminate the
Merger Agreement if the Company's failure to fulfill any obligation under the
Merger Agreement has been the cause of, or resulted in, the failure of Parent,
Purchaser or any affiliate to commence the Offer, or (4) prior to the purchase
of Shares pursuant to the Offer, (A) if any representation or warranty of
Parent and Purchaser set forth in the Merger Agreement shall be untrue in any
material respect
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when made, or (B) upon a breach in any material respect of any covenant or
agreement on the part of Parent or Purchaser set forth in the Merger
Agreement, in each case where such misrepresentation or breach would result in
a failure to satisfy any of the Conditions of the Offer; provided that the
Company shall not have such right to terminate the Merger Agreement if any
such breach is curable by Parent or Purchaser through the exercise of its
reasonable best efforts prior to the Final Termination Date and for so long as
Parent or Purchaser continues to exercise such reasonable best efforts; or (d)
by Parent and Purchaser, (1) if, prior to the purchase of the Shares pursuant
to the Offer, the Board of Directors shall have (A) withdrawn, modified or
changed in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger, or (B)
recommended an Acquisition Proposal or shall have executed an agreement in
principle or definitive agreement relating to an Acquisition Proposal or
similar business combination with a person or entity other than Parent,
Purchaser or their affiliates (or the Board of Directors resolves to do any of
the foregoing); (2) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
Conditions of the Offer, Parent, Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided that
neither Parent nor Purchaser shall have such right to terminate the Merger
Agreement if the failure of Purchaser or Parent to fulfill any obligation
under the Merger Agreement has been the cause of, or resulted in, the failure
of Parent, Purchaser or any affiliate to commence the Offer; (3) prior to the
purchase of Shares pursuant to the Offer, (A) if any representation or
warranty of the Company set forth in the Merger Agreement shall be untrue in
any material respect when made or (B) upon a breach in any material respect of
any covenant or agreement on the part of the Company set forth in the Merger
Agreement, in each case where such misrepresentation or breach would cause the
Conditions of the Offer not to be met; provided that neither Parent nor
Purchaser shall have such right to terminate the Merger Agreement if any such
breach is curable by the Company through the exercise of its reasonable best
efforts prior to the Final Termination Date and for so long as the Company
continues to exercise such reasonable best efforts; (4) if any person or group
shall have become the beneficial owner of 20% or more of the outstanding
Shares; or (5) if the Company shall have failed to file its Schedule 14D-9
with the SEC within 10 business days of the commencement of the Offer. As used
in the Merger Agreement, the term "Material Adverse Effect" means any change,
effect, matter or circumstances that has or would reasonably be expected to
have a material adverse effect on the business, assets or properties
(including intangible assets or properties), liabilities, results of
operations or financial condition of the Company and its subsidiaries taken as
a whole, other than any such changes, effects or circumstances (i)
specifically referred to in the Disclosure Schedule delivered by the Company
to Parent, (ii) generally affecting the United States economy or (iii)
resulting from both (x) the proposed acquisition of Company and (y) the fact
that the acquiror is Parent.
Pursuant to the Merger Agreement, in the event of the termination of the
Merger Agreement in accordance with its terms, the Merger Agreement shall
forthwith become null void and have no effect, without any liability on the
part of any party thereto or its affiliates, directors, officers or
stockholders, other than the provisions of the Merger Agreement relating to
fees and expenses (including the Termination Fee), the Termination Option (as
defined below), governing law and confidentiality of information.
Notwithstanding the foregoing, no party will be relieved from liability that
it may have for willful breach of the Merger Agreement.
TERMINATION FEE AND TERMINATION OPTION. The Company has agreed to pay to
Parent by wire transfer $13.5 million (the "Termination Fee"), upon demand, if
(i) the Company terminates the Merger Agreement pursuant to Section 8.1(c)(i)
thereof (which generally relates to a change in the Board's recommendation
adverse to Parent as a result of a Superior Offer), in which case the
Termination Fee must be paid simultaneously with such termination, (ii) Parent
or Purchaser terminates the Merger Agreement pursuant to Section 8.1(d)(i)
thereof (which generally relates to a change in the Board's recommendation
adverse to Parent or an agreement relating to an Acquisition Proposal with a
third
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party), or (iii) the Merger Agreement is terminated for any reason (other than
as a result of (x) the failure of Parent or Purchaser to fulfill any material
obligation under the Merger Agreement, (y) the applicable waiting period under
the HSR Act not having expired or been terminated on or prior to the Final
Termination Date or (z) the failure of certain Conditions of the Offer to be
satisfied or waived by Parent on or prior to the Final Termination Date), at
any time after an Acquisition Proposal has been made and within nine months
after such a termination, the Company completes either (x) a merger,
consolidation or other business combination between the Company or a
subsidiary of the Company and any other person or entity (other than Parent,
Purchaser or an affiliate of Parent) or (y) the sale of 30% or more (in voting
power) of the voting securities of the Company or of 30% or more (in market
value) of the assets of the Company and its subsidiaries, on a consolidated
basis.
Concurrently with the execution of the Merger Agreement the Company issued
to Parent the Termination Option to purchase 4,225,000 Shares at a price per
Share equal to $29.00 pursuant to the Stock Option Agreement dated as of May
5, 1997 between the Company and Parent (the "Stock Option Agreement"). Such
option becomes exercisable by Parent when a Termination Fee is payable to
Parent. For a summary of the Stock Option Agreement see "--Stock Option
Agreement."
AMENDMENT. The Merger Agreement may be amended by action taken by the
Company, Parent and Purchaser provided that after the date of adoption of the
Merger Agreement by the stockholders of the Company (if stockholder approval
of the Merger is required by applicable law), no amendment shall be made which
decreases the cash price per Share or that in any other way adversely affects
the rights of the Company's stockholders (other than termination of the Merger
Agreement) without the approval of such stockholders. The Merger Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties or party intended to be bound thereby.
FEES AND EXPENSES. Except as specifically provided in the Merger Agreement,
each party bears its own respective expenses incurred in connection with the
Merger Agreement, the Offer and the Merger, including the preparation,
execution and performance of the Merger Agreement and the transactions
contemplated thereby, and all fees and expenses of investment bankers,
finders, brokers, agents, representatives, counsel and accountants.
STOCK OPTION AGREEMENT
The following is a summary of certain provisions of the Stock Option
Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and
which is incorporated herein by reference. The following summary is qualified
in its entirety by reference to the Stock Option Agreement.
GRANT OF OPTION. Pursuant to the Stock Option Agreement, the Company granted
to Parent an irrevocable option (the "Termination Option") to purchase, under
certain circumstances, up to 4,225,000 (subject to adjustment as set forth
therein) Shares (the "Option Shares") at a purchase price of $29.00 (subject
to adjustment as set forth therein) per Option Share (the "Purchase Price").
In the event of any change in the Shares by reason of a stock dividend, split-
up, merger, recapitalization, combination, exchange of shares, distribution of
assets, or similar transaction, the type and number of shares or securities
subject to the Termination Option, and the Purchase Price thereof, will be
adjusted appropriately, and proper provision will be made in the agreements
governing such transaction, so that Parent will receive upon exercise of the
Termination Option the number and class of shares or other securities or
property that Parent would have received in respect of the Shares (after
giving effect to such event) if the Termination Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
Subject to the terms of the Stock Option Agreement, upon any issuance of
common stock by the Company (other than as referred to in the preceding
sentence) the number of Shares subject to the Termination Option will be
adjusted so that, after such issuance, it equals 19.9% of the number of Shares
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Termination Option, and the Purchase Price thereof will
be adjusted appropriately.
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EXERCISE OF TERMINATION OPTION. Parent may exercise the Termination Option,
with respect to all or any part of the Option Shares at any one time, subject
to the other provisions described in the next sentence, after the occurrence
of any event as a result of which Parent is entitled to receive the
Termination Fee pursuant to Section 8.2(b) of the Merger Agreement (a
"Purchase Event"). Notwithstanding anything to the contrary contained in the
Stock Option Agreement, any exercise of the Termination Option and purchase of
Option Shares is subject to the obtaining or making of any consents,
approvals, orders, notifications or authorizations, the failure of which to
have obtained or made would have the effect of making the issuance of Option
Shares illegal. In the event purchase of the Option Shares is subject to any
such restriction if the Termination Option is otherwise exercisable Parent may
purchase the number of Option Shares that Parent is then permitted to acquire
under the applicable laws and regulations, and if Parent thereafter obtains
the regulatory approvals to acquire the remaining balance of the Option
Shares, then Parent shall be entitled to acquire such remaining balance. The
Company has agreed to use its reasonable best efforts to assist Parent in
seeking any necessary regulatory approvals.
CASH-OUT RIGHT. In the event (i) Parent receives official notice that a
regulatory approval required for the purchase of any Option Shares will not be
issued or granted, (ii) such regulatory approval has not been issued or
granted within six months of the date of the notice exercising the Termination
Option, or (iii) Parent in its sole discretion shall so elect, Parent may
exercise its Cash-Out Right pursuant to the Stock Option Agreement with
respect to the Option Shares for which such regulatory approval will not be
issued or granted or has not been issued or granted.
TERMINATION. The Termination Option will terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B)
nine months after the first occurrence of a Purchase Event described in
clauses (i) or (ii) of Section 8.2(b) of the Merger Agreement, (C) termination
of the Merger Agreement in accordance with its terms prior to the occurrence
of a Purchase Event, unless, in the case of clause (C), Parent has, or upon
the occurrence of certain events would have, the right to receive the
Termination Fee under clause (iii) of Section 8.2(b) of the Merger Agreement
following such termination, in which case the Termination Option will not
terminate until the later of (x) six months following the time such
Termination Fee becomes payable and (y) the expiration of the period in which
Parent has or may have such right to receive the Termination Fee, and (D) when
the aggregate amount paid by the Company under the "cash out" provision of the
Stock Option Agreement and in connection with the Termination Fee equals or
exceeds $21,231,000. Notwithstanding the termination of the Termination
Option, Parent will be entitled to purchase the Option Shares if it has
exercised the Termination Option in accordance with the terms of the Stock
Option Agreement prior to the termination of the Termination Option, and the
termination of the Termination Option will not affect any rights under the
Stock Option Agreement which by their terms do not terminate or expire prior
to or as of such termination.
OTHER. Pursuant to the Stock Option Agreement, the Company makes certain
representations and warranties to Parent with respect to the authorization and
issuance of the Option Shares and certain other representations and
warranties. Further, Parent may also require the Company to cause the Shares
or other securities to be issued upon exercise of the Termination Option to be
registered under the Securities Act, to qualify such shares or other
securities under any applicable state securities laws and to promptly file an
application to list such shares or other securities on the NYSE (and any such
other national securities exchange or national securities quotation system).
CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement, dated as of April 26, 1997, between Parent and the Company (the
"Confidentiality Agreement"). This summary is qualified in its entirety by
reference to the Confidentiality Agreement which is incorporated herein by
reference and a copy of which has been filed with the SEC as an exhibit to the
Schedule 14D-1. The Confidentiality Agreement contains customary provisions
pursuant to which, among other matters,
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Parent agreed to keep confidential all nonpublic, confidential or proprietary
information furnished to it by the Company relating to the Company, subject to
certain exceptions (the "Confidential Information"), and to use the
Confidential Information solely for the purpose of evaluating a possible
transaction involving the Company and Parent.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer and the Merger is for Purchaser to acquire the
entire equity interest in the Company. Unless the Minimum Condition is waived,
consummation of the Offer will provide Purchaser with at least a two-thirds
equity interest in the Company. The Merger will allow Purchaser to acquire all
outstanding Shares not tendered and purchased pursuant to the Offer. The
acquisition of the entire equity interest in the Company has been structured
as a cash tender offer and a cash merger in order to provide a prompt and
orderly transfer of ownership of the Company from the public stockholders of
the Company to Parent. The purchase of Shares pursuant to the Offer will
increase the likelihood that the Merger will be consummated.
Parent has announced its strategy of being a national provider of a full
bundle of communications services--voice, video and data. Parent plans to
offer customers end to end managed network solutions and a superior high speed
network that is affordable, reliable and secure. By acquiring the Company,
Parent will acquire significant expertise and value-added services to
supplement its data initiatives. After consummation of the Offer, Parent and
Purchaser plan to assess various aspects of the Company's business and
operations to identify how best to maximize the Company's strengths in
implementing Parent's long-term strategy.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of
holders of Shares, which could adversely affect the liquidity and market value
of the remaining Shares held by stockholders other than Purchaser. Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer Price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing
and may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE could consider delisting the Shares if, among
other things, the number of publicly held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings
of 10% or more) were less than 600,000, there were less than 1,200 holders of
at least 100 Shares or the aggregate market value of the publicly held Shares
was less than $5 million. If, as a result of the purchase of Shares pursuant
to the Offer, the Shares no longer meet the requirements of the NYSE for
continued listing and the listing of Shares on such exchanges is discontinued,
the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
trade on another securities exchange or in the over-the-counter market and
that price quotations for the Shares would be reported by such exchange or
through Nasdaq or other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend upon
such factors as the number of holders and/or the aggregate market value of the
publicly held Shares at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act and other factors.
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The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans
made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are neither listed on a national securities
exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its stockholders
and to the SEC and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions
of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act may be impaired or eliminated. It is the current
intention of Parent to deregister the Shares after consummation of the Offer
if the requirements for termination of registration are met.
14. DIVIDENDS AND DISTRIBUTIONS.
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b)
acquire or otherwise cause a reduction in the number of outstanding Shares or
other securities or (c) issue or sell additional Shares (other than as
specifically permitted by the terms of the Merger Agreement), shares of any
other class of capital stock, other voting securities or any securities
convertible into or exchangeable for, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, then, without
prejudice to Purchaser's rights under Sections 1 and 16, Purchaser, in its
sole discretion, may make such adjustments as it deems appropriate in the
Offer Price and other terms of the Offer, including, without limitation, the
number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any dividend on the Shares or make any distribution (including, without
limitation, cash dividends, the issuance of additional Shares pursuant to a
stock dividend or stock split, the issuance of other securities or the
issuance of rights for the purchase of any securities) with respect to the
Shares, payable or distributable to stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to Purchase or its
nominee or transferee on the Company's stock transfer records, then, without
prejudice to Purchaser's rights under Sections 1 and 16, (a) the Offer Price
may, in the sole discretion of Purchaser, be reduced by the amount of any such
cash dividend or cash distribution and (b) the whole of any such noncash
dividend, distribution or issuance to be received by the tendering
stockholders will (i) be received and held by the tendering stockholders for
the account of Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer, or (ii) at
the direction of Purchaser, be exercised for the benefit of Purchaser, in
which case the proceeds of such exercise will promptly be remitted to
Purchaser. Pending such remittance and subject to applicable law, Purchaser
will be entitled to all rights and privileges as owner of any such dividend,
distribution or right and may withhold the entire purchase price for Shares
tendered in the Offer or deduct from the purchase price the amount or value
thereof, as determined by Purchaser in its sole discretion.
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Section 6.3 of the Merger Agreement prohibits the Company from taking any of
the foregoing actions without the prior consent of Parent.
15. EXTENSION OF TENDER PERIOD; AMENDMENT; TERMINATION.
Purchaser expressly reserves the right, in its sole discretion, at any time
or from time to time, regardless of whether or not any of the Conditions set
forth at Section 16 will have occurred or will have been determined by
Purchaser to have occurred, subject to the terms of the Merger Agreement and
the applicable rules of the SEC, to amend the terms and conditions of the
Offer in any respect by giving oral or written notice of such amendment to the
Depositary provided that without the consent of the Company, no amendment may
be made which (i) decreases the price per Share or changes the form of
consideration payable in the Offer, (ii) decreases the number of Shares sought
in the Offer, or (iii) imposes additional conditions to the Offer or amends
any other term of the Offer in any manner adverse to the holders of the
Shares. In the Merger Agreement, Parent and Purchaser have agreed that if all
of the Conditions set forth in Section 16 are not satisfied on the initial
Expiration Date of the Offer, and if the Merger Agreement has not been
terminated in accordance with its terms, Purchaser shall extend (and re-
extend) the Offer to provide time to satisfy such Conditions, through the
Final Termination Date. From and after the Final Termination Date, if all of
the Conditions have not been satisfied on any Expiration Date of the Offer and
the Merger Agreement has not been terminated in accordance with its terms,
Purchaser may but shall not be obligated to extend and re-extend the Offer to
provide time to satisfy such Conditions. In addition, whether or not the
Conditions have been satisfied, Purchaser may extend and re-extend the Offer,
from time to time, but in no event beyond November 15, 1997, if it believes
such extension is advisable in order to facilitate the orderly transition of
the business of the Company and to preserve and maintain the Company's
business relationships. The foregoing right to extend, among other things,
permits Parent to delay the consummation of the Offer if necessary or
desirable to permit it to deal with business arrangements between the Company
and third parties which could be terminated in the event of a change in
control of the Company. WorldCom, Inc. ("WorldCom"), which is party to two
such terminable arrangements with the Company, has agreed not to terminate
such agreements as a result of the consummation of the Offer and the Merger.
WorldCom has also entered into a letter agreement with Parent with respect to
its existing and anticipated business relationships with Parent. Under that
letter agreement (i) WorldCom has certain rights, following the consummation
of the Offer, to terminate its arrangements with the Company if amendments to
existing agreements between it and Parent are not successfully concluded and
(ii) Parent has certain rights to terminate any such amendments if WorldCom
interferes with the consummation of the Offer. In light of the foregoing,
Parent does not expect to utilize its right to extend the Offer beyond the
date on which all Conditions are satisfied.
Purchaser also reserves the right, in its sole discretion, subject to the
terms of the Merger Agreement, in the event any of the Conditions specified in
Section 16 will not have been satisfied and so long as Shares have not
theretofore been accepted for payment, to delay (except as otherwise required
by applicable law) acceptance for payment of or payment for Shares or to
terminate the Offer and not accept for payment or pay for Shares.
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its purchase of or payment for
Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in Section 4. However, the ability of Purchaser
to delay the payment for Shares which Purchaser has accepted for payment is
limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder
pay the consideration offered or return the securities deposited by or on
behalf of holders of securities promptly after the termination or withdrawal
of such bidder's offer.
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If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer (including the Minimum Condition), Purchaser
will disseminate additional tender offer materials and extend the Offer to the
extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the terms or information. With respect to a change in price or a change in
percentage of securities sought, a minimum ten business day period is
generally required to allow for adequate dissemination to stockholders and
investor response. If prior to the Expiration Date, Purchaser should decide to
increase the price per Share being offered in the Offer, such increase will be
applicable to all stockholders whose Shares are accepted for payment pursuant
to the Offer.
16. CONDITIONS TO THE OFFER.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including without limitation, Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return Shares
promptly after termination or withdrawal of the Offer), pay for, or may delay
the acceptance for payment of or payment for, any tendered shares, or may, in
its sole discretion, terminate or amend the Offer as to any Shares not then
paid for, if (i) any applicable waiting period under the HSR Act shall not
have expired or been terminated, (ii) the number of Shares validly tendered
and not withdrawn when added to the Shares then beneficially owned by Parent
does not constitute two-thirds of the Shares then outstanding; or (iii) on or
after the date of the Merger Agreement and at or before the time of payment
for the Shares, any of the following events shall occur and be continuing:
(a) there shall have occurred and be continuing (1) any general
suspension of trading in, or limitation on prices for, securities on the
NYSE, (2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory), (3) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States and having had or being reasonably likely to have a Material
Adverse Effect or would restrain, prohibit or delay beyond the Final
Termination Date the consummation of the Offer, (4) any limitation or
proposed limitation (whether or not mandatory) by any Governmental Entity,
or any other event, that materially adversely affects generally the
extension of credit by banks or other financial institutions, (5) from the
date of the Merger Agreement through the date of termination or expiration
of the Offer, a decline of at least 25% in the Standard & Poor's 500 Index
or (6) in the case of any of the situations described in clauses (1)
through (5) inclusive, existing at the date of the Merger Agreement, a
material acceleration, escalation or worsening thereof;
(b) (i) the representations and warranties of the Company set forth in
the Merger Agreement shall not have been true and correct in any material
respect on the date of the Merger Agreement or (ii) the representations and
warranties of the Company set forth in the Merger Agreement shall not be
true and correct in any respect as of the scheduled expiration date (as
such date may be extended) of the Offer as though made on or as of such
date or the Company shall have breached or failed in any respect to perform
or comply with any obligation, agreement or covenant required by the Merger
Agreement to be performed or complied with by it except, in each case with
respect to clause (ii), (x) for changes specifically permitted by the
Merger Agreement and (y) (A) for those representations and warranties that
address matters only as of a particular date which are true and correct as
of such date or (B) where the failure of representations and warranties
(without giving effect to any limitation based on "materiality," "Material
Adverse Effect" or words of similar effect set forth therein) to be true
and correct, or the performance or compliance with such obligations,
agreements or covenants, would not in the aggregate reasonably be expected
to have a Material Adverse Effect;
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(c) there shall be any action or proceeding commenced by or before, or
threatened in writing by, any Governmental Entity, which has a reasonable
likelihood of success and which, if decided adversely to the Company, would
have a Material Adverse Effect or would restrain, prohibit or delay beyond
the Final Termination Date the consummation of the Offer and if decided
adversely to Parent, would have the effect of (i) making the purchase of,
or payment for, some or all of the Shares pursuant to the Offer or the
Merger or otherwise illegal, or resulting in a material delay in the
ability of Parent or Purchaser to accept for payment or pay for some or all
of the Shares, (ii) compelling Parent or Purchaser to dispose of or hold
separately all or any material portion of the Company's or Parent's
business or assets, (iii)making illegal, or otherwise directly or
indirectly restraining or prohibiting or imposing material financial
burdens, penalties or, fines or requiring the payment of material damages
in connection with the making of, the Offer, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some of or all the
Shares by Parent or Purchaser, the consummation of the Offer or the Merger,
(iv) otherwise preventing consummation of the Offer or the Merger, or (v)
imposing limitations on the ability of Parent or Purchaser effectively (A)
to acquire, hold or operate the business of the Company and its
subsidiaries taken as a whole or (B) to exercise full rights of ownership
of the Shares acquired by it, including, but not limited to, the right to
vote the Shares purchased by it on all matters properly presented to the
stockholders of the Company, which, in either case, would effect a material
diminution in the value of the Company or the Shares;
(d) there shall been any law, rule or regulation enacted, promulgated,
entered or deemed applicable to the Offer or the Merger Agreement or any
other action shall have been taken or threatened in writing, by any
Governmental Entity on or after the date of the Offer that would reasonably
be expected to, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (v) of paragraph (c) above;
(e) the Board of Directors of the Company shall have publicly (including
by amendment of its Schedule 14D-9) withdrawn or adversely modified its
recommendation of acceptance of the Offer;
(f) since the date of the Merger Agreement, there shall have occurred any
event or events that, singly or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms, or Parent or Purchaser shall have reached an agreement or
understanding in writing with the Company providing for termination or
amendment of the Offer;
which, in any such case, and regardless of the circumstances (including any
action or inaction by Parent or Purchaser) giving rise to any such conditions,
makes it in the sole discretion of Parent inadvisable to proceed with the
Offer and/or with such acceptance for payment of or payment for the Shares.
The foregoing conditions (the "Conditions") are for the sole benefit of
Parent and Purchaser and may be asserted by Parent or Purchaser regardless of
the circumstances giving rise to any such Condition and may be waived by
Parent or Purchaser, in whole or in part, at any time and from time to time,
in the sole discretion of Parent or Purchaser. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right and each right will be deemed an ongoing right
which may be asserted at any time and from time to time.
17. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
GENERAL. Except as described in this Section 17, based upon a review of
publicly available filings by the Company with the SEC and other publicly
available information concerning the Company, neither Parent nor Purchaser is
aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely
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affected by the acquisition of Shares by Purchaser or Parent pursuant to the
Offer, the Merger or otherwise or, except as set forth below, of any approval
or other action by any governmental, administrative or regulatory agency or
authority, domestic or foreign, that would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer, the Merger or
otherwise. Should any such approval or other action be required, Purchaser and
Parent currently contemplate that it will be sought. While Purchaser does not
currently intend to delay the acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that adverse
consequences might not result to the Company's business or that certain parts
of the business of the Company or Parent might not have to be disposed of in
the event that such approvals were not obtained or any other actions were not
taken. Purchaser's obligation under the Offer to accept for payment and pay
for Shares is subject to certain conditions, including conditions relating to
certain of the legal matters discussed in this Section 17. See Section 16.
THE MERGER; DISSENTERS' RIGHTS. Under Chapter 156B of the MBCL, the
affirmative vote of the holders of at least two-thirds of the outstanding
Shares entitled to vote, including the Shares owned by Parent and its
affiliates (including Purchaser) would be required to adopt the Merger. No
dissenters' or appraisal rights are available in connection with the Offer.
However, if the Merger is consummated, stockholders of the Company may have
certain rights under Massachusetts law to dissent and demand appraisal of, and
payment in cash of the fair value of, their Shares (the "Dissenting Shares").
Such rights, if the statutory procedures were complied with, could lead to a
judicial determination of the fair value (excluding any element of value
arising from the accomplishment or expectation of the Merger) required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the price paid in the Offer and the market value
of the Shares, including asset values and the investment value of the Shares.
The value so determined could be more or less than the purchase price per
Share pursuant to the Offer or the consideration per Share to be paid in the
Merger. The foregoing summary of rights of dissenting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise dissenters' rights. The preservation and
exercise of dissenters' rights are conditioned upon strict adherence with
Massachusetts law.
In addition, the Merger will have to comply with other applicable procedural
and substantive requirements of Massachusetts law, including any duties to
minority stockholders imposed upon a controlling or, if applicable, majority
stockholder.
The SEC has adopted Rule 13e-3 under the Exchange Act, which is applicable
to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser
seeks to acquire the remaining Shares not held by it. Purchaser believes,
however, that if the Merger is consummated within one year of its purchase of
Shares pursuant to the Offer, Rule 13e-3 will not be applicable to the Merger.
Purchaser believes that if the Merger is not consummated within one year of
its purchase of Shares pursuant to the Offer, Rule 13e-3 will be applicable to
the Merger. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the SEC and disclosed to
stockholders prior to consummation of the transaction.
STATE TAKEOVER STATUTES. A number of states, including Massachusetts, have
adopted "takeover" statutes that purport to apply to attempts to acquire
corporations that are incorporated in such states, or whose business
operations have substantial economic effects in such states, or which have
substantial assets, security holders, employees, principal executive offices
or principal places of business in such states.
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In Edgar v. MITE Corporation, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in CTS Corp. v. Dynamics
Corp. of America, addressing Indiana's Control Share Acquisition Act, the
Supreme Court held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable under certain conditions, in particular, that
the corporation has a substantial number of stockholders in the state and is
incorporated there.
The Company conducts business in a number of states throughout the United
States, some of which have enacted "takeover" statutes. Purchaser does not
know whether any of these statutes will, by their terms, apply to the Offer,
and has not complied with any such statutes. To the extent that certain
provisions of these statutes purport to apply to the Offer, Purchaser believes
that there are reasonable bases for contesting such statutes. If any person
should seek to apply any state takeover statute, Purchaser would take such
action as then appears desirable, which action may include challenging the
validity or applicability of any such statute in appropriate court
proceedings. If it is asserted that one or more takeover statutes apply to the
Offer, and it is not determined by an appropriate court that such statute or
statutes do not apply or are invalid as applied to the Offer, Purchaser might
be required to file certain information with, or receive approvals from, the
relevant state authorities, and Purchaser might be unable to purchase or pay
for Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer. In such case, Purchaser may not be obligated to accept
for payment or pay for Shares tendered. See Section 15.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent
of a Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Antitrust Division of the Department of Justice (the "Antitrust Division") or
the Federal Trade Commission (the "FTC") or unless early termination of the
waiting period is granted. If, within the initial 15-calendar day waiting
period, either the Antitrust Division or the FTC requests additional
information or material from Parent concerning the Offer, the waiting period
will be extended and would expire at 11:59 p.m., New York City time, on the
tenth calendar day after the date of substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request
for additional information is authorized by the HSR Act. Thereafter, such
waiting period may be extended only by court order or with the consent of
Parent. In practice, complying with a request for additional information or
material can take a significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of the
Shares pursuant to the Offer and the Merger Agreement. At any time before or
after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by Purchaser or divestiture of substantial assets of Parent or its
subsidiaries. Private parties and state attorneys general may also bring legal
action under the antitrust laws in certain circumstances. Based upon an
examination of publicly available information relating to the business in
which Parent and the Company are engaged, Parent and Purchaser believe that
the acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by Purchaser on antitrust grounds will not be made or,
if such challenge is made, of the result. See Section 16 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions.
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FEDERAL RESERVE BOARD REGULATIONS. The margin regulations promulgated by the
Federal Reserve Board place restrictions on the amount of credit that may be
extended for the purpose of purchasing margin stock (including the Shares) if
such credit is secured directly or indirectly by margin stock. Purchaser and
Parent believe that the financing of the acquisition of the Shares will not be
subject to the margin regulations.
18. FEES AND EXPENSES
Purchaser and Parent have retained Goldman Sachs to act as the Dealer
Manager and to provide certain financial advisory services in connection with
the proposed acquisition of the Company. In connection with such services
Parent has agreed to pay Goldman Sachs a fee of up to $4 million. Parent will
also reimburse Goldman Sachs for certain reasonable out-of-pocket expenses,
including reasonable attorneys' fees. Parent will also indemnify Goldman Sachs
against certain liabilities and expenses in connection with the Offer,
including certain liabilities under the federal securities laws. Purchaser and
Parent have retained D.F. King & Co., Inc. to act as the Information Agent and
The First National Bank of Boston to serve as the Depositary in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain
liabilities and expenses under the federal securities laws.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person or entity (other than as described in the preceding
paragraph) in connection with the solicitation of tenders of Shares pursuant
to the Offer. Brokers, dealers, banks and trust companies will be reimbursed
by Purchaser upon request for customary mailing and handling expenses incurred
by them in forwarding material to their customers.
19. MISCELLANEOUS
Purchaser is not aware of any jurisdiction in which the making of the Offer
is not in compliance with applicable law. If Purchaser becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, Purchaser will make a good faith effort to comply with any
such law. If, after such good faith effort, Purchaser cannot comply with any
such law, the Offer will not be made to (nor will tenders be accepted from or
on behalf of) the holders of Shares residing in such jurisdiction. In those
jurisdictions whose securities or blue sky laws require the Offer to be made
by a licensed broker or dealer, the Offer is being made on behalf of Purchaser
by one or more registered brokers or dealers which are licensed under the laws
of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE
OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the SEC the Tender Offer Statement on
Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with
exhibits, furnishing certain additional information with respect to the Offer,
and may file amendments thereto. Such Schedule 14D-1 and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the manner set forth in Section 8 (except that such
material will not be available at the regional offices of the SEC).
GTE Massachusetts Incorporated
May 12, 1997
40
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Parent
and certain other information are set forth below. The address of each
director and officer is GTE Corporation (for purposes of this Schedule I,
"Parent" or "GTE"), One Stamford Forum, Stamford, Connecticut 06904. Unless
otherwise indicated, each occupation set forth below an individual's name
refers to employment with Parent. All directors and executive officers listed
below are citizens of the United States. Unless otherwise indicated, each such
person has held his or her present occupation as set forth below, or has been
an executive officer of Parent, or the organization indicated, for the past
five years.
DIRECTORS OF PARENT
CHARLES R. LEE, 57 DIRECTOR SINCE 1989
- -------------------------------------------------------------------------------
Chairman and Chief Executive Officer. Mr. Lee joined GTE in 1983 as Senior
Vice President-- Finance and in 1986 he was named Senior Vice President--
Finance and Planning. He was elected President and Chief Operating Officer,
effective January 1, 1989, and became Chairman and Chief Executive Officer in
1992. Prior to joining GTE, he held various financial and management positions
in the steel, transportation and entertainment industries. Mr. Lee is a
Director of United Technologies Corporation, USX Corporation and The Procter &
Gamble Company. He is a member of the Business Roundtable, a Trustee of the
Board of Trustees of Cornell University, a Trustee of the National Planning
Association, a member of the New American Realities Committee of the National
Planning Association, a member of The Conference Board, Harvard Business
School's Board of Directors of the Associates, and a Director of the Stamford
Hospital Foundation. Mr. Lee is a Personal Trustee of the GTE Foundation and a
member of the Strategic Issues, Planning and Technology Committee of GTE.
KENT B. FOSTER, 53 DIRECTOR SINCE 1992
- -------------------------------------------------------------------------------
President. Mr. Foster served as Vice Chairman of the Board of Directors from
October 1993 until June 1995 and President of GTE Telephone Operations Group
from January 1989 until June 1995. Since joining GTE in 1970, Mr. Foster
served in a number of positions of increasing responsibility throughout the
GTE system. Mr. Foster serves on the Board of Directors of Campbell Soup
Company, New York Life Insurance Company and the Dallas Symphony Orchestra. He
is a Trustee of The Dallas Museum of Art and a member of the Dallas Opera
Executive Board. Mr. Foster is also a Personal Trustee of the GTE Foundation.
MICHAEL T. MASIN, 52 DIRECTOR SINCE 1989
- -------------------------------------------------------------------------------
Vice Chairman of the Board and President--International. Mr. Masin was
elected Vice Chairman in October 1993 and President--International in June
1995. Prior to that, he was Managing Partner of the New York office of the law
firm of O'Melveny & Myers and Co-chair of the firm's International Practice
Group. Mr. Masin joined the firm in 1969 and became a partner in 1977. He is a
Director of BC Telecom Inc., BC TEL, Compania Anonima Nacional Telefonos de
Venezuela (CANTV), Travelers Group and VenWorld. Mr. Masin is a member of the
Board of Trustees of Carnegie Hall, the Board of Directors of the China
America Society, the Dean's Advisory Council of Dartmouth College, the US-
Canada Private Sector Advisory Council of the Inter-American Development
Board, the Business Committee of the Board of Trustees of the Museum of Modern
Art, the Council on Foreign Relations, and a Personal Trustee of the GTE
Foundation.
EDWIN L. ARTZT, 67 DIRECTOR SINCE 1984
- -------------------------------------------------------------------------------
Chairman of the Executive Committee and Director of The Procter & Gamble
Company. Mr. Artzt was Chairman of the Board and Chief Executive Officer from
January 1990 until July 1995. Mr. Artzt had served as Vice Chairman of the
Board of The Procter & Gamble Company and President of
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Procter & Gamble International since 1984. Prior to that, he was an Executive
Vice President since 1980 and had served as Group Vice President for European
operations. Mr. Artzt is a Director of Teradyne, Inc., Delta Air Lines, Inc.,
American Express Company, Barilla S.p.A. and a member of the Business Council.
Mr. Artzt is Chairman of the Strategic Issues, Planning and Technology
Committee and a member of the Nominating Committee and the Pension Trust
Coordinating Committee of GTE.
JAMES R. BARKER, 61 DIRECTOR SINCE 1976
- -------------------------------------------------------------------------------
Chairman of The Interlake Steamship Co. and Vice Chairman of Mormac Marine
Group, Inc. and the Moran Towing Company. Mr. Barker is also a Director and a
principal owner of Meridian Aggregates, Inc., a producer of aggregate products
for the construction and railroad industries. Mr. Barker was formerly Chairman
of the Board of Moore McCormack Resources, Inc. and Chairman of that company's
operating subsidiaries since April 1971. He was also Chief Executive Officer of
Moore McCormack Resources, Inc. from 1971 to January 1987. In 1969, Mr. Barker
co-founded a management consulting firm, Temple, Barker & Sloane, Inc., and
served in the capacity of Executive Vice President. He is a Director of The
Pittston Company and Eastern Enterprises, is Vice Chairman of the Board of
Trustees of Stamford Hospital, and is President of the Committee of SKULD (an
Oslo, Norway based marine insurance company). Mr. Barker is Chairman of the
Nominating Committee and a member of the Executive Compensation and
Organizational Structure Committee and the Strategic Issues, Planning and
Technology Committee of GTE.
EDWARD H. BUDD, 64 DIRECTOR SINCE 1985
- -------------------------------------------------------------------------------
Retired Chairman of the Board of The Travelers Corporation. From January
1994 to September 1994, Mr. Budd was Chairman of Travelers Insurance Group,
Inc. Mr. Budd was elected President and Chief Operating Officer of The
Travelers Corporation in 1976, Chief Executive Officer in 1981 and Chairman in
1982. He is a Director of Travelers Group, Delta Air Lines, Inc. and a member
of The Business Council. He is Chairman of the Audit Committee and a member of
the Nominating Committee and the Executive Compensation and Organizational
Structure Committee of GTE.
ROBERT F. DANIELL, 63 DIRECTOR SINCE 1996
- -------------------------------------------------------------------------------
Retired Chairman, United Technologies Corporation. Mr. Daniell was elected
Chairman, United Technologies Corporation, effective January 1, 1987. He
relinquished the offices of President and Chief Operating Officer in February
1992 and the office of Chief Executive Officer in April 1994. Mr. Daniell was
elected President and Chief Operating Officer in 1984 and named to the
additional post of Chief Executive Officer, effective January 1, 1986. He was
elected Senior Vice President--Defense Systems in 1983 and had served as Vice
President of United Technologies from 1982 to 1983 and President of Sikorsky
Aircraft from 1981 to 1983. He is a director of Shell Oil Co. and the
Travelers Group Inc. Mr. Daniell is a member of the Audit Committee, the
Pension Trust Coordinating Committee and the Public Policy Committee of GTE.
JAMES L. JOHNSON, 70 DIRECTOR SINCE 1985
- -------------------------------------------------------------------------------
Retired Chairman and Chief Executive Officer. Mr. Johnson, who retired in
1992, has been designated Chairman Emeritus by the Board. He joined GTE in
1949 and held a variety of management positions within the Telephone
Operations Group. He was elected President of the GTE Telephone Operations
Group in 1981, Senior Vice President of GTE and President and Chief Operating
Officer of its Telephone Operations Group in December 1983, President and
Chief Operating Officer of GTE in March 1986 and became Chairman and Chief
Executive Officer in May 1988. Mr. Johnson is a Director of MONY (The Mutual
Life Insurance Company of New York), Valero Energy Corporation, Harte-Hanks
Communications, Inc., The Finover Group, Walter Industries, Inc. and CellStar
Corporation. He is also a Trustee of the Joint Council on Economic Education.
Mr. Johnson is a member of the Audit Committee, the Pension Trust Coordinating
Committee and the Strategic Issues, Planning and Technology Committee of GTE.
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RICHARD W. JONES, 72 DIRECTOR FROM 1966-1974
DIRECTOR SINCE JANUARY 1975
- -------------------------------------------------------------------------------
Business Consultant, PaineWebber Incorporated. From 1977 to 1988 he was
Managing Director and Executive Vice President of the investment banking firm
of E.F. Hutton & Company, Inc. Prior to assuming that position, Mr. Jones was
associated with Paine, Webber, Jackson & Curtis Incorporated, investment
bankers, having served as Senior Vice President and a Director of that firm
from 1973 to 1977. Mr. Jones was also associated with Mitchum, Jones &
Templeton Incorporated, investment bankers, having served as President of that
firm from 1961 through 1970 and Chairman of the Board from 1970 through 1973.
He is a member of the Audit Committee, the Pension Trust Coordinating
Committee and the Public Policy Committee of GTE.
JAMES L. KETELSEN, 66 DIRECTOR SINCE 1986
- -------------------------------------------------------------------------------
Retired Chairman of Tenneco Inc. Mr. Ketelsen retired as Chairman of Tenneco
in 1992. He was elected Executive Vice President--Finance of Tenneco Inc. in
1972 and was appointed Chairman and Chief Executive Officer in 1978. He is a
Director of J.P. Morgan & Co. Incorporated and its principal subsidiary,
Morgan Guaranty Trust Company of New York, and of Sara Lee Corporation and a
Trustee of Northwestern University. Mr. Ketelsen is Chairman of the Pension
Trust Coordinating Committee and a member of the Executive Compensation and
Organizational Structure Committee and the Public Policy Committee of GTE.
SANDRA O. MOOSE, 55 DIRECTOR SINCE 1978
- -------------------------------------------------------------------------------
Senior Vice President, Director and Chair of the East Coast Practice, The
Boston Consulting Group, Inc. She is a Director of Rohm and Haas Company and
twenty-seven investment companies sponsored by The New England Funds, an
Overseer of the Beth Israel Deaconess Medical Center, a Trustee of the Boston
Public Library and a Director of the Harvard University Graduate School Alumni
Association. She is Chairperson of the Public Policy Committee and a member of
the Audit Committee and the Strategic Issues, Planning and Technology
Committee of GTE.
RUSSELL E. PALMER, 62 DIRECTOR SINCE 1984
- -------------------------------------------------------------------------------
Chairman and Chief Executive Officer, The Palmer Group. Mr. Palmer was
formerly Dean, The Wharton School, University of Pennsylvania from 1983 until
June 1990. Prior to that, he was Managing Director and Chief Executive Officer
of Touche Ross International (now Deloitte and Touche), a worldwide accounting
firm. Mr. Palmer joined Touche Ross in 1956 and was elected Managing Director
of Touche Ross International in 1974. Mr. Palmer is a Director of Bankers
Trust New York Corporation and its subsidiary, Bankers Trust Company, May
Department Stores Company, Allied-Signal, Inc., Safeguard Scientifics, Inc.
and Federal Home Loan Mortgage Corporation. He has been President of the
Financial Accounting Foundation and a member of the Board of Directors of the
American Institute of Certified Public Accountants. Mr. Palmer is a former
member of the Presidential Commission on Management Improvement and serves on
the boards of a number of charitable and civic organizations. He is Chairman
of the Executive Compensation and Organizational Structure Committee and a
member of the Nominating Committee and the Strategic Issues, Planning and
Technology Committee of GTE.
ROBERT D. STOREY, 61 DIRECTOR SINCE 1985
- -------------------------------------------------------------------------------
Partner with the Cleveland law firm of Thompson, Hine & Flory LLP. Mr.
Storey previously was a partner with the Cleveland law firm of McDonald,
Hopkins, Burke & Haber Co., L.P.A. Mr. Storey joined its predecessor firm in
1967 and became a partner in 1971. In 1964 he began his career as an attorney
with The East Ohio Gas Company and in 1966 he became Assistant Director of The
Legal Aid Society of Cleveland. He is a Director of Bank One, Cleveland, The
Procter & Gamble Company and May Department Stores Company. Mr. Storey is a
Trustee of Case Western Reserve University, the Kresge Foundation and the
George Gund Foundation and a former Trustee of Phillips Exeter Academy,
Cleveland State University and Overseer of Harvard University. He is a member
of the Audit Committee, the Nominating Committee and the Public Policy
Committee of GTE.
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EXECUTIVE OFFICERS OF PARENT
CHARLES R. LEE (see above).
KENT B. FOSTER (see above).
MICHAEL T. MASIN (see above).
WILLIAM P. BARR, 46
Senior Vice President and General Counsel since 1994. Prior to joining GTE,
Mr. Barr was a partner at the law firm of Shaw, Pittman, Potts & Trowbridge
since 1993. From 1991 to 1993 he served as Attorney General of the United
States.
ROBERT C. CALAFELL, 56
Senior Vice President--Corporate Planning and Development since 1995.
ARMEN DER MARDEROSIAN, 59
Senior Vice President--Technology and Systems since 1995.
J. MICHAEL KELLY, 40
Senior Vice President--Finance since 1994.
J. RANDALL MACDONALD, 48
Senior Vice President--Human Resources and Administration since 1995.
DAN J. COHRS, 44
Vice President and Treasurer since 1995. Prior to that, Mr. Cohrs served as
Assistant Treasurer of GTE from 1993 to 1995. He joined GTE from Northwest
Airlines where he was Vice President--International Finance.
GEOFFREY C. GOULD, 45
Vice President--Government and Regulatory Affairs since 1995.
HARVEY W. GREISMAN, 48
Vice President--Corporate Communications since 1997.
JOHN P. Z. KENT, 56
Vice President--Taxes since 1989.
LAWRENCE W. WHITMAN, 45
Vice President and Controller since 1995.
MARIANNE DROST, 47
Secretary since 1985.
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DIRECTORS AND EXECUTIVE OFFICERS
OF PURCHASER
The name of each director and executive officer of Purchaser are set forth
below. The present principal occupation or employment and five-year employment
history of such persons are set forth earlier in this Schedule I. The address
of each director and officer is GTE Massachusetts Incorporated, c/o GTE
Corporation, One Stamford Forum, Stamford, Connecticut 06904. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Purchaser. All directors and executive officers listed below
are citizens of the United States.
ROBERT C. CALAFELL, Director and President.
JAMES A. ATTWOOD, Director, Vice President and Treasurer. Mr. Attwood joined
GTE Service Corporation in 1995 and is Vice President--Corporate Planning and
Development. Prior to that he was an investment banker at Goldman, Sachs & Co.
Mr. Atwood is 39 years old.
MARIANNE DROST, Director and Clerk.
I-5
<PAGE>
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or
his broker, dealer, commercial bank or other nominee to the Depository at one
of its addresses set forth below.
The Depositary for the Offer is:
THE FIRST NATIONAL BANK OF BOSTON
Facsimile Transmission
(For Eligible Institutions Only)
(617) 575-2233
<TABLE>
<CAPTION>
By Mail: By Overnight Delivery: By Hand:
<S> <C> <C>
Corporate Reorganization The First National Bank of Boston Securities Transfer & Reporting
Department Corporate Reorganization Department Services, Inc.
P.O. Box 1889 M/S 45-02-53 55 Broadway--3rd Floor
M/S 45-02-53 150 Royall Street New York, New York
Boston, Massachusetts Canton, MA 02021 10006
02105-1889 Attention: Delivery Window
</TABLE>
Confirm Receipt of Notice of Guaranteed Delivery:
(800) 225-5160
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent at its telephone numbers and location
listed below. You may also contact your broker, dealer, commercial bank or
trust company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street, 20th Floor
New York, New York 10005
(212) 269-5550 (collect)
or
CALL TOLL FREE: (800) 290-6430
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000
<PAGE>
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BBN CORPORATION
AT $29 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 12, 1997
BY
GTE MASSACHUSETTS INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
GTE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 9, 1997, UNLESS THE OFFER IS EXTENDED.
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
broker, dealer, commercial bank or other nominee to the Depositary at one of
its addresses set forth below.
The Depositary for the Offer is:
THE FIRST NATIONAL BANK OF BOSTON
Facsimile Transmission
(For Eligible Institutions Only)
(617) 575-2233
<TABLE>
<CAPTION>
By Mail: By Overnight Delivery: By Hand:
<S> <C> <C>
Corporate Reorganization The First National Bank of Boston Securities Transfer & Reporting
Department Corporate Reorganization Department Services, Inc.
P.O. Box 1889 M/S 45-02-53 55 Broadway--3rd Floor
M/S 45-02-53 150 Royall Street New York, New York
Boston, Massachusetts Canton, MA 02021 10006
02105-1889 Attention: Delivery Window
</TABLE>
Confirm Receipt of Notice of Guaranteed Delivery:
(800) 225-5160
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER
OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED SHARE CERTIFICATE(S) AND SHARE(S)
HOLDER(S) TENDERED
(Please fill in, if blank, exactly as (Attach additional list if
name(s) appear(s) on necessary)
Share Certificate(s) and Share(s) Tendered)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE REPRESENTED OF SHARES
NUMBER(S)* BY CERTIFICATES* TENDERED**
----------- ---------------- ----------
----------- ---------------- ----------
----------- ---------------- ----------
----------- ---------------- ----------
----------- ---------------- ----------
----------- ---------------- ----------
TOTAL SHARES:
- ---------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be completed by stockholders either if
certificates are to be forwarded herewith or if delivery is to be made by
book-entry transfer to the Depositary's account at The Depository Trust
Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each, a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase (as defined below).
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot comply
with the book-entry transfer procedures on a timely basis must tender their
Shares according to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-
ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Check Box of Book-Entry Transfer Facility (Check one):
[_] The Depository Trust Company [_] Philadelphia Depository Trust
Company
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY SENT TO THE DEPOSITARY PRIOR TO THE DATE HEREOF AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ___________________________________________
Window Ticket Number (if any): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Name of Institution that Guaranteed Delivery: _____________________________
Check Box of Book-Entry Transfer Facility if Delivered by Book-Entry
Transfer (check one):
[_] The Depository Trust Company [_] Philadelphia Depository Trust
Company
Account Number (if delivered by Book-Entry Transfer): _____________________
Transaction Code Number: ___________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to GTE Massachusetts Incorporated, a
Massachusetts corporation ("Purchaser") and a wholly owned subsidiary of GTE
Corporation, a New York corporation ("Parent"), the above-described shares of
Common Stock, par value $1.00 per share (including the associated Rights)
(collectively, the "Shares"), of BBN Corporation, a Massachusetts corporation
(the "Company"), at $29 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated May 12, 1997 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or
assign, in whole or in part from time to time to Parent or one or more direct
or indirect wholly owned subsidiaries of Parent, the right to purchase Shares
tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all of the Shares
that are being tendered hereby and all other Shares or other securities or
property including the Rights (as defined in the Offer to Purchase) issued or
issuable in respect thereof on or after May 5, 1997 (such other Shares,
securities or property other than the Shares being referred to herein as the
"Other Securities") and irrevocably appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such
Shares and all Other Securities with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver Share Certificates evidencing such Shares and all Other
Securities, or transfer ownership of such Shares and all Other Securities on
the account books maintained by any of the Book-Entry Transfer Facilities,
together, in either case, with all accompanying evidences of transfer and
authenticity, to or upon the order of Purchaser, upon receipt by the
Depositary, as the undersigned's agent, of the purchase price (adjusted, if
appropriate, as provided in the Offer to Purchase), (b) present such Shares
and all Other Securities for transfer on the books of the Company, and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares and all Other Securities, all in accordance with the terms of
the Offer.
The undersigned hereby irrevocably appoints Parent, Robert C. Calafell and
Marianne Drost, and each of them or any other designees of Purchaser, the
attorneys and proxies of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights, including to
exercise such voting and other rights as each such attorney and proxy or his
(or her) substitute shall, in his (or her) sole discretion, deem proper, and
otherwise act (including pursuant to written consent), with respect to all of
the Shares tendered hereby which have been accepted for payment by Purchaser
(and any and all Other Securities issued or issuable in respect thereof on or
after May 5, 1997), which the undersigned is entitled to vote at any meeting
of stockholders of the Company (whether annual or special and whether or not
an adjourned meeting), or written consent in lieu of such meeting, or
otherwise. This proxy and power of attorney is coupled with an interest in the
Shares tendered hereby and is irrevocable and is granted in consideration of,
and is effective upon, the acceptance for payment of such Shares by Purchaser
in accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior proxies and consents granted by the
undersigned with respect to such Shares (and all Shares and other securities
issued in Other Securities in respect of such Shares), and no subsequent proxy
or power of attorney or written consent shall be given (and if given or
executed, shall be deemed not to be effective) with respect thereto by the
undersigned. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered,
3
<PAGE>
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
is able to exercise full voting and other rights with respect to such Shares
(including voting at any meeting of stockholders then scheduled or acting by
written consent without a meeting).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Other Securities, and that when such Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Other Securities will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver any signature guarantees or additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Other
Securities. In addition, the undersigned shall promptly remit and transfer to
the Depositary for the account of Purchaser all Other Securities in respect of
the Shares tendered hereby, accompanied by appropriate documentation of
transfer, and pending such remittance or appropriate assurance thereof,
Purchaser shall be entitled to all rights and privileges as owner of such
Other Securities and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by Purchaser in its
sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated
in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer. The undersigned recognizes that under certain circumstances set forth
in the Offer to Purchase, Purchaser may not be required to accept for payment
any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates evidencing Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates evidencing Shares not tendered or accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and the Special Payment Instructions
are completed, please issue the check for the purchase price and/or return any
Share Certificates evidencing Shares not purchased (together with accompanying
documents as appropriate) in the name(s) of, and deliver said check and/or
return such Share Certificates to, the person or persons so indicated.
Stockholders tendering Shares by book-entry transfer may request that any
Shares not accepted for payment be returned by crediting such account
maintained at DTC or PDTC as such stockholder may designate by making an
appropriate entry under "Special Payment Instructions." The undersigned
recognizes that Purchaser has no obligation pursuant to the Special Payment
Instructions to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not accept for payment any of the Shares so
tendered.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 5, 6, AND 7) (SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares purchased or Share Certif- Shares purchased or Share Certif-
icates evidencing Shares not ten- icates evidencing Shares not ten-
dered or not purchased are to be dered or not purchased are to be
issued in the name of someone mailed to someone other than the
other than the undersigned. undersigned, or to the under-
signed at an address other than
that shown under "Description of
Shares Tendered."
Issue
[_] Check and/or- [_] Certificate(s)
Mail
To: [_] Check and/or [_] Certificate(s)
To:
__________________________________
__________________________________ NAME (PLEASE PRINT)
NAME(S) (PLEASE PRINT)
__________________________________
__________________________________
__________________________________
__________________________________ ADDRESS
ADDRESS
__________________________________
(INCLUDE ZIP CODE) __________________________________
__________________________________ (INCLUDE ZIP CODE)
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
[_] CHECK HERE IF ANY OF THE SHARE CERTIFICATES THAT YOU OWN AND WISH TO TENDER
HAVE BEEN LOST, DESTROYED OR STOLEN. (SEE INSTRUCTION 11.)
Number of Shares represented by lost, destroyed or stolen certificates:
5
<PAGE>
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9)
X __________________________________________________________________________
X __________________________________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: __________________________ 1997
(Must be signed by registered holder(s) as name(s) appear(s) on share
certificate(s) or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or any other person
acting in a fiduciary or representative capacity, please provide the
following information. See Instruction 5.)
____________________________________________________________________________
(NAME(S))
____________________________________________________________________________
(PLEASE PRINT OR TYPE)
____________________________________________________________________________
CAPACITY (FULL TITLE)
____________________________________________________________________________
ADDRESS
____________________________________________________________________________
ZIP CODE
____________________________________ ____________________________________
AREA CODE AND TELEPHONE NUMBER TAX IDENTIFICATION OR SOCIAL
(HOME) SECURITY NUMBER (COMPLETE
____________________________________ SUBSTITUTE FORM W-9 BELOW)
AREA CODE AND TELEPHONE NUMBER
(BUSINESS)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
X __________________________________________________________________________
AUTHORIZED SIGNATURE
____________________________________________________________________________
NAME (PLEASE PRINT OR TYPE)
____________________________________ ____________________________________
FULL TITLE NAME OF FIRM
____________________________________________________________________________
ADDRESS
____________________________________________________________________________
INCLUDE ZIP CODE
______________________________________
AREA CODE AND TELEPHONE NUMBER
Date______________________________1997
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a participant in the Security Transfer Agents Medallion
Program or any other "eligible guarantor institution" as defined in Rule 17Ad-
15 under the Securities Exchange Act of 1934, as amended (each, an "Eligible
Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for the purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered hereby
and such holder(s) has (have) not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
this Letter of Transmittal or (ii) such Shares are tendered for the account of
an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders
either if Share Certificates are to be forwarded herewith or if a tender of
Shares is to be made pursuant to the procedures for delivery by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or confirmation ("Book-Entry
Confirmation") of any book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility of Shares delivered by book-entry transfer as
well as a properly completed and duly executed Letter of Transmittal, must be
received by the Depositary, at one of the addresses set forth herein prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase). If
Share Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery. Stockholders whose Share Certificates are not immediately
available, who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot comply
with the book-entry transfer procedures on a timely basis may tender their
Shares by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. Pursuant to such procedure, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the Share Certificates evidencing all physically tendered Shares (or
Book-Entry Confirmation with respect to such Shares), as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE
SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal (or
facsimile thereof), waive any right to receive any notice of the acceptance of
their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
7
<PAGE>
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer.) If fewer than all the Shares evidenced by any Share Certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In such case, new
Share Certificate(s) evidencing the remainder of the Shares that were
evidenced by the old Share Certificate(s) will be sent to the registered
holder, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by Share Certificates delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration,
enlargement or any change whatsoever. If any of the Shares tendered hereby are
held of record by two or more persons, all such persons must sign this Letter
of Transmittal.
If any tendered Shares are registered in different names on several Share
Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by Share Certificates listed and transmitted hereby, no
endorsements of Share Certificates or separate stock powers are required
unless payment is to be made to or Share Certificates evidencing Shares not
tendered or purchased are to be issued in the name of a person other than the
registered holder(s), in which case the Share Certificate(s) evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on such Share Certificate(s). Signatures on such
certificates and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names
of the registered holder or holders appear on the Share Certificate(s).
Signatures on such Share Certificate(s) or stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal or any Share Certificates or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation or any person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority so to act
must be submitted.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or if Share
Certificates evidencing Shares not tendered or purchased are to be registered
in the name of, any person other than the registered holder(s), or if Share
Certificates evidencing tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holder(s) or
such other person) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER
OF TRANSMITTAL.
8
<PAGE>
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name
of a person other than the person(s) signing this Letter of Transmittal or if
such check or any such Share Certificate is to be sent and/or any Share
Certificates are to be returned to someone other than the signer above, or to
the signer above but at an address other than that shown in the box entitled
"Description of Shares Tendered" on the first page hereof, the appropriate
boxes on this Letter of Transmittal should be completed. Stockholders
tendering Shares by book-entry transfer may request that Shares not purchased
be credited to such account maintained at any of the Book-Entry Transfer
Facilities as such stockholder may designate under "Special Delivery
Instructions." If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facilities designated above.
8. Request for Assistance or Additional Copies. Requests for assistance may
be directed to, or additional copies of the Offer to Purchase, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent or the Dealer Managers at the telephone numbers and address
set forth below. Stockholders may also contact their broker, dealer,
commercial bank or trust company.
9. Waiver of Conditions. Except as otherwise provided in the Offer to
Purchase, Purchaser reserves the right in its sole discretion to waive in
whole or in part at any time or from time to time any of the specified
conditions of the Offer or any defect or irregularity in tender with regard to
any Shares tendered.
10. Substitute Form W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or employer identification number,
on Substitute Form W-9, which is provided under "Important Tax Information"
below, and to certify, under penalties of perjury, whether he or she is
subject to backup withholding of federal income tax. If a tendering
stockholder is subject to backup withholding, he or she must cross out item
(2) of the Certification Box on Substitute Form W-9. Failure to provide the
information on Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price. If
the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, he or she should
write "Applied For" in the space provided for the TIN in Part I, sign and date
the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of payments for surrendered Shares thereafter until a TIN is
provided to the Depositary.
11. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder of a Share
Certificate whose certificate(s) has been mutilated, lost, stolen or destroyed
should (i) complete this Letter of Transmittal and check the appropriate box
on this Letter of Transmittal and (ii) complete and return to the Depositary
any additional documentation, including the posting of any indemnity bond,
requested by the Depositary. If required by Purchaser, the holder will be
required to post a bond in such reasonable amount as Purchaser may direct as
indemnity against any claim that may be made against Parent, Purchaser or any
of their respective affiliates with respect to such certificate(s).
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY CONFIRMATION) AND ALL
OTHER REQUIRED DOCUMENTS OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE
EXPIRATION DATE.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under federal tax law, a stockholder whose tendered Shares are accepted for
payment is required to provide the Depositary (as payor) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN or an adequate basis for
exemption, the stockholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such
stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding in an amount equal to 31% of the gross proceeds
resulting from the Offer.
Certain stockholders (including, among others, certain corporations and
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit an IRS Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. Such statements can
be obtained from the Depositary. See the enclosed Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder with
respect to Shares purchased pursuant to the Offer, the stockholder is required
to notify the Depositary of his or her correct TIN by completing the Substitute
Form W-9 contained herein, certifying that the TIN provided on the Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN) and that (1)
the stockholder is exempt from backup withholding, (2) the stockholder has not
been notified by the Internal Revenue Service that he or she is subject to
backup withholding as a result of failure to report all interest or dividends,
or (3) the Internal Revenue Service has notified the stockholder that he or she
is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security number
or employer identification number of the record owner of the Shares. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, he or she
should write "Applied For" in the space provided for the TIN in Part I, sign
and date the Substitute Form W-9 and sign and date the Certificate of Awaiting
Taxpayer Identification Number. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of all payments of the purchase price until a TIN is provided to
the Depositary.
10
<PAGE>
PAYOR'S NAME: THE FIRST NATIONAL BANK OF BOSTON, AS DEPOSITARY
- -------------------------------------------------------------------------------
PART I--PLEASE PROVIDE SOCIAL SECURITY OR EMPLOYEE
SUBSTITUTE YOUR TIN IN THE BOX AT IDENTIFICATION NUMBER
FORM W-9 RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW. ________________________
-----------------------------------------------------------
DEPARTMENT OF THE NAME (PLEASE PRINT) (If awaiting TIN write
TREASURY INTERNAL "Applied For")
REVENUE SERVICE -----------------------------------------------------------
ADDRESS
-----------------------------------------------------------
PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN) AND CERTIFICATION
CITY STATE ZIP CODE
-----------------------------------------------------------
PART II--For Payees NOT subject to backup withholding,
see the enclosed Guidelines for Certification of Tax-
payer Identification Number on Substitute Form W-9 and
complete as instructed therein.
-----------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY
THAT:
1. The number shown on this form is my correct Tax-
payer Identification Number (or I am waiting for a
number to be issued to me), and
2. I am not subject to backup withholding because ei-
ther (a) I am exempt from backup withholding, (b) I
have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup with-
holding as a result of a failure to report all in-
terest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
underreporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the
enclosed Guidelines.)
Signature: _________________________ Dated: ____, 1997
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU
MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
PART I OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will
be withheld until I provide a number.
Signature(s): ________________________ Dated: _________________________
11
<PAGE>
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street, 20th Floor
New York, New York 10005
(212) 269-5550 (collect)
or
Call Toll Free: (800) 290-6430
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-1000
12
<PAGE>
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BBN CORPORATION
TO
GTE MASSACHUSETTS INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
GTE CORPORATION
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form, or a form substantially equivalent to this form, must be used to accept
the Offer (as defined below) if the certificates representing shares of common
stock, par value $1.00 per share (together with associated Rights)
(collectively, the "Shares"), of BBN Corporation are not immediately available
or time will not permit all required documents to reach the Depositary prior
to the Expiration Date (as defined in the Offer to Purchase) or the procedures
for book-entry transfer cannot be completed on a timely basis. Such form may
be delivered by hand or transmitted by facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution (as defined
in Section 3 of The Offer to Purchase). See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
THE FIRST NATIONAL BANK OF BOSTON
Facsimile Transmission
(For Eligible Institutions Only)
(617) 575-2233
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
Corporate Reorganization The First National Bank of Boston Securities Transfer &
Department Corporate Reorganization Department Reporting Services, Inc.
P.O. Box 1889 M/S 45-02-53 55 Broadway--3rd Floor
M/S 45-02-53 150 Royall Street New York, New York 10006
Boston, Massachusetts Canton, MA 02021 Attention: Delivery Window
02105-1889
</TABLE>
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(800) 225-5160
---------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER
THAN AS LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to GTE Massachusetts Incorporated, a
Massachusetts corporation and a wholly owned subsidiary of GTE Corporation, a
New York corporation, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated May 12, 1997 (the "Offer to Purchase") and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase.
Name(s) of Record Holder(s):
Number of Shares: _______________ _________________________________
Share Certificate Numbers (if _________________________________
available): PLEASE TYPE OR PRINT
_________________________________ Address(es): ____________________
_________________________________ _______________________
If Shares will be delivered by ZIP CODE
book-entry trnasfer, check one
box:
Area Code and Telephone Number:
_________________________________
_________________________________
[ ] The Depository Trust Company _________________________________
[ ] Philadelphia Depository
Trust Company
_________________________________
SIGNATURE(S)
Account Dated: ____________________, 1997
Number: _________________________
Dated: ____________________, 1997
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or any other "eligible guarantor institution" as defined in Rule 17Ad-
15 under the Securities Exchange Act of 1934, as amended (each, an "Eligible
Institution"), hereby guarantees that either the certificates representing the
Shares tendered hereby in proper form for transfer, or timely confirmation of
a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company
(pursuant to procedures set forth in Section 3 of the Offer to Purchase),
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees (or, in the case of
a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase)) and any other documents required by the Letter of Transmittal, will
be received by the Depositary at one of its addresses set forth above within
three (3) New York Stock Exchange trading days after the date of execution
hereof.
2
<PAGE>
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal,
certificates for Shares and any other required documents to the Depositary
within the time period shown herein. Failure to do so could result in a
financial loss to such Eligible Institution.
Name of Firm: _____________________________________________________________
Address: __________________________________________________________________
___________________________________________________________________
ZIP CODE
Area Code and Telephone Number: ___________________________________________
AUTHORIZED SIGNATURE
Name: _____________________________________________________________________
PLEASE TYPE OR PRINT
Title: ____________________________________________________________________
Dated: ______________________________________________________________, 1997
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES ARE TO BE DELIVERED WITH THE LETTER OF
TRANSMITTAL.
3
<PAGE>
Exhibit (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BBN CORPORATION
BY
GTE MASSACHUSETTS INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
GTE CORPORATION
AT
$29 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MONDAY, JUNE 9, 1997, UNLESS THE OFFER IS EXTENDED.
May 12, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by GTE Massachusetts Incorporated, a Massachusetts
corporation ("Purchaser") and a wholly owned subsidiary of GTE Corporation, a
New York corporation ("Parent"), to act as Dealer Managers in connection with
its offer to purchase all outstanding shares of common stock, par value $1.00
per share (together with associated Rights) (collectively, the "Shares"), of
BBN Corporation, a Massachusetts corporation (the "Company"), at $29 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Purchaser's Offer to Purchase dated May 12,
1997 (the "Offer to Purchase") and in the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"), copies of which are enclosed herewith.
For your information and for forwarding to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase);
<PAGE>
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer;
5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by the
Company; and
6. A Return envelope addressed to The First National Bank of Boston, as
the Depositary.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 5, 1997 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. The Merger Agreement provides that, among other things, following
the consummation of the Offer and the satisfaction or waiver of the other
conditions set forth in the Merger Agreement, Purchaser will be merged with
and into the Company (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares held in the treasury of the Company,
owned by Parent, Purchaser or any wholly owned subsidiary of Parent or the
Company or held by stockholders who perfect their dissenters' rights under
Massachusetts law) will be converted into the right to receive the per Share
price paid in the Offer, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND
APPROVE THE MERGER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will be deemed to have accepted for payment, and will
pay for, all Shares validly tendered and not properly withdrawn by the
Expiration Date (as defined in the Offer to Purchase) if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of the tenders of such Shares for payment pursuant to the Offer.
Payment for Shares purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates evidencing such Shares or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined
in the Offer to Purchase), (ii) a properly completed and duly executed Letter
of Transmittal (or facsimile thereof) or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) and (iii)
any other documents required by the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (in the case of any book-entry
transfer), and any other documents required by the Letter of Transmittal,
should be sent to the Depositary, and either certificates representing the
tendered Shares should be delivered or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfers, all in
accordance with the instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or
to comply with the book-entry transfer procedures on a timely basis, a tender
may be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
Neither Parent nor Purchaser will pay any fees or commissions to any broker,
dealer or other person (other than the Dealer Managers, the Information Agent
and the Depositary as described in the Offer to Purchase) in connection with
the solicitation of tenders of Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse brokers, dealers, commercial banks and trust
companies for reasonable expenses incurred by them in forwarding materials to
their customers. Purchaser will pay all stock transfer taxes applicable to its
purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
2
<PAGE>
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 9, 1997, UNLESS THE OFFER IS
EXTENDED.
Any inquiries you may have with respect to the Offer may be addressed to the
Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover page of the Offer to Purchase. Requests for
additional copies of the enclosed materials may be directed to the Information
Agent or the Dealer Managers.
Very truly yours,
Goldman, Sachs & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU
OR ANY PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, ANY AFFILIATE
OF THE COMPANY, GOLDMAN, SACHS & CO., THE DEALER MANAGERS, THE INFORMATION
AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
3
<PAGE>
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BBN CORPORATION
AT
$29 NET PER SHARE
BY
GTE MASSACHUSETTS INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
GTE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON MONDAY, JUNE 9, 1997 UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated May 12, 1997
(the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer")
and other materials relating to the Offer by GTE Massachusetts Incorporated, a
Massachusetts corporation ("Purchaser") and a wholly owned subsidiary of GTE
Corporation, a New York corporation ("Parent"), to purchase all of the
outstanding shares of common stock, par value $1.00 per share (together with
the associated Rights) (collectively, the "Shares"), of BBN Corporation, a
Massachusetts corporation (the "Company"), at $29 per Share, net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in the Offer. Also enclosed is the letter to stockholders of the Company
from the Chairman of the Board, President and Chief Executive Officer of the
Company accompanied by the Company's Solicitation/Recommendation Statement on
Schedule 14D-9. This material is being sent to you as the beneficial owner of
Shares held by us for your account but not registered in your name. A tender
of such Shares can be made only by us as the holder of record and pursuant to
your instructions. The Letter of Transmittal accompanying this letter is
furnished to you for your information only and cannot be used by you to tender
Shares held by us for your account.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $29 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions of the Offer.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, June 9, 1997, unless the Offer is extended.
<PAGE>
3. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of May 5, 1997 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or
waiver of the other conditions set forth in the Merger Agreement, Purchaser
will be merged with and into the Company (the "Merger"). At the effective
time of the Merger, each outstanding Share (other than Shares held in the
treasury of the Company, owned by Parent, Purchaser or any wholly owned
subsidiary of Parent or the Company or held by stockholders who perfect
their dissenters' rights under Massachusetts law) will be converted into
the right to receive the per Share price paid in the Offer, without
interest.
4. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Offer and the Merger, has determined that the Offer
and the Merger are fair to and in the best interests of the stockholders of
the Company and unanimously recommends that stockholders accept the Offer
and approve the Merger.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer, that
number of Shares which, together with any Shares beneficially owned by
Parent or Purchaser, represent at least two-thirds of the Shares
outstanding. Subject to the terms of the Merger Agreement, the Offer is
also subject to other terms and conditions, including receipt of certain
regulatory approvals, set forth in the Offer to Purchase. Pursuant to the
Merger Agreement, the Purchaser has agreed to extend the Offer from time to
time until August 15, 1997, if at the initial Expiration Date (as defined
in the Offer to Purchase), or any extension thereof, all conditions to the
Offer have not been satisfied or waived. Notwithstanding the foregoing,
Purchaser may, in its judgment, extend and re-extend the Offer, from time
to time, but in no event beyond November 15, 1997, if it believes that such
extension is advisable in order to facilitate the orderly transition of the
business of the Company and preserve and maintain the Company's business
relationships. Any or all conditions to the Offer may be waived by
Purchaser.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or (in the case of any book-entry transfer) an Agent's
Message (as defined in the Offer to Purchase) and any other documents required
by the Letter of Transmittal, should be sent to The First National Bank of
Boston, the Depositary, and either certificates representing the tendered
Shares should be delivered or such Shares must be delivered to the Depositary
pursuant to the procedures for book-entry transfers, all in accordance with
the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
The Offer is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
in any jurisdiction in which the making of the Offer or acceptance thereof
would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of Purchaser by Goldman, Sachs & Co. or one or more registered
brokers or dealers licensed under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us
the instruction form set forth below. Please forward your instructions to us
in ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BBN CORPORATION
BY
GTE MASSACHUSETTS INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
GTE CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated May 12, 1997 and the related Letter of Transmittal, in
connection with the offer by GTE Massachusetts Incorporated, a Massachusetts
corporation and a wholly owned subsidiary of GTE Corporation, a New York
corporation, to purchase for cash all outstanding shares of common stock, par
value $1.00 per share (together with associated Rights) (collectively, the
"Shares"), of BBN Corporation, a Massachusetts corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) that are held by you for the account
of the undersigned, upon the terms and subject to the conditions set forth in
the Offer and the related Letter of Transmittal.
Dated: , 1997
NUMBER OF SHARES TO BE TENDERED:
...................................................................... SHARES*
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Signature(s)
- -------------------------------------------------------------------------------
Please Print Name(s)
- -------------------------------------------------------------------------------
Please Print Address(es)
- -------------------------------------------------------------------------------
Area Code and Telephone Number(s)
- -------------------------------------------------------------------------------
Tax Identification or Social Security Number(s)
- --------
* I (We) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by
you for my (our) account will be tendered.
3
<PAGE>
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF --
- --------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner
of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint account) The actual owner
of the account
or, if joint
funds, either
person(1)
4. Custodian account of a minor (Uniform Gift to Minors Act) The minor(2)
5. Adult and minor (joint account) The adult or, if
the minor is the
only
contributor, the
minor(1)
The ward, minor,
6. Account in the name of guardian or committee for a or incompetent
designated ward, minor, or incompetent person person(3)
7. a. The usual revocable savings trust account (grantor is The grantor-
also trustee) trustee(1)
b. So-called trust account that is not a legal or valid The actual
trust under State law owner(1)
8. Sole proprietorship account The owner(4)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- ------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension trust The legal entity
(Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of Agriculture in the name The public
of a public entity (such as a State or local government, entity
school district, or prison) that receives agricultural
program payments
</TABLE>
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your num-
ber, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDEN-
TIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the regulations under sections 6041, 6041A(a), 6045,
and 6050A.
PRIVACY ACT NOTICE.-- Section 6109 requires most recipients of dividend, in-
terest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are re-
quired to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated May 9, 1997 and the related Letter of
Transmittal and is not being made to, nor will tenders be accepted
from or on behalf of, holders of Shares in any jurisdiction in
which the making of the Offer or acceptance thereof would not
be in compliance with the laws of such jurisdiction. In those
jurisdictions where securities, blue sky or other laws
require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on
behalf of Purchaser (as defined below) by
Goldman, Sachs & Co. or one or more
registered brokers or dealers
licensed under the laws of
such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
BBN CORPORATION
AT
$29 NET PER SHARE
BY
GTE MASSACHUSETTS INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
GTE CORPORATION
GTE Massachusetts Incorporated, a Massachusetts corporation ("Purchaser")
and a wholly owned subsidiary of GTE Corporation, a New York corporation
("Parent"), is offering to purchase all outstanding shares of common stock,
$1.00 par value per share (the "Company Common Stock") and the associated common
stock purchase rights (the "Rights"; and together with the Company Common Stock,
the "Shares"), of BBN Corporation, a Massachusetts corporation (the "Company"),
at $29 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated May 12,
1997 (the "Offer to Purchase") and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 6, 1997, UNLESS THE OFFER IS EXTENDED.
<PAGE>
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer, that number of
Shares which, together with any Shares beneficially owned by Parent or
Purchaser, represent at least two-thirds of the Shares outstanding. The Offer
is subject to other terms and conditions, including receipt of certain
regulatory approvals, set forth in the Offer to Purchase. Pursuant to the
Merger Agreement (as defined below), Purchaser has agreed to extend the Offer
from time to time until August 15, 1997 (as such date may be extended pursuant
to the terms of the Merger Agreement) if at the initial Expiration Date (as
defined in the Offer to Purchase), or any extension thereof, all conditions to
the Offer have not been satisfied or waived. Pursuant to the Merger Agreement,
Purchaser also has certain rights to extend the Offer if it believes that such
extension is advisable in order to facilitate the orderly transition of the
business of the Company and preserve and maintain the Company's business
relationships.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 5, 1997 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. The Merger Agreement provides that, among other things, following
the consummation of the Offer and the satisfaction or waiver of the other
conditions set forth in the Merger Agreement, Purchaser will be merged with and
into the Company (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares held in the treasury of the Company, owned
by Parent, Purchaser or any wholly owned subsidiary of Parent or held by
stockholders who perfect their dissenters' rights under Massachusetts law) will
be converted into the right to receive the per Share price paid in the Offer,
without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, HAS UNANIMOUSLY DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, Purchaser shall not be
required to accept for payment or pay for, and may delay the acceptance for
payment of, or (whether or not the Shares have theretofore been accepted for
payment) the payment for, any Shares tendered, and may terminate or extend the
Offer and not accept for payment any Shares. Purchaser may waive any or all of
the conditions to the Offer in whole or in part at any time, to the extent
permitted by applicable law and the provisions of the Merger Agreement.
Purchaser reserves the right, at any time or from time to time, subject to
the terms of the Merger Agreement, to extend the period of time during which the
Offer is open by giving oral or written notice of such exentension to The First
National Bank of Boston (the "Depositary"). Any such extension will be followed
as promptly as practicable by a public announcement thereof no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled date on which the Offer was to expire. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment tendered Shares if, as and when Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a confirmation of
a book-entry transfer of such Shares into the Depositary's account at one of the
Book-Entry Transfer Facilities (as defined in the Offer to Purchase)), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase)) and any
other documents required by the Letter of Transmittal.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. After that, such tenders are irrevocable, except
that they may be withdrawn at any time after July 11, 1997, if they have not
previously been accepted for payment as provided in the Offer to Purchase. To
be effective, a written or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth in the Offer
to Purchase and must specify the name of the person who tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares.
2
<PAGE>
If the Shares to be withdrawn have been delivered to the Depositary or otherwise
identified to the Depositary, a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution (as defined in the Offer to Purchase) must
be submitted prior to the release of such Shares (except in the case of Shares
tendered by an Eligible Institution (as defined in the Offer to Purchase)). In
addition, such notice must specify the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn, or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares.
The Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares and will be furnished to brokers, banks and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent as set forth below, and copies will be furnished promptly at Purchaser's
expense. Neither Parent nor Purchaser will pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Managers, the
Information Agent and the Depositary) in connection with the solicitation of
tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC
77 Water Street, 20th Floor
New York, New York 10005
(212) 269-8550 (collect)
or
CALL TOLL FREE: (800) 290-6430
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New york, 10004
(212) 902-1000
May 9, 1997
3
<PAGE>
Exhibit (a)(8)
Contact: Sharon Cohen-Hagar, 203/965-3188 (after 6 p.m. 203/849-8728)
Bob Brand, 972/718-4945 (after 6 p.m. 972/317-0926)
May 6, 1997
GTE ANNOUNCES INITIATIVES TO BECOME A LEADING NATIONAL
PROVIDER OF TELECOMMUNICATIONS SERVICES
--WILL ACQUIRE BBN IN TRANSACTION VALUED AT $616 MILLION --
--PURCHASES FIBER-OPTIC NETWORK FROM QWEST --
--CREATES A NEW NATIONAL SALES, SERVICE AND MARKETING COMPANY --
STAMFORD, Conn.--GTE today announced a series of steps to position itself as a
market-leading, national provider of integrated telecommunications services,
according to GTE Chairman and Chief Executive Officer Charles R. Lee,
including a comprehensive plan to enter the $1000 billion market for value-
added data communications services--the fastest-growing segment of the
telecommunications industry.
The actions include the acquisition of BBN Corporation, a leading provider
of end-to-end Internet solutions; a strategic alliance with Cisco Systems,
Inc. to jointly develop enhanced data and Internet services for customers;
and, the purchase of a national, state-of-the-art fiber-optic network from
Qwest Communications. Also included is the creation of a new, deregulated unit
to market integrated voice, video and data solutions both within and outside
GTE's current markets.
"The actions announced today clearly position GTE to have the fastest, most
reliable and most secure national network available, enabling end-to-end
managed network solutions that we believe will be unmatched in the industry,"
said Lee.
In detailing its data plan, GTE said the moves announced today will enable
it to:
. Develop innovative and value-added communications services to meet
customer needs, especially in the fast-growing Internet-services market;
. Create a broadband, national backbone network based on SONET self-healing
fiber rings; and
. Rapidly deploy "next generation" value-added services and Internet
Protocol offerings.
"Simply put, GTE will become a leading national "one-stop' provider of
local, long distance, Internet and wireless services, and will establish an
advanced data network that will be fully operational next year," said GTE
President Kent B. Foster. "At that point, we will be in a position to reach
virtually the entire U.S. population."
GTE/BBN
Under the terms of the transaction, which was approved by the Boards of
Directors of both companies, GTE will shortly commence a cash tender offer to
acquire all the outstanding shares of BBN common stock at a price of $29 per
share. Based on the number of shares of BBN stock currently outstanding, the
equity portion of the transaction is valued at approximately $616 million. As
soon as practicable following the conclusion of the tender offer, GTE will
initiate a merger through which any remaining shares of BBN not owned by GTE
will be converted into cash at the cash tender offer price in the merger.
1
<PAGE>
Cambridge, Mass.-based BBN is a leading provider of high performance end-to-
end Internet solutions such as World Wide Web site hosting, network security,
consulting, systems integration, and dedicated and dial-up Internet access for
government and commercial customers. Its 2,200 employees have extensive
experience in leading-edge Internet and other telecommunications applications.
Twenty-eight years ago, BBN created ARPANET, the forerunner of the Internet.
"GTE will jump-start its entry into the enhanced Internet services market
for large businesses through the acquisition of BBN," said Foster.
George H. Conrades, chairman and chief executive officer of BBN said, "This
business combination is a perfect strategic fit. The Internet opportunity,
characterized by the convergence of computers and communications, is the
fastest-growing economic endeavor in human history. GTE is today declaring its
strategic intent to be a leading player in this important opportunity, backed
up by plans for significant investment and alliances. BBN has been chosen to
be the cornerstone of GTE's new strategy. We bring needed Internet skills, a
suite of offerings and a business customer base.
"At the same time, we will be able to take advantage of GTE's strong brand
image, distribution, network expansion plans and financial resources. Today,
no one player in this industry has all the piece parts necessary for customer
and competitive success. It's a game of scale and financial resources, as well
as specialization and innovation. With this announcement, GTE, with BBN, is
off to a great start," Conrades said.
GTE/CISCO
GTE and Cisco announce their intention to jointly develop enhanced
internetworking capabilities to power GTE's network. Beyond the network
infrastructure, the companies have committed to deliver targeted, turn-key,
bundled solutions of applications, equipment installation, maintenance and
telecommunication services.
"Cisco is the leading provider of Internet-related networking services. Its
skill sets perfectly complement those of GTE, and we are pleased to enter into
this long-term, mutually beneficial strategic relationship," said GTE's
Foster.
"This combination will create a fundamentally new offering in the
marketplace," said John Chambers, president and chief executive officer at
Cisco Systems, Inc. "GTE will have leadership capabilities to provide
integrated end-to-end services across all layers of the network such as
multimedia, quality and security. The relationship will accelerate the
deployment of these and other services through the alignment of our core
competencies."
GTE/QWEST
Denver-based Qwest Communications Corp. is constructing a fiber-based
national backbone network which will be equipped with state-of-the-art opto-
electronics. The network will span 13,000 miles, connecting 92 metropolitan
areas, including Atlanta, Chicago, Los Angeles, New York, San Francisco and
Washington, D.C. In an agreement announced Monday, GTE will acquire 21 dark
fibers, and certain associated facilities, in the new Qwest network.
"When completed in 1998, the network will provide the foundation for a
myriad of high-speed data communication services. GTE's network will greatly
reduce the high upfront cost of today's private data networks, making advanced
data communications more affordable for a greater segment of the population,"
Foster stated.
"We are extremely pleased with GTE's acquisition of dark fiber on the Qwest
network route," said Joe Nacchio, president and chief executive officer of
Qwest.
2
<PAGE>
GTE RESTRUCTURES TELEPHONE OPERATIONS,
CREATES NEW NATIONAL SALES, SERVICE AND MARKETING COMPANY
As part of the company's plan to capture new growth, GTE restructured its
Telephone Operations unit, Foster said.
To move with greater flexibility to capture growth opportunities in the
telecommunications marketplace, GTE created an unregulated sales, service and
marketing unit to offer an integrated package of local, long distance,
Internet and wireless services nationwide, regardless of GTE's traditional
market boundaries.
This new unit will operate as a competitive local exchange carrier (CLEC),
offering targeted customers premium servicing capabilities and packaged
products beyond what is currently available in the marketplace today.
Foster also announced the following realignment of key responsibilities:
Thomas W. White, 51, has been named corporate executive vice president-market
operations, reporting to Foster. He will assist the GTE president in
coordinating the activities of the below-mentioned business units and also
will be responsible for leading the company's overall data thrust. White has
served as president of GTE Telephone Operations since July 1995.
Also reporting to Foster are the following newly appointed individuals:
. Lew Wilks, 43, has been named president of GTE's new national sales,
service and marketing unit. This new retail business unit will offer a
bundled package of premium telecommunications services to business and
residential customers both within an outside GTE's current franchise
areas. Wilks previously served as president, business markets, since July,
1996.
. John Appel, 48, has been named president of GTE's current regulated local
exchange operations. Appel will continue work already underway to enhance
quality and customer service and to preserve and grow GTE's current in-
franchise, regulated business. Appel was appointed to his previous
position, executive vice president-Network Operations, in January 1996.
. Jerry Dinsmore, 47, has been named president--Business Development and
Integration, responsible for coordination and integration of all
marketing, technology, finance, planning and business analysis, and
regulatory from the above units. Dinsmore's principal responsibility will
be to lead an integrated approach to the marketplace.
Now that these individuals have been named, they will begin to develop
transition plans for their respective businesses and assume their new
positions on June 1.
GTE's Wireless, Directories and Airfone units will continue to report
directly to GTE President Kent Foster.
"The organizations and people now in place will drive our growth in the
marketplace in a powerful way," said Foster.
BACKGROUND ON BBN
BBN is one of the nation's leading providers of Internet access and value-
added services for businesses, with annualized revenue of more than $380
million for BBN's third quarter, announced today. It offers Fortune 1000
companies a complete set of managed Internet services, including high-speed
and dial-up access, systems development and electronic-commerce support,
network security, and Web hosting services. BBN also provides network-related
contract research and development for
3
<PAGE>
government and commercial customers. BBN's Internet customers include many of
the world's top information technology, manufacturing and financial services
companies. BBN's home page address is http://www.bbn.com.
BACKGROUND ON GTE
With revenues of more than $21 billion in 1996, GTE is one of the largest
publicly held telecommunications companies in the world. In the United States,
GTE offers local and wireless service in 29 states and long-distance service
in all 50 states. GTE was the first among its peers to offer "one-stop
shopping" for local, long-distance and Internet access services. Outside the
United States, where GTE has operated for more than 40 years, the company
serves over 6.5 million customers. GTE is also a leader in government and
defense communications systems and equipment, directories and
telecommunications-based information services, and aircraft-passenger
telecommunications.
# # #
71(97)
Additional information about GTE can be found on the Internet at
http://ww.gte.com.
4
<PAGE>
Exhibit (a)(9)
Contact: Sharon Cohen-Hagar, 203/965-3188 (after 6 p.m. 203/849-8728)
May 12, 1997
SUMMARY: GTE COMMENCES PREVIOUSLY ANNOUNCED CASH TENDER OFFER FOR ALL
OUTSTANDING SHARES OF BBN CORPORATION AT $29 PER SHARE.
STAMFORD, Conn.--GTE Corp. today announced that GTE Massachusetts
Incorporated, its wholly owned subsidiary, has commenced a cash tender offer
for all outstanding shares of common stock of BBN Corporation at $29 per
share.
The offer is being made pursuant to the previously announced merger
agreement among GTE, GTE Massachusetts and BBN. The offer is conditioned upon,
among other things, the tender of two-thirds of the outstanding shares.
The offer and withdrawal right are scheduled to expire at 12 midnight EDT on
Monday, June 9, 1997.
Goldman, Sachs & Co. is acting as the Dealer Manager, and D.F. King & Co.,
Inc. is acting as the Information Agent in connection with the offer.
With revenues of more than $21 billion in 1996, GTE is one of the largest
publicly held telecommunications companies in the world.
# # #
1
<PAGE>
EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
GTE CORPORATION
GTE MASSACHUSETTS INCORPORATED
AND
BBN CORPORATION
DATED AS OF MAY 5, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE 1.
THE OFFER................................................................ 1
Section 1.1 The Offer............................................... 1
Section 1.2 Company Actions......................................... 2
Section 1.3 Stockholder Lists....................................... 3
Section 1.4 Composition of the Board of Directors; Section 14(f).... 3
Section 1.5 Action by Continuing Directors.......................... 3
ARTICLE 2.
THE MERGER............................................................... 3
Section 2.1 The Merger.............................................. 3
Section 2.2 Effective Time.......................................... 4
Section 2.3 Effects of the Merger................................... 4
Section 2.4 Articles of Organization and By-Laws.................... 4
Section 2.5 Directors............................................... 4
Section 2.6 Officers................................................ 4
Section 2.7 Conversion of Shares.................................... 4
Section 2.8 Conversion of Purchaser's Common Stock.................. 5
Section 2.9 Stock Options........................................... 5
Restricted Stock Conversion and Directors Defined
Section 2.10 Compensation............................................ 6
Section 2.11 Employee Stock Purchase Plan............................ 7
Section 2.12 Stockholders' Meeting................................... 7
Section 2.13 Closing................................................. 8
ARTICLE 3.
DISSENTING SHARES; EXCHANGE OF SHARES.................................... 8
Section 3.1 Dissenting Shares....................................... 8
Section 3.2 Exchange of Shares...................................... 8
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................ 9
Section 4.1 Organization............................................ 9
Section 4.2 Capitalization.......................................... 10
Section 4.3 Authority............................................... 10
Section 4.4 No Default; Effect of Agreement......................... 10
Section 4.5 Financial Statements; SEC Reports....................... 11
Section 4.6 Absence of Certain Changes or Events.................... 11
Section 4.7 Compliance with Law; Litigation......................... 12
Section 4.8 Environmental Matters................................... 12
Section 4.9 Governmental Authorizations and Regulations............. 12
Section 4.10 Schedule 14D-9, Offer Documents and Schedule 14D-1...... 12
Section 4.11 Brokers................................................. 12
Section 4.12 Employee Agreements and Benefits........................ 13
Section 4.13 Fairness Opinion........................................ 14
Section 4.14 Material Agreements..................................... 14
Section 4.15 Title to Properties; Encumbrances....................... 14
Section 4.16 Intellectual Property................................... 15
Section 4.17 Tax Matters............................................. 15
Section 4.18 Interested Party Transactions........................... 17
Section 4.19 Government Contracts.................................... 17
Section 4.20 Takeover Statutes....................................... 18
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER................... 18
Section 5.1 Organization............................................ 18
Section 5.2 Authority............................................... 18
Section 5.3 Schedule 14D-1, Offer Documents and Schedule 14D-9...... 18
Section 5.4 Effect of Agreement..................................... 18
Section 5.5 Financing............................................... 19
Section 5.6 Brokers................................................. 19
ARTICLE 6.
COVENANTS................................................................ 19
Section 6.1 No Solicitation......................................... 19
Section 6.2 Appraisal Rights........................................ 20
Section 6.3 Conduct of Business of the Company...................... 20
Section 6.4 Access and Information.................................. 22
Section 6.5 Certain Filings, Consents and Arrangements.............. 22
Section 6.6 State Takeover Statutes................................. 23
Section 6.7 Compliance with Antitrust Laws.......................... 23
Section 6.8 Press Releases.......................................... 23
Section 6.9 Indemnification; Insurance.............................. 23
Section 6.10 Notification of Certain Matters......................... 24
Section 6.11 Fees and Expenses....................................... 24
Section 6.12 Actions Regarding the Rights............................ 24
Section 6.13 Shareholder Litigation.................................. 24
ARTICLE 7.
CONDITIONS TO THE MERGER................................................. 25
Conditions to the Obligations of Parent, Purchaser and
Section 7.1 the Company............................................. 25
Section 7.2 Conditions to the Obligations of Parent and Purchaser... 25
Section 7.3 Condition to the Company's Obligation................... 25
Section 7.4 Exception............................................... 26
ARTICLE 8.
MISCELLANEOUS............................................................ 26
Section 8.1 Termination............................................. 26
Section 8.2 Effect of Termination................................... 27
Non-Survival of Representations, Warranties and
Section 8.3 Agreements.............................................. 28
Section 8.4 Waiver and Amendment.................................... 28
Section 8.5 Entire Agreement........................................ 28
Section 8.6 Applicable Law.......................................... 28
Section 8.7 Headings................................................ 28
Section 8.8 Notices................................................. 28
Section 8.9 Counterparts............................................ 29
Section 8.10 Parties in Interest; Assignment......................... 29
Section 8.11 Specific Performance.................................... 29
Section 8.12 Certain Undertakings of Parent.......................... 29
Section 8.13 Interpretation.......................................... 30
Section 8.14 Severability............................................ 30
<CAPTION>
Exhibit A Conditions of the Offer.................................. A-1
<C> <S> <C>
Exhibit B Form of Termination Option.............................. B-1
</TABLE>
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 5, 1997 (this "AGREEMENT"),
among GTE CORPORATION, a New York corporation ("PARENT"), GTE MASSACHUSETTS
INCORPORATED, a Massachusetts corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and BBN CORPORATION, a Massachusetts corporation (the
"COMPANY").
RECITALS
WHEREAS, the Boards of Directors of the Company, Parent and Purchaser deem
it advisable and in the best interests of their respective stockholders that
Parent acquire the Company pursuant to the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Purchaser and the Company hereby agree as
follows:
ARTICLE 1.
THE OFFER
SECTION 1.1 The Offer.
(a) Subject to this Agreement not having been terminated in accordance with
the provisions of Section 8.1 hereof, Purchaser shall, and Parent shall cause
Purchaser to, as promptly as practicable, but in no event later than five
business days from the date of the public announcement of the terms of this
Agreement or the Offer, commence an offer to purchase for cash (as it may be
amended in accordance with the terms of this Agreement, the "OFFER") all
shares of common stock, $1.00 par value, of the Company (including the common
stock purchase rights referred to in Section 6.12 hereof (collectively, the
"SHARES")) outstanding immediately prior to the consummation of the Offer,
subject to the conditions set forth in Exhibit A hereto (the "CONDITIONS"), at
a price of $29.00 per Share, net to the seller in cash. Subject to this
Agreement not having been terminated in accordance with the provisions of
Section 8.1 hereof and to the Conditions, Purchaser shall, and Parent shall
cause Purchaser to, accept for payment and pay for all Shares validly tendered
pursuant to the Offer, and not withdrawn prior to the expiration date of the
Offer, as promptly as practicable following the expiration date of the Offer.
If all of the Conditions are not satisfied on the initial expiration date of
the Offer, and the Agreement has not been terminated in accordance with the
provisions of Section 8.1, Parent shall, and shall cause Purchaser to, extend
(and re-extend) the Offer to provide time to satisfy such Conditions provided
that Purchaser or Parent may but in no event shall be obligated to extend the
period of time the Offer is open beyond August 15, 1997 or, if Purchaser has
elected, in its judgment, to extend the Offer beyond August 15, 1997 pursuant
to the last sentence of this Section 1.1(a), November 15, 1997 (such
applicable date being known as the "Final Termination Date"). Purchaser
expressly reserves the right to amend the terms and conditions of the Offer;
provided, that without the consent of the Company, no amendment may be made
which (i) decreases the price per Share or changes the form of consideration
payable in the Offer, (ii) decreases the number of Shares sought, or (iii)
imposes additional conditions to the Offer or amends any other term of the
Offer in any manner adverse to the holders of Shares (it being understood that
extensions of the Offer as contemplated by this Section 1.1(a) are not adverse
to the holders of Shares). Notwithstanding the foregoing, Purchaser shall, in
its judgment, have right to extend and re-extend the Offer, from time to time,
but in no event beyond November 15, 1997, if it believes that such extension
is advisable in order to facilitate the orderly transition of the business of
the Company and preserve and maintain the Company's business relationships.
<PAGE>
(b) The Company will not, nor will it permit any of its Subsidiaries (as
defined below) to, tender into the Offer any Shares beneficially owned by it.
For purposes of this Agreement, "SUBSIDIARY" means, as to any Person (as
defined below), any corporation, limited liability company, partnership or
joint venture, whether now existing or hereafter organized or acquired: (i) in
the case of a corporation, of which at least a majority of the outstanding
shares of stock having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation (other than stock
having such voting power solely by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by such Person
and/or one or more of its Subsidiaries or (ii) in the case of a limited
liability company, partnership or joint venture, in which such Person or a
Subsidiary of such Person is a managing member, general partner or joint
venturer or of which a majority of the partnership or other ownership
interests are at the time owned by such Person and/or one or more of its
Subsidiaries. For purposes of this Agreement, "PERSON" means any individual,
corporation, company, voluntary association, limited liability company,
partnership, joint venture, trust, unincorporated organization or other
entity.
(c) On the date of the commencement of the Offer, Purchaser shall file with
the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer which will contain an offer to
purchase and form of the related letter of transmittal (together with any
supplements or amendments thereto, the "OFFER DOCUMENTS"). The Company and its
counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to the filing of such Offer Documents with the SEC.
Purchaser agrees to provide the Company and its counsel copies of any written
comments Purchaser and its counsel may receive from the SEC or its staff with
respect to the Offer Documents and a summary of any such comments received
orally promptly after the receipt thereof.
SECTION 1.2 Company Actions. The Company hereby consents to the Offer and
represents that its Board of Directors (the "BOARD" or "BOARD OF DIRECTORS")
(at a meeting duly called and held) has unanimously (i) approved the Offer and
the Merger (as defined in Section 2.1 hereof), as provided in Section 78 of
the Business Corporation Law of the Commonwealth of Massachusetts, as amended
(the "MASSACHUSETTS BCL"), (ii) determined that the Offer and the Merger are
fair to and in the best interests of the stockholders of the Company and (iii)
resolved to recommend acceptance of the Offer and approval and adoption of
this Agreement and the Merger by the stockholders of the Company. The Company
further represents that Alex. Brown & Sons Incorporated (the "FINANCIAL
ADVISOR") has delivered to the Board its opinion to the effect that, as of the
date of this Agreement, the cash consideration to be received by the holders
of Shares (other than Parent and its affiliates) in the Offer and the Merger
is fair to such holders from a financial point of view. Subject to its
fiduciary duties under applicable Laws (as defined in Section 2.4) as advised
as to legal matters by outside counsel, the Company hereby agrees to file a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE 14D-9")
containing the recommendation referred to in clause (iii) above with the SEC
(and the information required by Section 14(f) of the Securities Exchange Act
of 1934, as amended (together with all rules and regulations thereunder, the
"EXCHANGE ACT"), so long as Parent shall have furnished such information to
the Company in a timely manner) and to mail such Schedule 14D-9 to the
stockholders of the Company. The Company will use its best efforts to cause
the Schedule 14D-9 to be filed on the same date as Purchaser's Schedule 14D-1
is filed and mailed together with the Offer Documents; provided, that in any
event the Schedule 14D-9 shall be filed and mailed no later than 10 business
days following the commencement of the Offer. Purchaser and its counsel shall
be given a reasonable opportunity to review and comment on the Schedule 14D-9
prior to the Company's filing of the Schedule 14D-9 with the SEC. The Company
agrees to provide Parent and its counsel copies of any written comments the
Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 and a summary of any such comments received orally promptly
after the receipt thereof. Parent, Purchaser and the Company each agree
promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that any such information shall have become
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<PAGE>
false or misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to the stockholders of the Company,
in each case as and to the extent required by applicable securities laws.
SECTION 1.3 Stockholder Lists. In connection with the Offer, at the request
of Parent or Purchaser, from time to time after the date hereof, the Company
will promptly furnish Purchaser with mailing labels, security position
listings and any available listing or computer file maintained for or by the
Company containing the names and addresses of the record holders of the Shares
as of a recent date and shall furnish Purchaser with such additional
information reasonably available to the Company and assistance as Purchaser or
its agents may reasonably request in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of applicable Law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent, Purchaser
and its affiliates and associates shall hold in confidence the information
contained in any such labels, listings and files, will use such information
only in connection with the Offer and the Merger, and, if this Agreement shall
be terminated, will deliver to the Company all copies of such information in
their possession.
SECTION 1.4 Composition of the Board of Directors; Section 14(f). In the
event that Purchaser acquires at least a majority of the Shares outstanding
pursuant to the Offer, Parent shall be entitled to designate for appointment
or election to the Board, upon written notice to the Company, such number of
persons so that the designees of Parent constitute the same percentage (but in
no event less than a majority) of the Board (rounded up to the next whole
number) as the percentage of Shares acquired pursuant to the Offer. Effective
upon such purchase of at least a majority of the Shares pursuant to the Offer
(sometimes referred to herein as the "consummation" of the Offer), the Company
will increase the size of the Board or obtain the resignation of such number
of directors as is necessary to enable such number of Parent designees to be
so elected. In connection therewith, the Company will mail to the stockholders
of the Company the information required by Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder unless such information has previously been provided
to such stockholders in the Schedule 14D-9. Parent and Purchaser shall provide
to the Company in writing, and will be solely responsible for, any information
with respect to such companies and their nominees, officers, directors and
affiliates required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. Notwithstanding the provisions of this Section 1.4, the parties
hereto shall use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the
Effective Time (as defined in Section 2.2 hereof) be, Continuing Directors (as
defined below). For purposes hereof, the term "CONTINUING DIRECTOR" shall mean
(i) any member of the Board as of the date hereof, (ii) any member of the
Board who is unaffiliated with, and not a designee or nominee of Parent or
Purchaser, or (iii) any successor of a Continuing Director who is (A)
unaffiliated with, and not a designee or nominee, of Parent or Purchaser, and
(B) recommended to succeed a Continuing Director by a majority of the
Continuing Directors then on the Board, and in each case under clause (iii)
who is not an employee of the Company.
SECTION 1.5 Action by Continuing Directors. Following the election or
appointment of Purchaser's designees pursuant to Section 1.4 and prior to the
Effective Time (as defined below), any amendment of this Agreement or any
amendment to the Articles of Organization or By-Laws of the Company
inconsistent with this Agreement, any termination of this Agreement by the
Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Parent or Purchaser or any waiver of any
of the Company's rights hereunder will require the concurrence of a majority
of the Continuing Directors.
ARTICLE 2.
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the applicable provisions of the Massachusetts
BCL, Purchaser shall be merged (the
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<PAGE>
"MERGER") with and into the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article 7 hereof or,
subject to Section 1.5, on such other date as the parties hereto may agree.
Following the Merger the Company shall continue as the surviving corporation
(the "SURVIVING CORPORATION") and the separate corporate existence of
Purchaser shall cease.
SECTION 2.2 Effective Time. The Merger shall become effective by filing with
the Secretary of State of Massachusetts of articles of merger in accordance
with the relevant provisions of the Massachusetts BCL in a form reasonably
acceptable to Parent and the Company (the "ARTICLES OF MERGER"). The time at
which the Merger becomes effective is referred to as the "EFFECTIVE TIME."
SECTION 2.3 Effects of the Merger. The Company will continue to be governed
by the laws of the Commonwealth of Massachusetts, and the separate corporate
existence of the Company and all of its rights, privileges, powers and
franchises as well of a public as of a private nature, and being subject to
all of the restrictions, disabilities and duties as a corporation organized
under the Massachusetts BCL, will continue unaffected by the Merger. The
Merger will have the effects specified in the Massachusetts BCL. As of the
Effective Time the Company shall be a wholly-owned Subsidiary of Parent.
SECTION 2.4 Articles of Organization and By-Laws. The Articles of
Organization and By-laws of the Company as in effect at the Effective Time
(including such amendments to the Articles of Organization as are effected by
the Articles of Merger) shall be the Articles of Organization and By-laws of
the Surviving Corporation, until amended in accordance with applicable Law (as
defined below). For purposes of this Agreement, (i) "LAW" or "LAWS" means any
valid constitutional provision, statute, ordinance or other law (including
common law), rule, regulation, decree, injunction, judgment, order, ruling,
assessment or writ of any Governmental Entity (as defined below), as any of
these may be in effect from time to time, and (ii) "GOVERNMENTAL ENTITY" means
any government or any agency, bureau, board, commission, court, department,
official, political subdivision, tribunal or other instrumentality of any
government, whether federal, state or local, domestic or foreign.
SECTION 2.5 Directors. The directors of Purchaser at the Effective Time
shall be the initial directors of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Articles of
Organization and By-laws of the Surviving Corporation, or as otherwise
provided by Law.
SECTION 2.6 Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Articles of
Organization and By-laws of the Surviving Corporation, or as otherwise
provided by Law.
SECTION 2.7 Conversion of Shares.
(a) At the Effective Time, each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company or held by any wholly-owned Subsidiary, and other than Dissenting
Shares (as defined in Section 3.1 hereof)) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $29.00 in cash, or any higher price paid per Share in the
Offer (the "MERGER PRICE"), payable to the holder thereof, without interest
thereon, upon the surrender of the certificate formerly representing such
Share.
(b) At the Effective Time, each Share held in the treasury of the Company or
held by any wholly owned Subsidiary of the Company and each Share held by
Parent or any wholly-owned Subsidiary of Parent immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be canceled and retired and cease to exist.
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SECTION 2.8 Conversion of Purchaser's Common Stock. Each share of common
stock, $0.01 par value, of Purchaser issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and exchangeable for one
share of common stock of the Surviving Corporation.
SECTION 2.9 Stock Options. The Company shall not grant to any non-employees,
including non-employee members of the Board of Directors ("Directors"), and
former employees (collectively "NON-EMPLOYEES"), or to any current employees
any options to purchase Shares, stock appreciation rights, restricted stock,
restricted stock units or any other real or phantom stock or stock equivalents
on or after the date of this Agreement except as set forth in Attachment A to
Schedule 4.2(a). Options to acquire Shares which are outstanding as of the
date of this Agreement and which were granted to employees or Non-Employees
under any stock option plan, program or similar arrangement of the Company or
any Subsidiaries ("Options"), other than Options described in Sections 2.10
and 2.11, shall be treated as follows:
(i) Each current employee as of the date of this Agreement whose annual
base salary as of the date of this Agreement is $80,000 or more ("Key
Employee") and who is holding Options which have an exercise price
("Exercise Price") less than the Closing Price (as defined below) ("In the
Money Options") and which are vested as of the Closing Date shall be given
the opportunity by the Company to make an irrevocable election on a grant
by grant basis to be effective immediately following the Closing Date to
receive in exchange for cancellation of each such vested In the Money
Option either (A) a credit to an individual deferred compensation book
account equal to the excess of the Closing Price of a Share over the
Exercise Price of such In the Money Option times the number of Shares
subject to such In the Money Option, such deferred compensation book
account to have the terms described below, or (B) an option to purchase a
number of shares of Parent common stock (a "Parent Option") equal to 150%
of the number of Shares subject to the Key Employee's In the Money Option;
provided that (x) the Parent Option received in the exchange shall be fully
vested and have the same expiration date as the vested In the Money Option
exchanged therefor, (y) the Exercise Price of the Parent Option shall equal
the Fair Market Value (as defined below), and (z) the Parent Option shall
be governed by the provisions of the GTE Corporation 1997 Long-Term
Incentive Plan ("LTIP") and by applicable LTIP award agreements. For
purposes of this Section 2.9(i), the deferred compensation book account
shall be denominated in Parent phantom stock units, and dividend equivalent
payments shall be credited to such deferred compensation book account at
such time and in such manner as dividends are paid on Parent common stock.
Before the third anniversary of the day of the Closing Date, no
distribution may be made in respect of the deferred compensation book
account to a Key Employee who is employed by Parent or an affiliate of
Parent. The dividend equivalent payments on the deferred compensation book
account shall be subject to forfeiture in the event the Key Employee is not
employed by Parent or an affiliate of Parent on any date that precedes the
third anniversary of the day of the Closing Date. Parent shall determine
administrative procedures and provisions with regard to the deferred
compensation book account. In the event a Key Employee does not make an
irrevocable election described in this Section 2.9(i) before the Closing
Date, the Key Employee shall be deemed to have irrevocably elected the
deferred compensation book account credit as described in clause (A) above
and all In the Money Options shall be canceled. For purposes of this
Section 2.9, Section 2.10, and Section 2.11, (i) "Closing Price" shall mean
the purchase price per share of the Shares as set forth in Section 1.1(a),
(ii) "Fair Market Value" shall mean the average of the high and low sales
price of the Parent common stock on the composite tape of the New York
Stock Exchange issues as of the Closing Date, or, in the event that no
trading occurs on such day, then the applicable value shall be determined
on the last preceding day on which trading took place and (iii) "Closing
Date" shall mean the day of the consummation of the Offer.
(ii) Each current employee whose annual base salary as of the date of
this Agreement is less than $80,000 ("Employee") who is holding In the
Money Options which are vested as of the
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Closing Date shall be given the opportunity by the Company to make an
irrevocable election on a grant by grant basis to be effective immediately
following the Closing Date to receive in exchange for cancellation of each
such vested In the Money Option either (A) a cash payment equal, for each
such In the Money Option, to the excess of the Closing Price of a Share
over the Exercise Price of such In the Money Option times the number of
Shares subject to such In the Money Option, or (B) a Parent Option to
purchase a number of shares of Parent common stock equal to 150% of the
number of Shares subject to the Employee's In the Money Option; provided
that (x) the Parent Option received in the exchange shall be fully vested
and have the same expiration date as the vested In the Money Option
exchanged therefor, (y) the Exercise Price of the Parent Option shall equal
the Fair Market Value, and (z) the Parent Option shall be governed by the
provisions of the LTIP and by applicable LTIP award agreements. In the
event an Employee does not make an irrevocable election described in this
Section 2.9(ii) before the Closing Date, the Employee shall be deemed to
have irrevocably elected the cash payment described in clause (A) above,
and all In the Money Options shall be canceled.
(iii) Options of Key Employees or Employees which have an Exercise Price
equal to or in excess of the Closing Price ("Under-Water Options"),
regardless of whether such Under-Water Options are vested as of the Closing
Date, shall immediately following the Closing Date, be canceled and
exchanged for Parent Options to purchase a number of shares of Parent
common stock equal to 100% of the number of Shares subject to the Key
Employee's or Employee's Under-Water Options; provided that (x) the Parent
Options received in the exchange shall have the same vesting schedule and
expiration date as the Under-Water Options exchanged therefor, (y) the
Exercise Price of the Parent Options shall equal the Fair Market Value, and
(z) the Parent Options shall be governed by the provisions of the LTIP and
by applicable LTIP award agreements. Notwithstanding the foregoing, if, on
or after the date of this Agreement, a Key Employee exercises vested In the
Money Options that, on the date of this Agreement, represent 50% or more of
the dollar value of the Key Employee's vested In the Money Options, all of
such Key Employee's Under-Water Options shall be canceled immediately, the
exchange provisions of this Section 2.9(iii) shall not apply to such Key
Employee, and such Key Employee shall receive the sum of one dollar ($1.00)
as good and valuable consideration for all of such Key Employee's Under-
Water Options. For purposes of the immediately preceding sentence, the
dollar value of a vested In the Money Option shall be equal to the excess
of the Closing Price over the Exercise Price of such In the Money Option
times the number of Shares subject to the vested In the Money Option.
(iv) In the Money Options of individuals who are Non-Employees as of the
date of this Agreement, including Directors, which are vested as of the
Closing Date shall, immediately following the Closing Date, be canceled and
exchanged for a cash payment equal, for each vested In the Money Option, to
the excess of the Closing Price of a Share over the Exercise Price of such
In the Money Option times the number of Shares subject to such In the Money
Option. All other Options of Non-Employees, including Directors, shall be
canceled immediately as of the Closing Date and each such Non-Employee
shall receive the sum of one dollar ($1.00) as good and valuable
consideration for all such Options.
(v) With respect to In the Money Options of Key Employees, Employees, and
Non-Employees, including Directors, the Board of Directors or an
appropriate committee thereof, shall provide for the full and immediate
vesting of such In the Money Options as of the Closing Date. Except as
provided in the immediately preceding sentence on or after the date of this
Agreement, the Board of Directors shall not make any other changes to the
terms and conditions of any outstanding Options, stock appreciation rights,
restricted stock, restricted stock units or any other real or phantom stock
or stock equivalents.
SECTION 2.10 Restricted Stock Conversion and Directors Deferred
Compensation.
(a) Notwithstanding anything herein to the contrary other than Section
2.10(b) below, on the Closing Date, employees of the Company who hold Shares
subject to a risk of forfeiture within the
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meaning of Section 83(a) of the Internal Revenue Code of 1986, as amended,
(the "CODE"), or Options with an exercise price of zero dollars ($0.00)
("Restricted Stock") shall receive in exchange for such Restricted Stock a
right to receive a number of Parent phantom stock units pursuant to a phantom
stock plan ("Phantom Stock Units") determined by dividing (A) the product of
(i) the number of shares of Restricted Stock held by such employee on the
Closing Date, and (ii) the Closing Price, by (B) the Fair Market Value. Such
Phantom Stock Units shall be credited with dividend equivalent units at such
time and in such manner as dividends are normally paid on Parent common stock,
and the Phantom Stock Units and dividend equivalent units shall be subject to
the same vesting schedule as the Restricted Stock which was exchanged for the
Phantom Stock Units. Upon the Phantom Stock Units vesting, the employee shall
receive payment of the vested amounts in cash (less applicable withholding
taxes). Parent shall determine administrative procedures and provisions with
regard to Phantom Stock Units.
(b) Immediately following the Closing Date, Restricted Stock purchased by
two Key Employees and three Directors pursuant to the Company's 1996
Restricted Stock Plan shall no longer be subject to a risk of forfeiture
within the meaning of Section 83(a) of the Code and shall be tendered to
Purchaser in exchange for cash equal to the Closing Price times the number of
Shares so tendered.
(c) At the Closing Date, Company stock units in the deferred compensation
account of each Director who participates in the Company's Deferred
Compensation Plan for Directors (the "DCP") will be converted into a number of
Parent Phantom Stock Units determined by dividing (A) the product of (i) the
number of Company stock units credited to the Director's deferred compensation
account under the DCP as of the Closing Date, and (ii) the Closing Price, by
(B) the Fair Market Value. Such Phantom Stock Units shall be credited with
dividend equivalent units at such time and in such manner as dividends are
paid on Parent common stock. A cash payment equal to the Phantom Stock Units
shall be made to the Directors as soon as practicable after January 1, 1998.
Parent shall determine administrative procedures and provisions with regard to
Phantom Stock Units.
SECTION 2.11 Employee Stock Purchase Plan. Prior to the Closing Date, the
Board of Directors, or an appropriate committee thereof, shall cause written
notice of this Agreement to be given to persons holding "options" (as defined
in the Company's Employee Stock Purchase Plan ("ESPP")) to purchase Shares
("Purchase Rights") under the ESPP. Immediately following the Closing Date,
all Purchase Rights shall be accelerated as if the day of the Closing Date was
the last day of the "option period" (as defined in the ESPP), such Purchase
Rights shall be automatically canceled and terminated on such day and the
contributions to the ESPP during such option period shall be refunded to the
holder of the Purchase Right (the "Refund Amount"), and each holder of a
Purchase Right shall be entitled to receive as soon as practicable thereafter
from the Company in consideration for such cancellation an amount in cash
(less applicable withholding taxes, but without interest) equal to (a) the
product of (i) the number of Shares (and fractions thereof) subject to such
Purchase Right of such holder as of the Closing Date, multiplied by (ii) the
Closing Price, less (b) the Refund Amount of such holder. The foregoing is
subject to the right of an ESPP participant to terminate the participant's
payroll deduction authorization under the ESPP and to cancel the participant's
option and withdraw from the ESPP at any time prior to the day of the Closing
Date.
SECTION 2.12 Stockholders' Meeting. If required by applicable Law in order
to consummate the Merger, the Company, acting through the Board, shall, in
accordance with applicable Law, its Articles of Organization and its By-laws,
as soon as practicable:
(i) duly call, give notice of, convene and hold a special meeting of its
stockholders as soon as practicable following the consummation of the Offer
for the purpose of considering and taking action upon this Agreement (the
"STOCKHOLDERS' MEETING");
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(ii) subject to its fiduciary duties under applicable Laws as advised as to
legal matters by counsel, include in the proxy statement or information
statement prepared by the Company for distribution to stockholders of the
Company in advance of the Stockholders' Meeting in accordance with Regulation
14A or Regulation 14C promulgated under the Exchange Act (the "PROXY
STATEMENT") the recommendation of the Board referred to in Section 1.2 hereof;
and
(iii) use its reasonable efforts to (A) obtain and furnish the information
required to be included by it in the Proxy Statement and, after consultation
with Parent, respond promptly to any comments made by the SEC with respect to
the Proxy Statement and any preliminary version thereof and cause the Proxy
Statement to be mailed to its stockholders following the consummation of the
Offer and (B) obtain the necessary approvals of this Agreement and the Merger
by its stockholders.
Parent will provide the Company with the information concerning Parent and
Purchaser required to be included in the Proxy Statement and will vote, or
cause to be voted, all Shares owned by it or its Subsidiaries in favor of
approval and adoption of this Agreement and the transactions contemplated
hereby.
SECTION 2.13 Closing. Prior to the filings referred to in Section 2.2, a
closing will be held at the offices of O'Melveny & Myers LLP, 153 East 53rd
Street, New York, New York (or such other place as the parties may agree), for
the purpose of confirming all of the foregoing. The closing will take place
one business day after the later of (i) the business day immediately following
the receipt of approval or adoption of this Agreement by the Company's
stockholders and (ii) the business day on which the last of the conditions set
forth in Article 7 is satisfied or duly waived, or at such other time as the
parties may agree.
ARTICLE 3.
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 3.1 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares which are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have perfected any
dissenters' rights provided under the Massachusetts BCL, if applicable (the
"DISSENTING SHARES"), shall not be converted into or be exchangeable for the
right to receive the consideration provided in Section 2.7(a) of this
Agreement, unless and until such holder shall have failed to perfect or shall
have effectively withdrawn or lost such holder's right to appraisal and
payment under the Massachusetts BCL. If such holder shall have so failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
Shares shall thereupon be deemed to have been converted into and to have
become exchangeable for, at the Effective Time, the right to receive the
consideration provided for in Section 2.7(a) of this Agreement, without any
interest thereon.
SECTION 3.2 Exchange of Shares.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company to act as exchange agent in the Merger (the "EXCHANGE AGENT").
Immediately prior to the Effective Time, Parent will take all steps necessary
to enable and cause the Company to deposit with the Exchange Agent the funds
necessary to make the payments contemplated by Section 2.7(a) on a timely
basis.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to each
record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES") a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the Certificates
for payment therefor, in each case customary for transactions such as the
Merger.
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Upon surrender to the Exchange Agent of a Certificate, together with such
letter of transmittal duly executed, and any other required documents, the
holder of such Certificate shall be entitled to receive in exchange therefor
the consideration set forth in Section 2.7(a) hereof, and such Certificate
shall forthwith be canceled. No interest will be paid or accrued on the cash
payable upon the surrender of the Certificates. If payment is to be made to a
Person other than the Person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for
transfer and that the Person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a Person other than the
registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered in accordance with the provisions of this
Section 3.2, each Certificate (other than Certificates representing Shares
held by Parent or any wholly owned Subsidiary of Parent, Shares held in the
treasury of the Company or held by any wholly owned Subsidiary of the Company
and Dissenting Shares) shall represent for all purposes only the right to
receive the consideration set forth in Section 2.7(a) hereof, without any
interest thereon.
(c) After the Effective Time there shall be no transfers on the stock
transfer books of the Surviving Corporation of Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for the consideration provided in Section 2.7(a) hereof
in accordance with the procedures set forth in this Article 3.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Parent and Purchaser in a schedule
delivered to them at or prior to the execution hereof (the "DISCLOSURE
SCHEDULE") with respect to matters specifically set forth in this Article 4,
the Company represents and warrants to each of Parent and Purchaser as
follows:
SECTION 4.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts. Section 4.1 of the Disclosure Schedule lists all Subsidiaries
of the Company. Each Subsidiary of the Company is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization except where the failure to be so organized,
existing and in good standing would not in the aggregate be reasonably
expected to have a Material Adverse Effect. The Company and its Subsidiaries
have all necessary corporate power and authority to own their respective
properties and assets and to carry on their respective businesses as now
conducted and are duly qualified or licensed to do business as foreign
corporations in good standing in all jurisdictions in which the character or
the location of the assets owned or leased by any of them or the nature of the
business conducted by any of them requires licensing or qualification except
where the failure to be so qualified would not in the aggregate be reasonably
expected to have a Material Adverse Effect. For purposes of this Agreement,
the term "Material Adverse Effect" shall mean any change, effect, matter or
circumstance that has or would reasonably be expected to have a material
adverse effect on the business, assets or properties (including intangible
assets or properties), liabilities, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole, other than any
such changes, effects or circumstances (i) specifically referred to in the
Disclosure Schedule, (ii) generally affecting the United States economy or
(iii) resulting from both (x) the proposed acquisition of Company and (y) the
fact that the acquiror is Parent. Section 4.1 of the Disclosure Schedule lists
the current directors and executive officers of the Company. True, correct and
complete copies of the articles of organization and bylaws of the Company as
in effect on the date hereof have been delivered to Parent.
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SECTION 4.2 Capitalization.
(a) On the date hereof, the authorized capital stock of the Company consists
solely of 100,000,000 Shares. As of the opening of business on the date
hereof, (i) 21,230,097 Shares were validly issued and outstanding, fully paid
and nonassessable and not subject to preemptive rights, (ii) 3,733,729 Shares
would be issuable upon exercise of outstanding Options (both vested and
unvested), (iii) 2,823,000 Shares would be issuable upon exercise of the
Company's 6% Convertible Subordinated Notes due 2012 (the "SUBORDINATED
NOTES"), and (iv) 4,225,000 Shares were reserved for issuance upon exercise of
the Termination Option as defined in Section 8.2. Except for the Stock
Options, Subordinated Notes, the Rights (as defined in Section 6.12 hereof)
and the Termination Option, and except as set forth in Section 4.2(a) of the
Disclosure Schedule, Shares issued pursuant thereto and as set forth above in
this Section 4.2(a), there are no shares of capital stock of the Company
issued or outstanding or any subscriptions, options, warrants, calls, rights,
convertible securities or other agreements or commitments of any character
obligating the Company to issue, transfer or sell any of its securities.
(b) Except as set forth in Section 4.2(b) of the Disclosure Schedule, the
Company or one of its Subsidiaries owns all of the outstanding shares of
capital stock of each Subsidiary of the Company. Section 4.2(b) of the
Disclosure Schedule sets forth each other Person whose equity securities are
held by the Company or any of its Subsidiaries (the "MINORITY OWNED ENTITIES")
and the percentage interest held by the Company or such Subsidiary. Except as
set forth in Section 4.2(b) of the Disclosure Schedule, there are not now, and
there will not be as a result of the transactions contemplated by this
Agreement (including the Offer and the Merger), any outstanding subscriptions,
options, warrants, calls, rights, convertible securities or other agreements
or commitments of any character relating to the issued or unissued capital
stock or other securities of any of the Company's Subsidiaries or otherwise
obligating the Company or any such Subsidiary to issue, transfer or sell any
such securities.
(c) Except as set forth in Section 4.2(c) of the Disclosure Schedule, there
are no voting trusts or shareholder agreements or agreements providing for the
issuance of capital stock to which the Company or any of its Subsidiaries is a
party with respect to the voting of the capital stock of the Company, any of
its Subsidiaries or any of the Minority Owned Entities.
SECTION 4.3 Authority. The Company has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject only to
approval of the Merger, if necessary, by the stockholders of the Company as
provided in Section 2.12. This Agreement and the Merger have been unanimously
approved by the Board of Directors. This Agreement has been duly executed and
delivered by, and is a valid and binding obligation of, the Company
enforceable against the Company in accordance with its terms, except as (i)
such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the courts before which any
proceedings thereafter may be brought. The Board has unanimously determined
that the Offer and the Merger are fair and in the best interests of the
Company and its stockholders and has unanimously resolved to recommend
acceptance of the Offer and approval of the Merger by the Company's
stockholders.
SECTION 4.4 No Default; Effect of Agreement. Except as set forth in Section
4.4 of the Disclosure Schedule, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
including the making and consummation of the Offer, will not constitute a
breach or violation of or default under, nor is the Company or any of its
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Subsidiaries otherwise in breach or violation of or default under, (i) the
charter or the bylaws of the Company or such Subsidiary, as the case may be,
(ii) any applicable Laws, (iii) any Permit (as defined in Section 4.9 hereof)
issued by any Governmental Entity or otherwise, or (iv) any Material Contract,
other than, in the case of (i) through (iv) above, such breaches, violations
and defaults that would not in the aggregate have a Material Adverse Effect.
Except for compliance with the HSR Act (as defined below), the Exchange Act,
the securities laws of the various states, stockholder approval of the Merger,
and the filing of articles of merger pursuant to the Massachusetts BCL, the
consummation of the transactions contemplated hereby by the Company will not
require the consent or approval of or filing with any Governmental Entity or
other third party, other than consents and approvals the failure of which to
be obtained would not in the aggregate reasonably be expected to have a
Material Adverse Effect.
SECTION 4.5 Financial Statements; SEC Reports.
(a) Since June 30, 1993, the Company has filed with the SEC all Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K, proxy materials, registration statements and other materials required to
be filed by it pursuant to the federal securities laws and has made all other
filings with the SEC required to be made (collectively, the "SEC FILINGS").
Except as set forth in Section 4.5(a) of the Disclosure Schedule, the SEC
Filings did not (as of their respective filing dates, mailing dates or
effective dates, as the case may be) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) The audited and unaudited consolidated financial statements of the
Company included in the SEC Filings present fairly, in all material respects,
the financial position of the Company and its consolidated Subsidiaries as of
the respective dates thereof and the consolidated results of their operations
and changes in financial position for the respective periods then ended in
conformity with generally accepted accounting principles applied on a
consistent basis (except as stated in such financial statements or notes
thereto). The foregoing sentence is subject, in the case of the unaudited
financial statements, to normal year-end audit adjustments. Except as set
forth in Section 4.5(b) of the Disclosure Schedule or as disclosed in the
Annual Report on Form 10-K for the fiscal year ended June 30, 1996, or in
subsequent SEC Filings made prior to the date hereof, the Company and its
Subsidiaries have no liabilities, contingent or otherwise, that would be
required to be reflected or reserved against in a consolidated balance sheet
of the Company and its consolidated Subsidiaries prepared in accordance with
generally accepted accounting principles as applied in preparing the
consolidated balance sheet of the Company and its consolidated Subsidiaries as
at June 30, 1996 (the "BALANCE SHEET"). None of the Company's Subsidiaries is
required to file any statements or reports with the SEC.
SECTION 4.6 Absence of Certain Changes or Events. Except as disclosed in the
SEC Filings made prior to the date hereof or in Section 4.6 of the Disclosure
Schedule, since June 30, 1996, there has not been (i) any Material Adverse
Effect; (ii) any damage, destruction or loss, whether covered by insurance or
not, materially and adversely affecting the Company and its Subsidiaries;
(iii) any declaration, setting aside or payment of any dividend (whether in
cash, stock or property) with respect to the capital stock of the Company;
(iv) any split-up, combination or reclassification of the Shares or the
capital stock of any such Subsidiary; (v) any entry into an employment
agreement or consulting agreement with former employees calling for annual
compensation in excess of $200,000; or (vi) any amendment to the articles or
certificate of incorporation or charter, as applicable, or bylaws of the
Company or any such Subsidiary which has not been filed with the state in
which such entity is organized. No existing or, to the knowledge of the
Company, threatened strike, slowdown, work stoppage, lockout or other
collective labor action affecting the Company or any of its Subsidiaries or
efforts to unionize the Company's or any of its Subsidiaries' employees exists
on the date hereof.
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SECTION 4.7 Compliance with Law; Litigation. The businesses of the Company
and its Subsidiaries are not being, and have never been, conducted in
violation of any Laws, except for violations which in the aggregate do not
constitute a Material Adverse Effect. Except as described in the SEC Filings
made prior to the date hereof or as reflected in the Company's financial
statements (including the notes thereto) referred to in Section 4.5 or in
Section 4.7 of the Disclosure Schedule, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries which, if adversely determined, could
reasonably be expected to result in liability to the Company or any of its
Subsidiaries in an amount in excess of $250,000, or restrain or prohibit
consummation of the transactions contemplated hereby; nor is there any decree,
injunction, judgment, order, ruling, assessment or writ ("ORDER") outstanding
against the Company or any of its Subsidiaries which constitutes in the
aggregate a Material Adverse Effect or would restrain or prohibit consummation
of the transactions contemplated hereby.
SECTION 4.8 Environmental Matters. (i) The Company and its Subsidiaries are
and have always been in compliance with all applicable Environmental Laws (as
hereinafter defined), except where the failure to comply would not reasonably
be expected in the aggregate to have a Material Adverse Effect, (ii) except as
set forth in Section 4.8(ii) of the Disclosure Schedule there is no civil,
criminal or administrative judgment, action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries pursuant to Environmental Laws, and (iii) except as
set forth in Section 4.8(iii) to the Disclosure Schedule there are no past or
present events which reasonably would be expected to prevent compliance with,
or have given rise to or will give rise to liability on the part of the
Company or any of its Subsidiaries under, Environmental Laws where the failure
to comply would not reasonably be expected, in the aggregate, to have a
Material Adverse Effect. As used herein the term "ENVIRONMENTAL LAWS" shall
mean Laws relating to pollution, waste control, the generation, presence or
disposal of asbestos, hazardous or toxic wastes or substances, the protection
of the environment, environmental activity or public health and safety.
SECTION 4.9 Governmental Authorizations and Regulations. Except as set forth
in Section 4.9 of the Disclosure Schedule, the Company and its Subsidiaries
hold all licenses, permits, franchises, authorizations, consents, certificates
of authority, or orders, or any waivers of the foregoing (collectively,
"PERMITS") that are required by any Governmental Entity to permit each of them
to conduct their respective businesses as now conducted, and all Permits are
valid and in full force and effect and will remain so upon consummation of the
transactions contemplated by this Agreement, except where the failure to hold
or maintain such Permits would not in the aggregate be reasonably expected to
have a Material Adverse Effect. No suspension, cancellation or termination of
any of such Permits is threatened or imminent that would in the aggregate
reasonably be expected to constitute a Material Adverse Effect.
SECTION 4.10 Schedule 14D-9, Offer Documents and Schedule 14D-1. The
Schedule 14D-9 and any amendments and supplements thereto will, when filed
with the SEC, comply in all material respects with the Exchange Act, except
that no representation is made by the Company with respect to information
supplied by Parent or Purchaser in writing for inclusion therein. None of the
information supplied by the Company for inclusion in the Offer Documents or
the Schedule 14D-1, and any amendments thereof, or supplements thereto, will,
on the respective dates such materials are filed with the SEC, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.11 Brokers. No agent, broker, finder, or investment or commercial
banker, or other Person or firm engaged by or acting on behalf of the Company
or its Subsidiaries or any of their respective affiliates in connection with
the negotiation, execution or performance of this Agreement, the Merger or the
other transactions contemplated by this Agreement, is or will be entitled to
any brokerage or finder's or similar fee or other commission as a result of
this Agreement, the Merger or
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such transactions, except that the Financial Advisor has been employed as
financial advisor to the Company, pursuant to arrangements that have been
disclosed in writing to Parent and Purchaser, and as to whose fees,
commissions, expenses and other charges the Company shall have full
responsibility.
SECTION 4.12 Employee Agreements and Benefits.
(a) Except for those matters set forth in Section 4.12 of the Disclosure
Schedule, (i) each "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and
all other employee benefit, bonus, incentive, stock option (or other equity-
based), severance, change in control, welfare (including post-retirement
medical and life insurance) and fringe benefit plans (whether or not subject
to ERISA) maintained or sponsored by the Company or any of its Subsidiaries or
by any entity that would be deemed a member of a controlled group of
corporations with the Company under Section 414(b) of the Code or a trade or
business under common control with the Company under Section 414(c) of the
Code (any such entity, an "ERISA AFFILIATE"), for the benefit of any employee
or former employee of the Company, any Subsidiary of the Company or any ERISA
Affiliate (the "PLANS") is, and has been, operated in all material respects in
accordance with its terms and in substantial compliance (including the making
of governmental filings) with all applicable Laws, including ERISA and
applicable provisions of the Code; (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service (the "IRS") in a written
determination letter to be so qualified, and to the knowledge of the Company,
none of said determinations has been revoked by the IRS, nor has the IRS given
any indication to the Company, any Subsidiary of the Company or any ERISA
Affiliate that it intends to revoke any such determination, nor has any such
Plan been operated in a manner that could reasonably be expected to cause the
Plan to lose its tax-qualified status; (iii) neither the Company, nor any
Subsidiary of the Company nor any ERISA Affiliate contributes or is obligated
to contribute, or at any time within the last six years contributed or was
obligated to contribute, to any "multiemployer plan" (as defined in Section
3(37) of ERISA); and (iv) there are no pending or, to the knowledge of the
executive officers of the Company (including, but not limited to, the vice
president for human resources of the Company), threatened claims by, on behalf
of or against any of the Plans or any trusts related thereto, other than
routine claims for benefits.
(b) Neither the Company, nor any Subsidiary of the Company nor any ERISA
Affiliate sponsors, maintains or contributes to, or at any time within the
past six years has sponsored, maintained or been obligated to contribute to,
any Plan subject to Title IV of ERISA.
(c) Except as set forth in Section 4.12 of the Disclosure Schedule, the
Company has provided to Purchaser (i) a copy of the plan document and summary
description for each Plan and of any related insurance contracts, insurance
policies and trust agreements, and (ii) with respect to each Plan that is
subject to ERISA, a copy of the most recent annual report (Form 5500 series)
filed for such Plan.
(d) Neither the Company, nor any Subsidiary of the Company nor any ERISA
Affiliate has failed to make any contribution or payment to any Plan which has
resulted or could result in the imposition of a material Lien (as defined in
Section 4.15) or the posting of a material bond or other material security
under ERISA or the Code.
(e) Except as otherwise set forth in Section 4.12 of the Disclosure Schedule
or as expressly provided for in this Agreement, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current
or former employee, officer or director of the Company, any Subsidiary of the
Company or any ERISA Affiliate to severance pay, unemployment compensation or
any other payment, (ii) entitle any current or former employee or officer of
the Company or any ERISA Affiliate to any severance benefit provided for under
Section 183 of Chapter 149 of the General Laws of the Commonwealth of
Massachusetts, or (iii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee, officer or director.
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(f) Section 4.12 of the Disclosure Schedule lists any employment, material
consulting, bonus, profit sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, or other employee benefit
arrangements, trusts, plans, funds, or other arrangements for the benefit or
welfare of any director, officer, or employee of the Company or any of its
Subsidiaries, copies of which have been delivered to Parent.
(g) Except as set forth in Section 4.12 of the Disclosure Schedule, none of
the employees of the Company or any of its Subsidiaries has been or currently
is represented by an "employee organization" within the meaning of Section
3(4) of ERISA.
SECTION 4.13 Fairness Opinion. The Company has received from the Financial
Advisor, and provided to Parent, an executed copy of the opinion (the
"FAIRNESS OPINION"). The Company has been authorized by the Financial Advisor
to include the Fairness Opinion in the Offer Documents and the Proxy Statement
and has not been notified by the Financial Advisor that the Fairness Opinion
has been withdrawn or modified.
SECTION 4.14 Material Agreements. Except as set forth in Section 4.14 of the
Disclosure Schedule and except as described in, or filed as an exhibit to, the
SEC Filings made prior to the date hereof, none of the Company or any of its
Subsidiaries is a party to any Material Contract (as defined below). True
copies of the Material Contracts, including all amendments and supplements,
have been made available to Parent. Except for any of the following the
failure of which to be true has not and would not in the aggregate be
reasonably expected to have a Material Adverse Effect, (i) each Material
Contract is valid and subsisting; (ii) the Company or the applicable
Subsidiary has duly performed all its material obligations thereunder to the
extent that such obligations to perform have accrued; and (iii) no breaches or
defaults, alleged breach or default, or event which would (with the passage of
time, notice or both) constitute a breach or default thereunder by the
Company, any of its Subsidiaries or, to the best knowledge of the Company, any
other party or obligor with respect thereto, has occurred or as a result of
this Agreement or performance thereof will occur. Except as described in
Section 4.14 of the Disclosure Schedule, consummation of the transactions
contemplated by this Agreement will not (and will not give any Person a right
to) terminate or modify any rights of, or accelerate or augment any obligation
of, the Company or any of its Subsidiaries under any Material Contract or any
other contract to which the Company or any of its Subsidiaries is a party or
by which any of their assets are bound except where such terminations,
modifications or accelerations would not in the aggregate be reasonably
expected to have a Material Adverse Effect. For purposes of this Agreement,
"MATERIAL CONTRACT" means any agreement, arrangement, bond, commitment,
contract, franchise, indemnity, indenture, instrument, lease, license,
understanding or undertaking, whether or not in writing, that (i) after June
30, 1996 obligates the Company or any of its Subsidiaries to pay, or entitles
the Company or any of its Subsidiaries to receive, an amount of $2,500,000 or
more annually, (ii) involves an extension of credit other than consistent with
normal credit terms, (iii) contains non-competition, no solicitation or no
hire provisions or (iv) is otherwise required to be described in or filed as
an exhibit to the SEC filings.
SECTION 4.15 Title to Properties; Encumbrances. Except as set forth in
Section 4.15 of the Disclosure Schedule, each of the Company and its
Subsidiaries has good and marketable title to or other legal right to use all
material properties and assets (real, personal and mixed, and tangible, but
specifically excluding Intellectual Property which is covered in Section
4.16), including all such properties and assets that it or they purport to own
or have a legal right to use as reflected on the Balance Sheet or acquired
after the date thereof, except for properties and assets disposed of since
June 30, 1996 in the ordinary course of business and consistent with past
practice. Except as set forth in Section 4.15 of the Disclosure Schedule, none
of such properties or assets reflected on the Balance Sheet or acquired after
the date of the Balance Sheet are subject to any Lien except (i) statutory
Liens not yet delinquent, (ii) Liens with respect to the properties or assets
of the Company and its Subsidiaries taken as a whole that do not materially
impair or materially interfere with the present use of the properties or
assets subject thereto or affected thereby, or otherwise materially impair
present business operations at such properties, (iii) Liens for taxes not yet
delinquent or the validity of which
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are being contested in good faith by appropriate actions, (iv) Liens
identified in the SEC Filings made prior to the date hereof, and (v) other
Liens which would not be reasonably expected to have in the aggregate a
Material Adverse Effect. For purposes of this Agreement, "LIEN" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind whatsoever in respect of such asset.
SECTION 4.16 Intellectual Property.
(a) Section 4.16 of the Disclosure Schedule lists all of the Intellectual
Property (as hereinafter defined) in which the Company or any of its
Subsidiaries have an ownership interest for which a governmental registration
has been issued or applied. The Company and its Subsidiaries own or have the
right to use all Intellectual Property utilized in connection with their
businesses, as presently conducted, except for such Intellectual Property the
absence of which would not in the aggregate be reasonably expected to have a
Material Adverse Effect. Except as disclosed in Section 4.16 of the Disclosure
Schedule, the Company and its Subsidiaries have not received any written
notice to the effect that, or based on the circumstances have no reason to
know that, the use of the Intellectual Property by the Company or its
Subsidiaries in their business as presently conducted conflicts with any
rights of any Person, including any Intellectual Property of any Person,
except for any such conflicts would not in the aggregate be reasonably
expected to have a Material Adverse Effect.
(b) Except as set forth on Section 4.16 of the Disclosure Schedule: (i)
neither the Company nor its Subsidiaries have granted any exclusive license or
other exclusive rights to any Person to the Intellectual Property listed on
Section 4.16 of the Disclosure Schedule; and (ii) the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not breach, violate or conflict with or adversely
affect the Intellectual Property, except such breaches, violations, conflicts
or adverse affects which would not in the aggregate be reasonably expected to
have a Material Adverse Effect.
As used in this Agreement, the following terms shall have the meanings set
forth below: (i) "INTELLECTUAL PROPERTY" means any Intellectual Property
Rights, unpublished works, inventions, research and development findings,
inventories, computer firmware and software (existing in any form), marketing
rights, contractual rights, licenses and all related agreements and
documentation, other industrial and intellectual property rights, and all
Marks; (ii) "INTELLECTUAL PROPERTY RIGHTS" means any and all industrial and
intellectual property rights, including patents, patent applications, patent
rights, trademarks, trademark applications, service marks, service mark
applications, copyrights, Know-How, Trade Secrets, and proprietary processes,
formulae and other information; (iii) "KNOW-HOW" means any information,
including invention records, research and development records and reports,
experimental and engineering reports, pilot designs, production designs,
production specifications, raw material specifications, quality control
reports and specifications, drawings, photographs, models, tools, parts,
algorithms, processes, methods, market and competitive analysis, computer
software (in any form) and related documentation and other information
possessed by the Company or its Subsidiaries, whether or not considered
proprietary or a Trade Secret; (iv) "MARK" means any brand name, service mark,
trademark, trade name, logo, and all registrations or applications for
registration of any of the foregoing; and (v) "TRADE SECRETS" means any Know-
How, formulae, patterns, devices, methods, processes, compilations of
information, software or any other information, business or technical, (in any
form) which is used in connection with the business of the Company or its
Subsidiaries, as presently conducted, and which gives an opportunity to obtain
an advantage over competitors who do not know or use it.
SECTION 4.17 Tax Matters.
(a) Except as set forth in Section 4.17 of the Disclosure Schedule, the
Company has paid, or the Balance Sheet contains adequate provision for, all
material Company Taxes (as defined herein) for the taxable period ended on the
date of the Balance Sheet and all fiscal periods of the Company
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and its Subsidiaries prior thereto. The Company Taxes paid and/or incurred
from the date of the Balance Sheet until the Effective Date include only the
Company Taxes incurred in the ordinary course of business determined in the
same manner as in the taxable period ending on the date of the Balance Sheet.
All Tax Returns (as defined herein) required to be filed with respect to
Company Taxes under federal, state, local or foreign Laws by the Company or
any Subsidiary have been timely filed (taking into account any extensions of
time for filing such Tax Returns), (ii) at the time filed, such Tax Returns
were (and, as to Tax Returns not filed as of the date hereof, will be) true,
correct and complete in all material respects and each of the Company and each
of its Subsidiaries has timely paid all Company Taxes due and payable, (iii)
there are no material Liens for Company Taxes upon the assets of the Company
or any Subsidiary which are not provided for in the financial statements
included in the SEC Filings made prior to the date hereof, except Liens for
Company Taxes not yet due, and (iv) there are no material outstanding
deficiencies for any Company Taxes proposed, asserted or assessed against the
Company or any of its Subsidiaries which are not provided for in the financial
statements included in the SEC Filings made prior to the date hereof (other
than those which are being contested in good faith and either for which
adequate reserves have been established or the amounts are immaterial). In
addition, except in each case where the failure to do any of the following
would not reasonably be expected in the aggregate to have a Material Adverse
Effect, the Company and each of its Subsidiaries has properly accrued in all
material respects all Company Taxes for periods subsequent to the periods
covered by the Tax Returns filed by the Company or any such Subsidiary. The
Company has made available copies of all such Tax Returns to Parent. Except as
set forth in Section 4.17 of the Disclosure Schedule, neither the Company nor
any of its Subsidiaries has filed or entered into, or is otherwise bound by,
any election, consent or extension agreement that extends any applicable
statute of limitations with respect to taxable periods of the Company. Except
as set forth in Section 4.17 of the Disclosure Schedule, no action, audit,
examination, suit or other proceeding is pending or, to the Company's
knowledge, threatened by any Governmental Entity for assessment or collection
from the Company or any of its Subsidiaries of any Company Taxes, no
unresolved claim for assessment or collection of any Company Taxes has been
asserted against the Company or any of its Subsidiaries (other than those for
which adequate reserves have been established, which are being contested in
good faith or are immaterial), and all resolved assessments of the Company
Taxes have been paid or are reflected in the Balance Sheet.
(b) Except as disclosed in Section 4.17 of the Disclosure Schedule, there
are no outstanding written requests, agreements, consents or waivers to extend
the statutory period of limitations applicable to the assessment of any
material Company Taxes or deficiencies against the Company or any of its
Subsidiaries, and no power of attorney granted by either the Company or any of
its Subsidiaries with respect to any Company Taxes is currently in force.
Except as disclosed in Section 4.17 of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries is a party to any agreement providing for
the allocation or sharing of Taxes. Except as disclosed in Section 4.17 of the
Disclosure Schedule, no claim has ever been made or, to the best knowledge of
the Company, could be made by an authority in a jurisdiction where any of the
Company or its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. Except as set forth in Section 4.17
of the Disclosure Schedule none of the Company or its Subsidiaries has made
any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code (S) 280G. None of the Company
or its Subsidiaries (i) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent
of which was the Company) or (ii) has any liability for the Taxes of any other
person or entity (other than any of the Company and its Subsidiaries) under
Treas. Reg. (S) 1.1502-6 (or any similar provision of state, local or foreign
Law), as a transferee or successor, by contract or otherwise. The unexpired
net operating losses of the Company for federal income tax purposes, as of
June 30, 1996, is set forth in Section 4.17 of the Disclosure Schedule.
(c) As used in this Agreement, (i) "COMPANY TAXES" shall mean any and all
taxes, charges, fees, levies or other assessments, including income, gross
receipts, excise, real or personal property,
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sales, withholding, social security, occupation, use, service, service use,
value added, license, net worth, payroll, franchise, transfer and recording
taxes, fees and charges, imposed by the IRS or any taxing authority (whether
domestic or foreign including any state, local or foreign government or any
subdivision or taxing agency thereof (including a United States possession))
on the Company or any Subsidiary, whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall
include any interest, penalties or additional amounts attributable to, or
imposed upon, or with respect to, any such taxes, charges, fees, levies or
other assessments, and (ii) "TAX RETURN" shall mean any report, return,
document, declaration or other information or filing required to be supplied
to any taxing authority or jurisdiction (foreign or domestic) with respect to
Company Taxes.
SECTION 4.18 Interested Party Transactions. Except as set forth in the SEC
Filings made prior to the date hereof, since the date of the Company's last
proxy statement to its stockholders, no event has occurred that would be
required to be reported by the Company as a "Certain Relationship" or "Related
Transaction," pursuant to Item 404 of Regulation S-K promulgated by the SEC.
SECTION 4.19 Government Contracts.
(a) Except as set forth in Section 4.19 of the Disclosure Schedule and
except as would not in the aggregate reasonably be expected to have a Material
Adverse Effect, with respect to each and every government contract and
subcontract under a government contract, (collectively "GOVERNMENT CONTRACT")
of the Company and its Subsidiaries: (i) the Company and its Subsidiaries have
complied in all respects with all material terms, conditions, representations
and certifications of each government contract and proposal submitted for any
such government contract; (ii) the Company and its Subsidiaries have complied
in all respects with all requirements of all applicable Laws or agreements,
including but not limited to, the cost accounting standards and cost
principles, pertaining to each government contract and proposal submitted for
any such government contract; (iii) no termination for convenience,
termination for default, cure notice or show cause notice is currently in
effect or threatened pertaining to any government contract and proposal
submitted for any such agreement contract; and (iv) no Governmental Entity has
provided the Company or its Subsidiaries with written notice of any cost
incurred by the Company and its Subsidiaries pertaining to such government
contract which has been questioned, challenged or disallowed or has been the
subject of any investigation.
(b) Except as set forth in Section 4.19 of the Disclosure Schedule, (i)
neither the Company or its Subsidiaries nor, to the best knowledge of the
Company, any of their directors, officers, employees, consultants or agents
engaged in the business of the Company or its Subsidiaries is (or during the
last six years has been) under administrative, civil or criminal
investigation, notice of proposed debarment or suspension, indictment or
information or equivalent official governmental charge or allegation by any
Governmental Entity or other Person with respect to any alleged irregularity,
misstatement or omission or other matter arising under or relating to any
government contract or proposal submitted for any such government contract and
(ii) except as would not in the aggregate reasonably be expected to have a
Material Adverse Effect, there is no irregularity, misstatement or omission or
other matter arising under or relating to any government contract or proposal
therefore that has led or could reasonably be expected to lead, either before
or after the Effective Time, to any of the consequences set forth in clause
(i) of this sentence.
(c) Except as set forth in Section 4.19 of the Disclosure Schedule and
except as would not in the aggregate reasonably be expected to have a Material
Adverse Effect on the Company, there exist (i) no outstanding claims, requests
for equitable adjustment, audits, disputes or other contractual action for
relief against the Company and its Subsidiaries, either by the U.S. Government
or by any prime contractor, subcontractor, vendor or other person, arising
under or relating to any government contract, performance of any government
contract or otherwise, and (ii) no settlement, compromise or similar
agreements waiving, releasing or abandoning any claim, entitlement, right or
defense of the Company or its Subsidiaries relating to the U.S. Government,
any prime contractor, subcontractor, vendor or other person.
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(d) Except as set forth in Section 4.19 of the Disclosure Schedule and
except as in the aggregate would not reasonably be expected to have a Material
Adverse Effect, no government contract contains Organization Conflict of
Interest ("OCI") clauses or other similar provisions that might restrict or
preclude Parent or any of its affiliates from supplying products or services
to any Governmental Entity or supplier thereto.
SECTION 4.20 Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statue or regulation enacted
under state or federal laws in the United States (each a "TAKEOVER STATUTE")
including Chapters 110C-110F of the Massachusetts General Laws, applicable to
the Company or any of the its Subsidiaries is applicable to the execution,
delivery and performance of this Agreement or the consummation of the Offer or
the Merger or the other transactions contemplated by this Agreement.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser represents and warrants to the Company as
follows:
SECTION 5.1 Organization. Parent is a corporation duly organized and validly
existing and in good standing under the laws of the State of New York.
Purchaser is a corporation duly organized and validly existing and in good
standing under the laws of the Commonwealth of Massachusetts. Parent and
Purchaser have all necessary corporate power and authority to own their
respective properties and assets and to carry on their respective businesses
as now conducted and are duly qualified or licensed to do business as foreign
corporations in good standing in all jurisdictions in which the character or
the location of the assets owned or leased by any of them or the nature of the
business conducted by any of them requires licensing or qualification except
where the failure to be so qualified would not have a material adverse effect
on the consummation of the transactions contemplated hereby.
SECTION 5.2 Authority. Each of Parent and Purchaser has the requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder; the execution, delivery and performance by Parent and
Purchaser of this Agreement and the transactions contemplated hereby have been
duly authorized by all necessary corporate action on either of their part and
no other corporate proceedings on either of their part are necessary to
authorize the execution, delivery or performance of this Agreement. This
Agreement constitutes a valid and binding obligation of Parent and Purchaser
enforceable against Parent and Purchaser in accordance with its terms, except
as (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or hereafter in effect
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and the discretion of the courts before which any
proceeding therefor may be brought.
SECTION 5.3 Schedule 14D-1, Offer Documents and Schedule 14D-9. The Offer
Documents and the Schedule 14D-1 and all amendments and supplements thereto,
will, when filed with the SEC, comply in all material respects with the
Exchange Act, except that no representation is made by Parent or Purchaser
with respect to information supplied by or on behalf of the Company for
inclusion therein. None of the information supplied by Parent or Purchaser for
inclusion in Schedule 14D-9 and any amendments thereof or supplements thereto
will, on the respective dates such materials are filed with the SEC, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.4 Effect of Agreement. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
including the making of the Offer, by Parent and Purchaser will not constitute
a breach or violation of or a default under (i) the Articles of
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Incorporation or the Bylaws of Parent or Purchaser, (ii) any applicable Law,
(iii) any Permit issued by a Governmental Entity or otherwise, or (iv) any
indenture, agreement or instrument of Parent or Purchaser or to which Parent
or Purchaser or any of their respective properties is subject, other than in
the case of (i) through (iv) above, breaches, violations or defaults which
would not prevent, materially hinder or make materially more burdensome the
consummation by Parent or Purchaser of the transactions contemplated hereby.
Except for compliance with the HSR Act, the Exchange Act, the securities Laws
of the various states and the filing of the Articles of Merger pursuant to the
Massachusetts BCL, the consummation by Parent and Purchaser of the
transactions contemplated hereby will not require the consent or approval of
or filing with any Governmental Entity or other third party.
SECTION 5.5 Financing. Parent has, and will provide to Purchaser prior to
the expiration of the Offer, all funds necessary for the purchase of the
Shares pursuant to the Offer. Prior to the Effective Time, Purchaser will have
all funds necessary to consummate the Merger and to consummate all other
transactions contemplated hereunder.
SECTION 5.6 Brokers. No agent, broker, finder, or investment or commercial
banker, or other Person or firm engaged by or acting on behalf of Parent or
Purchaser or any of their respective affiliates in connection with the
negotiation, execution or performance of this Agreement, the Merger or the
other transactions contemplated by this Agreement, is or will be entitled to
any brokerage or finder's or similar fee or other commission as a result of
this Agreement, the Merger or such transactions, except that Goldman, Sachs &
Co. has been employed as financial advisor to Parent and Purchaser, who have
full responsibility for their fees, commissions, expenses and other charges.
ARTICLE 6.
COVENANTS
SECTION 6.1 No Solicitation.
(a) The Company and its Subsidiaries will not, and will cause their
respective officers, directors, employees and investment bankers, attorneys or
other agents retained by or acting on behalf of the Company or any of its
Subsidiaries (collectively, the "REPRESENTATIVES"), as applicable, not to, (i)
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any Acquisition Proposal (as defined below), (ii) except as
permitted below, engage in negotiations or discussions with, or furnish any
information or data to any third party relating to an Acquisition Proposal,
(iii) except as permitted below, enter into any agreement with respect to any
Acquisition Proposal or approve or resolve to approve any Acquisition Proposal
or (iv) except as permitted below, participate in any discussions regarding,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to any
Acquisition Proposal (other than the transactions contemplated hereby).
Notwithstanding the foregoing, in response to any unsolicited Acquisition
Proposal, the Company may (at any time prior to the consummation of the Offer)
furnish information concerning its business, properties or assets to the
Person or group (a "POTENTIAL ACQUIROR") making such unsolicited Acquisition
Proposal and participate in negotiations with the Potential Acquiror if (x)
the Company's Board of Directors is advised by one or more of its independent
financial advisors that such Potential Acquiror has the financial wherewithal
to consummate without undue delay such an Acquisition Proposal, (y) the
Company's Board of Directors reasonably determines, after receiving advice
from the Company's financial advisor, that such Potential Acquiror has
submitted an Acquisition Proposal that involves consideration to the Company's
shareholders that are superior to the Offer and the Merger, and (z) based upon
advice of counsel to such effect, the Company's Board of Directors determines
in good faith that it is necessary to so furnish information and/or negotiate
in order to comply with its fiduciary duty to stockholders of the Company. In
the event the Company shall determine to provide any information as described
above or shall receive any offer of the type referred to in this Section
6.1(a), it shall (x) promptly inform Parent as to the fact that such an offer
has been received and/or such an offer has been received and/or information is
to be
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provided, (y) promptly provide Parent with a copy of any written offer or
other materials received by Company, its Subsidiaries or Representatives in
connection therewith, and (z) if such offer is not in writing, promptly
furnish to Parent in writing the identity of the recipient of such information
and/or the proponent of such offer and a summary of the terms thereof. The
Company agrees that any non-public information furnished to a Potential
Acquiror will be pursuant to a confidentiality agreement with confidential
information and no solicitation/no hire provisions substantially similar to
those set forth in the Confidentiality Agreement (as defined in Section 6.4
hereof). The Company will keep Parent fully informed of the status and
details, including amendments or proposed amendments to any such Acquisition
Proposal.
(b) The Board of Directors of the Company (x) shall not withdraw or modify
or propose to withdraw or modify, in any manner adverse to Parent, the
approval or recommendation of such Board of Directors of this Agreement, the
Offer or the Merger or (y) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal unless, in each case, in connection with a
Superior Offer, such Board of Directors determines in good faith, based on
advice of outside legal counsel, that it is necessary to do so in order to
comply with such Board of Directors' fiduciary duties under applicable Law.
(c) For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
bona fide proposal, whether in writing or otherwise, made by a third party to
acquire beneficial ownership (as defined under Rule 13(d) of the Exchange Act)
of all or a material portion of the assets of the Company or any of
Subsidiaries, or any material equity interest in the Company pursuant to a
merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar transaction
involving either the Company or any of its Subsidiaries, including any single
or multi-step transaction or series of related transactions which is
structured to permit such third party to acquire beneficial ownership of any
material portion of the assets of, or any material equity interest in, the
Company and its Subsidiaries.
(d) The term "SUPERIOR OFFER" means a bona fide offer to acquire, directly
or indirectly, for consideration consisting of cash and/or securities, two-
thirds or more of the Shares then outstanding or all or substantially all the
assets of the Company, and otherwise on terms which the Board of Directors of
the Company determines in its good faith reasonable judgment to be more
favorable to the Company's shareholders than the Offer and the Merger (based
on advice of the Company's independent financial advisor that the value of the
consideration provided for in such proposal is superior to the value of the
consideration provided for in the Offer and the Merger), for which financing,
to the extent required, is then committed or which, in the good faith
reasonable judgment of the Board of Directors, based on advice from the
Company's independent financial advisor, is reasonably capable of being
financed by such third party and for which the Board of Directors determines,
in its good faith reasonable judgment, that such proposed transaction is
reasonably likely to be consummated without undue delay.
SECTION 6.2 Appraisal Rights. The Company shall not settle or compromise any
claim for appraisal rights in respect of the Merger without the prior written
consent of Parent or Purchaser.
SECTION 6.3 Conduct of Business of the Company. During the period from the
date of this Agreement to the Effective Time, except as specifically
contemplated by this Agreement (including matters specifically identified in
Section 6.3 of the Disclosure Schedule) or as otherwise approved in writing by
Parent or Purchaser, the Company shall conduct, and it shall cause each of its
Subsidiaries to conduct, its or their businesses in the ordinary course and
consistent with past practice, subject to the limitations contained in this
Agreement, and the Company shall, and it shall cause each of its Subsidiaries
to, use its or their reasonable best efforts to preserve intact its business
organization, to keep available the services of its officers and employees and
to maintain satisfactory relationships with all Persons with which the Company
has significant business relations. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, after
the date of this Agreement and prior to the Effective Time, neither the
Company nor any of its Subsidiaries will, without the prior consent of
Purchaser:
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(i) amend or propose to amend its Articles of Organization or Bylaws (or
comparable governing instruments);
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or
propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to acquire
or sell any shares of, the capital stock or other securities of the Company or
any of its Subsidiaries including any securities convertible into or
exchangeable for shares of stock of any class of the Company or any of its
Subsidiaries, or enter into any agreement, understanding or arrangement with
respect to the purchase or voting of shares of its capital stock, except for
the issuance of Shares pursuant to the exercise of Options or the conversion
of the Subordinated Notes outstanding on the date of this Agreement, in
accordance with their present terms, and issuances of up to 120,000 Shares and
options under the ESPP to employees in the ordinary course of business;
(iii) split, combine or reclassify any shares of its capital stock, make any
other changes in its capital structure, or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends or
distributions to the Company or a Subsidiary wholly owned by the Company, or
redeem, purchase or otherwise acquire or offer to acquire any shares of its
capital stock or other securities, except for the repurchase of shares of
common stock from employees, consultants or directors of the Company upon
termination of their relationship with the Company in accordance with existing
contractual rights or obligations of repurchase;
(iv) (a) except for debt (including, but not limited to, obligations in
respect of capital leases) not in excess of $7,000,000 per month or
$30,000,000 in the aggregate for all entities combined, create, incur or
assume any short-term debt, long-term debt or obligations in respect of
capital leases; (b) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for the
obligations of any Person, except for obligations of the Company or any wholly
owned Subsidiary of the Company in the ordinary course of business consistent
with past practice; (c) make any capital expenditures other than in the
ordinary course in amounts not to exceed $7,000,000 per month or $30,000,000
in the aggregate; (d) or make any loans, advances or capital contributions to,
or investments in, any other Person (other than customary relocation loans to
employees made in the ordinary course of business consistent with past
practice); or (e) acquire the stock or substantially all the assets of, or
merge or consolidate with, any other Person;
(v) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber,
or agree to sell, transfer, mortgage, pledge or otherwise dispose of or
encumber, any material assets or properties (including Intellectual Property),
real, personal or mixed (except for (i) sales of assets in the ordinary course
of business and in a manner consistent with past practice, (ii) disposition of
obsolete or worthless assets and (iii) encumbrances on assets to secure
purchase money financings of equipment and capital improvements);
(vi) (A) increase the compensation of any of its or their directors,
officers or key employees, except pursuant to the terms of agreements or plans
currently in effect; (B) pay or agree to pay any pension, retirement or other
employee benefit provided in any existing plan, agreement or arrangement to
any director, officer or key employee except in the ordinary course and
consistent with past practice; (C) commit, other than pursuant to any existing
collective bargaining agreement, to any additional pension, profit sharing,
bonus, extra compensation, incentive, deferred compensation, stock purchase,
stock option, stock appreciation right, group insurance, severance pay,
retirement or other employee benefit plan, agreement or arrangement, or to any
employment or consulting agreement with or for the benefit of any director,
officer or key employee, whether past or present; (D) amend, in any material
respect, any such plan, agreement or arrangement; or (E) enter into, adopt or
amend any employee benefit plans or employment or severance agreement, or
(except for normal increases in the ordinary and usual course of business for
employees with annual base cash compensation of less than $80,000) increase in
any manner the compensation of any employees;
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(vii) settle or compromise any claims or litigation involving payments by
the Company or any of its Subsidiaries of more than $250,000 in any single
instance or related instances, or that otherwise are material;
(viii) make any tax election or permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except in
the ordinary and usual course of business consistent with past practices;
(ix) enter into any license with respect to Intellectual Property unless
such license is non-exclusive and entered into in the ordinary course
consistent with past practice or in accordance with existing contracts or
other agreements;
(x) take any action or omit to take any action, which action or omission
would result in a breach of any of the covenants, representations and
warranties of the Company set forth in this Agreement;
(xi) enter into any lease or amend any lease of real property other than in
the ordinary course of business consistent with past practice;
(xii) change any accounting practices, other than in the ordinary course and
consistent with past practice;
(xiii) fail to use reasonable business efforts to keep in full force and
effect insurance comparable in amount and scope of coverage to insurance now
carried by it;
(xiv) fail to pay all accounts payable and other obligations, when they
become due and payable, in the ordinary course of business consistent with
past practice and with the provisions of this Agreement, except if the same
are contested in good faith, and, in the case of the failure to pay any
material accounts payable or other obligations which are contested in good
faith, only after consultation with Purchaser;
(xv) fail to comply in all material respects with all Laws applicable to it
or any of its properties, assets or business and maintain in full force and
effect all Permits necessary for, or otherwise material to, such business; or
(xvi) agree, commit or arrange to do the foregoing.
SECTION 6.4 Access and Information. The Company shall, upon reasonable
notice and subject to government security restrictions and restrictions
contained in confidentiality agreements to which it is subject, give to
Parent, Purchaser and their representatives full access to all of their
employees, and to all the premises and books and records of the Company and
its Subsidiaries and shall, and shall cause its Subsidiaries, officers and
independent auditors to furnish to Parent, Purchaser and their representatives
and designees such financial and operating data and other information,
including access to the working papers of its independent auditors, with
respect to its business and properties and the business and properties of its
Subsidiaries as Parent or Purchaser shall from time to time reasonably
request. Any such investigation shall be conducted in such manner as not to
interfere unreasonably with the operation of the business of the Company and
its Subsidiaries. No investigation pursuant to this Section shall affect or be
deemed to modify any representations or warranties made in this Agreement or
the conditions to the obligations of the parties to consummate the Merger. The
Confidentiality Agreement dated April 26, 1997 (the "CONFIDENTIALITY
AGREEMENT"), between Parent and the Company shall apply to the information
provided pursuant to this Section 6.4.
SECTION 6.5 Certain Filings, Consents and Arrangements.
(a) Parent, Purchaser and the Company shall use their reasonable best
efforts to obtain any Permits necessary for the consummation of the
transactions contemplated by this Agreement, provided that the Company shall
not, without the consent of Parent (which consent shall not be unreasonably
withheld), agree to any amendment to any material instrument or agreement to
which it is a party.
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(b) Parent, Purchaser and the Company shall cooperate with one another (i)
in promptly determining whether any filings are required to be made or Permits
are required to be obtained under any Law or otherwise (including from other
parties to Material Contracts) in connection with the consummation of the
Offer and the Merger and (ii) in promptly making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such Permits.
(c) Each party shall use its reasonable best efforts promptly to take, or
cause to be taken, all actions and promptly to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement; provided that
nothing in this Section 6.5 shall require any party hereto to proffer such
party's willingness to accept an Order providing for divestiture of its assets
or businesses which amount to 7.5% or more of Company's assets or earning
power. The Company shall take all actions reasonably requested by Parent to
ensure the orderly transition of the business of the Company and to preserve
and maintain the Company's business relationships.
SECTION 6.6 State Takeover Statutes. The Company shall, upon the request of
Parent or Purchaser, take all reasonable steps to assist in any challenge by
Parent or Purchaser to the validity or applicability to the Offer or Merger of
any state takeover statutes.
SECTION 6.7 Compliance with Antitrust Laws. Each party shall as promptly as
practicable make all filings necessary under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), or to comply with any
other request or demand by a Governmental Entity investigating the Offer or
the Merger under applicable antitrust Laws. Each party shall use its
reasonable best efforts to resolve such objections, if any, as any
Governmental Entity may assert with respect to the Offer or the Merger.
Nothing in this Section 6.7 shall require any party hereto to proffer such
party's willingness to accept an Order providing for divestiture of its assets
or businesses which amount to 7.5% or more of Company's assets or earning
power.
SECTION 6.8 Press Releases. Parent, Purchaser and the Company shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated hereby as may
be required by Law or by obligations pursuant to any listing agreement with
any national securities exchange.
SECTION 6.9 Indemnification; Insurance.
(a) From and after the consummation of the Offer, Parent shall cause the
Company and, after the Effective Time, the Surviving Corporation to indemnify,
defend and hold harmless the present and former directors and officers of the
Company and its Subsidiaries (each an "INDEMNIFIED PARTY") against all losses,
claims, damages or liabilities arising out of actions or omissions in their
capacity as a director or officer of the Company or a Subsidiary occurring on
or prior to the consummation of the Offer to the maximum extent permitted or
required under the Massachusetts BCL and the Company's Bylaws in effect on the
date hereof, including provisions with respect to advances of expenses
incurred in the defense of any action or suit, provided that any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth under the Massachusetts BCL and the
Company's Bylaws shall be made by independent legal counsel selected in good
faith by the Surviving Corporation. From and after the consummation of the
Offer, Parent shall cause the Company and, after the Effective Time, the
Surviving Corporation, to pay from time to time in advance of the disposition
of any such action, suit or other proceeding expenses, including counsel fees,
reasonably incurred by the Indemnified Party in connection with any such
action, suit or other proceeding; provided that such Indemnified Party shall
undertake to repay the amounts so paid if it is ultimately determined that
indemnification for such expenses is not authorized under this Agreement or
otherwise.
(b) From and after the consummation of the Offer, Parent shall cause the
Company and, after the Effective Time, the Surviving Corporation to maintain
the Company's existing officers' and directors'
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liability insurance ("D&O INSURANCE") in full force and effect without
reduction of coverage for a period of three years after the Effective Time;
provided that the Surviving Corporation will not be required to pay an annual
premium therefor in excess of 200% of the last annual premium paid prior to
the date hereof (the "CURRENT PREMIUM"); and, provided, further, that if the
existing D&O Insurance expires, is terminated or canceled during the 3-year
period, the Surviving Corporation will use reasonable efforts to obtain as
much D&O Insurance as can be obtained for the remainder of such period for a
premium on an annualized basis not in excess of 200% of the Current Premium.
(c) The Company will maintain, through the Effective Time, the Company's
existing D&O Insurance in full force and effect without reduction of coverage.
(d) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
and the continuing or surviving entity does not assume the obligations of the
Surviving Corporation set forth in this Section 6.9, or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in
each such case, proper provision shall be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in this
Section 6.9.
SECTION 6.10 Notification of Certain Matters. The Company shall give prompt
notice to Parent and Purchaser, and Parent or Purchaser shall give prompt
notice to the Company, of (i) any claims, actions, proceedings or
investigations commenced or, to the best of its knowledge, threatened,
involving or affecting the Company or any of its Subsidiaries or any of their
property or assets, that relate to the Offer or the Merger, (ii) the
occurrence, or failure to occur, of any event that would be likely to cause
(with the passage of time or otherwise) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
or, in the case of the Company, a Material Adverse Effect, and (iii) any
material failure of the Company, Parent or Purchaser, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder. No such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
SECTION 6.11 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses (including, in the case of the
Company, the costs of printing the Proxy Statement), whether or not the Offer
or the Merger is consummated.
SECTION 6.12 Actions Regarding the Rights.
Prior to the execution of this Agreement, the Company, in accordance with
the terms and provisions of the Common Stock Rights Agreement dated as of June
23, 1988 between the Company and The First National Bank of Boston, as Rights
Agent (the "RIGHTS AGREEMENT"), has amended the Rights Agreement so that the
transactions contemplated by this Agreement are exempted from certain
provisions of the Rights Agreement and a "Common Stock Event" thereunder will
not occur as a result of such transactions. The Company, with the consent of
Parent, shall continue to take all actions necessary to cause the transactions
contemplated by this Agreement to remain exempted from such provisions of the
Rights Agreement, including, if desirable, entering into further amendments to
the Rights Agreement or causing the rights issued under the Rights Agreement
(the "RIGHTS") to be extinguished, canceled or redeemed.
SECTION 6.13 Shareholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that Parent shall have the
right to prevent the Company from entering into any such settlement without
Parent's consent if Parent agrees to indemnify the Company and each director
of the Company for the amount of its, his or her liability, if any, arising
from the underlying claim, net of any insurance proceeds received by such
person, that is in excess of the amount that such person would have been
liable for under such settlement.
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ARTICLE 7.
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to the Obligations of Parent, Purchaser and the
Company. The obligations of Parent, Purchaser and the Company to consummate
the Merger are subject to the satisfaction, at or before the Effective Time,
of each of the following conditions:
(a) the stockholders of the Company shall have duly approved the Merger, if
required by applicable Law; and
(b) the consummation of the Merger shall not be precluded by any order or
injunction of a court of competent jurisdiction (each party agreeing to use
its reasonable best efforts to have any such order reversed or injunction
lifted), and there shall not have been any action taken or any statute, rule
or regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity that makes consummation of the Merger illegal.
SECTION 7.2 Conditions to the Obligations of Parent and Purchaser. The
obligations of Parent and Purchaser to consummate the Merger are subject to
the satisfaction, at or before the Effective Time, of the following additional
conditions:
(a) the Company shall have performed in all material respects the covenants
and agreements set forth herein to be performed by it at or prior to the
Effective Time;
(b) the representations and warranties of the Company in Article 4 shall be
true and correct in all material respects on the date as of which made and on
the Effective Date with the same force and effect as though made on and as of
such date;
(c) there shall not have occurred after the completion of the Offer any
material adverse change in the business of the Company and its Subsidiaries
taken as a whole, except for such changes that are caused by the Company's
compliance with the terms of this Agreement and the Offer or that are
contemplated hereby;
(d) no governmental or other action or proceeding shall have been commenced
after completion of the Offer that (a) in the opinion of Parent's or
Purchaser's counsel is more likely than not to be successful, and (b) either
(i) seeks an injunction, a restraining order or any other Order seeking to
prohibit, restrain, invalidate or set aside consummation of the Merger or (ii)
if successful, would have a Material Adverse Effect; and
(e) the Company shall have delivered to Parent and Purchaser a certificate,
as of the Effective Time, executed by a senior executive officer of the
Company, to the effect that, to the best of such officer's knowledge, the
conditions set forth in this Section 7.2 have been fulfilled.
SECTION 7.3 Conditions to the Company's Obligation. The obligation of the
Company to consummate the Merger is subject to the satisfaction, at or before
the Effective Time, of the following additional conditions:
(a) Parent and Purchaser shall have performed in all material respects the
covenants and agreements set forth herein to be performed by them at or prior
to the Effective Time;
(b) The representations and warranties of Parent and Purchaser set forth in
Article 5 shall be true and correct in all material respects on the date as of
which made and on the Effective Date with the same force and effect as though
made on and as of such date; and
(c) Parent and Purchaser shall have each delivered to the Company a
certificate, dated the date of the Effective Time and executed in each case by
a senior executive officer thereof, that to the best of such officer's
knowledge, the conditions set forth in this Section 7.3 have been fulfilled.
25
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SECTION 7.4 Exception. The conditions set forth in Section 7.2 and 7.3
hereof shall cease to be conditions to the obligations of any of the parties
hereto if Purchaser shall have accepted for payment and paid for Shares
validly tendered pursuant to the Offer.
ARTICLE 8.
MISCELLANEOUS
SECTION 8.1 Termination. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after shareholder approval thereof:
(a) subject to Section 1.5, by the mutual consent of Parent and the Company;
(b) by either the Company, on the one hand, or Parent and Purchaser, on the
other hand:
(i) if the Shares shall not have been purchased pursuant to the Offer on or
prior to the Final Termination Date; provided, however, that the right to
terminate this Agreement under this Section 8.1(b)(i) shall not be available
to any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of Purchaser to purchase the
Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action the
parties hereto shall use their respective reasonable best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement or prohibiting Parent or Purchaser
to acquire or hold or exercise rights of ownership of the Shares except such
prohibitions which would not reasonably be expected to have a Material Adverse
Effect or prevent the consummation of the Offer prior to the Final Termination
Date, and such order, decree, ruling or other action shall have become final
and non-appealable;
(c) by the Company:
(i) if, prior to the purchase of Shares pursuant to the Offer the Board of
Directors shall have withdrawn, or modified or changed in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger (or the Board of Directors resolves to do any of the
foregoing) as a result of a Superior Offer, and if concurrently with such
termination the Termination Fee (as defined in Section 8.2) is paid to Parent;
or
(ii) if Parent or Purchaser shall have terminated the Offer, or the Offer
shall have expired, without Purchaser purchasing any Shares pursuant thereto;
provided that the Company may not terminate this Agreement pursuant to this
Section 8.1(c)(ii) if the Company's failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, termination of the Offer
or the failure of Purchaser to purchase any Shares pursuant to the Offer; or
(iii) if, due to an occurrence that if occurring after the commencement of
the Offer would result in a failure to satisfy any of the Conditions, the
Parent, Purchaser or any of their affiliates shall have failed to commence the
Offer on or prior to five business days following the date of the initial
public announcement of the Offer; provided, that the Company may not terminate
this Agreement pursuant to this Section 8.1(c)(iii) if the Company's failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of Parent, Purchaser or any affiliate to commence the
Offer; or
(iv) prior to the purchase of Shares pursuant to the Offer, (x) if any
representation or warranty of Parent and Purchaser set forth in this Agreement
shall be untrue in any material respects when made, or (y) upon a breach in
any material respect of any covenant or agreement on the part of Parent or
Purchaser set forth in this Agreement, in each case where such
misrepresentation or breach would result in a failure to satisfy any of the
Conditions, provided, that, if any such breach is curable by
26
<PAGE>
Parent or Purchaser through the exercise of its reasonable best efforts prior
to the Final Termination Date and for so long as Parent or Purchaser continues
to exercise such reasonable best efforts, the Company may not terminate this
Agreement under this Section 8.1(c)(iv); or
(d) by Parent and Purchaser:
(i) if, prior to the purchase of the Shares pursuant to the Offer, the Board
of Directors shall have (A) withdrawn, modified or changed in a manner adverse
to Parent or Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger, (B) recommended an Acquisition Proposal or shall have
executed an agreement in principle or definitive agreement relating to an
Acquisition Proposal or similar business combination with a person or entity
other than Parent, Purchaser, or their affiliates (or the Board of Directors
resolves to do any of the foregoing); or
(ii) if, due to an occurrence that if occurring after the commencement of
the Offer would result in a failure to satisfy any of the Conditions, Parent,
Purchaser or any of their affiliates shall have failed to commence the Offer
on or prior to five business days following the date of the initial public
announcement of the Offer; provided that neither Parent nor Purchaser may
terminate this Agreement pursuant to this Section 8.1(d)(ii) if the failure of
Purchaser or Parent to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Parent, Purchaser or any
affiliate to commence the Offer; or
(iii) prior to the purchase of Shares pursuant to the Offer, (i) if any
representation or warranty of the Company set forth in this Agreement shall be
untrue in any material respect when made or (ii) upon a breach in any material
respect of any covenant or agreement on the part of the Company set forth in
this Agreement, in each case where such misrepresentation or breach would
cause any of the Conditions not to be met, provided, that, if any such breach
is curable by the Company through the exercise of its reasonable best efforts
prior to the Final Termination Date and for so long as the Company continues
to exercise such reasonable best efforts, neither Parent nor Purchaser may
terminate this Agreement under this Section 8.1(c)(iii); or
(iv) any Person or group shall have become the beneficial owner of 20% or
more of the outstanding Shares; or
(v) if the Company shall have failed to file its Schedule 14D-9 with the SEC
within 10 business days of the commencement of the Offer;
provided, however, that the Company shall not terminate this Agreement
pursuant to Section 8.1(c)(i), and neither Parent nor Purchaser shall
terminate this Agreement pursuant to Section 8.1(d)(i), if any Shares are
purchased by Purchaser pursuant to the Offer.
SECTION 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in Section
8.1, written notice thereof shall forthwith be given to the other party or
parties specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall forthwith become null and void, and there shall
be no liability on the part of Parent, Purchaser or the Company or their
respective directors, officers, employees, shareholders, representatives,
agents or advisors other than, with respect to Parent, Purchaser and the
Company, the obligations pursuant to this Article 8 and the last sentence of
Section 6.4. Nothing contained in this Section 8.2(a) shall relieve Parent,
Purchaser or the Company from liability for willful breach of this Agreement.
(b) The Company shall pay to Parent by wire transfer $13.5 million (the
"TERMINATION FEE"), upon demand, if (i) the Company terminates this Agreement
pursuant to Section 8.1(c)(i), in which case the Termination Fee must be paid
simultaneously with such termination, (ii) Parent or Purchaser terminates this
Agreement pursuant to Section 8.1(d)(i), or (iii) this Agreement is terminated
for any reason (other than as a result of (x) the failure of Parent or
Purchaser to fulfill any material obligation
27
<PAGE>
under this Agreement, (y) the applicable waiting period under the HSR Act
shall not have expired or been terminated on or prior to the Final Termination
Date or (z) the failure of any of the Conditions set forth in paragraph (iii)
(a) of Exhibit A hereto or the Conditions set forth in paragraph (iii) (d) of
Exhibit A hereto to be satisfied or waived by Parent on or prior to the Final
Termination Date), at any time after an Acquisition Proposal has been made and
within nine months after such a termination, the Company completes either (x)
a merger, consolidation or other business combination between the Company or a
Subsidiary of the Company and any other Person (other than Parent, Purchaser
or an affiliate of Parent) or (y) the sale of 30% or more (in voting power) of
the voting securities of the Company or of 30% or more (in market value) of
the assets of the Company and its Subsidiaries, on a consolidated basis.
(c) Concurrently with the execution hereof the Company is issuing to Parent
an option to purchase 4,225,000 Shares at a price per Share equal to $29.00
(such option is referred to herein as the "TERMINATION OPTION"), in the form
set forth as Exhibit B hereto.
SECTION 8.3 Non-Survival of Representations, Warranties and Agreements. The
representations and warranties in this Agreement shall terminate at the
Effective Time or the termination of this Agreement pursuant to Section 8.1,
as the case may be. The covenants and agreements contained in this Agreement
shall survive the Effective Time or termination of this Agreement, as the case
may be, and shall continue until they terminate in accordance with their
terms.
SECTION 8.4 Waiver and Amendment. Subject to Section 1.5, any provision of
this Agreement may be waived at any time by the party that is, or whose
stockholders are, entitled to the benefits thereof. Subject to Section 1.5,
this Agreement may be amended or supplemented at any time, except that after
approval hereof by the stockholders of the Company, no amendment shall be made
which decreases the Merger Consideration or that in any other way materially
adversely affects the rights of such stockholders (other than a termination of
this Agreement) without the further approval of such stockholders. No such
waiver, amendment or supplement shall be effective unless in writing and
signed by the party or parties intended to be bound thereby.
SECTION 8.5 Entire Agreement. Except for the Confidentiality Agreement,
(which is hereby incorporated herein by this reference) and the Termination
Option, this Agreement (a) contains the entire agreement among Parent,
Purchaser and the Company with respect to the Offer, the Merger and the other
transactions contemplated hereby, and supersedes all prior agreements among
the parties with respect to such matters, and (b) is not intended to confer
upon any other persons any rights or remedies hereunder. The parties hereto
acknowledge that the Confidentiality Agreement remains in full force and
effect and is unmodified, except that paragraph 7 thereof is terminated and of
no further force or effect.
SECTION 8.6 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in that State, except to the extent
Massachusetts law is mandatorily applicable to the Merger.
SECTION 8.7 Headings. The descriptive headings contained herein are for
convenience and reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.8 Notices. All notices or other communications hereunder shall be
in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by facsimile, telegram, telex or other
standard form of telecommunications, or by registered or certified mail,
postage prepaid, return receipt requested addressed as follows:
If to the Company:
BBN Corporation
150 Cambridge Park Drive
Cambridge, MA 02140
Attention: General Counsel
Telecopy: (617) 873-3408
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<PAGE>
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: Robert Hayes
Telecopy: (617) 951-7050
If to Purchaser or Parent:
GTE Corporation
One Stamford Forum
Stamford, CT 06904
Attention: Senior Vice President
and General Counsel
Telecopy: (203) 965-3464
With a copy to:
O'Melveny & Myers LLP
153 East 53rd Street, 54th Floor
New York, NY l0066
Attn: Jeffrey J. Rosen, Esq.
Telecopy: (212) 326-2061
or to such other address as any party may have furnished to the other parties
in writing in accordance herewith.
SECTION 8.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one agreement.
SECTION 8.10 Parties in Interest; Assignment. This Agreement is binding upon
and is solely for the benefit of the parties and their respective successors,
legal representatives and assigns except that Section 6.9 shall be for the
express benefit of the persons in the categories referred to therein. Parent
and Purchaser shall have the right (i) to assign to one or more direct or
indirect wholly owned Subsidiaries of the Parent any and all rights and
obligations of Purchaser under this Agreement, including the right to
substitute in Purchaser's place such a Subsidiary as one of the constituent
corporations in the Merger (if such Purchaser assumes all of the obligations
of Purchaser in connection with the Merger), (ii) to transfer to one or more
direct or indirect wholly owned Subsidiaries of Parent the right to purchase
Shares tendered pursuant to the Offer and (iii) to restructure the transaction
to provide for the merger of the Company with and into Purchaser or any such
other corporation as provided above. If Parent or Purchaser exercise their
right to so restructure the transaction, the Company shall promptly enter into
appropriate agreements to reflect such restructuring. In any such event the
amounts to be paid to holders of Shares shall not be reduced nor shall there
be any material delay of the Effective Time.
SECTION 8.11 Specific Performance. The parties agree that irreparable damage
would occur if any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached. It is agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, in addition to any other remedy to which any party is entitled
at law or in equity.
SECTION 8.12 Certain Undertakings of Parent. Parent shall perform, or cause
to be performed, any obligation of Purchaser (or any successor person pursuant
to Section 8.10) under this Agreement which shall have been breached by
Purchaser (or such successor).
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SECTION 8.13 Interpretation. The words "hereof", "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references
are to the articles, sections, paragraphs, exhibits and schedules of this
Agreement unless otherwise specified. Whenever the words "include", "includes"
or "including" are used in this Agreement they shall be deemed to be followed
by the words "without limitation". The words describing the singular number
shall include the plural and vice versa, and words denoting any gender shall
include all genders and words denoting natural persons shall include
corporations and partnerships and vice versa. The phrase "to the best
knowledge of" or any similar phrase shall mean such facts and other
information which as of any date of determination are known to any vice
president, chief financial officer, controller, or any officer superior to any
of the foregoing, of the referenced party. The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to May 5, 1997. As used in this
Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule
12b-2 of the Exchange Act. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.
SECTION 8.14 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any Governmental Entity, the
remaining provisions of this Agreement to the extent permitted by Law shall
remain in full force and effect provided that the essential terms and
conditions of this Agreement for all parties remain valid, binding and
enforceable; provided that the economic and legal substance of the
transactions contemplated is not affected in any manner materially adverse to
any party. In the event of any such determination, the parties agree to
negotiate in good faith to modify this Agreement to fulfill as closely as
possible the original intents and purposes hereof. To the extent permitted by
Law, the parties hereby to the same extent waive any provision of Law that
renders any provision hereof prohibited or unenforceable in any respect.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
under seal as of the date first written above.
GTE CORPORATION
/s/ Kent B. Foster
By: _________________________________
Name: Kent B. Foster
Title: President
/s/ Marianne Drost
By: _________________________________
Name: Marianne Drost
Title: Secretary
GTE MASSACHUSETTS INCORPORATED
/s/ Robert C. Calafell
By: _________________________________
Name: Robert C. Calafell
President
/s/ James A. Attwood
By: _________________________________
Name: James A. Attwood
Treasurer
BBN CORPORATION
/s/ John Montjoy
By: _________________________________
Name: John Montjoy
Senior Vice President
/s/ Bruce Haskin
By: _________________________________
Name: Bruce Haskin
Treasurer
S-1
<PAGE>
EXHIBIT A
TO
AGREEMENT AND PLAN OF MERGER
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including without limitation, Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return Shares
promptly after termination or withdrawal of the Offer), pay for, or may delay
the acceptance for payment of or payment for, any tendered shares, or may, in
its sole discretion, terminate or amend the Offer as to any Shares not then
paid for, if (i) any applicable waiting period under the HSR Act shall not
have expired or been terminated, (ii) the number of Shares validly tendered
and not withdrawn when added to the Shares then beneficially owned by Parent
does not constitute two-thirds of the Shares then outstanding, or (iii) on or
after the date of this Agreement and at or before the time of payment for the
Shares, any of the following events shall occur and be continuing:
(a) there shall have occurred and be continuing (1) any general suspension
of trading in, or limitation on prices for, securities on the New York Stock
Exchange, Inc., (2) the declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States (whether or not
mandatory), (3) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States and having had or being reasonably likely to have a Material Adverse
Effect or would restrain, prohibit or delay beyond the Final Termination Date
the consummation of the Offer, (4) any limitation or proposed limitation
(whether or not mandatory) by any Governmental Entity, or any other event,
that materially adversely affects generally the extension of credit by banks
or other financial institutions, (5) from the date of this Agreement through
the date of termination or expiration of the Offer, a decline of at least 25%
in the Standard & Poor's 500 Index or (6) in the case of any of the situations
described in clauses (1) through (5) inclusive, existing at the date of this
Agreement, a material acceleration, escalation or worsening thereof;
(b) (i) the representations and warranties of the Company set forth in this
Agreement shall not have been true and correct in any material respect on the
date hereof or (ii) the representations and warranties of the Company set
forth in this Agreement shall not be true and correct in any respect as of the
scheduled expiration date (as such date may be extended) of the Offer as
though made on or as of such date or the Company shall have breached or failed
in any respect to perform or comply with any obligation, agreement or covenant
required by this Agreement to be performed or complied with by it except, in
each case with respect to clause (ii), (x) for changes specifically permitted
by this Agreement and (y) (A) for those representations and warranties that
address matters only as of a particular date which are true and correct as of
such date or (B) where the failure of representations and warranties (without
giving effect to any limitation based on "materiality," "Material Adverse
Effect" or words of similar effect set forth therein) to be true and correct,
or the performance or compliance with such obligations, agreements or
covenants, would not in the aggregate reasonably be expected to have a
Material Adverse Effect;
(c) there shall be any action or proceeding commenced by or before, or
threatened in writing by, any Governmental Entity, which has a reasonable
likelihood of success and which, if decided adversely to the Company, would
have a Material Adverse Effect or would restrain, prohibit or delay beyond the
Final Termination Date the consummation of the Offer, and if decided adversely
to Parent, would have the effect of (i) making the purchase of, or payment
for, some or all of the Shares pursuant to the Offer or the Merger or
otherwise illegal, or resulting in a material delay in the ability of Parent
or Purchaser to accept for payment or pay for some or all of the Shares, (ii)
compelling Parent or Purchaser to dispose of or hold separately all or any
material portion of the Company's or Parent's business or assets, (iii) making
illegal, or otherwise directly or indirectly restraining or prohibiting or
A-1
<PAGE>
imposing material financial burdens, penalties or, fines or requiring the
payment of material damages in connection with the making of, the Offer, the
acceptance for payment of, payment for, or ownership, directly or indirectly,
of some of or all the Shares by Parent or Purchaser, the consummation of the
Offer or the Merger, (iv) otherwise preventing consummation of the Offer or
the Merger, or (v) imposing limitations on the ability of Parent or Purchaser
effectively (A) to acquire, hold or operate the business of the Company and
its Subsidiaries taken as a whole or (B) to exercise full rights of ownership
of the Shares acquired by it, including, but not limited to, the right to vote
the Shares purchased by it on all matters properly presented to the
stockholders of the Company, which, in either case, would effect a material
diminution in the value of the Company or the Shares;
(d) there shall been any Law enacted, promulgated, entered or deemed
applicable to the Offer or the Agreement or any other action shall have been
taken or threatened in writing, by any Governmental Entity on or after the
date of the Offer that would reasonably be expected to, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (v) of paragraph (c) above;
(e) the Board of Directors of the Company shall have publicly (including by
amendment of its Schedule 14D-9) withdrawn or adversely modified its
recommendation of acceptance of the Offer; or
(f) since the date hereof, there shall have occurred any event or events
that, singly or in the aggregate, have had or would reasonably be expected to
have a Material Adverse Effect; or
(g) the Agreement shall have been terminated in accordance with its terms,
or Parent or Purchaser shall have reached an agreement or understanding in
writing with the Company providing for termination or amendment of the Offer;
which, in any such case, and regardless of the circumstances (including any
action or inaction by Parent or Purchaser) giving rise to any such conditions,
makes it in the sole discretion of Parent inadvisable to proceed with the
Offer and/or with such acceptance for payment of or payment for the Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
giving rise to any such condition and may be waived by Parent or Purchaser, in
whole or in part, at any time and from time to time, in the sole discretion of
Parent or Purchaser. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right
and each right will be deemed an ongoing right which may be asserted at any
time and from time to time.
A-2
<PAGE>
EXHIBIT B
TO
AGREEMENT AND PLAN OF MERGER
FORM OF TERMINATION OPTION
B-1
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EXHIBIT (C)(2)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 5, 1997, by and between BBN
Corporation, a Massachusetts corporation (the "COMPANY"), and GTE Corporation,
a New York corporation ("PARENT").
WHEREAS, as a condition to its willingness to enter into the Agreement and
Plan of Merger, dated as of May 5, 1997 (the "MERGER AGREEMENT"; capitalized
terms used herein without definition shall have the meanings set forth in the
Merger Agreement), among the Company, Parent and GTE Massachusetts
Incorporated, a Massachusetts corporation ("PURCHASER"), Parent has required
that the Company agree, and the Company has agreed, to grant Parent the option
as set forth herein to purchase up to 4,225,000 (subject to adjustment as set
forth herein) shares of Common Stock, $1.00 par value of the Company (the
"COMPANY COMMON STOCK").
NOW, THEREFORE, to induce Parent to enter into the Merger Agreement and in
consideration of the Merger Agreement and of the mutual covenants and
agreements set forth herein, the parties agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
the Company hereby grants to Parent an irrevocable option (the "OPTION") to
purchase up to 4,225,000 (subject to adjustment as set forth herein) shares of
Company Common Stock (the "OPTION SHARES") at a purchase price of $29 (subject
to adjustment as set forth herein) per Option Share (the "PURCHASE PRICE").
2. Exercise of Option. (a) Parent may exercise the Option, with respect to
all or any part of the Option Shares at any one time, subject to the
provisions of Section 2(c), after the occurrence of any event as a result of
which Parent is entitled to receive the Termination Fee pursuant to Section
8.2(b) of the Merger Agreement (a "PURCHASE EVENT"); provided, however, that
(i) except as provided in the last sentence of this Section 2(a), the Option
will terminate and be of no further force and effect upon the earliest to
occur of (A) the Effective Time, (B) 9 months after the first occurrence of a
Purchase Event described in clauses (i) or (ii) of Section 8.2(b) of the
Merger Agreement, (C) termination of the Merger Agreement in accordance with
its terms prior to the occurrence of a Purchase Event, unless, in the case of
clause (C), Parent has, or upon the occurrence of certain events would have,
the right to receive the Termination Fee under clause (iii) of Section 8.2(b)
following such termination, in which case the Option will not terminate until
the later of (x) six months following the time such Termination Fee becomes
payable and (y) the expiration of the period in which Parent has or may have
such right to receive the Termination Fee, and (D) when the aggregate amount
paid by the Company under Section 6 and in connection with the Termination Fee
equals or exceeds $21,231,000 and (ii) any purchase of Option Shares upon
exercise of the Option will be subject to compliance with the HSR Act and the
obtaining or making of any consents, approvals, orders, notifications or
authorizations, the failure of which to have obtained or made would have the
effect of making the issuance of Option Shares illegal (the "REGULATORY
APPROVALS"). Notwithstanding the termination of the Option, Parent will be
entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option and
the termination of the Option will not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such termination.
(b) In the event that Parent wishes to exercise the Option, it will send to
the Company a written notice (an "EXERCISE NOTICE"; the date of which being
herein referred to as the "NOTICE DATE") to that effect, which Exercise Notice
also specifies the number of Option Shares, if any, Parent wishes to purchase
pursuant to this Section 2(b), the number of Option Shares, if any, with
respect to which Parent wishes to exercise its Cash-Out Right (as defined
herein) pursuant to Section 6(c), and a date not earlier than three business
days nor later than 20 business days from the Notice Date for the closing of
such purchase (an "OPTION CLOSING"; the date of which being referred to as the
"OPTION CLOSING DATE"). Any Option Closing will be at an agreed location and
time in New York, New York on
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the applicable Option Closing Date or at such later date as may be necessary
so as to comply with clause (ii) of Section 2(a).
(c) Notwithstanding anything to the contrary contained herein, any exercise
of the Option and purchase of Option Shares shall be subject to compliance
with applicable laws and regulations, which may prohibit the purchase of all
the Option Shares specified in the Exercise Notice without first obtaining or
making certain Regulatory Approvals. Notwithstanding anything in Section 2(a)
hereof to the contrary, in such event, if the Option is otherwise exercisable
and Parent wishes to exercise the number of Option Shares specified in the
Exercise Notice that Parent is then permitted to acquire under the applicable
laws and regulations, and if Parent thereafter obtains the Regulatory
Approvals to acquire the remaining balance of the Option Shares specified in
the Exercise Notice, then Parent shall be entitled to acquire such remaining
balance. The Company agrees to use its reasonable best efforts to assist
Parent in seeking the Regulatory Approvals.
In the event (i) Parent receives official notice that a Regulatory Approval
required for the purchase of any Option Shares will not be issued or granted,
(ii) such Regulatory Approval has not been issued or granted within six months
of the date of the Exercise Notice, or (iii) Parent in its sole discretion
shall so elect, Parent shall have the right to exercise its Cash-Out Right
pursuant to Section 6(c) with respect to the Option Shares for which such
Regulatory Approval will not be issued or granted or has not been issued or
granted.
3. Payment and Delivery of Certificates. (a) At any Option Closing, Parent
will pay to the Company in immediately available funds by wire transfer to a
bank account designated in writing by the Company an amount equal to the
Purchase Price multiplied by the number of Option Shares to be purchased at
such Option Closing.
(b) At any Option Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), the Company will deliver to
Parent a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear
of all Liens of any kind whatsoever except as may generally obtain under
applicable securities laws. If at the time of issuance of Option Shares
pursuant to an exercise of the Option hereunder, any rights shall be
outstanding under the Company's shareholder rights plan, then each Option
Share issued pursuant to such exercise will also represent such a
corresponding right with terms substantially the same as and at least as
favorable to Parent as are provided under any shareholders rights agreement or
similar agreement relating to the Company or Company Common Stock then in
effect.
(c) Certificates for the Option Shares delivered at an Option Closing will
have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
It is understood and agreed that the reference to restrictions arising under
the Securities Act of 1933, as amended, together with any regulations
promulgated thereunder (the "SECURITIES ACT") in the above legend will be
removed by delivery of substitute certificate(s) without such reference if
such Option Shares have been registered pursuant to the Securities Act, such
Option Shares have been sold in reliance on and in accordance with Rule 144
under the Securities Act or Parent has delivered to the Company a copy of a
letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to the Company, to the effect that such
legend is not required for purposes of the Securities Act.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent as follows:
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(a) The Company has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from the
date hereof until the obligation to deliver Option Shares upon the exercise of
the Option terminates, shall have reserved for issuance, upon exercise of the
Option, shares of Company Common Stock necessary for Parent to exercise the
Option, and will take all necessary corporate action to authorize and reserve
for issuance all additional shares of Company Common Stock or other securities
which may be issued pursuant to Section 6 upon exercise of the Option. The
Option Shares have been duly authorized and all additional shares of Company
Common Stock or other securities which may be issuable pursuant to Section 6
upon exercise of the Option, upon issuance pursuant hereto, will be duly and
validly issued, fully paid and nonassessable, and will be delivered free and
clear of all Liens of any kind or nature whatsoever except as may generally
obtain under applicable securities laws, including without limitation any
preemptive rights of any stock holder of the Company.
(b) The Company is a corporation duly organized and validly existing in good
standing under the laws of the Commonwealth of Massachusetts. The Company has
all requisite corporate power and authority to enter into and perform all of
its obligations under this Agreement. The execution, delivery and performance
of this Agreement and all the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or any of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by a duly authorized officer of the Company,
and constitutes a legal, valid and binding agreement of the Company, and
assuming this Agreement is a legal, valid and binding obligation of Parent,
this Agreement is enforceable against it in accordance with its terms, except
as (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the courts before which any
proceedings thereafter may be brought.
(c) The Company has taken all necessary corporate action to authorize and
reserve for issuance upon exercise of the Option 4,225,000 authorized but
unissued shares of Company Common Stock.
(d) No consent of any court or governmental authority is necessary for the
execution, delivery and performance of this Agreement by the Company.
(e) The execution and delivery of this Agreement do not, and the performance
of this Agreement will not (i) violate the articles of organization or by-laws
of the Company, or (ii) conflict with or result in a breach of any terms or
provisions of, or constitute a default or give rise to a right of acceleration
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company under any Material
Contract or any existing applicable Law or any rule or regulation of any
national securities exchange having jurisdiction over the Company or any of
its property.
(f) The representations and warranties set forth in Section 4.2 of the
Merger Agreement are true and correct.
5. Representations and Warranties of Parent. Parent hereby represents and
warrants to the Company that the Option is being acquired for investment
purposes only, any Option Shares acquired by Parent upon exercise will be
acquired for investment purposes only, and the Options and any Option Shares
or other securities acquired by Parent upon exercise of the option will not be
transferred or otherwise disposed of except in a transaction registered, or
exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any
change in Company Common Stock by reason of a stock dividend, split-up,
merger, recapitalization, combination, exchange of shares, distribution of
assets or similar transaction, the type and number of shares or
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securities subject to the Option, and the Purchase Price thereof, will be
adjusted appropriately, and proper provision will be made in the agreements
governing such transaction, so that Parent will receive upon exercise of the
Option the number and class of shares or other securities or property that
Parent would have received in respect of Company Common Stock (after giving
effect to such event) if the Option had been exercised immediately prior to
such event or the record date therefor, as applicable. Subject to Section 1,
and without limiting the parties' relative rights and obligations under the
Merger Agreement, if any additional shares of Company Common Stock are issued
after the date of this Agreement (other than pursuant to an event described in
the first sentence of this Section 6(a)), the number of shares of Company
Common Stock subject to the Option will be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Company Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option, and the Purchase Price thereof will be adjusted
appropriately. The Company shall provide notice to Parent as soon as possible
of any event requiring an adjustment under this clause (a).
(b) Without limiting the parties' relative rights and obligations under the
Merger Agreement, in the event that the Company enters into an agreement (i)
to consolidate with or merge into any Person, other than Parent or one of its
Subsidiaries and the Company will not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any Person, other
than Parent or one of its Subsidiaries, to merge into the Company and the
Company will be the continuing or surviving corporation, but in connection
with such merger, the shares of Company Common Stock outstanding immediately
prior to the consummation of such merger will be changed into or exchanged for
stock or other securities of the Company or any other Person or cash or any
other property, or the shares of Company Common Stock outstanding immediately
prior to the consummation of such merger will, after such merger, represent
less than 50% of the outstanding voting securities of the merged company, or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any Person, other than Parent or one of its Subsidiaries, then, and in each
such case, notice of such transaction will be provided as soon as possible to
Parent by the Company, and the agreement governing such transaction will make
proper provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option with identical terms appropriately adjusted
to acquire the number and class of shares or other securities or property that
Parent would have received in respect of Company Common Stock in connection
with such transaction if the Option had been exercised immediately prior to
such consolidation, merger, sale or transfer, or the record date therefor, as
applicable and make any other necessary adjustments so that the holders of the
Option may benefit fully from such transaction.
(c) If, at any time during the period commencing on a Purchase Event and
ending on the termination of the Option in accordance with Section 2, Parent
sends to the Company an Exercise Notice indicating Parent's election to
exercise its right (the "CASH-OUT RIGHT") pursuant to this Section 6(c), then
the Company shall pay to Parent, on the Option Closing Date, in exchange for
the cancellation of the Option with respect to such number of Option Shares as
Parent specifies in the Exercise Notice, an amount in cash equal to such
number of Option Shares multiplied by the difference between (i) the average
closing price, for the 10 New York Stock Exchange ("NYSE") trading days
commencing on the 12th NYSE trading day immediately preceding the Notice Date
(or, at the election of Parent, the date of the Purchase Event in the event
the Option has become exercisable and is subject to termination under clause
(C) of Section 2(a)(i)), per share of Company Common Stock as reported on the
NYSE Composite Transaction Tape (or, if not listed on the NYSE, as reported on
any other national securities exchange or national securities quotation system
on which Company Common Stock is listed or quoted, as reported in The Wall
Street Journal (Northeast edition), or, if not reported thereby, any other
authoritative source) (the "CLOSING PRICE") and (ii) the Purchase Price. The
amount of cash that the Company will be obligated to pay under this Section 6,
when added to the Termination Fee, shall not exceed in the aggregate
$21,231,000. Notwithstanding the termination of the Option, Parent will be
entitled to exercise its rights under this Section 6(c) if it has exercised
such rights in accordance with the terms hereof prior to the termination of
the Option.
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7. Registration Rights. The Company will, if requested by Parent at any time
and from time to time within two years of the exercise of the Option, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have
been acquired by or are issuable to Parent upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Parent, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and the Company will use its best
efforts to qualify such shares or other securities under any applicable state
securities laws. The Company will use reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers
of other parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 180 calendar days from
the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The obligations
of the Company hereunder to file a registration statement and to maintain its
effectiveness may be suspended for up to 60 calendar days in the aggregate if
the Board of Directors of the Company shall have determined that the filing of
such registration statement or the maintenance of its effectiveness would
require premature disclosure of material non-public information that would
materially and adversely affect the Company or otherwise interfere with or
adversely affect any pending or proposed offering of securities of the Company
or any other material transaction involving the Company. Any registration
statement prepared and filed under this Section 7, and any sale covered
thereby, will be at the Company's expense except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of Parent's counsel
related thereto. Parent will provide all information reasonably requested by
the Company for inclusion in any registration statement to be filed hereunder.
If, during the time periods referred to in the first sentence of this Section
7, the Company effects a registration under the Securities Act of Company
Common Stock for its own account or for any other stockholders of the Company
(other than on Form S-4 or Form S-8, or any successor form), it will allow
Parent the right to participate in such registration, and such participation
will not affect the obligation of the Company to effect demand registration
statements for Parent under this Section 7; provided that, if the managing
underwriters of such offering advise the Company in writing that in their
opinion the number of shares of Company Common Stock requested to be included
in such registration exceeds the number which can be sold in such offering,
the Company will include the shares requested to be included therein by Parent
pro rata with the shares intended to be included therein by the Company. In
connection with any registration pursuant to this Section 7, the Company and
Parent will provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification, and
contribution in connection with such registration.
8. Transfers. The Option Shares may not be sold, assigned, transferred, or
otherwise disposed of except (i) in an underwritten public offering as
provided in Section 7 or (ii) pursuant to an exemption from the registration
requirements under the Securities Act.
9. Listing. If Company Common Stock or any other securities to be acquired
upon exercise of the Option are then listed on the NYSE (or any other national
securities exchange or national securities quotation system), the Company,
upon the request of Parent, will promptly file an application to list the
Company Common Stock or other securities to be acquired upon exercise of the
Option on the NYSE (and any such other national securities exchange or
national securities quotation system) and will use reasonable efforts to
obtain approval of such listing as promptly as practicable.
10. Loss or Mutilation. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new Agreement
of like tenor and the date. Any such new Agreement executed and delivered will
constitute an additional contractual obligation on the part of the Company,
whether or not the Agreement so lost, stolen, destroyed, or mutilated shall at
any time be enforceable by anyone.
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11. Miscellaneous. (a) Expenses. Except as otherwise expressly provided
herein, each of the parties hereto will bear and pay all costs and expenses
incurred by to or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
(b) Amendment. This Agreement may not be amended, except by an instrument in
writing signed on behalf of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York regardless of the laws that
might otherwise govern under applicable principles of conflict of the laws
thereof.
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (and shall be deemed to
have been duly received if so given) if personally delivered or sent by
telegram, cable, or telex, or by registered or certified mail, postage
prepaid, addressed to the respective parties as set forth in Section 8.7 of
the Merger Agreement.
(f) Assignment. None of this Agreement, the Option or any of the rights,
interests, or obligations under this Agreement may be assigned or delegated,
in whole or in part, by operation of law or otherwise, by either party without
the prior written consent of the other party except that Parent may assign its
rights to any of its Subsidiaries. Any assignment or delegation in violation
of the preceding sentence will be void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
(g) Further Assurances. In the event of any exercise of the Option by
Parent, the Company and Parent will execute and deliver all other documents
and instruments and take all other actions that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(h) Enforcement. The parties agree that irreparable damage would occur and
that the parties would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties will be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of competent jurisdiction, the
foregoing being in addition to any other remedy to which they are entitled at
law or in equity.
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IN WITNESS WHEREOF, the Company and Parent caused this Agreement to be
signed by their respective officers thereunto authorized as of the date first
written above.
GTE CORPORATION
/s/ Kent B. Foster
By___________________________________
Name: Kent B. Foster
Title: President
/s/ Marianne Drost
By___________________________________
Name: Marianne Drost
Title: Secretary
BBN CORPORATION
/s/ John Montjoy
By___________________________________
Name: John Montjoy
Title: Senior Vice President
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EXHIBIT (C)(3)
April 26, 1997
[Letterhead of BBN Corporation]
GTE Corporation
1 Stamford Forum
Stamford, CT 06901-3516
CONFIDENTIALITY AGREEMENT
Ladies and Gentlemen:
In connection with your possible interest in a transaction (the
"Transaction") involving BBN Corporation (the "Company"), it is likely that
technical and financial information and other information of a confidential or
proprietary nature will be disclosed by both parties, their respective
subsidiaries and affiliates. All such information (whether written or oral)
furnished by either party's directors, officers, employees, affiliates,
representatives, (including, without limitation, financial advisors, attorneys
and accountants) or agents (collectively, "Representatives") to the other
party and all analyses, compilations, forecasts, studies, or other documents
prepared by either party or its Representatives in connection with its or
their review of, or its interest in, the Transaction which contain or reflect
any such information is hereinafter referred to as the "Information". The term
Information will not, however, include information which (i) is or becomes
publicly available other than as a result of a disclosure by the receiving
party or its Representatives or (ii) is or becomes available to the receiving
party on a nonconditional basis from a source (other than the disclosing party
or its Representatives) which, to the best of the receiving party's knowledge
after due inquiry, is not prohibited from disclosing such information to the
receiving party by a legal, contractual, or fiduciary obligation.
Accordingly, it is hereby agreed:
1. Each party and its Representatives (i) will keep the Information received
from the other party confidential and will not (except as required by
applicable law, regulation, or legal process, and only after compliance with
paragraph 3 below), without the prior written consent of the disclosing party,
disclose any Information in any manner whatsoever, and (ii) will not use any
Information other than in connection with the evaluation of a Transaction;
provided, however, that the receiving party may reveal the Information to its
Representatives (a) who need to know the Information for the purpose of
evaluating the Transaction, (b) who are informed by the receiving party of the
confidential nature of the Information, and (c) who agree to act in accordance
with the terms of this letter agreement. Each party will cause its
Representatives to observe the terms of this letter agreement, and each party
will be responsible for any breach of this letter agreement by any of its
Representatives.
2. Each party and its Representatives will not (except as required by
applicable law, regulation, or legal process), without the prior written
consent of the other party, disclose to any person the fact that the
Information exists or has been made available, that the parties are or
negotiations are taking or have taken place concerning the Transaction or
involving the Company or any term, condition, or other fact relating to the
Transaction or such discussions or negotiations, including, without
limitation, the status thereof.
3. In the event that either party or any of their Representatives is
requested pursuant to, or required by, applicable law, regulation or legal
process to disclose any of the Information, that party will notify the other
promptly so that it may seek a protective order or other appropriate remedy
or, in its sole discretion, waive compliance with the terms of this letter
agreement.
4. If either party determines not to proceed with the Transaction, that
party will promptly inform the other party of that decision and, in that case,
and at any time upon the request of either party or any of their
Representatives, the party having such Information will, at its option, either
(i) promptly destroy all copies of the written Information in their or their
Representatives' possession and confirm such destruction to the other party in
writing, or (ii) promptly deliver to the other party all copies of the written
Information in its or its Representatives' possession. All Information,
including any oral Information will continue to be subject to the terms of
this letter agreement.
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5. The parties acknowledge that neither party or its Representatives, nor
any of their respective officers, directors, employees, agents, or controlling
persons within the meaning of Section 20 of the Securities Exchange Act of
1934, as amended, makes any express or implied representation or warranty as
to the accuracy or completeness of the Information, and the parties or
omissions therefrom. The parties further agree that they are not entitled to
rely on the accuracy or completeness of the Information and that they will be
entitled to rely solely on such representations and warranties as may be
included in any definitive agreement with respect to the Transaction, subject
to such limitations and restrictions as may be contained therein.
6. Each party is aware, and will advise its Representatives who are informed
of the matters that are the subject of this letter agreement, of the
restrictions imposed by the United States securities laws on the purchase or
sale of securities by any person who has received material, non-public
information from the issuer of such securities and on the communication of
such Information to any other person when it is reasonably foreseeable that
such other person is likely to purchase or sell such securities in reliance
upon such Information.
7. Each party will not for one year from the date hereof, directly or
indirectly, unless specifically requested or approved in writing in advance by
an executive officer of the Board of Directors of the other party, which
approval, in the case of subparagraph (i) below, shall not be unreasonably
withheld or delayed (in either case such other party being referred to for
purposes of this paragraph as the "Other Party"):
(i) acquire or agree, offer, seek, or propose to acquire (or request
permission to do so), ownership (including, but not limited to, beneficial
ownership as defined in Rule 13d-3 under the Exchange Act) of substantially
all of the Other Party's assets or businesses or in excess of 5% of the
outstanding voting securities issued by the Other Party, or any rights or
options to acquire such ownership (including from a third party), or
(ii) directly or indirectly solicit or try to induce any employee of the
Other Party to leave that employment, or agree to employ or to employ
anyone who is at the time of such action, or was within the three month
period prior thereto, an employee of the Other Party or any of its
subsidiaries.
Notwithstanding the foregoing, (a) the terms of the above subparagraph (i)
shall be null and void (A) upon the execution of a contract between the
parties hereto with respect to the Transaction or (B) in the event the Other
Party fails to negotiate in good faith with respect to the Transaction and any
agreement pertaining thereto or (C) if another person engages in any activity
(or comparable activity) in which a party would be precluded from engaging by
reason of this letter agreement or otherwise, or if another person proposes or
announces an intention to engage in such activity (or comparable activity),
and (b) the terms of the above subparagraph (i) shall not be applicable to the
purchase and sale of any securities of either party by independent third-party
managers of pension or other employee benefit plans who have not received any
of the Information and who are acting as passive investors.
8. The parties acknowledge that remedies at law may be inadequate to protect
against any actual or threatened breach of this letter agreement by either
party or by its Representatives, and, without prejudice to any rights and
remedies otherwise available to the non-breaching party, the breaching party
agrees to the granting of injunctive relief in favor of the non-breaching
party without proof of actual damages.
9. No failure or delay by a party in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
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10. This letter agreement will be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts applicable to contracts
between residents of that state and executed in and to be performed in that
state.
11. This letter agreement contains the entire agreement between you and us
concerning the confidentiality of the Information, and no modifications of
this letter agreement or waiver of the terms and conditions hereof will be
binding upon you or us, unless approved in writing by each of you and us.
Please confirm your agreement with the foregoing by signing and returning to
the undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
BBN CORPORATION
/s/ John Montjoy
By: _________________________________
John Montjoy
Name: _______________________________
Senior Vice President
Title: ______________________________
Accepted and Agreed as of the
date first written above:
GTE CORPORATION
/s/ Marianne Drost
By: _________________________________
Marianne Drost
Name: _______________________________
Secretary
Title: ______________________________
3
