File No. 333-14235
As filed with the Securities and Exchange Commission on November 26, 1996.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ELECTROMAGNETIC SCIENCES, INC.
(Exact name of issuer as specified in its charter)
Georgia 3665 58-1035424
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(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
660 Engineering Drive
Norcross, Georgia 30092
(770) 263-9200
(Address, including zip code, and telephone number, including area code, of
issuer's principal executive offices)
William S. Jacobs
Vice President and General Counsel
660 Engineering Drive
Norcross, Georgia 30092
(770) 263-9200, ext. 4214
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
Michael H. Trotter, Esquire
KILPATRICK & CODY, L.L.P.
1100 Peachtree Street, Atlanta, Georgia 30309-4530
Telephone: (404) 815-6500
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Approximate date of commencement of proposed sale to the public:
November 27, 1996
Title of each class of securities to be registered: Common Stock, par
value $.10 per share.
Amount to be Registered: 773,583 shares*
Proposed Maximum Offering Price per Unit: $15.667*
Proposed Maximum Aggregate Offering Price: $12,119,725*
Amount of registration fee: $4,179.22*
Title of each class of securities to be registered: Common Stock, par
value $.10 per share.
Amount to be Registered: 20,000 shares
Proposed Maximum Offering Price per Unit: $16.00**
Proposed Maximum Aggregate Offering Price: $320,000**
Amount of registration fee: $110.34
* The filing fee of $4,179.22 on the original 773,583 shares was previously
paid upon the original filing of this Registration Statement.
** Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(f). Calculated on the basis of $12.00 per share, the
average of the high and low sale prices of the Common Stock of LXE Inc.
(constituting the securities to be received by the Registrant in the
transaction) reported on the NASDAQ National Market System on November 19,
1996, and an exchange ratio of .75 shares of Common Stock of the Registrant
for each share of Common Stock of LXE Inc.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Cross Reference Sheet
Pursuant to Item 501(b) of Regulation S-K, showing the location
in the Offering Circular/Prospectus
of the information required by Part I of Form S-4.
Item Number and Caption Location or Caption in Offering
in Form S-4 Circular/Prospectus
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A. Information About the
Transaction.
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1 Forepart of the Registra- Cover Page of Registration
tion Statement and Outside Statement; Cross Reference
Front Cover Page of Sheet; Outside Front Cover Page
Prospectus of Offering Circular/Prospectus
2 Inside Front and Outside Inside Front Cover Page of
Back Cover Pages of Offering Circular/Prospectus;
Prospectus Table of Contents; Available
Information; Incorporation of
Documents by Reference; Outside
Back Cover Page of Offering
Circular/Prospectus
3 Risk Factors, Ratio of Summary; Selected Historical
Earnings to Fixed Charges Financial Data; Summary Pro
and Other Information. Forma Financial Data;
Comparison of Certain Unaudited
Per Share Data
4 Terms of the Transaction Summary; The Exchange Offer;
Description of Capital Stock of
ELMG; Description of Capital
Stock of LXE; Comparison of
ELMG Shares and LXE Shares
5 Pro Forma Financial Summary; Pro Forma
Information Consolidated Financial
Information -- Unaudited
6 Material Contacts with Summary; The Exchange Offer;
the Company Being Acquired Certain Relationships and
Related Transactions
7 Additional Information Not Applicable
Required for Reoffering
by Persons and Parties
Deemed to be Underwriters
8 Interests of Named Experts Legal Matters; Experts
and Counsel
9 Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act
Liabilities
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B. Information About the
Registrant.
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10 Information With Respect to Summary; Available Information;
S-3 Registrants Incorporation of Documents by
Reference; Information about
ELMG.
11 Incorporation of Certain Incorporation of Documents
Information by Reference by Reference
12 Information With Respect Not Applicable
to S-2 or S-3 Registrants
13 Incorporation of Certain Not Applicable
Information by Reference
14 Information With Respect Not Applicable
to Registrants Other Than
S-2 or S-3 Registrants
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C. Information About the
Company Being Acquired.
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15 Information With Respect to Not Applicable
S-3 Companies
16 Information With Respect to Summary; Available Information;
S-2 or S-3 Companies Incorporation of Documents by
Reference; Information about
LXE INC.
17 Information With Respect to Not Applicable
Companies Other Than S-2 or
S-3 Companies
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D. Voting and Management
Information.
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18 Information if Proxies, Not Applicable
Consents or Other
Authorizations are to be
Solicited
19 Information if Proxies, The Exchange Offer; Certain
Consents or Other Relationships and Related
Authorizations are not to Transactions; Security
be Solicited or in an Ownership; Available
Exchange Offer Information; Incorporation of
Documents by Reference
OFFERING CIRCULAR/PROSPECTUS
Offer by
ELECTROMAGNETIC SCIENCES, INC.
for all outstanding Shares of Common Stock of
LXE INC.
on the basis of .75
ELMG Shares for each LXE Share
Electromagnetic Sciences, Inc. ("ELMG.") hereby offers, upon
the terms and subject to the conditions set forth herein and in
the related Letter of Transmittal (collectively, the "Exchange
Offer"), to exchange shares of common stock, par value $.10 per
share, of Electromagnetic Sciences, Inc. ("ELMG Shares") for all
outstanding shares of common stock ("LXE Shares"), par value $.01
per share, of LXE Inc. ("LXE") not already owned by ELMG, at an
exchange ratio of .75 ELMG Shares for each LXE Share. The
Exchange Offer is subject to certain conditions as set forth
under "THE EXCHANGE OFFER -- Certain Conditions of the Exchange
Offer," including the conditions, which cannot be waived, that on
or before the date on which the Exchange Offer expires (the
"Expiration Date"), ELMG's shareholders approve the issuance of
ELMG Shares in the Exchange Offer and Merger described below, and
that ELMG receive tenders of a sufficient number of LXE Shares to
increase its ownership of LXE Shares to at least 90% of those
outstanding. Both ELMG Shares and LXE Shares are traded on the
NASDAQ National Market System ("NASDAQ"). On November 25, 1996,
the last reported sale price per ELMG Share as quoted on NASDAQ
was $21-1/8 and the last reported sale price per LXE Share as
quoted on NASDAQ was $15.00.
If ELMG accepts LXE Shares under the Exchange Offer, it
will immediately thereafter, and without further action by the
board of directors of LXE (the "LXE Board"), the shareholders of
ELMG or other shareholders of LXE, cause LXE to merge with a
wholly owned subsidiary of ELMG. If such merger is effected,
shareholders of LXE would receive ELMG Shares on the same basis
as in the Exchange Offer. Any such merger is referred to herein
as the "Merger" and, together with the Exchange Offer, the
"Transaction." This Offering Circular/Prospectus also
constitutes the prospectus with respect to the ELMG Shares
issuable in the Merger.
Questions and requests for assistance or additional copies
of this Offering Circular/Prospectus and the Letter of
Transmittal may be directed to the Information Agent at its
address and telephone number set forth on the back cover of this
Offering Circular/Prospectus.
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THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, ATLANTA TIME, ON December 30, 1996, UNLESS THE EXCHANGE
OFFER IS EXTENDED.
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THE SECURITIES TO WHICH THIS OFFERING CIRCULAR/PROSPECTUS RELATES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING
CIRCULAR/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Offering Circular/Prospectus
is November 27, 1996
The Dealer Manager for the Exchange Offer is:
Oppenheimer & Co., Inc.
<PAGE>
IMPORTANT
Any LXE shareholder desiring to tender shares either should
(i) complete and sign the Letter of Transmittal (or facsimile
thereof) in accordance with the instructions in the Letter of
Transmittal and deliver it with such shares and all other
required documents to the Exchange Agent, or (ii) request such
shareholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such shareholder. An
LXE shareholder having shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must
contact such person if such shareholder desires to tender such
shares.
Any LXE shareholder who desires to tender shares and cannot
deliver such shares and all other required documents to the
Exchange Agent by the expiration of the Exchange Offer must
tender such shares pursuant to the guaranteed delivery procedure
set forth under "THE EXCHANGE OFFER -- Procedure for Tendering
LXE Shares."
No person has been authorized to give any information or to
make any representation not contained in this Offering
Circular/Prospectus with respect to the transactions contemplated
hereby, and, if given or made, such information or representation
should not be relied upon as having been authorized. The
delivery of this Offering Circular/Prospectus does not constitute
an offer to sell, or the solicitation of an offer to purchase,
the securities offered hereby where such offer or solicitation
would be unlawful. Neither the delivery of this Offering
Circular/Prospectus nor the issuance of any securities hereunder
shall under any circumstances create any implication that there
has been no change in the affairs of either LXE or ELMG since the
date as of which information is furnished or the date hereof.
In accordance with various state securities laws applicable
to the Exchange Offer which require the Exchange Offer to be made
to the public by a licensed broker or dealer, the Exchange Offer
hereby is made to LXE shareholders residing in each such state by
Oppenheimer & Co., Inc. ("Oppenheimer"), as Dealer Manager, on
behalf of ELMG.
THIS OFFERING CIRCULAR/PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
THESE DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE
INFORMATION INCORPORATED HEREIN) ARE AVAILABLE WITHOUT CHARGE,
UPON ORAL OR WRITTEN REQUEST BY ANY PERSON RECEIVING THIS
OFFERING CIRCULAR/PROSPECTUS TO WILLIAM S. JACOBS, SECRETARY,
ELECTROMAGNETIC SCIENCES, INC., 660 ENGINEERING DRIVE, NORCROSS,
GEORGIA 30092, (770) 263-9200. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY December
19, 1996.
TABLE OF CONTENTS
AVAILABLE INFORMATION
SUMMARY
ELMG
LXE
Background; Purpose of the Exchange Offer
The Exchange Offer
Selected Historical Financial Data
Summary Pro Forma Financial Data -- Unaudited
MARKETS FOR THE ELMG AND LXE SHARES
Comparative Market Prices
Condition of the Market for the LXE Shares
THE EXCHANGE OFFER
Background
Purpose of the Exchange Offer and Merger
Determination of the Exchange Ratio
Financial Advisor
Interests of Certain Persons in the Exchange Offer and
Merger
Terms of the Exchange Offer
Conversion of LXE Options
Procedure for Tendering LXE Shares
Exchange of LXE Shares
Withdrawal Rights
Extension of Tender Period; Termination; Amendment
Certain Conditions of the Exchange Offer
Approval by ELMG's Shareholders
Certain Federal Income Tax Consequences
Effects of the Exchange Offer and Merger
Fees and Expenses
Source of Funds
Regulatory Approvals
Miscellaneous
INFORMATION ABOUT LXE
INFORMATION ABOUT ELMG
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SECURITY OWNERSHIP
LACK OF DISSENTERS' RIGHTS OF LXE AND ELMG SHAREHOLDERS
DESCRIPTION OF CAPITAL STOCK OF ELMG
Antitakeover Provisions
Miscellaneous
DESCRIPTION OF CAPITAL STOCK OF LXE; COMPARISON
OF ELMG SHARES AND LXE SHARES
LXE Capital Stock
Comparison
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION -- UNAUDITED
ELMG Pro Forma Consolidated Condensed Balance
Sheet -- Unaudited (September 30, 1996)
ELMG Pro Forma Consolidated Statement of
Income -- Unaudited (Nine Months Ended September 30, 1996)
ELMG Pro Forma Consolidated Condensed Statement
of Income -- Unaudited (Year Ended December 31, 1995)
LEGAL MATTERS
EXPERTS
SCHEDULE I -- DIRECTORS AND EXECUTIVE OFFICERS OF ELMG
<PAGE>
AVAILABLE INFORMATION
Electromagnetic Sciences, Inc. has filed a Registration
Statement on Form S-4 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") covering
the ELMG Shares to be issued in connection with the Exchange
Offer and Merger, and will file a Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") with the Commission in
connection with the Exchange Offer. As permitted by the rules
and regulations of the Commission, this Offering
Circular/Prospectus omits certain information contained in the
Registration Statement and the Schedule 14D-1. For such
information, reference is made to the Registration Statement, the
Schedule 14D-1 and the exhibits thereto.
Pursuant to Rules 14d-9 and 14e-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), LXE will
be required to file with the Commission within ten business days
after the commencement of the Exchange Offer a statement on
Schedule 14D-9 furnishing certain information with respect to its
position concerning the Exchange Offer. Such Schedule and any
amendments thereto should be available for inspection and copying
as set forth below (except that such Schedule and any amendments
thereto will not be available at the regional offices of the
Commission).
Each of Electromagnetic Sciences, Inc. and LXE Inc. is subject
to the informational requirements of the Exchange Act, and in
accordance therewith files reports and other information with the
Commission. The Registration Statement, as well as reports,
proxy statements and other information filed by Electromagnetic
Sciences, Inc. and LXE Inc. with the Commission pursuant to the
information requirements of the Exchange Act may be inspected and
copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the Commission: New York
Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10007; and Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60606. Copies of such material
also can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. ELMG Shares and LXE Inc. Shares are quoted
for trading on NASDAQ, and such reports, proxy statements and
other information concerning Electromagnetic Sciences, Inc. and
LXE Inc. may be inspected at the offices of NASDAQ, 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission
pursuant to the Exchange Act are hereby incorporated by reference
in this Offering Circular/Prospectus:
(a) Annual Report on Form 10-K of Electromagnetic Sciences,
Inc. for the fiscal year ended December 31, 1995;
(b) Quarterly Reports on Form 10-Q of Electromagnetic
Sciences, Inc. for the quarters ended March 31, June 30 and
September 30, 1996;
(c) Annual Report on Form 10-K of LXE Inc. for the fiscal
year ended December 31, 1995*; and
(d) Quarterly Reports on Form 10-Q of LXE Inc. for the
quarters ended March 31, June 30 and September 30*, 1996.
* Copies of these items are being delivered with this Offering
Circular/Prospectus.
All documents filed by Electromagnetic Sciences, Inc. or LXE
Inc. pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date hereof and before the date on which
the Transaction is completed or the Exchange Offer is terminated,
whichever first occurs, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing
thereof. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Offering
Circular/Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document that also is
or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Offering
Circular/Prospectus.
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the
detailed information appearing elsewhere in this Offering
Circular/Prospectus. Capitalized terms used and not otherwise
defined in this Summary have the meanings ascribed to them
elsewhere in this Offering Circular/Prospectus.
As used herein the term "ELMG" refers to Electromagnetic
Sciences, Inc. and "LXE" refers to LXE Inc. and, unless the
context otherwise requires, such entities and their respective
subsidiaries.
ELMG
ELMG designs and produces a wide range of advanced
communications and signal processing products with an emphasis on
wireless networks. ELMG's operations are conducted through its
wholly-owned subsidiary, EMS Technologies, Inc.; a 74%-owned
subsidiary, CAL Corporation, which is a Canadian corporation
acquired in 1993; and LXE, of which ELMG owns approximately 81.4%
of the outstanding shares. The Company's antennas, microwave
systems, subsystems and components are used in space and
satellite communications, cellular telecommunications, radar,
surveillance, search and rescue systems, and military
countermeasures. Through LXE, ELMG also produces wireless data
communications systems; these systems provide real-time, wireless
data and transaction processing, mainly for materials handling
operations. Advanced communications and signal processing
products accounted for 52%, 46% and 54% of consolidated net sales
in 1995, 1994 and 1993, respectively, while LXE's wireless data
communications systems accounted for 48%, 54% and 46% of
consolidated sales in the same respective years.
ELMG is a Georgia corporation with its principal executive
offices at 660 Engineering Drive, Norcross, Georgia 30092,
telephone (770) 263-9200.
LXE
LXE designs, manufactures and supports wireless data
communications systems, mainly for materials handling operations.
Typical customers in the materials handling markets are medium
and large sized companies that have substantial inventories or
complex distribution networks. LXE 's systems permit real-time
interaction between the customer's host computer network and
terminal operations in situations where mobility is desirable or
where cabled computer connections are not practical. LXE 's
systems improve the speed and reliability of communications with
materials handling personnel, facilitate improved accuracy of
inventory records and, in general, increase efficiency and
productivity in materials handling operations. LXE also has
begun developing and marketing systems for applications "outside
of the warehouse," which are believed to have potential for
future growth, including factory floor movement, transportation
and delivery, and electronic medical records retrieval.
LXE is a Georgia corporation with its principal executive
offices located at 303 Research Drive, Norcross, Georgia 30092,
telephone (770) 447-4224.
Background; Purpose of the Exchange Offer
In recent years, LXE's profitability has not been maintained
at stable or growing levels, principally due to increased
competition in the materials handling market for LXE's
traditional wireless local area network ("LAN") products, and to
difficulties experienced by LXE in timely introducing new
generations of products needed to meet evolving technical
requirements. At the same time, the boundaries between LXE's
commercial LAN products and the balance of ELMG's business have
become less distinct as other commercial markets and applications
for wireless communications products have been developing, and as
an increasing portion of ELMG's other business has shifted to
commercial, rather than governmental, customers. In this
environment, ELMG has become increasingly aware of opportunities
for LXE and other components of ELMG's business to share, or
jointly develop, technology and markets. In addition, ELMG
believes that LXE 's status as a separate public company results
in disproportionate analyst and investor attention to LXE 's role
within the overall ELMG organization. As a result of these
considerations, during 1995 ELMG began considering increasing its
ownership of LXE, and through certain transactions in February
and May 1996 increased its ownership from 71.6% to approximately
81.5%.
On July 31, 1996, ELMG's management reviewed with the ELMG
Board of Directors (the "ELMG Board") the benefits and costs of a
transaction that would result in full ownership of LXE. The
ELMG Board authorized management to continue the review process
and to retain investment banking assistance, and appointed a
special committee (the "ELMG Special Committee") to approve the
retention of an investment banker and to make a recommendation to
the full ELMG Board. At a meeting held on October 2, 1996, the
ELMG Special Committee unanimously made the recommendation that
ELMG proceed with the Exchange Offer on the terms recommended by
the Committee, and at a meeting on October 3, 1996, the full
ELMG Board unanimously accepted and approved the Committee's
recommendation. See "THE EXCHANGE OFFER -- Background."
ELMG currently owns 81.5% of the LXE shares. The acquisition
of 100% of LXE is primarily intended to facilitate and encourage
the exchange and sharing of technical, production and marketing
resources among ELMG's subsidiaries, to eliminate various
expenses associated with LXE's status as a separate publicly
traded company, and to improve ELMG's ability to communicate the
role and capabilities of its various subsidiaries in the context
of its overall business strategies. ELMG also believes that the
Exchange Offer may be attractive to holders of LXE Shares because
the trading market for LXE Shares has been relatively illiquid
with much lower trading volumes and much wider bid-asked spreads
than the market for ELMG Shares, and because as holders of ELMG
Shares they will retain a significant indirect interest in LXE.
See "THE EXCHANGE OFFER -- Purpose of the Exchange Offer and
Merger."
THE EXCHANGE OFFER
Terms of The Exchange Offer
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ELMG is offering to exchange ELMG Shares for LXE Shares on the
basis of .75 ELMG Shares for each LXE Share exchanged pursuant to
the Exchange Offer. To be eligible to receive ELMG Shares
pursuant to the Exchange Offer, a holder of LXE Shares must
validly tender for exchange and not withdraw LXE Shares on or
before the Expiration Date. See "THE EXCHANGE OFFER -- Terms of
the Exchange Offer."
Expiration Date
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12:00 midnight, Atlanta time, on December 30, 1996, unless
extended, in which case the term "Expiration Date" shall mean the
last date and time to which the Exchange Offer is extended. See
"THE EXCHANGE OFFER -- Extension of Tender Period; Termination;
Amendment."
Exchange Offer Terms Not Arm's Length
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The terms of the Exchange Offer are not the result of an arm's-
length negotiating process. They were determined solely by the
ELMG special Committee and ELMG Board, whose principal fiduciary
duty is to ELMG and its shareholders. No investment banker or
other independent third party has passed on the adequacy of
fairness of the Exchange Offer. ELMG and the ELMG Board are
making no recommendation to LXE shareholders as to whether to
tender, and each LXE shareholder should decide for itself whether
to accept the terms of the Exchange Offer.
Certain Consequences of The Exchange Offer and The Merger
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Upon consummation of the Exchange Offer and the Merger, the
Unaffiliated LXE Shareholders will become shareholders of
ELMG. LXE Shares will cease to trade on NASDAQ and application
will be made to de-register those Shares under the Exchange Act.
After consummation of the Exchange Offer and Merger, and without
giving effect to outstanding stock options of ELMG and LXE, the
holders of ELMG Shares immediately prior to the consummation of
the Exchange Offer will own approximately 90.7% of the ELMG
Shares that will be outstanding after the Merger and the LXE
shareholders other than ELMG will own approximately 9.3% of the
ELMG Shares that will be outstanding after the Merger.
Operation of LXE After the Exchange Offer and Merger
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ELMG currently intends that, following consummation of the
Exchange Offer and Merger, the business of LXE will operate in
substantially the same way as at present, except for greater
exchange and sharing of technical, production and marketing
resources among LXE and ELMG's other subsidiaries. LXE will
continue in those positions. ELMG has formulated no plans for
changes in the officers of LXE following the Merger, but may do
so in the future. It is unlikely that following the Merger the
LXE Board of Directors would continue to include members who were
not employed by or otherwise affiliated with ELMG.
Conduct of the Business of the Business of ELMG and LXE if the
Exchange Offer and Merger Are Not Consummated
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If the Exchange Offer (and, therefore, the Merger) are not
consummated, it is expected that the business and operations of
ELMG and LXE will each continue to be conducted substantially
as they are currently being conducted and that LXE will continue
to be controlled by ELMG. ELMG has made no determination as to
any future transactions that might occur if the Exchange Offer
and Merger are not consummated, but reserves the right in such
event to purchase or propose to purchase LXE Shares from time to
time, subject to availability at prices deemed acceptable to
ELMG, pursuant to a merger transaction, cash tender offer,
exchange offer, open market or privately negotiated purchase or
otherwise, on terms that could be more or less favorable to other
LXE Shareholders than the terms of the Exchange Offer.
Interest of Certain Persons in the Merger
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Certain officers and directors of ELMG are also officers and/or
directors of LXE, and are the holders of LXE Shares and options
to acquire additional LXE Shares. See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS" and "SECURITY OWNERSHIP."
Conditions of the Exchange Offer
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The Exchange Offer is subject to certain conditions, including
the conditions, which cannot be waived, (i) that ELMG's
shareholders approve certain aspects of the Transaction, and (ii)
that ELMG receive sufficient tenders of LXE Shares to increase
its ownership above 90% , and that it then cause the Merger to
occur immediately after accepting such tendered shares. To
satisfy the second condition, not less than 473,993 LXE Shares
must be tendered, subject to the effects of possible exercises of
LXE Options. All of the other conditions to the Exchange Offer
may be waived in whole or in part in the sole discretion of ELMG.
See "THE EXCHANGE OFFER -- Certain Conditions of the Exchange
Offer."
Amendment and Termination
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The Exchange Offer may be amended at any time before or after
requisite approval by ELMG's shareholders and may be terminated
by ELMG at any time. See "THE EXCHANGE OFFER -- Certain
Conditions of the Exchange Offer; -- Extension of Tender Period;
Termination; Amendment."
Procedures for Tendering
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Holders of LXE Shares desiring to accept the Exchange Offer must
complete and sign the Letter of Transmittal in accordance with
instructions contained therein, and forward or hand deliver it,
together with any other required documents, to the Exchange
Agent, either with the LXE Shares to be tendered or in compliance
with the specified procedures for guaranteed delivery of LXE
Shares. See "THE EXCHANGE OFFER -- Procedure for Tendering LXE
Shares."
Withdrawal Rights
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Subject to the conditions set forth herein, tenders of LXE Shares
may be withdrawn at any time on or before the Expiration Date,
and, unless theretofore accepted for exchange, after January 26,
1996. See "THE EXCHANGE OFFER -- Withdrawal Rights."
No Fractional Shares
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No fractional ELMG Shares will be distributed. Holders of LXE
Shares who would otherwise be entitled to receive a fractional
ELMG Share will be paid cash in lieu of such fraction. See "THE
EXCHANGE OFFER -- Terms of the Exchange Offer."
Delivery of ELMG Shares
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ELMG will deliver ELMG Shares and cash in lieu of fractional
shares as soon as possible after acceptance of LXE Shares for
exchange. See "THE EXCHANGE OFFER -- Exchange of LXE Shares."
Exchange Agent
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SunTrust Bank, Atlanta
Information Agent
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Corporate Investor Communications, Inc.
Certain Federal Income Tax Consequences
- -----------------------------------------------------------------
The Exchange Offer and Merger will constitute a tax-free
reorganization and no income, gain or loss will be recognized by
LXE shareholders upon the receipt of ELMG Shares in exchange for
their LXE Shares. For a discussion of certain federal income tax
consequences to holders of LXE Shares who receive cash in lieu of
fractional shares in the Exchange Offer, see "THE EXCHANGE OFFER
- -- Certain Federal Income Tax Consequences."
The Merger
Under applicable corporate law, if ELMG acquires sufficient
LXE Shares in the Exchange Offer to increase its ownership of LXE
to at least 90% of the then-outstanding LXE Shares, ELMG may
cause the Merger (in which each remaining LXE Share not owned by
ELMG would be converted into .75 ELMG Shares) to occur without
further action by the LXE Board or by the shareholders of either
ELMG or LXE. It is a condition of ELMG's acceptance of LXE
Shares in the Exchange Offer that ELMG receive sufficient tenders
to reach the 90% ownership level, and that it exercise its right
to cause the Merger immediately upon acquisition of the tendered
LXE Shares.
As of November 25, 1996, 5,574,518 LXE Shares were outstanding
and options covering 293,118 LXE Shares were exercisable.
Assuming that no LXE Options are exercised, 473,993 LXE Shares
must have been validly tendered and not withdrawn as of the
Expiration Date for ELMG to own 90% of the then-outstanding LXE
Shares.
The terms of the Merger would result in the conversion of all
options (the "LXE Options") outstanding under LXE's 1989 Stock
Incentive Plan (the "LXE Stock Plan") into options (the "ELMG
Options") to acquire a proportionate number of ELMG Shares under
ELMG's 1992 Stock Incentive Plan (the "ELMG Stock Plan"). The
LXE Options are held by current and former employees, directors
and officers of LXE and the option prices of the ELMG Options
would be adjusted upwards such that the aggregate exercise price
of each option would be unchanged by the conversion. See "THE
EXCHANGE OFFER -- Conversion of LXE Options."
Determination of the Exchange Ratio
The exchange ratio being offered for the LXE Shares was
recommended by the ELMG Special Committee (whose members have no
ownership or other personal interest in LXE) and approved by the
ELMG Board. The exchange ratio is not the product of an arm's-length
negotiating process, and in particular has not been
negotiated with LXE or the LXE Board. LXE's Board has designated
a Special Committee, consisting of those LXE Board members who
are not employed by or otherwise affiliated with ELMG, to review
the Exchange Offer. The LXE Special Committee retained The
Robinson-Humphrey Company, Inc. as financial advisor to assist in
its review. For information concerning the LXE Special
Committee's position with respect to the Exchange Offers,
holders of LXE shares should refer to the
Solicitation/Recommendation Statement on Schedule 14D-9 effected
to be distributed by the LXE Special Committee on or before
December 12, 1996.
In fixing the exchange ratio, the ELMG Special Committee and
Board considered a variety of factors, principally including:
relative historical and anticipated contributions to ELMG's
earnings; relative share trading prices; market valuations of
comparable companies as multiples of various operating results;
the terms of comparable minority buy-out transactions; the fact
that tendering holders of LXE Shares would continue to
participate in the business of LXE as holders of ELMG Shares; the
perception of ELMG's management regarding LXE 's business
prospects; the condition of the NASDAQ public market for the LXE
Shares; and the perceived benefits to ELMG of obtaining 100%
ownership of LXE. See "THE EXCHANGE OFFER -- Determination of
the Exchange Ratio."
Required Action by ELMG Shareholders
The Exchange Offer is conditioned upon approval of certain
aspects of the Transaction by the shareholders of ELMG. The ELMG
Board has called a Special Meeting of the ELMG Shareholders (the
"ELMG Special Meeting"), to be held at 11:00 a.m. on December 30,
1996, for the purpose of voting on the matter, and is
distributing a Proxy Statement to the ELMG Shareholders in
connection with that meeting and vote.
The affirmative vote of a majority of the ELMG Shares present
at the ELMG Special Meeting is required to approve the
Transaction. The ELMG Board believes that the Transaction is in
the best interests of ELMG and its shareholders, and is
recommending that ELMG shareholders vote for its approval.
Market Prices
ELMG Shares and LXE Shares are traded on the NASDAQ National
Market System ("NASDAQ"). On November 22, 1996, the last full
trading day for which quotations were available at the time of
printing of this Offering Circular/Prospectus, the reported
closing sales prices as quoted by NASDAQ were $21-1/8 per ELMG
Share and $15 per LXE Share, and the closing high bids (the
prices that dealers stood ready to pay to investors seeking to
sell their shares) were $20-3/4 and $14, respectively.
The following chart sets forth certain information concerning
the market value of the ELMG and LXE Shares on October 2, 1996,
the day preceding the announcement of the Exchange Offer and
proposed Merger:
Equivalent Value
Final NASDAQ Based on .75
Sales Price Exchange Ratio
------------ ----------------
ELMG Shares $ 17-1/4 Not Applicable
LXE Shares 10-3/4 12-15/16
For information relating to market prices of ELMG Shares and LXE
Shares during the current fiscal year and the past two fiscal
years, see "MARKETS FOR THE ELMG AND LXE SHARES." SHAREHOLDERS
ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR ELMG SHARES AND LXE
SHARES.
Lack of Dissenters' Rights
Holders of LXE Shares and ELMG Shares will not be entitled to
dissenters' rights under the Georgia Business Corporation Code in
connection with the Transaction. See "LACK OF DISSENTERS' RIGHTS
OF LXE AND ELMG SHAREHOLDERS."
Accounting Treatment
ELMG's acquisition of LXE Shares in the Exchange Offer and
Merger will be accounted for by ELMG using the purchase method of
accounting under generally accepted accounting principles.
Currently, ELMG's consolidated financial statements include
all of LXE 's assets, liabilities, revenues, costs and other
deductions, and a minority interest amount that represents the
portion of LXE 's results of operations and shareholders' equity
applicable to the interest of minority shareholders of LXE . In
accordance with the purchase method of accounting, the
consolidated financial statements of ELMG would reflect the
Exchange Offer and Merger only from and after the closing date.
The minority interest amount reflected in ELMG's consolidated
financial statements applicable to LXE would be eliminated as a
result of the Exchange Offer and Merger, and ELMG's share of
LXE's results of operations would be increased to 100%.
ELMG will establish a new accounting basis for the portion of
LXE 's assets and liabilities attributable to the minority
shareholders' interests being purchased. LXE 's assets and
liabilities will be adjusted by ELMG to their respective fair
values as of the date of acquisition to the extent of the
ownership interests acquired. The value of the ELMG Shares being
exchanged for LXE Shares held by the minority shareholders is
anticipated to exceed the fair value of the net assets applicable
to the LXE Shares being acquired from the minority shareholders.
This excess cost will be allocated to goodwill, which will be
amortized on a straight-line basis over a 25-year period from the
date of acquisition.
Regulatory Approvals
ELMG is not aware of any federal or state regulatory agencies
whose approval is required for completion of the Transaction.
Selected Historical Financial Data
The following tables present summary historical consolidated
financial information for ELMG and LXE, which is derived from the
separate historical consolidated financial statements of ELMG and
LXE. The historical consolidated financial information as of
December 31, 1995, 1994, 1993, 1992 and 1991, and for the years
then ended, has been derived in part from audited consolidated
financial statements of ELMG and LXE , respectively. The
consolidated financial statements of both ELMG and LXE as of
December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, are incorporated by
reference elsewhere in this Offering Circular/Prospectus.
Historical consolidated financial information as of September 30,
1996 and 1995, and for the nine-month periods then ended, is
derived in part from unaudited consolidated financial statements
incorporated by reference elsewhere in this Offering
Circular/Prospectus. In each case, the following summary
financial information should be read along with the incorporated
consolidated financial statements and related notes. See
"INCORPORATION OF DOCUMENTS BY REFERENCE."
<TABLE>
(In thousands, except per share amounts)
Nine Months
Ended Years Ended
September 30 December 31
ELMG 1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
Consolidated results of
operations for period:
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 106,771 93,930 128,950 117,993 99,004 71,822 75,340
Gain on initial public
offering of LXE common
stock, net of income
taxes $ - - - - - - 3,638
Earnings from continuing
operations $ 2,916 1,434 2,310 4,263 1,391 924 7,456
Earnings from continuing
operations per common
and common equivalent
share $ .38 .20 .32 .58 .20 .10 .98
Weighted average number
of common and common
equivalent shares
outstanding 7,669 7,124 7,266 7,043 6,856 7,331 7,605
Consolidated financial
condition at end of
period:
Total assets $114,841 100,934 104,954 96,751 87,861 72,970 75,147
Long-term debt
(excluding current
installments) 12,422 4,262 10,989 4,592 5,060 927 1,104
Minority interest in
LXE 6,093 9,236 9,274 8,681 7,155 7,012 5,971
Stockholders' equity 68,134 59,217 60,209 56,431 51,548 50,079 52,063
No cash dividends have been declared or paid during any of the periods presented.
</TABLE>
<TABLE>
(In thousands, except per share amounts)
Nine Months
Ended Years Ended
September 30 December 31
--------------- -----------------------------------------------
LXE 1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
Consolidated results of
operations for period:
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $48,935 45,188 62,291 63,142 45,643 44,401 38,721
Net earnings (loss) $ 200 (299) (165) 4,122 336 3,310 3,236
Net earnings (loss)
per common
and common equiva-
lent shares $ .04 (.05) (.03) .71 .06 .57 .60
Weighted average number
of common and common
equivalent shares
outstanding 5,659 5,525 5,532 5,766 5,721 5,786 5,398
Consolidated financial
condition at end of
period:
Total assets $ 54,388 48,295 49,481 45,741 37,865 37,115 32,718
Long-term debt
(excluding
current install-
ments) 8,500 144 6,925 350 594 827 1,004
Long-term debt to
parent and due to
parent - non current 1,191 1,466 1,397 1,672 1,946 2,221 2,473
Stockholders' equity 32,929 32,478 32,611 32,298 27,713 27,264 23,663
No cash dividends have been declared or paid during any of the periods presented.
</TABLE>
Summary Pro Forma Financial Data -- Unaudited
The unaudited pro forma financial information presented is for
informational purposes only and is not necessarily indicative of
either future results of operations or financial position or of
the results of operations or financial position that would have
been reported had the Exchange Offer and Merger been completed
at the beginning of the respective periods or as of the dates for
which such unaudited pro forma information is presented. For
additional detail, see "PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION -- UNAUDITED."
The following summary unaudited pro forma consolidated
financial information is based on the historical results of
operations and financial condition of ELMG and LXE . For the
periods presented, LXE has been a majority-owned subsidiary of
ELMG and, accordingly, has been consolidated with ELMG in the
historical financial statements of ELMG. This information should
be read in conjunction with the Pro Forma Consolidated Financial
Statements that are included elsewhere herein and with the
historical consolidated financial statements of ELMG incorporated
by reference in this Offering Circular/Prospectus. The pro forma
data give effect to the Exchange Offer and Merger, resulting in
LXE being a wholly owned subsidiary of ELMG, accounted for as a
purchase and based upon the conversion (i) of each currently
outstanding LXE Share into .75 ELMG Shares, and (ii) of each LXE
Option into an option for ELMG Shares on the basis of .75 ELMG
Shares for each share subject to the LXW Option, with the per-share
exercise price being adjusted upwards by one-third, as if
such transactions had occurred effective as of the first day of
the accounting period presented or as of the balance sheet date
presented.
ELMG Pro Forma Financial Data -- Unaudited
The following tables set forth for the periods and the dates
indicated certain unaudited pro forma consolidated financial
information of ELMG adjusted to reflect ownership at the dates
and for the periods presented of 100% of the LXE Shares, on the
terms specified in the Exchange Offer.
<TABLE>
(In thousands, except per share amounts)
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
As As As As
Reported Adjusted Reported Adjusted
-------- -------- -------- --------
Consolidated results
of operations:
<S> <C> <C> <C> <C>
Net sales $ 106,771 106,771 128,950 128,950
Net earnings $ 2,916 2,699 2,310 2,108
Net earnings per
common and common
equivalent share $ .38 .31 .32 .24
Weighted average
number of common
and common
equivalent shares
outstanding 7,669 8,585 7,266 8,639
</TABLE>
September 30, 1996
As Reported As Adjusted
----------- -----------
Consolidated financial
condition:
Total assets $114,841 124,589
Long-term debt (excluding
current installments) 12,422 12,422
Minority interest in LXE 6,093 -
Stockholders' equity 68,134 86,204
Comparison Of Certain Unaudited Per Share Data
The following tables show comparative historical per share data for ELMG and
LXE , pro forma per share data for ELMG and LXE , and combined and equivalent
pro forma per share data for LXE .
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
------------------------ -----------------------
Historical Pro Forma Historical Pro Forma
--------- --------- ---------- ---------
ELMG $ .38 .31 .32 .24
Net earnings
Shareholders' equity -
end of period 9.11 10.44 8.60 10.08
LXE
Net earnings .04 .23 (.03) .18
Shareholders' equity -
end of period 5.91 7.83 5.87 7.56
MARKETS FOR THE ELMG AND LXE SHARES
Comparative Market Prices
ELMG Shares and LXE Shares are principally traded on NASDAQ
(symbols: ELMG and LXEI). The following tables set forth the
high and low sales prices per ELMG Share and LXE Share as
reported by NASDAQ for each period indicated. They also set
forth the closing high bid and low asked prices quoted by market
makers for the ELMG Shares and the LXE Shares. The high bid at
any given time is the highest price that a market maker is at
that time offering to pay to an investor who wishes to sell his
or her shares, and the low asked at any given time is the lowest
price at which a market maker is at that time offering to sell
shares to an investor who wishes to buy them. For shares with
wide bid-asked spreads, such as the LXE Shares, the high bid and
low asked prices provide clearer information concerning market
prices than do the reported sales prices; because the sales
prices are reported for transactions between a market maker and
an investor, the reported sales price will be relatively high if
the reported transaction is a sale by a market maker, and
relatively low if it is a purchase by a market maker. The bid-asked
prices provide no assurance that the specified prices were
available for transactions involving more than one round lot (100
shares).
Neither ELMG nor LXE has paid a cash dividend with respect to
its shares. The fiscal year for each company ends on December 31
of each year. On October 3, 1996, the last full trading day
before the public announcement of the Exchange Offer, the closing
sale price per ELMG Share, as quoted by NASDAQ, was $17.25 and
such price per LXE Share was $10.625. also on that day, there
was a $.375 spread between ELMG's closing bid price of $17 and
closing asked price of $17.375, compared with a $1.375 spread
between LXE's closing bid price of $10.125 and closing asked
price of $11.50.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR ELMG
SHARES AND LXE SHARES.
ELMG Shares LXE Shares
Price Range Price Range
High Low High Low
---- --- ---- ---
1994
First Quarter $ 9-3/8 7-3/4 12-1/2 9-1/2
Second Quarter 9-1/4 7-7/8 12-1/4 10-1/4
Third Quarter 9-1/8 8 14 11
Fourth Quarter 12-1/8 8 15-1/4 12-3/4
1995
First Quarter 12-1/8 10 17-3/4 13-1/2
Second Quarter 15-3/8 10 16-1/4 13
Third Quarter 17-5/8 10-3/8 16-3/8 9-1/2
Fourth Quarter 12-1/8 9-1/2 10-1/4 7-1/2
1996
First Quarter 13-11/16 10-1/2 10-3/8 7
Second Quarter 16-3/8 10-3/4 12 8-3/4
Third Quarter 17 10-1/4 12 8
Fourth Quarter
(through 11/22) 21-1/8 16-1/8 15 10-1/8
ELMG Shares LXE Shares
1996 Bid Asked Bid Asked
--- ----- --- -----
January 2 $ 11 11-1/4 8-1/4 8-3/4
January 31 11-1/8 11-3/8 8 8-3/4
February 29 12-7/8 13-1/4 9-5/8 10-1/4
March 29 12-1/8 12-3/8 9-1/4 9-3/4
April 30 11-3/8 11-3/4 8-3/4 9-1/4
May 31 14-1/4 14-1/2 9-3/4 10-3/8
June 28 14-3/8 14-3/4 10 10-5/8
July 31 12-1/4 12-1/2 8-1/4 9
August 30 13-3/8 13-3/4 10-5/8 11-3/8
September 30 17-3/8 17-1/4 10-1/8 11-1/2
Condition of the Market for the LXE Shares
Of the 1,031,444 outstanding LXE Shares not owned by ELMG, an
aggregate of approximately 656,000 are held by nine institutional
investors, and the remaining approximately 375,000 shares are
believed to be held by approximately 2,000 holders. As compared
with the trading market for the ELMG Shares, the market for the
publicly held LXE Shares in recent months has been characterized
by wide bid-asked spreads, as indicated in the foregoing table.
It has also been characterized by relatively sporadic, low-volume
trading, as indicated in the following table that sets forth
NASDAQ trading volume for the first nine months of 1996. The
volumes are reported by market makers, and thus may represent
only one side of the buy-sell cycle, with subsequent offsetting
transactions also being reported as separate trading volume.
ELMG Shares LXE Shares
Number of Total Number of Total
Days With Monthly Days With Monthly
1996 No Trading Volume No Trading Volume
---- ---------- ------- ---------- -------
January - 375,187 3 108,077
February - 1,435,122 2 93,089
March - 547,931 3 44,922
April - 304,493 3 104,160
May - 883,071 5 86,085
June - 938,911 1 96,554
July - 611,301 6 60,022
August - 793,905 6 136,237
September - 1,047,750 3 26,241
October - 948,980 8 22,689
To be included in NASDAQ, a security must have at least two
market makers. As late as August 1996, there were 4 market
makers for the LXE Shares, but currently only two broker-dealers
are making a market. If either of these market makers concluded
that the low trading volumes did not justify the risks and
required commitment of resources, the LXE Shares would no longer
be eligible for inclusion NASDAQ. By way of comparison,
6 broker-dealers act as market makers for the ELMG Shares, which
have approximately 5,000 holders and an average trading volume
during 1996 of 789,000 shares per day.
THE EXCHANGE OFFER
Background
In 1991, ELMG caused LXE, which at that time was its wholly-owned
subsidiary, to offer approximately 22% of its outstanding
shares in an initial public offering. This offering was
intended to raise capital for further expansion of LXE's
business, and to increase investor familiarity with the LXE
component of ELMG's business. At that time, the defense markets,
which had been central to ELMG's growth and profitability during
the 1980's, had been declining in volume and profitability, while
LXE's commercial wireless data communications business, in
various materials handling settings, had been expanding. The
offering was completed in April 1991, and ELMG believes that the
intended objectives were achieved.
In recent years, LXE's profitability has not been maintained
at stable or growing levels, principally due to increased
competition in the materials handling market for LXE's
traditional wireless local area network ("LAN") products, and to
difficulties experienced by LXE in timely introducing new
generations of products needed to meet evolving technical
requirements. At the same time, the boundaries between LXE's
commercial LAN products and the balance of ELMG's business have
become less distinct as other commercial markets and applications
for wireless communications products have been developing, and as
an increasing portion of ELMG's other business has shifted to
commercial, rather than governmental, customers. In this
environment, ELMG has become increasingly aware of opportunities
for LXE and other components of ELMG's business to share, or
jointly develop, technology and markets.
As a result of these various considerations, during 1995 ELMG
began reviewing the appropriateness of increasing its ownership
of LXE. In late August 1995, the ELMG Board authorized
management to identify investment banking assistance in analyzing
methods of increasing ELMG's ownership of LXE, to prepare a plan
for protecting ELMG's level of LXE ownership if favorable LXE
share prices resulted in significant exercises of outstanding LXE
Options, and to purchase (if available at approximately then-current
market prices) the LXE Shares held by two partnerships
controlled by David A. Rocker. The Rocker partnership shares at
that time constituted the largest single holding of any LXE
shareholder other than ELMG, and were sufficient to raise ELMG's
LXE ownership above the 80% level required for filing
consolidated income tax returns.
In September 1995, before management acted on the ELMG Board's
various authorizations, and before any proposals were formulated,
adopted or presented to any LXE shareholders, LXE announced an
anticipated loss for the quarter ending September 30, 1995. From
a closing price of $13.50 at the end of August, the reported
closing sales prices for the LXE Shares declined to $10.25 at the
end of September and $8.00 at the end of November and December
1995, for an aggregate decline of approximately 40%. In view of
the depressed market for LXE Shares and the efforts being
undertaken to return LXE to profitability, management concluded,
in consultation with the ELMG Board, that it was no longer
desirable or appropriate at that time to pursue 100% ownership.
However, management continued to believe that ELMG would benefit
by acquiring the Rocker partnership shares and increasing its LXE
ownership above 80%. Based on preliminary discussions with Mr.
Rocker, management concluded that these shares were not available
at the then-current depressed market prices, and management
sought and received the ELMG Board's authorization to negotiate a
transaction at a premium over market prices using ELMG Shares
for all or a portion of the purchase price. Further preliminary
conversations with Mr. Rocker in October 1995 caused management
to conclude that at that time the parties would be unable to
agree on key terms, including the extent to which any purchase
price would be paid by delivery of ELMG Shares, and the matter
was not pursued until January 1996. Negotiations commencing at
that time resulted in the acquisition, on February 23, 1996, of
548,200 LXE Shares. In this transaction, ELMG delivered to the
Rocker partnerships .8337 ELMG Shares plus $.912 in cash for each
LXE Share acquired, and also received the agreement of Mr. Rocker
and the partnerships to make no further purchases of LXE Shares
for a period of five years. At the date of closing, the ELMG
Shares had a closing market value of $12.25 per share, or $10.21
for each .8337 ELMG Shares. The ELMG Shares delivered in the
transaction were not registered under state or federal securities
laws, and could not be freely traded by their holders, but ELMG
agreed to register such shares for resale by such holders and
subsequently obtained such registration.
ELMG also acquired 19,874 LXE Shares in a cash transaction, at
$9.44 per share, on May 1, 1996. This transaction was with a
market maker who had acquired these shares from a former LXE
executive officer who had terminated as an employee and had
exercised an option previously granted to him in connection with
his employment. This transaction was entered in connection with
the conclusion of the former officer's employment relationship
and in order to protect ELMG's 80% ownership level.
LXE reported a further loss for the quarter ended March 31,
1996, but returned to profitability in the quarter ended June 30,
1996, and was expected by management to report improving
performance in the immediately succeeding future quarters. As a
result, in July 1996, ELMG's management conducted a review of the
benefits and costs of a transaction that would result in full
ownership of LXE . The matter was reviewed with the ELMG Board
at a meeting held on July 31, 1996. Based on the potential
perceived advantages, the Board authorized management to continue
the review process, and to retain investment banking assistance
in evaluating whether to propose such a transaction and in
developing a proposed structure and terms. Because of the
significant holdings of LXE Shares and LXE Options of four
members of the ELMG Board (John B. Mowell, John E. Pippin, Don T.
Scartz and Thomas E. Sharon) the ELMG Board delegated to the ELMG
Special Committee, consisting of Anthony J. Iorillo, Jerry H.
Lassiter, and John H. Levergood, the responsibility for approving
the retention of an investment banker, and for making a
recommendation to the full ELMG Board as to whether to proceed
with a transaction and if so, on what terms.
The LXE Board held its regular quarterly meeting the following
day, August 1, 1996. ELMG management and directors present at
this meeting were Thomas E. Sharon, John E. Pippin, John B.
Mowell, Don T. Scartz and William S. Jacobs. Dr. Sharon and
Messrs. Scartz and Jacobs advised the other members of the LXE
Board of the status of ELMG's consideration of a transaction to
acquire the minority LXE Shares by issuing ELMG Shares, and
reported the appointment of the ELMG Special Committee and
proposed retention of investment banking assistance. Because
ELMG was at that time considering the possibility of a merger
transaction, which would involve negotiations with and, in order
to proceed, approval of the LXE Board, the LXE Board appointed
its own Special Committee (the "LXE Special Committee")
consisting of Frank W. Blount, William F. Evans and Francis X.
Stankard, being all of the LXE directors who were not directors,
employees or shareholders of ELMG.
The LXE Special Committee was delegated full authority to
identify and retain investment banking and legal advisors in
order to be in position to respond to a merger offer by ELMG, if
one was forthcoming, and to negotiate (or reject) an agreement on
behalf of LXE.
Other than the proposed use of ELMG Shares, no proposed
transaction terms were discussed. Mr. Evans observed that, in
his view, in recent years LXE had become less attractive as a
separate investment approach, and that LXE shareholders likely
would improve their investment prospects by becoming ELMG
shareholders in an appropriately structured transaction. No
member of the LXE Special Committee indicated the merger terms or
exchange ratio that he might consider to be appropriate.
Following further review of alternative transactions,
potential transaction costs and timing, the number of LXE 's
shareholders, and the concentration of LXE Shares in a small
number of institutional holders, ELMG concluded that if the ELMG
Special Committee and the ELMG Board chose to proceed, an
exchange offer directly to the LXE Shareholders probably would be
the most efficient and cost-effective transaction structure. On
September 3, 1996, Mr. Scartz, as ELMG's Senior Vice President
and Chief Financial Officer, and Mr. Jacobs, as its Vice
President and General Counsel, participated in telephone
conversations with each of Messrs. Evans and Stankard. At this
time, Messrs. Evans and Stankard were advised that ELMG was
contemplating the possibility of an exchange offer and was no
longer considering the possibility of proposing a negotiated
merger. Messrs. Scartz and Jacobs also advised that ELMG was not
contemplating negotiation with the LXE Special Committee
concerning the terms of an exchange offer, if one were initiated.
Based on this information, Messrs. Evans and Stankard concluded
that retention of an investment banker was not necessary at that
time, but that independent legal counsel would be retained to
advise the LXE Special Committee if and at the time ELMG
determined to proceed.
At a meeting held on October 2, 1996, following presentations
by and discussions with ELMG's management and Oppenheimer, which
had been retained to provide investment banking assistance, the
ELMG Special Committee unanimously approved the recommendation
that ELMG proceed with the Exchange Offer, on the terms described
in this Offering Circular/Prospectus. At a meeting held on
October 3, 1996, the full ELMG Board unanimously accepted and
approved the ELMG Special Committee's recommendation.
At its regular quarterly meeting held on October 24, 1996, the
LXE Board received a report on the status and expected schedule
of the Exchange Offer, but held no substantive discussions of its
proposed terms. At that meeting, the LXE Board, with approval by
the members of the Special Committee, authorized access by ELMG
to the LXE shareholder list for use in the Exchange Offer. The
Board also delegated to the Special Committee full authority to
determine and communicate the LXE Board's position statement
required by SEC Rule 14d-9.
On November 12, 1996, the LXE Special Committee held a meeting
to which it invited, as representatives of ELMG, Dr. Sharon and
Messrs. Scartz and Jacobs. The meeting was also attended by
representatives of Hicks, Maloof & Campbell, legal counsel to the
LXE Special Committee, and by representatives of The Robinson-Humphrey
Company, Inc. ("R-H"), investment bankers. The purposes
of this meeting were to provide to the LXE Special Committee data
assembled by ELMG with the assistance of Oppenheimer, and used by
the ELMG Special Committee and Board in determining the exchange
ratio; to review the analysis and reasons considered by the ELMG
Special Committee and Board in that process; and to provide an
opportunity for the LXE Special Committee to question ELMG
representatives concerning the proposed Exchange Offer and
Merger. During the course of the meeting, the ELMG
representatives provided and discussed: information concerning
the shareholders of each company; data concerning market
valuations of comparable companies based on multiples of various
operating results, including current and expected earnings per
share; historical and projected operating results for each
company; historical stock trading patterns for each company; and
comparative data concerning other minority interest buy-out
transactions and acquisition transactions involving data
communications companies. The ELMG representatives also reviewed
the manner in which the ELMG Special Committee and Board had
determined the .75 exchange ratio, stating that the principal
factors considered had been comparative multiples of 1997
estimated net income, expected relative contribution to 1997
operating results, and typical minority buy-out premiums to pre-offer
market trading prices. In reviewing the analyses based on
future operating performance, it was explained that, as had been
presented at the recent quarterly meeting of the LXE Board, rapid
growth in new markets for LXE products, primarily healthcare
applications, could result in higher actual future levels of
sales and earnings than those used by the ELMG Special Committee
and Board in determining the exchange ratio; the ELMG
representatives also stated that the projections used by the ELMG
Special Committee and Board for ELMG's future operating
performance similarly did not include potential higher-than-expected
growth rates in certain new markets, particularly that
for PCS/cellular base station antennas, and that because these
products are directly manufactured by ELMG, they provide
substantially higher margins than do the LXE healthcare products,
which are largely manufactured by other companies. Dr. Sharon
discussed with the LXE Special Committee his view of potential
operating efficiencies available if LXE were a wholly owned
subsidiary and thus technical, manufacturing and marketing
resources could be more easily shared; he also discussed his
view that development by LXE of radio products needed to achieve
higher margins on healthcare installations requires RF
engineering expertise that LXE does not separately possess but
that is a strength of other ELMG subsidiaries.
At the conclusion of the LXE Special Committee meeting, the
Committee advised the ELMG representatives that the Committee
would be holding a further meeting on November 13, 1996, to
review its responsibilities and to determine the procedures that
would be followed, including the possibility that R-H would be
retained as financial advisor. Following that subsequent
meeting, the LXE Special Committee advised ELMG that it had
retained R-H to review, and to provide advice to the Committee
with respect to, the Exchange Offer as it affects holders of LXE
Shares. The LXE Special Committee also reported that due to the
time required for R-H to perform its review and for the Committee
to thereafter meet and determine its position, the Committee
planned to provide its position statement to the holders of LXE
Shares in a separate mailing subsequent to distribution by ELMG
of its Exchange Offer materials.
Purpose of the Exchange Offer and Merger
The Exchange Offer is being made for the purpose of acquiring
100% of the outstanding LXE Shares. ELMG is seeking 100%
ownership of LXE for the following reasons:
* Ownership of 100% of the LXE Shares would facilitate and
encourage greater exchange and sharing of technical and marketing
resources among LXE and ELMG's other operating subsidiaries,
particularly EMS Technologies, Inc., which is a 100% owned
subsidiary and possesses superior RF wireless engineering
capabilities. ELMG believes that access to such capabilities will
be important in LXE's future efforts to expand its wireless
networking business into new applications and markets, and that
greater access to LXE's marketing and product experience will be
helpful to EMS Technologies as it seeks to further increase its
sales of commercial wireless communications products. With LXE
as a 100% owned subsidiary, such exchange and sharing can be
effected more expeditiously and with simpler review and approval
procedures than is possible under current procedures, which are
designed to protect the interests of the minority LXE
shareholders.
* As a 100% owned subsidiary, LXE would no longer incur
separate SEC reporting, shareholder reporting, tax reporting,
annual meeting and independent board expenses, as well as other
certain separate corporate expenses. ELMG estimates that
elimination of these expenses would result in savings of
approximately $420,000 per year.
* ELMG believes the greater ease in sharing of resources among
subsidiaries would permit consolidation of various functions and
operations, and more efficient allocation and operation of
production facilities, resulting in direct savings believed to be
significant but for which no firm estimates have been developed.
* It is ELMG's belief, based on its management's participation
in conferences and discussions with analysts and other members of
the investment community, that LXE's status as a separately-traded
company results in disproportionate attention to LXE's
role within the ELMG organization, and detracts from ELMG's
ability to communicate the role and capabilities of its various
subsidiaries in the context of ELMG's overall business
strategies.
* Conversion of the LXE minority shareholder interest into
additional outstanding ELMG shares would increase ELMG's share
capitalization and number of shareholders, and may thus encourage
market makers and analysts to participate in the market for the
ELMG Shares.
* ELMG believes that the conversion on the proposed terms of
the LXE Shares held by minority LXE shareholders may be
attractive to those shareholders because, among other
possible reasons, the trading market for LXE Shares has
been relatively illiquid with much lower trading volumes and much
wider bid-asked spreads than the market for ELMG Shares, and
thus may be less attractive to potential investors,
particularly those interested in liquidity for a substantial
holding. See "MARKETS FOR THE ELMG AND LXE SHARES." In
addition, as holders of ELMG Shares, LXE shareholders would
retain a significant indirect interest in LXE.
If ELMG holds, upon completion of the Exchange Offer, at least
90% of such outstanding shares, under Georgia law ELMG could and
would cause the merger of LXE with a newly formed subsidiary of
ELMG without seeking a vote of LXE's shareholders or the LXE
Board, in which event remaining LXE shareholders (other than
ELMG) would receive .75 ELMG Shares for each LXE Share.
If ELMG does not receive a sufficient tender in the Exchange
Offer to increase its LXE ownership above 90%, it will not accept
tendered LXE Shares, and has not formulated any plans or
proposals with respect to any subsequent efforts to acquire
additional LXE Shares.
Management believes that if the Exchange Offer is successful
the above-referenced benefits would be obtained with no
earnings-per-share dilution in 1997 or later years. This belief
reflects projections of 1997 LXE earnings prepared internally for
normal business planning purposes. The preparation and analysis
of such projections of future operating results are, in
management's view, an essential tool in managing the business of
LXE and ELMG. However, neither management nor the ELMG Board can
know the course of future events, and thus any such projections
are no more than management's expectations, based on its current
understanding of factors it believes to be relevant, and are
subject to future developments and events that cannot currently
be known by, and may be beyond the control of, LXE or ELMG. For
example, management's projections of LXE's earnings in 1997 could
be materially affected, negatively or positively, by unexpected
product advances by competitors, by the unexpected development of
alternative technologies, by unexpected growth rates (either
faster or slower) in existing and target markets for LXE's
products, by currently unknown technical breakthroughs by LXE's
engineering staff, by unexpected difficulties in designing and
manufacturing new products, and by general economic trends and
conditions both in the United States and abroad.
Management's belief that the issuance of ELMG Shares in the
Exchange Offer and Merger would not adversely affect future
earnings per share is dependent on the anticipated savings
described above. These savings include both LXE's expenses as a
separate publicly traded company, as to which quantified savings
are readily identifiable, and other savings, which have not been
specifically quantified, arising from greater ease in sharing
resources throughout the organization.
ELMG management also believes it is possible that LXE's future
operations could achieve higher levels than those contained in
the above-described projections. In the course of managing LXE's
business affairs, management has analyzed potential scenarios
involving, for example, higher assumed rates of growth in LXE's
traditional markets and in new markets (such as healthcare) that
LXE is seeking to establish. Utilizing favorable assumptions,
such scenarios support the possibility of future earnings at LXE
substantially exceeding those considered by the ELMG Special
Commmittee and Board in determining the Exchange Ratio, or
required for ELMG to avoid earnings-per-share dilution as a
result of the Exchange Offer and Merger. Such scenarios and
higher earnings are believed to be possible, and from time to
time are used internally for purposes of contingency planning and
encouraging higher levels of achievement. However, while
achievement of higher earnings is a primary objective of ELMG's
management and Board, such scenarios are viewed by ELMG as being
speculative, dependent on favorable future developments, and
highly subject to risks. For this reason, such scenarios and the
potential higher earnings that they support have not been relied
upon either by management for purposes of establishing employment
levels or other external commitments, or by the ELMG Special
Committee or Board in determining the exchange ratio.
Except for the Transaction and except as otherwise described
in this Offering Circular/Prospectus, ELMG does not have any
present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of any operations of LXE,
or the sale or transfer of a material amount of assets involving
LXE or any of its subsidiaries, or any changes in LXE's
capitalization or any other change in LXE's corporate structure
or business or the composition of its management. However, ELMG
may, in the future, propose or develop additional or new plans or
proposals, or may propose the acquisition or disposition of
assets or other changes in LXE's business, corporate structure,
capitalization, management or dividend policy.
Determination of the Exchange Ratio
The ELMG Board has approved the exchange ratio being offered
for the LXE shares, based on the recommendation of the ELMG
Special Committee, whose members have no ownership or other
personal interest in LXE. In making such recommendation and
giving such approval, both the ELMG Special Committee and ELMG
Board received analyses and advice of Oppenheimer as described
below at "Financial Advisor," and also discussed various matters
deemed relevant, including business prospects, with the Chief
Executive Officer and other management personnel of each company.
The ELMG Special Committee and ELMG Board each concluded that
the exchange ratio was reasonable and appropriate in light of
numerous factors, principally including: relative historical and
anticipated contributions to ELMG's earnings, with particular
emphasis on estimated 1997 earnings; relative trading prices for
the LXE and ELMG Shares; market valuations of comparable
companies as multiples of selected operating results, including
revenues and earnings per share, again with particular emphasis
on estimated 1997 earnings; the terms of comparable minority buy-out
transactions; the fact that tendering holders of LXE Shares
would continue to participate in the business of LXE as holders
of ELMG Shares; the perception of ELMG's management regarding
LXE's business prospects; the condition of the NASDAQ public
market for the LXE Shares; and the perceived benefits to ELMG of
obtaining 100% ownership of LXE.
In considering the foregoing factors, the ELMG special
Committee and Board used estimated 1997 earnings for LXE of $.59
per share, an estimate that had been prepared by ELMG and LXE for
normal business planning purposes. This projection was not
prepared with a view toward public disclosure, but was believed
material and relevant by the Special Committee and Board in
connection with their determination of the exchange ratio, and
for that reason is bing disclosed in this Offering
Circular/Prospectus. As discussed above at "Purpose of the
Exchange and Merger," such projections represent management's
expectations, based on its current understanding of factors it
believes to be relevant, and are subject to future developments
and events that cannot currently be known by, and may be beyond
the control of, LXE or ELMG. Accordingly, actual results could
vary significantly from those set forth in such projections.
The exchange ratio selected by the ELMG Special Committee and
Board represents a premium of 22.1% based on the relative final
closing sales prices of ELMG Shares and LXE Shares on October 2,
1996, the last trading day preceding the date on which the
exchange ratio was approved by the ELMG Board and the Exchange
Offer and proposed Merger were announced, and a premium of 15.5%
based on the relative average closing reported sales prices
during the 10 trading days ending on such date, in each case as
reported by NASDAQ. Based on relative closing high bid
quotations reported by NASDAQ, the premiums are 29.5% and 20.4%,
respectively; high bid prices are the prices at which at least
one market maker stands ready to purchase at least one round lot
from investors seeking to sell their shares, and ELMG believes
that, for shares (such as those of LXE ) with wide bid-asked
spreads, the high bids provide a more accurate measure of sales
prices available to individual investors.
As discussed below at "Financial Advisor," Oppenheimer provided
various analyses to the ELMG Special Committee and Board, but
advised that, in its view, the three most important analytical
approaches were those based on multiples of 1997 estimated
earnings, relative contribution to combined-company operating
results, and premiums to market in other minority-buyout
transactions. Oppenheimer's analyses of comparable-company share
price multiples of estimated 1997 earnings per share reflected
that companies deemed comparable to LXE were trading at a
representative multiple of 15.5x, and those deemed comparable to
ELMG were trading at a representative multiple of 16.6x; applying
these multiples to the respective projected 1997 EPS of each
company, as prepared by management, results in an implicit
exchange ratio of approximately .6 ELMG Shares for each LXE
Share. Oppenheimer's analysis of relative contribution to
combined-company estimated 1997 net income of the ownership
interest of the LXE minority shareholders reflected an 8.5%
contribution; the exchange ratio that would result in LXE
minority shareholders holding 8.5% of the ELMG Shares outstanding
after the Merger (based on ELMG Shares outstanding on October 2,
1996) is .68 ELMG Shares for each LXE Share. Oppenheimer's
analysis of premiums paid in other minority buyout transactions
revealed average premiums, as a percentage of the target
companies' stock prices at certain times prior to announcement
of the transaction ranging from 19.4% to 23.3%.
In selecting an exchange ratio of .75 ELMG Shares for each LXE
Share, the ELMG Special Committee and Board considered
Oppenheimer's advice (which, as described below at "Financial
Advisor," did not constitute an opinion as to the fairness) that
an exchange ratio of .70 to .75 was reasonable and consistent
with the three principal analytical approaches; the Special
Committee and Board also gave substantial weight to the premiums
to market price that are typical in minority-buyout transactions,
to the expectation that any earnings dilution from the
Transaction would be at minimal levels that could reasonably be
expected to by offset by synergistic operating efficiencies, and
to the overall benefits of the Transaction to ELMG as described
above at "Purpose of the Exchange Offer and Merger."
Financial Advisor
Oppenheimer was retained by the ELMG Special Committee and
Board to provide advice in connection with the Transaction.
However, Oppenheimer was not requested to, and has not, rendered
any opinion as to the fairness of the Exchange Offer, from a
financial point of view or otherwise, to either LXE shareholders
or ELMG shareholders, and Oppenheimer makes no recommendation as
to whether LXE shareholders should tender their LXE shares to
ELMG pursuant to the Exchange Offer.
Oppenheimer is an internationally recognized investment
banking firm and is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions,
leveraged buyouts, negotiated underwritings, secondary
distributions of listed and unlisted securities and private
placements, and in valuations for estate, corporate and other
purposes. Oppenheimer was retained by the ELMG Special Committee
and Board as financial advisor because of, among other things,
Oppenheimer's expertise in financial matters in general and in
wireless technology industries in particular, and because of its
familiarity with both ELMG and LXE through analysts and
investment bankers who have been following and maintaining
contact with both companies.
In providing assistance to the ELMG Special Committee and
Board, Oppenheimer performed and described to the Special
Committee and/or the Board a variety of financial analyses. The
forecasts of the future operating results of ELMG and LXE
utilized by Oppenheimer in its analyses were provided to or
reviewed for Oppenheimer by the management of each of ELMG and
LXE. ELMG and LXE do not publicly disclose internal management
forecasts of the type provided to Oppenheimer in connection with
the review of the Exchange Offer and Merger, and such forecasts
were not prepared with a view toward public disclosure. The
forecasts were based on numerous variables and assumptions which
are inherently uncertain, including, without limitation, factors
related to general economic and competitive conditions.
Accordingly, actual results could vary significantly from those
set forth in such forecasts. In addition, the analyses performed
by Oppenheimer do not purport to be appraisals or necessarily to
reflect the prices at which companies or their securities
actually may be sold.
In providing assistance to the ELMG Special Committee and
Board, Oppenheimer reviewed, among other things, (i) the Annual
Reports to Shareholders and Annual Reports on Form 10-K for the
three fiscal years ended December 31, 1995 of ELMG and LXE; (ii)
Quarterly Reports on Form 10-Q of ELMG and LXE for the fiscal
years 1995 and 1996; (iii) certain other communications from ELMG
and LXE to their respective stockholders; (iv) certain internal
financial analyses and forecasts of ELMG and LXE prepared by
their respective managements; (v) the reported price and trading
activity for the ELMG Shares and the LXE Shares; (vi) certain
financial and stock market information for ELMG and LXE, which
was compared with similar information for certain other publicly
traded companies; (vii) to the extent publicly available, the
financial terms of certain recent business combinations in the
wireless communications industry; and (viii) stock price premiums
paid in certain minority buyout transactions. In addition,
Oppenheimer held discussions with members of the managements of
ELMG and LXE regarding the past and current business operations,
financial condition and future prospects of their respective
companies and the business synergies expected by the respective
managements to be realized from the Merger, and performed such
other studies and analyses and considered such other financial,
economic and market criteria as it believed necessary.
The following summary is not a complete description of the
analyses performed by Oppenheimer and furnished to the ELMG
Special Committee and Board. Rather, it is intended to describe
generally the analytical approaches utilized by Oppenheimer, and
to provide additional information concerning those approaches
that were believed by Oppenheimer to be most relevant to the ELMG
Special Committee's and Board's objective of selecting a
reasonable and appropriate exchange ratio.
Analysis of LXE
Comparable Company Analysis. Oppenheimer furnished the ELMG
Special Committee and Board with a comparison of certain
historical and estimated earnings and other operating and
financial data and ratios, and of multiples of income statement
and operating cash flow parameters of certain other publicly
traded companies deemed to be generally comparable to LXE.
Financial data compared included enterprise value (defined as the
sum of the face value of a company's debt plus the market value
of its equity securities ("market capitalization") less cash and
cash equivalents), market capitalization, sales, operating cash
flow (defined as earnings before interest, taxes, depreciation
and amortization ("EBITDA")), operating income (defined as
earnings before interest and taxes ("EBIT")), net income,
earnings per share ("EPS"), gross margin, operating margin, net
margin, historical sales, operating cash flow, net income and EPS
growth, projected EPS and EPS growth rates, balance sheet data,
and certain expenses and expense ratios. Multiples compared
included enterprise value to sales, enterprise value to operating
cash flow, enterprise value to operating income, and price per
share to actual and projected EPS. The analysis of the ratios of
price per share to projected 1997 EPS, which Oppenheimer believed
to be the most important and widely accepted indicator of value,
reflected that companies selected as comparable to LXE traded at
multiples to projected 1997 EPS of between 12.1x and 18.3x, with
a representative multiple of 15.5x.
Minority-Buyout Valuation Analysis. Oppenheimer furnished the
ELMG Special Committee and Board with an analysis of the premiums
paid in 41 pending and completed minority-buyout transactions
occurring since January 1992. Oppenheimer considered, among
other factors, the structure (tender offer or merger), the
consideration (cash or stock), and the percentage of the target's
shares held by the acquiror at the time of the announcement.
This analysis revealed that the average premiums paid in these
transactions, as a percentage of the target companies' stock
prices one day, one week, and four weeks prior to announcement of
the transaction, ranged from 19.4% to 23.3%.
Other Analytical Approaches. Oppenheimer also furnished the
ELMG Special Committee and Board with a discounted cash flow
analysis of LXE on a stand-alone basis, and an analysis of the
implied valuation multiples of seven completed merger and
acquisition transactions occurring since October 1994 and
involving companies in the data communications industry. Because
the discounted cash flow analysis in LXE's case is heavily
dependent upon the ending, or "terminal," valuation, which is
derived from expected income, capital market conditions, and
applicable multiples and discount rates at the end of five years,
Oppenheimer advised the ELMG Special Committee that in its view
the discounted cash flow analysis would not be an appropriate or
widely accepted indicator of value in the circumstances.
Oppenheimer also advised the ELMG Special Committee and Board
that the universe of recent data communications company mergers
did not include companies with businesses similar to that of LXE,
and that the seven transactions reviewed by Oppenheimer involved
third-party acquisitions and thus the higher premiums typically
paid for the transfer of control. For these reasons, and in view
of the fact that ELMG already holds a controlling equity interest
in LXE, Oppenheimer expressed its belief that the comparative
merger-and-acquisition analysis was not appropriate or helpful in
the Special Committee's and Board's efforts to determine an
exchange ratio.
Analysis of ELMG
Comparable Company Analysis. Oppenheimer furnished the ELMG
Special Committee and Board with an analysis of certain
historical and estimated earnings and other operating and
financial data and ratios, and of multiples of income statement
and operating cash flow parameters, of certain other publicly
traded companies deemed to be generally comparable to ELMG.
Financial data compared included enterprise value, market
capitalization, sales, operating cash flow, operating income, net
income, earnings per share, gross margin, operating margin, net
margin, historical sales, operating cash flow, net income and EPS
growth, projected EPS and EPS growth rates, balance sheet data,
and certain expenses and expense ratios. Multiples compared
included enterprise value to sales, enterprise value to operating
cash flow, enterprise value to operating income, and price per
share to actual and projected EPS. The analysis of the ratios of
price per share to projected 1997 EPS, which Oppenheimer believed
to be the most important and widely accepted indicator of value,
reflected that the ELMG comparable companies traded at average
and representative multiples to projected 1997 EPS of 19.1x and
16.6x, respectively.
Other Analytical Approaches. Oppenheimer also furnished the
ELMG Special Committee and Board with a discounted cash flow
analysis of ELMG on a stand-alone basis. As was also the case
with LXE, the ELMG discounted cash flow analysis is heavily
dependent upon the terminal valuation, which is derived from
expected income, capital market conditions, and applicable
multiples and discount rates at the end of five years. For this
reason, Oppenheimer advised that the discounted cash flow
analysis would not be an appropriate or widely accepted indicator
of value in the circumstances.
Analysis of Combined ELMG/LXE
Contribution Analysis. Oppenheimer furnished the ELMG Special
Committee and Board with an analysis of the relative contribution
to combined-company operating results represented by the
ownership interest of the unaffiliated LXE shareholders, and
compared that contribution to the pro forma combined-company
ownership of the unaffiliated LXE shareholders based on various
exchange ratios. This analysis, which was based on Oppenheimer's
review of fiscal 1995 actual results and estimates of 1996 and
1997 financial information (including projected 1997 EPS for LXE
of $.59 as discussed above at "Determination of the Exchange
Ratio"),as provided by LXE's and ELMG's respective managements,
revealed that for the specified periods the interest of the
unaffiliated LXE shareholders provided from 8.3% (in 1996) to
8.9% (in 1995) of combined revenues; from 4.1% (in 1995) to 7.7%
(in 1997) of combined operating cash flow; from negative 2.8% (in
1995) to 8.0% (in 1997) of combined operating income, and from
negative 1.6% (in 1995) to 8.5% (in 1997) of combined net income.
Historical Market Prices Ratio Analysis. Oppenheimer reviewed
for the ELMG Special Committee and Board the relationship of the
daily closing prices of LXE Shares relative to the daily closing
prices of ELMG Shares. This analysis indicated that the ratio of
the daily closing prices of the LXE Shares to ELMG Shares has
been as high as 1.8 during the past four years, but on October 1,
1996 (two business days prior to announcement of the Transaction)
was 0.57.
Pro Forma Merger Impact Analysis. Oppenheimer furnished the
ELMG Special Committee and Board with an analysis of certain pro
forma effects resulting from the Merger. In conducting its
analysis, Oppenheimer relied upon certain assumptions and
financial forecasts provided by the managements of ELMG and LXE,
as described above. Oppenheimer also discussed, without
independent verification, with the managements of ELMG and LXE
the possible cost savings and synergies achievable as a result of
the Merger. As part of this analysis, Oppenheimer reviewed the
pro forma accretion of or dilution to ELMG's 1997 to 2001
projected earnings per share following the Merger. Oppenheimer's
analysis separately considered the accretion/dilution (i) on an
unadjusted basis excluding any effects from possible operating
cost savings and synergies (other than savings from elimination
of the costs of separate public-company requirements, such as
financial and shareholder reporting), and (ii) after giving
effect to varying levels of operating synergies. Oppenheimer
also considered the effect on its analysis of variances between
actual operating results and the operating results projected by
LXE's management.
Summary Advice. Following presentation of its analysis,
Oppenheimer advised the Special Committee that, in its view, the
three most important of the analytical approaches described above
were the analyses based on multiples of 1997 estimated earnings,
relative contribution to combined-company operating results, and
premiums to market in other minority-buyout transactions. While
various analytical approaches could be used to support lower or
higher exchange ratios, Oppenheimer stated its view that an
exchange ratio of .70 to .75 was reasonable and consistent with
the three principal analytical approaches. Oppenheimer noted
that an exchange ratio in such range would provide a premium over
recent market price exchange ratios, while resulting in ELMG per-share
pro forma earnings dilution at minimal levels that could
reasonably be expected to be offset by synergistic operating
efficiencies. As noted above, however, Oppenheimer was not
requested to, and did not, provide an opinion as to the fairness
of the proposed transaction to the shareholders of either ELMG or
LXE.
***************
In the ordinary course of business, Oppenheimer and its
affiliates may actively trade the securities of ELMG and LXE for
their own account or for the accounts of their customers and,
accordingly, may at any time hold a long or short position in
such securities. Oppenheimer has advised ELMG that as of the date
it presented its analysis to the ELMG Special Committee and
Board, and as of the date of this Offering Circular/Prospectus,
Oppenheimer and its affiliates held no securities of ELMG or LXE
for their own account.
As compensation for its services in providing advice to the
ELMG Special Committee and Board, and for serving as Dealer
Manager for the Exchange Offer, ELMG has paid Oppenheimer
$125,000 ($25,000 of which constituted a retainer and $100,000 of
which became payable upon commencement of the Exchange Offer),
and has agreed to pay Oppenheimer an additional fee of $175,000
in the event ELMG is successful in acquiring, pursuant to the
Exchange Offer or otherwise, 50% or more of the LXE shares not
already owned by ELMG. In addition, and regardless of whether
ELMG is successful in acquiring 50% or more of the LXE Shares not
already owned by ELMG, ELMG has agreed (i) to reimburse
Oppenheimer for its out-of-pocket expenses, and (ii) to indemnify
Oppenheimer and certain related persons against certain
liabilities and expenses in connection with its services,
including certain liabilities under the federal securities laws.
Interests of Certain Persons in the Exchange Offer and Proposed
Merger
Thomas E. Sharon is the President and Chief Executive Officer
of ELMG and is the Chairman of the Board and Chief Executive
Officer of LXE. John E. Pippin is the Chairman of the Board of
ELMG and a director of LXE. Don T. Scartz is the Senior Vice
President and Chief Financial Officer, Treasurer and a director
of ELMG, and is Chief Financial Officer and Treasurer of LXE.
William S. Jacobs is Vice President, Secretary and General
Counsel of ELMG, and is Secretary and General Counsel of LXE.
John B. Mowell is a director of both ELMG and LXE.
Two holders of in excess of 5% of the outstanding ELMG Shares
also are substantial holders of LXE Shares, and certain directors
and executive officers of ELMG are the beneficial owners of LXE
Shares or LXE Options. The tables set forth in "SECURITY
OWNERSHIP" detail the holdings of ELMG Shares, ELMG Options, LXE
Shares and LXE Options of each such person.
Each of the individual directors and executive officers has
advised ELMG of his intention to tender the LXE Shares controlled
by him in the Exchange Offer, and to vote the ELMG Shares
controlled by him in favor of the Merger. ELMG has been advised
by Kopp Investment Advisors, Inc. that it currently intends to
tender its LXE Shares in the Exchange Offer, and to recommend to
the beneficial holders of the ELMG Shares controlled by it that
they be voted in favor of the Transaction. ELMG has not
requested or received a binding commitment from these directors,
officers or shareholders with respect to their tender of LXE
Share or their voting of ELMG Shares.
Terms of the Exchange Offer
Upon the terms and subject to the conditions of the Exchange
Offer, ELMG hereby offers to exchange ELMG Shares for all
outstanding LXE Shares, at an exchange ratio of .75 ELMG Shares
for each LXE Share, provided that such LXE Shares are validly
tendered by the Expiration Date and not withdrawn as provided at
"Withdrawal Rights." The term "Expiration Date" means 12:00
midnight, Atlanta time, on December 30, 1996, unless ELMG extends
the period of time for which the Exchange Offer is open, in which
event the term "Expiration Date" means the latest time and date
to which the Exchange Offer is so extended by ELMG.
Upon the terms and subject to the conditions of the Exchange
Offer, ELMG will exchange all LXE Shares for ELMG Shares.
Tendering shareholders will not be obligated to pay any charges
or expenses of the Exchange Agent or any brokerage commissions.
Except as set forth in the Letter of Transmittal, any transfer
taxes on the exchanged LXE Shares pursuant to the Exchange Offer
will be paid by or on behalf of ELMG unless such payment would
jeopardize the tax-free nature of the Transaction for federal
income tax purposes. Currently, ELMG is not aware of any
transfer taxes, the payment of which by ELMG would have such a
result.
No fractional ELMG Shares will be distributed. The Exchange
Agent, acting as agent for LXE shareholders otherwise entitled to
receive fractional shares, will aggregate all fractional shares
and sell them for the accounts of such shareholders. Proceeds
from sales of fractional shares will be paid by the Exchange
Agent based upon the average gross selling price per share of all
such sales.
The Exchange Offer is subject to certain conditions set forth
below at "Certain Conditions of the Exchange Offer," including
the conditions, which cannot be waived, (i) that on or before the
Expiration Date, ELMG's shareholders approve the issuance of ELMG
Shares pursuant to the Transaction and certain amendments to the
ELMG Stock Plan related to the conversion of LXE Options in the
Merger, and (ii) that ELMG receive sufficient tenders of LXE
Shares to increase its ownership to at least 90% and that it then
causes the Merger to occur immediately after accepting such
tendered Shares. If any condition is not satisfied, ELMG may (i)
terminate the Exchange Offer and return all tendered LXE Shares
to tendering shareholders, (ii) extend the Exchange Offer and,
subject to withdrawal rights as set forth below at "Withdrawal
Rights," retain all such LXE Shares until the expiration of the
Exchange Offer as so extended, or (iii) waive such condition
(other than the conditions specifically referred to in the
preceding sentence) and, subject to any requirement to extend the
period during which the Exchange Offer is open, exchange all LXE
Shares validly tendered for exchange by the Expiration Date and
not withdrawn. For a description of ELMG's right to extend the
period during which the Exchange Offer is open and to amend or
terminate the Exchange Offer, see "Extension of Tender Period;
Termination; Amendment," below.
This Offering Circular/Prospectus and the related Letter of
Transmittal will be mailed to record holders of LXE Shares and
will be furnished, for transmittal to beneficial owners of LXE
Shares, to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the LXE shareholder list or,
if applicable, who are listed as participants in a clearing
agency's security position listing.
Conversion of LXE Options
LXE has maintained the LXE Stock Plan, under which it has from
time to time issued Options to acquire LXE Shares to its
directors, officers and other senior employees. All such LXE
Options have been issued at the fair market value of the LXE
Shares on the date the option was granted. Options to acquire
366,543 LXE Shares remain outstanding, and options for 293,118
shares currently are exercisable at prices ranging from $3.66 to
$18.25. The remaining options for 53,425 shares become
exercisable not later than September 26, 2002, at option prices
ranging from $5.66 to $11.25. The ELMG Special Committee and
other members of the ELMG Board believe that stock options are an
important tool for attracting and retaining qualified personnel,
and for aligning the interests of key employees with those of the
shareholders. As a result, the ELMG Special Committee and the
ELMG Board believe that the LXE Options should be converted into
options to acquire .75 ELMG Shares for each LXE Share under
option, subject to the same vesting and expiration dates and
other material terms as the existing LXE Options. The exercise
prices of the ELMG Options would be adjusted proportionately
upwards by one-third, such that the aggregate exercise price for
each option would be unchanged by the Merger conversion.
Under the LXE Stock Plan, the outstanding LXE Options could,
as an alternative to conversion into ELMG Options, be canceled in
the Merger, but only if the option holders first had the
opportunity to exercise their options and thus receive ELMG
Shares in the Merger. The ELMG Special Committee, the
Compensation Committee of the ELMG Board and the full ELMG Board
all believe that it is preferable and more consistent with the
original intent of the LXE Options to convert them into ELMG
Options, thereby maintaining the equity incentives that options
provide, and limiting the potential adverse effects of
substantial sales of ELMG Shares by officers and employees who,
if the cancellation alternative were elected, would be required
to cover the exercise prices and taxes on income realized on
exercise. The ELMG Special Committee, the Compensation Committee
and the full ELMG Board also concluded that converting the
outstanding LXE Options into a proportionate number of comparable
ELMG Options was preferable to making cash payments to buy out
LXE Options at their respective spreads, because the cash buyout
approach would involve current accounting charges and use of
cash, and also would eliminate the continuing incentives intended
at the time the LXE Options were granted.
Procedures for Tendering LXE Shares
To tender LXE Shares pursuant to the Exchange Offer, either:
(a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the
Letter of Transmittal must be received by the Exchange Agent at
one of its addresses set forth on the back cover of this Offering
Circular/Prospectus and either (i) certificates for the shares of
LXE Shares to be tendered must be received by the Exchange Agent
at one of such addresses, or (ii) such LXE Shares must be
delivered pursuant to the procedures for book-entry transfer
described below (and a confirmation of such delivery received by
the Exchange Agent), in each case by the Expiration Date; or (b)
the guaranteed delivery procedure described below must be
complied with.
The Exchange Agent will establish an account with respect to
the LXE Shares at The Depository Trust Corporation ("DTC" or
collectively, the "Book-Entry Transfer Facility") for purposes of
the Exchange Offer within two business days after the date of
this Offering Circular/Prospectus, and any financial institution
that is a participant in the system of any Book-Entry Transfer
Facility may make delivery of LXE Shares by causing such Book-Entry
Transfer Facility to transfer such LXE Shares into the
Exchange Agent's account in accordance with the procedures of
such Book-Entry Transfer Facility. However, although delivery of
LXE Shares may be effected through book-entry transfer, the
Letter of Transmittal (or facsimile thereof) and any other
required documents must, in any case, be received by the Exchange
Agent at one of its addresses set forth on the back cover of this
Offering Circular/Prospectus by the Expiration Date, or the
guaranteed delivery procedure 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 Exchange Agent.
Except as otherwise provided below, all signatures on a Letter
of Transmittal must be guaranteed by a financial institution
(including most banks, savings and loan associations and
brokerage houses) which is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). Signatures on a
Letter of Transmittal need not be guaranteed if (a) the Letter of
Transmittal is signed by the registered holder of the LXE Shares
tendered therewith and such holder has not completed the box
entitled "Special Exchange Instructions" on the Letter of
Transmittal, or (b) such LXE Shares are tendered for the account
of an Eligible Institution. See Instructions 5 and 7 of the
Letter of Transmittal.
If a shareholder desires to tender LXE Shares pursuant to the
Exchange Offer and cannot deliver such LXE Shares and all other
required documents to the Exchange Agent by the Expiration Date,
such LXE Shares may nevertheless be tendered if all of the
following conditions are met:
(i) such 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 ELMG
is received by the Exchange Agent by the Expiration Date; and
(iii) the certificates for such LXE Shares (or a
confirmation of a book-entry transfer of such LXE Shares into the
Exchange Agent's account at one of the Book Entry Transfer
Facilities), together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal, are received by
the Exchange Agent within five NASDAQ trading days after the date
of execution of the Notice of Guaranteed Delivery.
The method of delivery of LXE Shares and all other required
documents is at the option and risk of the tendering shareholder.
If certificates for LXE Shares are sent by mail, registered mail
with return receipt requested, properly insured, is recommended
and sufficient time to ensure timely receipt should be allowed.
To avoid backup federal income tax withholding with respect to
ELMG Shares received by a shareholder pursuant to the Exchange
Offer, the shareholder must provide the Exchange Agent with his
correct taxpayer identification number or certify that he is not
subject to backup federal income tax withholding by completing
the Substitute Form W-9 included in the Letter of Transmittal.
The tender of LXE Shares pursuant to any one of the procedures
described above will constitute an agreement between the
tendering shareholder and ELMG upon the terms and subject to the
conditions of the Exchange Offer.
All questions as to the form of documents and the validity,
eligibility (including time of receipt) and acceptance for
exchange of any tender of LXE Shares will be determined by ELMG,
in its sole discretion, which determination will be final and
binding. ELMG reserves the absolute right to reject any or all
tenders of LXE Shares determined by it not to be in proper form
or the acceptance for exchange of LXE Shares which may, in the
opinion of ELMG's counsel, be unlawful. ELMG also reserves the
absolute right to waive any defect or irregularity in any tender
of LXE Shares. None of ELMG, the Exchange Agent, the Information
Agent, the Dealer Manager or any other person will be under any
duty to give notification of any defect or irregularity in
tenders, or incur any liability for failure to give any such
notification.
Exchange of LXE Shares
Upon the terms and subject to the conditions of the Exchange
Offer, ELMG will accept for exchange, and will transfer ELMG
Shares in exchange for, LXE Shares validly tendered and not
withdrawn by the Expiration Date as promptly as practicable
after the Expiration Date. In addition, ELMG reserves the right,
in its sole discretion subject to Rule 14e-1(c) promulgated under
the Exchange Act, to delay the acceptance for exchange, or delay
exchange, of any LXE Shares in order to comply with any
applicable law. For a description of ELMG's right to terminate
the Exchange Offer and not accept or exchange, or to delay
acceptance or exchange of any LXE Shares, see "Extension of
Tender Period; Termination; Amendment," below.
For purposes of the Exchange Offer, ELMG shall be deemed to
have accepted for exchange and exchanged LXE Shares tendered for
exchange when, as and if ELMG gives oral or written notice to the
Exchange Agent of its acceptance of the tenders of such LXE
Shares for exchange. Exchange of LXE Shares accepted for
exchange pursuant to the Exchange Offer will be made by deposit
of tendered LXE Shares with the Exchange Agent, which will act as
agent for the tendering shareholders for the purpose of receiving
ELMG Shares from ELMG and transmitting such ELMG Shares to
tendering shareholders. In all cases, exchange for shares of LXE
Shares accepted for exchange pursuant to the Exchange Offer will
be made only after timely receipt by the Exchange Agent of
certificates for such LXE Shares (or of a confirmation of a book-entry
transfer of such LXE Shares into the Exchange Agent's
account at one of the Book-Entry Transfer Facilities), a properly
completed and duly executed Letter of Transmittal (or facsimile
thereof), and any other required documents. For a description of
the procedure for tendering LXE Shares pursuant to the Exchange
Offer, see " Procedures for Tendering LXE Shares," above.
Accordingly, exchanges of ELMG Shares for LXE Shares may be made
to tendering shareholders at different times if delivery of the
LXE Shares and other required documents occur at different times.
Under no circumstances will interest be paid by ELMG pursuant to
the Exchange Offer, regardless of any delay in making such
exchange.
If certain events occur, ELMG may not be obligated to exchange
ELMG Shares for LXE Shares pursuant to the Exchange Offer. See
"Certain Conditions of the Exchange Offer," below.
If any tendered LXE Shares are not exchanged pursuant to the
Exchange Offer for any reason, or if certificates are submitted
for more LXE Shares than are tendered, certificates for such
unexchanged or untendered LXE Shares will be returned (or, in the
case of LXE Shares tendered by book-entry transfer, such LXE
Shares will be credited to an account maintained at one of the
Book-Entry Transfer Facilities), without expense to the tendering
shareholder, as promptly as practicable following the expiration
or termination of the Exchange Offer.
Withdrawal Rights
Tenders of LXE Shares made pursuant to the Exchange Offer may
be withdrawn at any time before the Expiration Date. Thereafter,
such tenders are irrevocable, except that they may be withdrawn
after January 26, 1997 unless theretofore accepted for exchange
as provided in this Offering Circular/Prospectus. If ELMG
extends the period during which the Exchange Offer is open, is
delayed in its acceptance of LXE Shares for exchange or is unable
to accept LXE Shares for exchange pursuant to the Exchange Offer
for any reason, then, without prejudice to ELMG's rights under
the Exchange Offer, the Exchange Agent may, on behalf of ELMG,
retain all LXE Shares tendered, and such LXE Shares may not be
withdrawn except as otherwise provided in this section, subject
however to legal restrictions identified below at "Extension of
Tender Period; Termination; Amendment."
To be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth on the back
cover of this Offering Circular/Prospectus, and must specify the
name of the shareholder who tendered the LXE Shares to be
withdrawn and the number of LXE Shares to be withdrawn. If the
LXE Shares to be withdrawn have been delivered to the Exchange
Agent, a signed notice of withdrawal with signatures guaranteed
by an Eligible Institution (unless not required by the terms set
forth above at "Procedures for Tendering LXE Shares") must be
submitted before such LXE Shares will be released. In addition,
such notice must specify, in the case of LXE Shares tendered by
delivery of certificates, the name of the registered holder (if
different from that of the tendering shareholder) and the serial
numbers shown on the particular certificates evidencing the LXE
Shares to be withdrawn or, in the case of LXE 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 LXE Shares. Withdrawals may not be rescinded and LXE
Shares withdrawn will thereafter be deemed not validly tendered
for purposes of the Exchange Offer. However, withdrawn LXE
Shares may be retendered by again following one of the procedures
described above at "Procedures for Tendering LXE Shares" before
the Expiration Date.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by ELMG,
in its sole discretion, which determination will be final and
binding. None of ELMG, the Exchange Agent, the Information
Agent, the Dealer Manager or any other person will be under any
duty to give notification of any defect or irregularity in any
notice of withdrawal, or incur any liability for failure to give
any such notification.
Extension of Tender Period; Termination; Amendment
ELMG reserves the right (but will not be obligated), at any
time or from time to time, in its sole discretion and regardless
of whether or not any of the conditions specified below at
"Certain Conditions of the Exchange Offer" have been satisfied,
to (i) extend the period during which the Exchange Offer is open
by giving oral or written notice of such extension to the
Exchange Agent and by making public announcement of such
extension, or (ii) amend the Exchange Offer in any respect by
making a public announcement of such amendment. There can be no
assurance that ELMG will exercise its right to extend or amend
the Exchange Offer.
If ELMG materially changes the terms of the Exchange Offer
(other than a change in price or percentage of securities sought)
or the information concerning the Exchange Offer, or waives a
material condition of the Exchange Offer, ELMG will extend the
Exchange Offer, if required by applicable law, for a period
sufficient to allow shareholders to consider the amended terms of
the Exchange Offer. Certain rules promulgated under the Exchange
Act provide that the minimum period during which an 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 on
the facts and circumstances, including the relative materiality
of such terms or information. The Commission has stated that, as
a general rule, it is of the view that an offer should remain
open for a minimum of five business days from the date that
notice of such a material change is first published, sent or
given, and that, if material changes are made with respect to
information that approaches the significance of price and share
levels, a minimum of ten business days may be required to allow
adequate dissemination and investor response. If (i) ELMG
increases or decreases the consideration offered for LXE Shares
pursuant to the Exchange Offer or ELMG decreases the number of
LXE Shares eligible for exchange, and (ii) the Exchange Offer is
scheduled to expire at any time earlier than the expiration of a
period ending on the tenth business day from and including the
date that notice of such increase or decrease is first published,
sent or given, the Exchange Offer will be extended until the
expiration of such period of ten business days. The term
"business day" means any day other than a Saturday, Sunday or
federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, Atlanta time.
ELMG also reserves the right, in its sole discretion, if any
condition specified below at "Certain Conditions of the Exchange
Offer" has not been satisfied on or prior to the Expiration Date
and so long as LXE Shares have not theretofore been accepted for
exchange, to delay (except as otherwise required by applicable
law) acceptance of, or the delivery of ELMG Shares in exchange
for, any tendered LXE Shares, or to terminate the Exchange Offer
and not accept, or deliver ELMG Shares in exchange for, any such
LXE Shares.
If ELMG extends the period of time during which the Exchange
Offer is open for any reason, is delayed in accepting or in
delivering ELMG Shares in exchange for, any LXE Shares, or is
unable to accept or so deliver in exchange for, any tendered LXE
Shares, then, without prejudice to ELMG's rights under the
Exchange Offer, the Exchange Agent may, on behalf of ELMG, retain
all LXE Shares tendered, and such LXE Shares may not be withdrawn
except as otherwise provided above at "Withdrawal Rights." The
reservation by ELMG of the right to delay acceptance, or exchange
of, any LXE Shares is subject to the requirements of Rule 14e-1(c)
under the Exchange Act, which requires that ELMG pay the
consideration offered or return the LXE Shares deposited by or on
behalf of shareholders promptly after the termination or
withdrawal of the Exchange Offer.
Any extension, termination or amendment of the Exchange Offer
will be followed as promptly as practicable by a public
announcement thereof. Without limiting the manner in which ELMG
may choose to make any public announcement, ELMG will have no
obligation (except as otherwise required by applicable law) to
publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News
Service, subject to ELMG's obligations under Rule 14d-4(c) under
the Exchange Act (relating to the dissemination of public
announcements concerning material changes in the Offering
Circular/Prospectus), if such rule is applicable. If the
Exchange Offer is extended, Commission regulations require a
public announcement of such extension no later than 9:00 a.m.,
Atlanta time, on the next business day after the previously
scheduled Expiration Date.
Certain Conditions of the Exchange Offer
ELMG may not accept tendered LXE Shares for exchange unless
each of the following conditions, which may not be waived by
ELMG, shall have been satisfied:
(a) The shareholders of ELMG, acting at a duly convened
meeting by vote of not less than half of the ELMG Shares voted,
shall have approved the issuance of ELMG Shares in the
Transaction, and certain amendments to the ELMG Stock Plan
related to conversion of LXE Options in the Merger (see "Approval
by ELMG's Shareholders," below); and
(b) There shall have been tendered in the Exchange Offer
and not withdrawn at least that number of LXE Shares as shall,
upon acceptance thereof, increase ELMG's ownership of LXE Shares
to at least 90% of those then-outstanding, and ELMG shall have
provided to the Exchange Agent its irrevocable commitment to
cause the Merger to occur immediately following such acceptance.
Notwithstanding any other provision of the Exchange Offer and
without prejudice to ELMG's other rights under the Exchange
Offer, ELMG shall not be required to accept or deliver ELMG
Shares in exchange for any LXE Shares, and may terminate the
Exchange Offer as provided above at "Extension of Tender Period;
Termination; Amendment," if any of the following conditions
exists:
(c) there shall be threatened, instituted or pending any
action or proceeding by any government or governmental authority
or agency, domestic or foreign, or by any other person, domestic
or foreign, before any court or governmental authority or agency,
domestic or foreign, (i) challenging or seeking to make illegal,
to delay or otherwise directly or indirectly to restrain or
prohibit the making of the Exchange Offer or any other material
element of the Transaction, the acceptance for exchange of, or
delivery of ELMG Shares in exchange for, some of or all of the
LXE Shares by ELMG, or seeking to obtain material damages or
otherwise directly or indirectly relating to the transactions
contemplated by the Exchange Offer (including the other elements
of the Transaction), (ii) seeking any material diminution in the
benefits expected to be derived by ELMG or any of its affiliates,
including LXE , as a result of the transactions contemplated by
the Exchange Offer (or any other elements of the Transaction), or
(iii) that otherwise, in the reasonable judgment of ELMG, has or
may have material adverse significance with respect to either the
value of ELMG or any of its subsidiaries or affiliates (including
LXE) or the value of the LXE Shares to ELMG;
(d) there shall be any action taken, or any statute,
rule, regulation, injunction, order or decree proposed, enacted,
enforced, promulgated, issued or deemed applicable
to the Exchange Offer or any transaction contemplated by the
Exchange Offer (including the other elements of the Transaction)
by any court, government or governmental authority or agency,
domestic or foreign, that, in the reasonable judgment of ELMG
might, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (iii) of paragraph (c)above;
(e) there shall have occurred (i) any general suspension
of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the counter market,
(ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any
material adverse change (or development or threatened development
involving a prospective material adverse change) in United States
or any other currency exchange rates, or a suspension of or a
limitation on the markets therefor, (iv) the commencement of a
war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (v)
any limitation (whether or not mandatory) by any governmental
authority or agency on, or any other event that, in the
reasonable judgment of ELMG, might adversely affect, the
extension of credit by banks or other financial institutions, or
(vi) in the case of any of the foregoing existing at the time of
the commencement of the Exchange Offer, a material acceleration
or worsening thereof; or
(f) any material adverse change (i) shall have occurred
or been threatened (or any development shall have occurred or
been threatened involving a prospective material adverse change)
in the business, financial condition, results of operations or
prospects of LXE , or (ii) shall have occurred in the market
price of the LXE Shares or in the United States securities,
financial or commodities markets, or ELMG shall have become aware
of any facts which, in the reasonable judgment of ELMG, have or
may have material adverse significance with respect to the value
of LXE Shares to ELMG, which, in the sole judgment of ELMG, in
any such case and regardless of the circumstances (including any
action or omission by ELMG) giving rise to any such condition,
makes it inadvisable to proceed with such acceptance for exchange
of, or delivery of ELMG Shares in exchange for, any LXE Shares.
The foregoing conditions (c) - (f) are for the sole benefit
of ELMG and may be asserted by ELMG in its sole discretion
regardless of the circumstances (including any action or omission
by ELMG) giving rise to any such condition or may be waived by
ELMG in its sole discretion in whole at any time or in part from
time to time. The failure by ELMG at any time to exercise its
rights under any of the foregoing conditions shall not be deemed
a waiver of any such right. The waiver of any such right with
respect to particular facts and circumstances shall not be deemed
a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right which may be
asserted at any time or from time to time.
Any determination by ELMG concerning the events described in
this section will be final and binding upon all parties. All
applicable conditions must be either waived or satisfied prior to
the Expiration Date.
In addition, ELMG will not accept for exchange any LXE Shares
tendered, and no ELMG Shares will be transferred in exchange for
any such LXE Shares, at any time at which there is in effect a
stop order issued by the Commission with respect to the
Registration Statement under which the ELMG Shares are being
offered.
Approval by ELMG's Shareholders
The NASD's rules for securities traded on the NASDAQ National
Market System require shareholder approval of transactions in
which any director, officer or substantial shareholder of the
traded company has a 5% or greater interest (or such persons
collectively have a 10% or greater interest) in the company to be
acquired, or in the consideration to be delivered in the
transaction, and the present or potential issuance of common
stock could result in an increase in outstanding common shares of
5% or more. Certain holders of in excess of 5% of the ELMG
Shares, as well as certain ELMG directors and officers, have
interests in LXE exceeding these individual or collective
threshold levels. The Shares remaining available for option
under the ELMG Stock Plan are not sufficient to allow conversion
of all outstanding LXE Options -- of the 500,000 shares
authorized under that Plan, 73,280 shares remain available for
options, whereas up to 274,907 shares would be required for
conversion of outstanding LXE Options in the Merger. In
addition, some holders of LXE Options currently are not employees
of LXE and would not be eligible to receive a current grant of an
ELMG Option under the ELMG Stock Plan. Under both the ELMG Stock
Plan and NASD rules, shareholder approval is required to amend
that plan to increase the number of available shares and to issue
ELMG Options to all current holders of LXE Options.
ELMG intends to seek shareholder approval, of the matters
required to complete the Transaction, at the ELMG Special
Meeting, which is expected to be held on December 30, 1996. See
"THE EXCHANGE OFFER -- Certain Conditions of the Exchange Offer."
Certain Federal Income Tax Consequences
The following discussion summarizes certain federal income tax
consequences of the Exchange Offer and Merger to holders of LXE
Shares, but does not purport to be a complete analysis of all of
the potential tax effects of the Transaction. The discussion is
based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, Internal Revenue Service ("IRS")
rulings and judicial decisions now in effect, all of which are
subject to change at any time by legislative, judicial or
administrative action, and any such change may be applied
retroactively. No information is provided herein with respect to
foreign, state or local tax laws or estate and gift tax
considerations. This information is directed to LXE shareholders
who hold their LXE Shares as "capital assets" within the meaning
of Section 1221 of the Code. This information does not apply to
LXE shareholders who are entitled to special treatment under
federal income tax laws, including dealers in securities, banks,
insurance companies, tax-exempt organizations, non-United States
persons, and persons who acquired their LXE Shares pursuant to
the exercise of options or otherwise as compensation. ELMG does
not intend to request a ruling from the IRS with respect to the
Exchange Offer or the Merger. The opinion of Kilpatrick & Cody,
L.L.P., tax counsel to ELMG ("Tax Counsel") regarding federal
income tax consequences relevant to the Exchange Offer and Merger
is filed as an exhibit to the Registration Statement of which
this Offering Circular/Prospectus is a part, and is subject to
the qualifications stated therein. Such opinion, however, has no
binding effect on the IRS or the courts.
In the opinion of Tax Counsel, (i) the Exchange Offer together
with the Merger will constitute a tax-free exchange under
Section 368 of the Code; (ii) no income, gain or loss will be
recognized by LXE shareholders upon the receipt of ELMG Shares in
exchange for their LXE Shares, (iii) no income, gain or loss will
be recognized by ELMG or LXE pursuant to the Exchange Offer and
Merger, (iv) the tax basis of the ELMG Shares received by LXE
shareholders will be equal to their tax basis in LXE Shares
immediately before consummation of the Exchange Offer and Merger,
(v) the holding period of the ELMG Shares received by each LXE
shareholder will include the period for which such shareholder
has held the LXE Shares surrendered in exchange therefor, and
(vi) the payment of cash in lieu of fractional share interests in
ELMG will be treated for federal income tax purposes as if the
fractional shares were issued as part of the overall transaction,
and then were redeemed by ELMG. The cash payments will be
treated as having been received as distributions in full payment
in exchange for the shares redeemed as provided in Section 302(a)
of the Code.
Certain LXE shareholders may be subject to backup withholding
at a rate of 20% on payments of cash in lieu of fractional share
interests in ELMG. In order to avoid such backup withholding,
each LXE shareholder must provide the Exchange Agent with such
LXE shareholder's correct taxpayer identification number and
certify that such is not subject to such backup withholding by
completing the Substitute Form W-9 included in the Letter of
Transmittal.
Effects of the Exchange Offer and Merger
As a result of the Exchange Offer and Merger, if completed,
LXE would become a wholly owned subsidiary of ELMG, and LXE's
shareholders other than ELMG would hold, in lieu of their
currently outstanding LXE Shares, ELMG Shares representing
approximately 9.3% of the then-outstanding equity ownership of
ELMG.
LXE Shares would no longer be traded on NASDAQ or on any other
market, and would no longer be registered under the Exchange Act.
ELMG currently intends that the business of LXE will operate in
substantially the same way as at present, except for greater
exchange and sharing of technical, production and marketing
resources among LXE and ELMG's other subsidiaries. ELMG has
formulated no plans for changes in the officers of LXE following
the Merger, but may do so in the future. It is unlikely that
LXE's Board would continue to include members who were not
employed by or otherwise affiliated with ELMG.
Fees and Expenses
Financial Advisor and Dealer Manager. Oppenheimer is acting
as ELMG's financial advisor in connection with the proposed
acquisition of LXE and as Dealer Manager for the Exchange Offer.
In connection with such services, ELMG has agreed to pay to
Oppenheimer an aggregate fee of up to $300,000, plus certain
expenses. See "THE EXCHANGE OFFER--Financial Advisor."
Oppenheimer may be an underwriter of the ELMG Shares under the
Securities Act.
The LXE Special Committee is incurring fees and expenses of
its legal counsel and financial advisor in connection with
determining its position with respect to the Exchange Offer, and
is also incurring printing and mailing expenses to disseminate
that portion to the LXE shareholders. ELMG has agreed to pay
such fees and expenses on behalf of LXE and the LXE Special
Committee.
Information and Exchange Agents. ELMG has retained Corporate
Investor Communications, Inc. to act as the Information Agent and
SunTrust Bank, Atlanta to act as the Exchange Agent in connection
with the Exchange Offer. The Information Agent may contact
holders of LXE Shares by mail, telephone, telex, telegraph and
personal interviews, and may request brokers, dealers and other
nominee shareholders to forward materials relating to the
Exchange Offer to beneficial owners. The Information Agent and
the Exchange Agent each will receive reasonable and customary
compensation for their respective services, will be reimbursed
for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection therewith,
including certain liabilities under the federal securities laws.
The Information Agent and the Exchange Agent have not been
retained to make solicitations or recommendations in their
respective roles as Information Agent or Exchange Agent.
Others. Brokers, dealers, commercial banks and trust
companies will, upon request, be reimbursed by ELMG for
reasonable and necessary costs and expenses incurred by them in
forwarding materials to their customers.
It is estimated that the expenses incurred by ELMG in
connection with the Exchange Offer and Merger will be
approximately as set forth below:
Investment banking fees $ 300,000
Legal fees 75,000
Expenses of the LXE Special
Committee, including legal
and financial advisor fees 150,000
Accounting and Exchange Agent fees
Filing fees 5,000
Printing, mailing and Information
Agent fees 55,000
Miscellaneous 15,000
---------
$ 650,000
=========
Source of Funds
ELMG expects to obtain the funds for fees and expenses related
to the Transaction from available cash and cash equivalents.
Regulatory Approvals
ELMG is not aware of any license or regulatory permit which
appears to be material to the business of LXE and which is likely
to be adversely affected by ELMG's acquisition of LXE Shares
pursuant to the Exchange Offer and Merger, or of any approval or
other action by any state, federal or foreign government or
governmental agency that would be required before the acquisition
of LXE Shares pursuant to the Exchange Offer or Merger. ELMG
presently intends to take such actions with respect to any
approvals as will enable it to acquire LXE Shares as
expeditiously as possible. In this regard, ELMG expressly
reserves the right to challenge the validity and applicability of
any state, foreign or other statutes or regulations purporting to
require approval of the commencement or consummation of the
Exchange Offer and Merger.
There can be no assurance that any license, permit, approval
or other action, if needed, would be obtained or, if so obtained,
when, or that adverse consequences might not result to LXE or to
its business in the event of adverse regulatory action or
inaction.
Miscellaneous
ELMG is not aware of any jurisdiction where the making of the
Exchange Offer or the acceptance thereof would not comply with
applicable law. If ELMG becomes aware of any jurisdiction where
the making of the Exchange Offer or acceptance thereof would not
comply with applicable law, ELMG will make a good faith effort to
comply with such law. If, after such good faith effort, ELMG
cannot comply, the Exchange Offer will not be made to, nor will
tenders be accepted from or on behalf of, holders of LXE Shares
in such jurisdiction.
No person has been authorized to give any information or make
any representation on behalf of ELMG not contained in this
Offering Circular/Prospectus or in the Letter of Transmittal and,
if given or made, such information or representation must not be
relied upon as having been authorized.
INFORMATION ABOUT LXE
Copies of LXE's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, and of its Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, are delivered with this
Offering Circular/Prospectus. The description of LXE in such
Reports and in certain other reports filed by LXE with the
Commission pursuant to the Exchange Act is incorporated herein by
reference. See "INCORPORATION OF DOCUMENTS BY REFERENCE."
INFORMATION ABOUT ELMG
The description of ELMG set forth in its Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and in
subsequent reports filed by ELMG with the Commission pursuant to
the Exchange Act is incorporated herein by reference. See
"INCORPORATION OF DOCUMENTS BY REFERENCE."
ELMG is subject to the informational filing requirements of
the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating
to its business, financial statements and other matters.
Information as of particular dates concerning ELMG's directors
and executive officers, their remuneration, options granted to
them, the principal holders of ELMG's securities and any material
interests of such persons in transactions with ELMG is required
to be disclosed in proxy statements distributed to ELMG's
shareholders and filed with the Commission. Such reports, proxy
statements and other information are available for inspection and
may be copied as described in "AVAILABLE INFORMATION," or
obtained in the manner specified on page -ii- of this Offering
Circular/Prospectus.
Except as described above and in "THE EXCHANGE OFFER --
Background" and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,"
(a) neither ELMG nor, to the best of ELMG's knowledge, any of
ELMG's directors and executive officers has any contract,
arrangement, understanding or relationship with any other person
with respect to any securities of LXE , and (b) there have not
been any contracts, negotiations or transactions between (i) ELMG
or any of ELMG's directors, officers or affiliates, on the one
hand, and (ii) LXE or any of its directors, officers or
affiliates, on the other hand, that are required to be disclosed
pursuant to the rules and regulations of the Commission. None of
ELMG and its directors and executive officers has effected any
transaction in LXE Shares during the 60 days preceding the
commencement of the Exchange Offer.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LXE's Relationship and Transactions with ELMG
As of October 11, 1996, ELMG owned 4,543,074 LXE Shares,
representing approximately 81.5% of the 5,574,518 outstanding LXE
Shares. ELMG has the power, acting alone, to elect the entire
LXE Board and, except as may otherwise be provided by law, to
approve any action requiring shareholder approval, and three of
the six members of the LXE Board are also members of the ELMG
Board. ELMG's ownership of more than a majority of the
outstanding LXE Shares precludes a change in control of LXE not
favored by ELMG.
During the past three fiscal years, ELMG has provided LXE with
a variety of services, and ELMG and LXE have entered into a
variety of transactions. It is the intention of LXE and ELMG
that all transactions between them, or between LXE and any other
affiliated party, will be beneficial to LXE and will be approved
by disinterested members of the LXE Board. In this regard,
transactions with ELMG or other affiliates are reviewed and
approved by the LXE Audit Committee members who are not otherwise
affiliated with ELMG. Reviews of continuing relationships, such
as those under the Services Agreement or with respect to the
retirement and group health plans, as described below, occur no
less often than annually. The following is a description of
transactions between ELMG and LXE since the beginning of the
fiscal year ended December 31, 1992:
Administrative and Other Services. Pursuant to a Services
Agreement that is updated annually, ELMG provides administrative
and other services to LXE. Under this Agreement, ELMG is
obligated for a one-year term, and during any subsequent
renewals, to provide services as reasonably required by LXE. The
Services Agreement covers accounting services, services related
to facilities operations and maintenance, data processing
services, investor relations services, and engineering design
services. Amounts to be paid are determined by reference to
allocation formulas that are reviewed each year and are intended
to reimburse ELMG for the cost of providing each category of
services, including overhead costs associated with the personnel
and facilities involved. The Services Agreement also provides
for the allocation to LXE of approximately 50% (45% in 1994) of
the compensation and overhead costs of ELMG's Chief Executive
Officer, Chief Financial Officer and General Counsel, each of
whom also serves LXE in a similar capacity. This allocation was
determined after consideration of anticipated relative time
commitments and of anticipated relative net sales of the two
companies for the year in question. For all services under the
Services Agreements, LXE paid to ELMG $1,579,000 for 1993,
$1,739,000 for 1994, and $1,724,000 for 1995, and ELMG
anticipates that the amount to be paid in 1996 will not
significantly differ from the 1995 amount.
In order to reduce the number of items for which allocations
are made, the Services Agreement provides that, to the extent
feasible, all third-party suppliers will submit invoices directly
to LXE for goods or services provided for LXE's benefit; to the
extent separate invoicing is not feasible, third-party invoices
are allocated between LXE and ELMG on a basis determined by ELMG
to fairly reflect the respective benefits to LXE and ELMG.
ELMG believes that it will continue to be beneficial for the
foreseeable future for LXE to obtain a significant portion of its
administrative services from ELMG, whether or not the Transaction
occurs, because of the efficiencies involved in utilizing a
larger-scale, existing administrative structure.
Employee Benefit Plans. LXE personnel participate in a
defined-contribution retirement plan maintained by ELMG and under
which annual contributions are determined from year to year by
the ELMG Board. ELMG has charged LXE $477,000, $411,000, and
$534,000 for the years ended December 31, 1993, 1994 and 1995,
respectively, representing the actual contributions allocated to
the accounts of LXE's employees for the year. LXE also is
responsible for a prorata share of plan overhead expenses.
LXE personnel participate in the group health plans maintained
by ELMG; for the years ended December 31, 1993, 1994 and 1995,
ELMG charged LXE $1,199,000, $1,319,000 and $1,346,000,
respectively, for expenses incurred under these plans, based on
LXE's proportionate share of the covered employee census. ELMG
expects that LXE's personnel will continue to participate in the
ELMG group health plans for the foreseeable future.
LXE personnel are also eligible to participate in the stock
purchase and 401(k) savings plans maintained by ELMG. Under the
stock purchase plan, LXE matches, on a one-for-four basis,
employee salary deductions, up to a maximum matching contribution
of 1-1/4% of base compensation; the employee deductions and LXE
contributions are forwarded to a custodian to be applied to the
purchase of ELMG Sharesfor the employee's account. Under the
ELMG 401(k) savings plan, the employer matches on a one-for-four
basis, up to a maximum matching contribution of 1-1/2% of
eligible compensation, salary deductions for employee personal
savings plan accounts. During the years ended December 31, 1993,
1994 and 1995, LXE's contributions with respect to the
participation of its employees in these plans were $3,000, $3,000
and $23,000, respectively, for the stock purchase plan and
$99,000, $88,000 and $106,000, respectively, for the 401(k)
savings plan.
Technology Park Buildings. In 1991, LXE acquired from ELMG
the 112,000 square-foot 125 Technology Park Building, which had
previously been occupied by ELMG and had been renovated to LXE's
specifications. A portion of the purchase price of this building
is being financed by ELMG under a note providing for monthly
installments of principal and interest over a 10-year period,
bearing interest at the prime rate, and secured by a junior
mortgage on the building. During 1993, 1994 and 1995, the
principal balance of this note was reduced from $2,496,000 to
$1,672,000, and LXE paid $141,000, $132,000 and $177,000 to ELMG
as interest. During 1993 and 1994, ELMG used approximately
22,000 square feet, and during 1995 approximately 8,000 square
feet, of the 125 Technology Park Building for certain of its
production operations. For such usage, ELMG paid LXE rent of
$3.23 per square foot per year in 1993 and 1994, and $3.70 per
square foot per year in 1995, plus operating expenses. The
rental payments equal LXE's cost, based on actual depreciation
charges, interest cost on the unamortized investment, taxes and
insurance. Also during 1995, ELMG used approximately 20,000
square feet of space in another building located in Technology
Park in which LXE has leased approximately 36,000 square feet.
ELMG paid LXE rent for such space equal to LXE's own lease
payments, or $8.52 per square foot per annum, plus operating
expenses. The amount of such space initially used by ELMG during
1996 was approximately the same as in 1995, but ELMG moved these
production operations to a larger facility in September 1996; LXE
plans to vacate its portion of the building, and is seeking
another tenant to assume its lease obligations, but until this
occurs, ELMG is continuing to reimburse LXE for lease payments on
the 20,000 square feet.
Interests of ELMG Directors and Executive Officers
Thomas E. Sharon is the President and Chief Executive Officer
of ELMG and is the Chairman of the Board and Chief Executive
Officer of LXE. John E. Pippin is the Chairman of the Board of
ELMG and a director of LXE. Don T. Scartz is the Senior Vice
President and Chief Financial Officer, Treasurer and a director
of ELMG, and is Chief Financial Officer and Treasurer of LXE.
William S. Jacobs is Vice President, Secretary and General
Counsel of ELMG, and is Secretary and General Counsel of LXE.
John B. Mowell is a director of both ELMG and LXE.
The tables included at "SECURITY OWNERSHIP" detail the holdings
of ELMG Shares, ELMG Options, LXE Shares and LXE Shares by the
executive officers and directors of ELMG.
SECURITY OWNERSHIP
The following table sets forth certain information
concerning ELMG Shares and LXE Shares beneficially
owned as of November 22, 1996 (except as otherwise
noted), by ELMG's directors and executive officers, and
by persons who beneficially own more than 5% of the
ELMG Shares. The table also sets forth the potential
issuance of ELMG Shares as a result of the Exchange
Offer and Merger, based on each person's holdings of
LXE Shares or LXE Options. Except as otherwise
indicated, each person possessed sole voting and
investment power with respect to the shares shown.
<TABLE>
ELMG Shares LXE Shares Potential ELMG
-------------------------- ------------------------ Shares upon Potential
Amount of Approximate Amount of Approximate Exchange/ Percent of
Beneficial Percent of Beneficial Percent of Conversion of Outstanding
Name Ownership Class Ownership Class LXE Shares ELMG Shares
---- ---------- ----------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Kopp Investment Advisors, Inc. 1,445,455 (1) 18.3% 304,305(1) 5.4% 1,677,955 19.1%
6600 France Avenue So.
Edina, Minnesota 55435
David A. Rocker 779,252 (2) 9.9% - * 779,252 8.9%
Suite 1759
45 Rockefeller Plaza
New York, New York 10111
Dimensional Fund Advisors, Inc. 491,499 (3) 6.2% 168,900 2.9% 618,174 7.0%
1299 Ocean Avenue
Santa Monica, California 90401
Brinson Partners, Inc. 491,800 6.2% - * 491,800 5.6%
209 South LaSalle
Chicago, Illinois 60604-1295
Wellington Management Company 403,000 5.1% - * 403,000 4.6%
75 State Street
Boston, Massachusetts 02109
Anthony J. Iorillo 2,000 (4) * - * 2,000 *
Jerry H. Lassiter 17,672 (4) * - * 17,672 *
John H. Levergood 2,000 (4) * - * 2,000 *
John B. Mowell 30,784 (4) * 26,900 (5) * 50,959 *
John E. Pippin 206,767 (4) 2.6% 114,210 (5) 2.0% 292,425 3.3%
Don T. Scartz 55,252 (4) * 4,092 (5) * 58,321 *
Thomas E. Sharon 117,660 (4) 1.5% 48,219 (5) * 153,824 1.8%
William S. Jacobs 22,033 (4) * 7,000 (5) * 27,283 *
John J. Farrell, Jr. 6,000 (4) * - * 6,000 *
Jeffrey A. Leddy 33,249 (4) * - * 33,249 *
Neilson A. Mackay 22,718 (4) * - * 22,718 *
All directors and executive officers
as a group (11 persons) 516,135 6.5% 200,421 3.5% 666,451 7.6%
- ------------------------------------
* Percentage of shares beneficially owned does not exceed 1%
</TABLE>
(1) Data as of November 11, 1996. Kopp Investment Advisors, Inc.
has advised that it exercises investment discretion as to all listed
shares, but exercises voting power only as to approximately 85,000
ELMG Shares and 15, 000 LXE Shares. Kopp Advisors is the record owner
of 15,000 ELMG Shares and 5,000 LXE Shares.
(2) David A. Rocker has advised that the shares to which he is
deemed to have beneficial ownership are owned by Rocker Partners, L.
P., a New York limited partnership (733,496 shares) and Compass
Holdings, Ltd., a corporation organized under the Business Companies
Ordinance of the British Virgin Islands (81,956 shares). Ownership
data is as of September 20, 1996.
(3) Dimensional Fund Advisors, Inc. (Dimensional) has advised
that the shares of which it is deemed to have beneficial ownership are
held in the portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans; Dimensional serves as investment
manager to all of these entities. Dimensional disclaims beneficial
ownership of all such shares. Ownership data is as of September 20,
1996.
(4) Includes shares that are subject to currently exercisable
options in the amounts of 2,000 for Mr. Iorillo, 10,782 for Mr.
Lassiter, 2,000 for Mr. Levergood, 10,782 for Mr. Mowell, 130,514 for
Dr. Pippin, 42,000 for Mr. Scartz, 109,916 for Dr. Sharon, 9,000 for
Mr. Jacobs, 28,000 for Mr. Leddy, and 20,000 for Dr. Mackay. For Mr.
Mowell, Dr. Pippin and Mr. Jacobs, these totals also include 5,000,
42,593 and 7,400 shares, respectively, as to which each person shares
voting and investment power with family members but disclaims
beneficial interest.
(5) Includes shares that are subject to currently exercisable
options in the amounts of 15,900 for Mr. Mowell, 95,400 for Dr.
Pippin, 40,893 for Dr. Sharon, 2,000 for Mr. Scartz, and 5,000 for
Mr. Jacobs. The total for Mr. Mowell also includes 1,000 shares, and
for Mr. Jacobs 300 shares, as to which each shares voting and
investment power with a family member, but disclaims beneficial
interest.
--------------------------------
LACK OF DISSENTERS' RIGHTS OF LXE AND ELMG SHAREHOLDERS
Neither holders of ELMG Shares nor holders of LXE Shares would be
entitled to dissenters' rights under Georgia law in connection with
the Exchange Offer or Merger, and ELMG does not intend to accord
dissenters' rights to holders of ELMG Shares or LXE Shares. Georgia
law provides that holders of LXE Shares are not entitled to
dissenters' rights if, at the LXE record date for the Merger, LXE
Shares are listed on a national securities exchange (or securities
quotation system such as NASDAQ) and if, as a result of the Merger,
the holders of LXE Shares become entitled to receive only shares of
stock of a corporation which at the effective time of the Merger are
either listed on a national securities exchange (or securities
quotation system such as NASDAQ) or held of record by more than 2,000
shareholders, and cash in lieu of fractional shares. It is expected
that each of these conditions will be satisfied in connection with the
Merger, and that holders of LXE Shares will thus not be entitled to
any dissenters' rights in connection with the Transaction. Georgia
law provides appraisal rights only to shareholders of the constituent
corporations in a merger. Because the Merger would be effected by a
newly formed subsidiary of ELMG, holders of ELMG Shares would not be
entitled to dissenters' rights under Georgia law.
DESCRIPTION OF CAPITAL STOCK OF ELMG
The authorized capital stock of ELMG consists of 75,000,000
shares of common stock, $.10 par value per share, of which 7,641,073
shares currently are outstanding. Holders of ELMG Shares are entitled
to one vote per share on all matters to be voted upon by shareholders.
ELMG has authorized 10,000,000 shares of preferred stock, $1.00 par
value per share. No shares of preferred stock have been issued and
ELMG presently does not contemplate the issuance of such shares.
Antitakeover Provisions
Existing provisions of ELMG's Articles of Incorporation and By
laws could deter, to varying degrees and in various circumstances, an
effort to take control of ELMG without approval of the ELMG Board.
Stockholder Rights Plan. On March 23, 1989, the ELMG Board
adopted the ELMG Stockholder Rights Plan, under which the acquisition
by any person of 20% or more of the outstanding ELMG Shares, without
prior approval of disinterested members of the ELMG Board, would
result in distribution to other ELMG shareholders of rights that would
significantly dilute the interest of the 20% shareholder. The plan is
intended to provide the ELMG Board with sufficient time and leverage
to adequately represent shareholder interests in response to
unsolicited, and potentially abusive or unfair, takeover efforts.
Kopp Investment Advisors, Inc. ("Kopp") beneficially owns 18.3% of the
currently outstanding ELMG Shares, plus 5.4% of the currently
outstanding LXE Shares, and may in the course of its normal activities
acquire beneficial ownership of additional ELMG or LXE Shares. In
that event, if the LXE Shares held by Kopp are exchanged in the
Exchange Offer or converted in the Merger, Kopp could beneficially own
in excess of 20% of the ELMG Shares outstanding after the Merger. In
order to make it possible for Kopp to tender its LXE Shares in the
Exchange Offer, if it wishes to do so, and to support approval of the
Transaction as an ELMG shareholder without further restricting its
investment activities prior to completion of the Transaction, the ELMG
Board has formally consented to the acquisition of additional ELMG
Shares by Kopp in the Exchange Offer and Merger, in an amount not
exceeding 23% of the ELMG Shares outstanding after the Merger. Under
the ELMG Stockholder Rights Plan, Kopp could thereafter acquire up to
an additional 2% of the outstanding ELMG Shares (for aggregate
beneficial ownership not exceeding 25%) without triggering a rights
distribution.
Bylaws Provisions. The Bylaws of ELMG elect coverage of two
provisions of the Georgia Business Corporation Code which would
provide certain protections to ELMG and its shareholders in the event
of an attempt to take over ELMG by third parties. The first provision
(the "Fair Price Provision") is designed to achieve a measure of
assurance that any multi-step attempt to take over ELMG is made on
terms which offer similar treatment of all holders of each class of
ELMG's voting stock. The second provision (the "Business Combination
Provision") is designed to encourage any person who would acquire 10%
or more of the voting stock of ELMG to seek the approval of the ELMG
Board before the acquisition.
These provisions may have the effect of discouraging takeover
attempts and also may have the effect of maintaining the position of
incumbent management. In addition, the provisions may have a
significant effect on the ability of shareholders of ELMG to benefit
from certain kinds of transactions that may be opposed by the
incumbent ELMG Board. Accordingly, before tendering their LXE Shares,
LXE shareholders are urged to consider the Fair Price and Business
Combination Provisions.
The Fair Price Provision requires that a business combination
with a holder of at least 10% of a company's outstanding voting stock
(an "Interested Shareholder") either be unanimously approved by the
members of the board who are unaffiliated with the Interested
Shareholder (the "Continuing Directors"), or recommended by at least
two-thirds of the Continuing Directors and approved by the holders of
a majority of the outstanding shares entitled to vote thereon other
than voting shares beneficially owned by the Interested Shareholder.
If the approval or recommendation requirements cannot be met, then the
business combination cannot be completed unless certain minimum price
criteria and procedural safeguards are satisfied.
The Business Combination Provision prohibits an Interested
Shareholder from engaging in any business combination with ELMG for a
period of five years from the date the person became an Interested
Shareholder, unless either (a) before such person became an Interested
Shareholder, the ELMG Board approves either the business combination
or the transaction which resulted in such person becoming an
Interested Shareholder, (b) the Interested Shareholder becomes the
owner of at least 90% of the voting shares of ELMG in the same
transaction in which he became an Interested Shareholder, excluding
voting shares owned by directors, officers, their affiliates and
associates, subsidiaries of ELMG, and employee stock plans of ELMG in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer (collectively, "Insiders"), or
(c) subsequent to becoming an Interested Shareholder, the Interested
Shareholder acquires additional shares resulting in ownership of at
least 90% of the voting shares and obtains the approval of the holders
of a majority of the voting shares other than voting shares
beneficially owned by the Interested Shareholder and Insiders.
DESCRIPTION OF CAPITAL STOCK OF LXE; COMPARISON
OF ELMG SHARES AND LXE SHARES
LXE has authorized 20,000,000 shares of common stock, $0.01 par
value per share (the "LXE Shares"), with 5,574,518 shares currently
outstanding, of which 4,543,074 are owned by ELMG. Holders of LXE
Shares are entitled to one vote per share on all matters to be voted
upon by shareholders. LXE has authorized 5,000,000 shares of
preferred stock, $1.00 par value per share. No shares of preferred
stock have been issued and LXE presently does not contemplate the
issuance of such shares.
Comparison
Both ELMG and LXE are Georgia corporations. Consequently, except
for the differences noted below, the rights of holders of ELMG Shares
and LXE Shares are substantially identical. The Articles of
Incorporation and the Bylaws of LXE do not elect coverage under the
Fair Price and Business Combination Provisions under which ELMG has
elected coverage. In addition, LXE has not adopted a shareholder
rights plan or any other plan similar to the ELMG Stockholder Rights
Plan described above. See "DESCRIPTION OF CAPITAL STOCK OF ELMG --
Antitakeover Provisions."
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION -- UNAUDITED
The following unaudited pro forma financial information is
presented for informational purposes only and is not necessarily
indicative of either future results of operations or financial
position or of the results of operations or financial position that
would have been reported had the Exchange Offer and Merger been
completed at the beginning of the respective periods or as of the
dates for which such unaudited pro forma information is presented.
The following unaudited Pro Forma Consolidated Condensed
Financial Statements for ELMG has been prepared based upon the
historical consolidated results of operations of both ELMG and LXE and
the historical financial condition of ELMG. LXE is a 81% owned
subsidiary of ELMG and, accordingly, has been consolidated and
included in the historical consolidated financial statements of ELMG.
The pro forma consolidated financial data give effect to the Exchange
Offer and Merger, resulting in LXE being a wholly owned subsidiary of
ELMG. The Exchange Offer and Merger are accounted for as a purchase
based upon the conversion (i) of each LXE Share into .75 ELMG Shares,
and (ii) of each LXE Option into an option for ELMG Shares on the
basis of .75 ELMG Shares for each share subject to the LXE Option,
with the per-share exercise price being adjusted upwards by one third.
The Pro Forma Consolidated Condensed Balance Sheet as of September 30,
1996 assumes that the Exchange Offer and Merger occurred effective as
of the date presented. The Pro Forma Consolidated Condensed Income
Statements assume that the Exchange Offer and Merger occurred
effective as of January 1, 1995.
The Pro Forma Consolidated Condensed Balance Sheet should be read
in conjunction with the accompanying pro forma notes and the separate
historical consolidated financial statements and related notes thereto
of ELMG and LXE reported in their respective Annual Reports on Form
10-K for the fiscal year ended December 31, 1995, and Quarterly
Reports on Form 10-Q for the quarters ended March 31, June 30 and
September 30, 1996, which are incorporated herein by reference. See
"INCORPORATION OF DOCUMENTS BY REFERENCE."
ELMG
Pro Forma Consolidated Balance Sheet -- Unaudited
September 30, 1996
(In thousands)
Pro Forma
As Reported Adjustments As Adjusted
----------- ----------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 4,210 (650)(a) 3,560
Trade accounts receivable, net 45,512 45,512
Inventories 17,694 17,694
Deferred income taxes 1,363 1,363
------- -------
Total current assets 68,779 68,129
Net property, plant and equipment 30,315 30,315
Other assets 8,875 8,875
Goodwill, net of accumulated
depreciation 6,872 10,398 (b) 17,270
------- -------
$ 114,841 124,589
======= =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Current installments of
long-term debt 3,029 3,029
Accounts payable and
accrued liabilities 18,119 18,119
Other current liabilities 2,636 2,636
------- -------
Total current liabilities 23,784 23,784
------- -------
Long-term debt, excluding
current installments 12,422 12,422
Deferred income taxes (note 3) 4,408 (2,229)(c) 2,179
------- -------
Total liabilities 40,614 38,385
------- -------
Minority interest in LXE 6,093 (6,093)(d) -
Stockholders' equity:
Common stock 752 77 (e) 829
Paid-in capital 15,633 15,764 (e) 31,397
Foreign currency translation
adjustment (12) (12)
Retained earnings 51,761 2,229 (c) 53,900
------- -------
Total stockholders' equity 68,134 86,204
------- -------
$114,841 124,589
======= =======
Pro forma adjustments:
(a) Expenses of the Exchange Offer
(b) Goodwill from Exchange Offer and Merger
(c) Write-off of deferred income taxes
(d) Elimination of minority interest
(e) Equity increase from ELMG shares issued in
the Exchange Offer
See accompanying notes to Unaudited Pro Forma Consolidated Financial
Statements.
ELMG
Pro Forma Consolidated Statement of Income --Unaudited
Nine Months Ended September 30, 1996
(In thousands, except per share amounts)
Pro Forma
As Reported Adjustments As Adjusted
----------- ----------- -----------
Net sales $ 106,771 106,771
Cost of sales 69,094 69,094
Selling, general and
administrative expenses 23,053 312 (a)
(315)(b) 23,050
Research and development
expenses 9,136 9,136
------- -------
Operating income 5,488 5,491
Interest and other income,
net of foreign exchange
gains and losses 102 102
Interest expense (831) (831)
------- -------
Income before income
taxes and LXE
minority interest 4,759 4,762
Income taxes (note 3) (1,943) (120)(c) (2,063)
LXE minority interest 100 (100)(d) -
------- -------
Net earnings $ 2,916 2,699
======= =======
Net earnings per
common and common
equivalent share $ .38 .31
======= =======
Weighted average number
of common and common 774 (e)
equivalent shares 7,669 142 (f) 8,585
Pro Forma adjustments:
(a) Amortization of goodwill
(b) Public company expense savings
(c) Income tax effect of expense
savings
(d) Elimination of minority interest
(e) ELMG shares issued in the
Exchange Offer
(f) Common equivalent shares derived
from LXE Options converted to
ELMG Options
See accompanying notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
ELMG
Pro Forma Consolidated Statement of Income --Unaudited
Year Ended December 31, 1995
(In thousands, except per share amounts)
Pro Forma
As Reported Adjustments As Adjusted
----------- ----------- -----------
Net sales $ 128,950 128,950
Cost of sales 83,865 83,865
Selling, general and
administrative expenses 30,836 418 (a)
(420) (b) 30,384
Research and development
expenses 10,392 10,392
------- -------
Operating income 3,857 3,859
------- -------
Interest and other income,
net of foreign exchange
gains and losses 675 675
Interest expense (864) (864)
------- -------
Income before income
taxes and LXE minority
interest 3,668 3,670
Income taxes (note 3) (1,402) (160)(c) 1,562
LXE minority interest 44 (44)(d) -
------- -------
Net earnings $ 2,310 2,108
======= =======
Net earnings per common
and common equivalent
share $ .32 .24
======= =======
Weighted average number of
common and common equivalent
shares 7,266 774 (e)
142 (f)
457 (g) 8,639
Pro Forma adjustments:
(a) Amortization of goodwill
(b) Public company expense savings
(c) Income tax effect of expense savings
(d) Elimination of minority interest
(e) ELMG shares issued in the Exchange Offer
(f) Common equivalent shares derived from LXE
Options converted to ELMG Options
(g) Shares issued in connection with February 1996
purchase of LXE shares from Rocker partnerships
See accompanying notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
ELMG
Notes to Unaudited Pro Forma Financial Statements
(1) Basis of Presentation
The Unaudited Pro Forma Consolidated Financial Statements
for ELMG presented in this document have been prepared based upon
the historical consolidated results of operations and the
historical financial condition of ELMG and LXE. LXE is a 81%
owned subsidiary of ELMG and, accordingly, has been consolidated
and included in the historical consolidated financial statements
of ELMG. The pro forma consolidated financial data give effect
to the Exchange Offer and Merger, resulting in LXE being a
wholly owned subsidiary of ELMG. The Exchange Offer and Merger
are accounted for as a purchase based upon the conversion (i) of
each LXE Share into .75 ELMG Shares, and (ii) of each LXE Option
into an option for ELMG Shares on the basis of .75 ELMG Shares
for each share subject to the LXE Option, with the per-share
exercise price being adjusted upwards by one-third. The Pro
Forma Consolidated Balance Sheet as of September 30, 1996 assumes
that the Exchange Offer and Merger occurred effective as of the
date presented. The Pro Forma Consolidated Income Statements
assume that the Exchange Offer and Merger occurred effective as
of January 1, 1995.
The Unaudited Pro Forma Consolidated Financial Statements
should be read in conjunction with the separate historical
consolidated financial statements and related notes thereto of
ELMG and LXE reported in their respective Annual Reports on Form
10-K for the fiscal year ended December 31, 1995, and Quarterly
Reports on Form 10-Q for the quarters ended March 31, June 30 and
September 30, 1996, which are incorporated herein by reference.
See "INCORPORATION OF DOCUMENTS BY REFERENCE."
(2) Assumptions
The Unaudited Pro Forma Financial Statements include certain
assumptions concerning the effects of the Exchange and Merger:
Goodwill - ELMG will establish a new accounting basis for
the portion of LXE's assets and liabilities attributable to the
minority shareholders' interests being purchased. The combined
value of the ELMG Shares (based upon the October 3, 1996 closing
price of $17.25) and the exercisable ELMG Options (based upon the
Black-Scholes option pricing model) being exchanged for LXE
Shares held by the minority shareholders and LXE Options is
expected to exceed the fair value of the net assets being
acquired by ELMG; this excess will be allocated to goodwill,
which will be amortized on a straight-line basis over a 25-year
period from the date of acquisition.
Expense Savings - As a 100% owned subsidiary, LXE would no
longer incur separate SEC reporting, shareholder reporting, tax
reporting, annual meeting and independent board expenses, as well
as certain certain separate corporate expenses. Elimination of
these expenses is expected to result in initial savings of
approximately $420,000 per year.
Conversion of LXE Options - LXE Options will be converted
into options to acquire a proportionate number of ELMG Shares
under ELMG's 1992 Stock Incentive Plan. The option prices of the
ELMG Options would be adjusted upwards by one-third such that the
aggregate exercise price of each option would be unchanged by the
conversion. Under Statement of Financial Accounting Standards
123, there is no compensation charge for the conversion of the
LXE Options; however, the value (based upon the Black-Scholes
option pricing model) of converted ELMG Options that are
exercisable will increase the amount of goodwill associated with
the Exchange Offer and Merger. In addition, those converted ELMG
Options that have an exercise price below the current market
price of ELMG Shares will increase the common equivalent shares
utilized in the calculation of earnings per share.
(3) Write-off of Deferred Income Taxes
In 1991, ELMG recognized a pre-tax gain of approximately
$5.9 million, representing ELMG's share of the increase in LXE's
book value at the time of LXE's initial public offering of common
stock. ELMG provided approximately $2.2 million of deferred
income tax expense on the gain, which will be written off as a
result of the tax-free Exchange Offer and Merger; this write-off
will be reflected in ELMG's consolidated income statement as a
$2.2 million reduction of income tax expense for the year in
which the Exchange Offer and Merger become effective.
LEGAL MATTERS
The validity of the securities offered hereby has been
passed upon by William S. Jacobs, Vice President, Secretary and
General Counsel of ELMG.
Mr. Jacobs is an officer and employee of ELMG, and he and/or
members of his family are beneficial owners of an aggregate of
13,033 of the outstanding ELMG Shares, and of options to acquire
13,000 additional shares (of which options for 9,000 shares
currently may be exercised); they also are beneficial owners of
2,000 of the outstanding LXE Shares, and of currently exercisable
options to acquire an additional 5,000 shares.
EXPERTS
The consolidated financial statements and schedules of ELMG
as of December 31, 1994 and 1995, and for each of the years in
the three-year period ended December 31, 1995, have been
incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements and schedules of LXE
as of December 31, 1994 and 1995, and for each of the years in
the three-year period ended December 31, 1995, have been
incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts
in accounting and auditing.
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF ELMG
The name, business address, present principal occupation or
employment and five-year employment history of each director and
executive officer of ELMG are set forth below. Unless otherwise
indicated below, the address of each director and officer is 660
Engineering Drive, Norcross, Georgia 30092. All directors and
officers listed below are citizens of the United States, except
for Dr. Mackay, who is a citizen of Canada.
Present Principal Occupation or
Name, Title and Employment, Five Year Employment
Business Address History
- ------------------- -------------------------------------
Thomas E. Sharon, President and Chief Executive Officer of ELMG
President and Chief (since 1994); previously President and Chief
Executive Officer, Operating Officer of ELMG.
and Director
John E. Pippin, Chairman Chairman of the Board of ELMG; until 1994,
of the Board Dr. Pippin also served as Chief Executive
Officer.
Don T. Scartz, Senior Vice President since 1995, Chief
Senior Vice President Financial Officer and Treasurer of ELMG.
and Chief Financial Until 1995, Mr. Scartz was a Vice President
Officer, Treasurer, of ELMG.
and Director
Anthony J. Iorillo, Until 1996, Chairman of the Board, American
Director Mobile Satellite Corporation, Reston,
551 Paseo Miramar Virginia, a major provider of satellite-
Pacific Palisades, CA based communications for ground vehicles,
90272 ships and aircraft in the United States and
surrounding areas and waters (since 1994).
Previously, and until his retirement in 1994,
Mr. Iorillo was a Senior Vice President of
Hughes Aircraft Company and President of
Hughes telecommunications and Space Sector
El Segundo, California, a leading supplier
and operator of communications satellites and
related network equipment. Mr. Iorillo also
is a director of Ortel Corp.
Jerry H. Lassiter, Private investor organizing and managing
48 Hickory Hollow interests in finance and real estate.
Winder, GA 30680
John H. Levergood, President, Broadband Communications Group,
4261 Communications Dr. Scientific-Atlanta, Inc., Atlanta, Georgia,
Norcross, GA 30092 which designs and produces a broad range of
advanced cable television equipment (since
1992). Previously, Mr. Levergood had served
as a consultant to the Broadband
Communications Group following his retirement,
in 1989, as president and Chief Operating
Officer of Scientific-Atlanta. Mr. Levergood
also is a director of Golden Poultry, Inc.
John B. Mowell, President, Mowell Financial Group, Inc.,
Director Tallahassee, Florida, an investment counseling
407 East 6th Avenue firm.
Tallahassee, Florida
32315
William S. Jacobs, General Counsel and Secretary of ELMG since
Vice President, General 1992, and Vice President since 1993. He also
Counsel and Secretary serves as General Counsel and Secretary of
EMS Technologies, Inc. and LXE. Previously,
he was engaged in the private practice of law
with Trotter Smith & Jacobs, Atlanta, Georgia,
and in such capacity had served as ELMG's
principal corporate legal counsel since 1982.
Neilson A. Mackay, President of CAL Corporation since September
President of CAL 1992, a controlling interest in which was
Corporation acquired by ELMG in January 1993. Before
1050 Morrison Drive joining CAL, he had served since 1988 as
Ottawa, Ontario President of Innotech Aviation Limited, a
K2H 8K7 Montreal, Quebec-based privately held aero-
space company with approximately 650
employees. Innotech is active in all post-
manufacturing sectors of the corporate
aviation market, including aircraft sales,
flight management, maintenance, and interior
and avionics modifications.
Jeffrey A. Leddy, President of EMS Technologies, Inc. since July
EMS Technologies, Inc. 1994. Mr. Leddy joined ELMG as an engineer
in September 1980.
John J. Farrell, President and Chief Operating Officer of LXE
Chief Operating since May 1995. Before joining LXE, Mr.
Officer of LXE Farrell had been Senior Vice President and
303 Research Drive Chief Operating Officer of Oki Telecom, a
Norcross, GA 30092 world-wide supplier of cellular telephones
and base stations, since 1993. During the
three years before 1993, he directed Oki
Telecom's marketing and sales efforts.
Facsimile copies of the Letter of Transmittal will be accepted. The
Letter of Transmittal, certificates for LXE Shares and any other required
documents should be sent by each shareholder of LXE or such shareholder's
broker-dealer, commercial bank, trust company or other nominee to the
Exchange Agent as follows:
The Exchange Agent is:
SunTrust Bank, Atlanta
By Mail: Corporate Trust Department
P. O. Box 4625
Atlanta, Georgia 30302
By Facsimile Transmission: (404) 332-3875
By Hand: Corporate Trust Department
58 Edgewood Avenue
Room 225 Annex
Atlanta, Georgia 30308
For Information call:
(404) 588-7815
(800) 568-3476
Any questions or requests for assistance or additional copies of the
Offering Circular/Prospectus and the Letter of Transmittal may be directed
to either the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You also may contact your
broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Exchange Offer.
The Information Agent is:
Corporate Investor Communications, Inc.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Call Toll Free: (888) 776-9943
Banks and Brokers call: (201) 896-1900
The Dealer Manager is:
Oppenheimer & Co., Inc.
Oppenheimer Tower
One World Financial Center
39th Floor
New York, New York 10281
(212) 667-7000 or
(800) 999-6726
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Bylaws of the Company provide that the Company will indemnify its
directors and officers, and persons serving at the request of the Company
as a director of officer of another corporation, partnership, joint
venture, trust or other enterprise, against all expenses, judgments and
amounts paid in settlement actually and reasonably incurred by any such
person in connection with threatened or actual actions, suits or
proceedings, whether civil, criminal, administrative or investigative, to
which such person becomes subject by having served in such role. Such
indemnification shall be made if such person acted in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalents, will not, of itself, create a presumption that such person
did not so act and did not have such reasonable cause to believe. With
respect to actions by or on behalf of the Company, the foregoing
indemnification pursuant to the Bylaws shall not be paid for judgments or
amounts paid in settlement, but shall be paid for expenses; however,
except as discussed below, no indemnification will be made for any claim,
issue or matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Company,
except to the extent that a court of competent jurisdiction determines
upon application that such person is fairly and reasonably entitled to
indemnity.
The Company will indemnify the persons discussed in the immediately
preceding paragraph only when (a) the Company's board of Directors by a
majority vote of a quorum consisting of directors who are not parties to
the action, suit or proceeding, (b) if such a quorum is not obtainable, a
committee, consisting of two or more directors who are not parties to the
action, suit or proceeding designated by the Board of Directors in which
designation interested directors may participate), by a majority vote, or
(c) special legal counsel selected by the Board of Directors or its
committee in the manner described in (a) or (b) above, or, if a quorum of
the Board of Directors cannot be obtained, by a majority vote of the full
Board of Directors (in which selection interested directors may
participate), or (d) the shareholders, by the affirmative vote of a
majority of the shares entitled to vote thereon, determine that
indemnification is proper in the circumstances because the person has met
the applicable standard of conduct discussed in the immediately preceding
paragraph. However, expenses shall be paid by the company as they are
incurred and in advance of the final disposition of the relevant case,
upon receipt of an undertaking by the director or officer to repay such
amounts if it shall ultimately be determined that he or she is not
entitled to be indemnified. Independent of these indemnification
provisions contained in the Bylaws, the Georgia Business Corporation Code
provides a statutory right to indemnification from the Company to a
director who is successful in the defense of any proceeding to which he
was a party because he is a director of the Company.
In addition to the foregoing indemnification provisions, the Bylaws
authorize further indemnification of directors and officers. Pursuant to
this provision, the Company is a party to Indemnification Agreements that
provide substantially broader indemnity rights than those described above.
Among other things, these Agreements provide for indemnification in
respect of judgments in actions by or on behalf of the Company, and do not
require, as a condition of indemnification, independent determinations
that the individual met the specified standards of conduct. However,
under the Agreements and applicable Georgia law, no indemnification may be
paid: (i) if it is determined that the individual's conduct constituted
intentional misconduct, fraud or a knowing violation of the law, or an
appropriation, in violation of his or her duties, of any business
opportunity of the Company; (ii) with respect to liability for
distributions to shareholders in excess of amounts legally available for
such distributions; or (iii) with respect to any transaction from which he
or she received an improper personal benefit.
The Company maintains a directors' and officers' liability insurance
policy covering certain losses arising from claims made against them by
reason of wrongful acts (with certain exceptions) committed by them in
their capacities as directors and officers. The insurer's limit of
liability under the policy is $10 million per policy year.
Item 21. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed as part of this Registration
Statement:
Exhibit
Number Description of Exhibit
- ------- -----------------------
1.1 Dealer Manager Agreement to be dated November 27, 1996, by and
between Oppenheimer & Co., Inc. and Electromagnetic Sciences, Inc.
3.1 Amended and Restated Articles of Incorporation of Electromagnetic
Sciences, Inc., effective July 3, 1989 (incorporated by reference
to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995).
3.2 Bylaws of Electromagnetic Sciences, Inc., as amended through
March 20, 1995 (incorporated by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1994).
4.1 Electromagnetic Sciences, Inc. Stockholder Rights Plan dated as
of July 3, 1989 (incorporated by reference to Exhibit 4.1 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995).
4.2 Agreement with respect to long-term debt pursuant to Item
601(b)(4)(iii)(A) (incorporated by reference to Exhibit 4.2 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995).
5.1 Opinion of William S. Jacobs, General Counsel, as to legality of
the securities offered.
8.1 Opinion of Kilpatrick & Cody, L.L.P., as to certain tax matters.
10.1 Employment Agreement dated as of January 1, 1989, by and between
the Company and Thomas E. Sharon (incorporated by reference to
Exhibit 19.9 to the Company's Report on Form 10-Q for the
quarter ended June 30, 1992).
10.2 Amendment, dated July 29, 1992, of Employment Agreement dated as
of January 1, 1989, by and between the Company and Thomas E.
Sharon (incorporated by reference to Exhibit 10.4 to the
Company's Report on Form 10-K for the year ended December 31, 1993).
10.3 Second Amendment, dated November 15, 1994, of Employment
Agreement dated as of January 1, 1989, by and between the
Company and Thomas E. Sharon (incorporated by reference to
Exhibit 10.3 to the Company's annual Report on Form 10-K for the
year ended December 31, 1994).
10.4 Separation Agreement between LXE Inc. and Malcolm M. Bibby,
effective December 13, 1994 (incorporated by reference to
Exhibit 10.12 to the Annual Report on Form 10-K of LXE Inc. for
the year ended December 31, 1994).
10.5 Consulting Agreement, effective January 1, 1995, by and between
the Company and John E. Pippin (incorporated by reference to
Exhibit 10.5 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994).
10.6 1981 Incentive Stock Option Plan, as amended and restated
February 6, 1987, and further amended through March 23, 1989
(incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995).
10.7 Form of split-dollar life insurance agreement between the
Company and certain of its officers (incorporated by reference
to Exhibit 10.4 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991).
10.8 Form of split-dollar life ins urance agreement effective January
1, 1993, between the Company and an executive officer
(incorporated by reference to Exhibit 10.5 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993).
10.9 Electromagnetic Sciences, Inc. 1986 Directors' Stock Option
Plan, as amended through July 31, 1992 (incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on Form
10-K for the year ended December 31, 1995).
10.10 Electromagnetic Sciences, Inc. 1986 Non-Qualified Stock Option
Plan, as amended through July 31, 1992 (incorporated by
reference to Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995).
10.11 Electromagnetic Sciences, Inc. 1992 Stock Incentive Plan,
as amended through October 3, 1996.
10.12 LXE Inc. 1989 Stock Incentive Plan, as amended and restated
March 1, 1991 and further amended March 6, 1992 (incorporated
by reference to Exhibit 19.2 to the Report on Form 10-Q of
LXE Inc. for the quarter ended March 31, 1992).
10.13 Form of Stock Option Agreement evidencing options granted in
1992, 1993 and 1995 to certain executive officers under the
Electromagnetic Sciences, Inc. 1992 Stock Incentive Plan
(incorporated by reference to Exhibit 19.3 to the Company's
Report on Form 10-Q for the quarter ended June 30, 1992).
10.14 Form of Stock Option Agreement dated May 15, 1995, evidencing
option granted to John J. Farrell, Jr. under the 1992 Stock
Incentive Plan (incorporated by reference to Exhibit 10.14 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.15 Form of Stock Option Agreement evidencing options granted
automatically under the 1992 Stock Incentive Plan to newly-
elected non-employee members of the Board of Directors
(incorporated by reference to Exhibit 10.15 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995).
10.16 Form of Stock Option Agreement evidencing option granted January
27, 1995, to John E. Pippin (incorporated by Reference to
Exhibit 10.16 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995).
10.17 Form of Stock Option Agreement evidencing options granted
January 1,1989 to certain executive officers under the LXE Inc.
1989 Stock Incentive Plan (incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1990).
10.18 Form of Stock Option Agreement evidencing options granted
September 26, 1990 to an executive officer under the LXE Inc.
1989 Stock Incentive Plan (incorporated by reference to Exhibit
19.2 to the Report on Form 10-Q of LXE Inc. for the quarter ended
June 30, 1991).
10.19 Form of Stock Option Agreement evidencing options granted
September 26, 1990 to John B. Mowell under the LXE Inc. 1989
Stock Incentive Plan (incorporated by reference to Exhibit 19.3
to the Report on Form 10-Q of LXE Inc. for the quarter ended
June 30, 1991).
10.20 Form of Stock Option Agreement evidencing options granted in
1992 to certain executive officers under the LXE Inc. 1989 Stock
Incentive Plan (incorporated by reference to Exhibit 19.1 to the
Report on Form 10-Q of LXE Inc. for the quarter ended June 30,
1992).
10.21 Form of Stock Option Agreement dated May 15, 1995, evidencing
options granted to John J. Farrell, Jr. under the LXE Inc. 1989
Stock Incentive Plan (incorporated by reference to Exhibit 10.6
to the LXE Inc. Annual Report on Form 10-K for the year ended
December 31, 1995).
10.22 Form of Restricted Stock Award Restriction Agreement governing
awards of restricted stock made to the Company's executive
officers effective January 27, 1995 (incorporated by reference
to Exhibit 10.19 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10.23 Forms of Amendments dated April 21, 1995 and January 26, 1996,
to Restricted Stock Award Restriction Agreements effective
January 27, 1995 (incorporated by reference to Exhibit 10.23 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.24 Restricted Stock Award Restriction Agreement dated May 15, 1995,
between the Company and John J. Farrell, Jr. (incorporated by
reference to Exhibit 10.24 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995).
10.25 Form of Indemnification Agreement between the Company and its
directors (incorporated by reference to Exhibit 19.5 to the
Company's Report on Form 10-Q for the quarter ended June 30,
1992).
10.26 Form of Indemnification Agreement between the Company and its
Vice President and General Counsel (incorporated by reference to
Exhibit 19.6 to the Company's Report on Form 10-Q for the
quarter ended June 30, 1992).
10.27 Form of Indemnification Agreement between LXE Inc. and certain
of the Company's officers and directors in their capacity as
directors of LXE Inc. (incorporated by reference to Exhibit 19.2
to the Report on Form 10-Q of LXE Inc. for the quarter ended
June 30, 1992).
10.28 Form of Indemnification Agreement between LXE Inc. and certain
officers of the Company in their capacity as officers of LXE
Inc. (incorporated by reference to Exhibit 19.3 to the Report on
Form 10-Q of LXE Inc. for the quarter ended June 30, 1992).
10.29 Letters dated April 17, 1995 and April 19, 1995 between LXE Inc.
and John J. Farrell, Jr. concerning the terms of his employment
as President of LXE Inc. (incorporated by reference to
Exhibit 10.1 to Report on Form 10-Q of LXE Inc. for the quarter
ended June 30, 1995).
11.1 Statement re: Computation of Per Share Earnings.
22.1 Subsidiaries of the registrant.
23.1 Consent of Independent Auditors.
23.2 Consent of William S. Jacobs (included in his opinion filed as
Exhibit 5.1).
23.3 Consent of Kilpatrick & Cody, L.L.P. (included in its opinion
filed as Exhibit 8.1).
25.1 Power of Attorney (also, see signature page of Registration
statement as originally filed).
99.1 Form of Letter of Transmittal for tendering LXE Shares.
99.2 Letter to Securities Dealers, Commercial Banks, Trust Companies
and other Nominees.
99.3 Letter to Clients of Securities Dealers, Commercial Banks, Trust
Companies and other Nominees.
99.4 Form of Notice of Guaranteed Delivery.
99.5 Proxy Materials for Special Meeting of the Shareholders of
Electromagnetic Sciences, Inc. to be held on December 30, 1996,
including form of Proxy (incorporated by reference to the
definitive Proxy Materials filed with respect to such Special
Meeting).
99.6 Form of cover letter for transmitting Offering
Circular/Prospectus to LXE Shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Atlanta, State of Georgia, on November 25, 1996.
ELECTROMAGNETIC SCIENCES, INC.
By: /s/ Thomas E. Sharon
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities indicated or on their behalf by their duly
apointed attorney-in-fact.
Signature Title Date
- --------------------- --------------------- -----------------
/s/ Thomas E. Sharon President and Chief November 25, 1996
- -------------------- Executive Officer and
Thomas E. Sharon Director (Principal
Executive Officer)
/s/ John E. Pippin Chairman of the Board November 25, 1996
- --------------------
John E. Pippin
/s/ Don T. Scartz Senior Vice President November 25, 1996
- -------------------- and Chief Financial
Don T. Scartz Officer, Treasurer, and
Director (Principal
Financial and Accounting
Officer)
/s/ Thomas E. Sharon Director November 25, 1996
- --------------------
Anthony J. Iorillo
/s/ Thomas E. Sharon Director November 25, 1996
- --------------------
Jerry H. Lassiter
/s/ Thomas E. Sharon Director November 25, 1996
- --------------------
John H. Levergood
/s/ Thomas E. Sharon Director November 25, 1996
- --------------------
John B. Mowell
<PAGE>
EXHIBIT 1.1
ELECTROMAGNETIC SCIENCES, INC.
DEALER MANAGER AGREEMENT
November 27, 1996
Oppenheimer & Co., Inc.
Oppenheimer Tower
One World Financial Center
New York, New York 10281
Ladies and Gentlemen:
1. General. Electromagnetic Sciences, Inc., Georgia corporation
(the "Company"), proposes to offer to exchange 0.75 of a share of the
common stock, par value $.10 per share (the "Offered Securities"), of the
Company for each of the outstanding shares of common stock, par value $.01
per share (the "Subject Securities"), of LXE Inc., a Georgia corporation
(the "Subject Company"), on the terms set forth in the Prospectus (as
hereinafter defined). The exchange offer described above, as it may be
amended and supplemented, is herein referred to as the "Exchange Offer."
2. Engagement as Dealer Manager. By this Dealer Manager Agreement
(the "Agreement"), the Company hereby engages and appoints you as the
exclusive Dealer Manager for the Exchange Offer and authorizes you to act
as such in connection with the Exchange Offer. As Dealer Manager you
agree, in accordance with your customary practice, to perform in
connection with the Exchange Offer those services as are customarily
performed by investment banking concerns in connection with similar
offers, including, without limitation, soliciting from individuals and
institutions the tender of Subject Securities pursuant to and in
accordance with the terms and conditions of the Exchange Offer. You shall
act as an independent contractor in connection with the Exchange Offer
with duties solely to the Company and nothing herein contained shall
constitute you as an agent of the Company in connection with the
solicitation of such Subject Securities pursuant to and in accordance with
the terms and conditions of the Exchange Offer; provided, however, that
the Company hereby authorizes the Dealer Manager, and/or one or more
registered brokers or dealers chosen by the Dealer Manager, to act as the
Company's agent in making the Exchange Offer to residents of any
jurisdiction in which such agent designation may be necessary to comply
with applicable law. Nothing in this Agreement shall constitute the
Dealer Manager, either individually or collectively, a partner or joint
venturer with the Company or any of its subsidiaries. On the basis of the
representations and warranties and agreements of the Company contained
herein and subject to and in accordance with the terms and conditions
hereof and of the Exchange Offer, the Dealer Manager agrees to act in such
capacity.
3. Registration Statement, Prospectus and Offering Materials.
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission"), under the Securities Act of 1933,
as amended, and the rules and regulations of the Commission promulgated
thereunder (collectively, the "Securities Act"), a registration statement
on Form S-4 covering the registration of the Offered Securities. Such
registration statement, including the exhibits thereto and any documents
incorporated by reference therein, as amended at the time it becomes
effective or as thereafter amended or supplemented from time to time, is
herein called the "Registration Statement." The final prospectus included
in the Registration Statement (including any documents incorporated in the
prospectus by reference) is herein called the "Prospectus," except that if
the final prospectus furnished to the Dealer Manager for use in connection
with the Exchange Offer differs from the prospectus set forth in the
Registration Statement (whether or not such prospectus is required to be
filed pursuant to Rule 424(b)), the term "Prospectus" shall refer to the
final prospectus furnished to the Dealer Manager for such use. The terms
"supplement" and "amendment" or "supplemented" and "amend" as used herein
with respect to the Prospectus shall include all documents deemed to be
incorporated by reference in the Prospectus that are filed subsequent to
the date of the Prospectus and prior to the termination of the Exchange
Offer by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) The Company has prepared and filed, or agrees that prior to
or on the date of commencement of the Exchange Offer (the "Commencement
Date") it will file, with the Commission under the Exchange Act and the
rules and regulations promulgated thereunder a Statement on Schedule 14D-1
with respect to the Exchange Offer (including the exhibits thereto and any
documents incorporated by reference therein, the "Schedule 14D-1").
(c) The Registration Statement, Prospectus and the related
letters from the Dealer Manager to securities brokers, dealers, commercial
banks, trust companies and other nominees, letters to beneficial owners of
Subject Securities, letters of transmittal (the "Letters of Transmittal"),
notices of guaranteed delivery (the "Notices of Guaranteed Delivery") and
any newspaper announcements, press releases and other offering materials
and information the Company may use or prepare, approve or authorize for
use in connection with the Exchange Offer, including the Schedule 14D-1 as
amended or supplemented from time to time, are herein collectively
referred to as the "Exchange Offer Materials."
4. Use of Exchange Offer Materials.
(a) The Exchange Offer Materials have been or will be prepared
and approved by, and are the sole responsibility of, the Company. The
Company shall, to the extent permitted by law, use its best efforts to
disseminate the Exchange Offer Materials to each registered holder of any
Subject Securities, as soon as practicable after the Commencement Date,
pursuant to Rule 14d-3 under the Exchange Act and comply in all material
respects with its obligations thereunder. Thereafter, to the extent
practicable until the expiration of the Exchange Offer, the Company shall
use its best efforts to cause copies of such Exchange Offer Materials and
a return envelope to be mailed to each person who becomes a holder of
record of any Subject Securities. The Company acknowledges and agrees
that you may use the Exchange Offer Materials as specified herein without
assuming any responsibility for independent verification on your part and
the Company represents and warrants to you that you may rely on the
accuracy and completeness of any information delivered to you by or on
behalf of the Company without assuming any responsibility for independent
verification of such information or without performing or receiving any
appraisal or evaluation of the assets or liabilities of the Company or the
issuer of the Subject Securities.
(b) The Company agrees to provide you as many copies as you may
reasonably request of the Exchange Offer Materials. The Company agrees
that within a reasonable time prior to using or filing with any federal,
state or other governmental agency or instrumentality of the United States
of any Exchange Offer Materials, it will submit copies of such materials
to you and will give reasonable consideration to your and your counsel's
comments, if any, thereon. The Company agrees that prior to the
termination of the Exchange Offer, before amending or supplementing the
Registration Statement or the Prospectus, it will furnish copies of drafts
to, and consult with, the Dealer Manager and its counsel within a
reasonable time in advance of filing with the Commission of any amendment
or supplement to the Registration Statement, the Prospectus or the other
Exchange Offer Materials. The Company shall not file any such amendment
or supplement to which the Dealer Manager shall reasonably object;
provided, however that the foregoing requirement shall not apply to any of
the Company's filings with the Commission required to be filed pursuant to
Section 13(a) or 15(d) of the Exchange Act, copies of which filings the
Company will cause to be delivered to the Dealer Manager promptly after
being transmitted for filing with the Commission.
(c) The Company has furnished or shall use its best efforts to
furnish to you, as soon as practicable after the date hereof (to the
extent not previously furnished), lists in reasonable quantities showing
the names of persons who were the holders of record or, to the extent
available, the beneficial owners of the Subject Securities as of a recent
date, together with their addresses and the number of Subject Securities
held by them. Additionally, the Company shall update such information
from time to time during the term of this Agreement as may be reasonably
requested by you. Except as otherwise provided herein, you agree to use
such information only in connection with the Exchange Offer.
(d) The Company authorizes the Dealer Manager to use the
Exchange Offer Materials in connection with the Exchange Offer and for
such period of time as any such materials are required by law to be
delivered in connection therewith. The Dealer Manager shall not have any
obligation to cause any Exchange Offer Materials to be transmitted
generally to the holders of Subject Securities.
(e) The Company authorizes the Dealer Manager to communicate
with any information agent (the "Information Agent") or exchange agent
(the "Exchange Agent") appointed by the Company to act in such capacity in
connection with the Exchange Offer. The Company will arrange for the
Exchange Agent to advise you daily, as necessary, as to such matters
relating to the Exchange Offer as you may reasonably request.
(f) The Company agrees that any reference to the Dealer Manager
in any Exchange Offer Materials or in any newspaper announcement or press
release or other document or communication is subject to the Dealer
Manager's prior consent, which consent shall not be unreasonably withheld.
5. Withdrawal. In the event that the Company (i) uses or permits
the use of, or files with the Commission, any amendment or supplement to
the Registration Statement and any such document has not been previously
submitted to you for your comment if prior submission is required in
accordance with the provisions of Section 4(b) hereof; or (ii) shall have
breached, in any material respect, any of its representations, warranties,
agreements or covenants herein, then you shall be entitled upon written
notice to the Company to withdraw as Dealer Manager in connection with the
Exchange Offer without any liability or penalty to you or any other
indemnified person (as defined in Section 11 below) and without loss of
any right to indemnification or contribution provided in Section 11 or to
the payment of (x) all fees payable pursuant to Section 6 and (y) all
reasonable expenses payable hereunder which have accrued through the date
of such withdrawal.
6. Fees. The Company has agreed to pay certain fees of the Dealer
Manager in connection with the Exchange Offer as set forth in a separate
letter agreement dated September 5, 1996, between the Company and the
Dealer Manager (the "Engagement Letter").
7. Expenses and Reimbursement of Expenses. The Company agrees to
pay the reasonable costs and expenses incident to the performance of the
obligations hereunder, including, without limitation, all costs and
expenses (i) incurred by dealers and brokers (including yourself),
commercial banks, trust companies and nominees for their customary mailing
and handling expenses incurred in forwarding the Exchange Offer Materials
to their customers, (ii) incident to the preparation, issuance, execution
and delivery of the Offered Securities, (iii) incident to the preparation,
printing and filing under the Securities Act of the Registration
Statement, the Prospectus (including, without limitation, in each case all
exhibits, amendments and supplements thereto), (iv) incurred in connection
with the registration or qualification of the Offered Securities under the
laws of such jurisdictions as the Dealer Manager may designate (including,
without limitation, reasonable fees of counsel for the Dealer Manager and
its reasonable disbursements), (v) in connection with the printing
(including word processing and duplication costs) and delivery of all
Exchange Offer Materials (including, without limitation, any preliminary
and supplemental blue sky memoranda) including, without limitation,
mailing and shipping, (vi) all advertising expenses related to the
Exchange Offer and the fees and expenses of the Exchange Agent and the
Information Agent, (vii) the fees and disbursements of Kilpatrick & Cody,
L.L.P., counsel to the Company, and KPMG Peat Marwick LLP, auditors to the
Company, and (viii) the costs of obtaining any requisite stock exchange or
similar approvals. In addition, the Company agrees to reimburse the
reasonable out-of- pocket expenses of the Dealer Manager in connection
with the Exchange Offer (including, without limitation, the reasonable
legal fees and expenses of counsel to the Dealer Manager in connection
with the Exchange Offer) as provided in the Engagement Letter.
8. Representations, Warranties and Certain Agreements of the
Company. The Company represents and warrants to you, and agrees with you
that:
(a) the Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission;
(b) (i) the Exchange Offer Materials, including the
Registration Statement and Prospectus, comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the Exchange Act and the applicable rules and
regulations of the Commission thereunder; (ii) the Registration Statement,
when it became effective, did not contain and as amended or supplemented,
if applicable, will not contain, any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) none of
the Prospectus or other Exchange Offer Materials contains, and, as amended
or supplemented, if applicable, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; except that the representations and warranties
set forth in this paragraph 8(b) do not apply to statements or omissions
in the Exchange Offer Materials, the Registration Statement or the
Prospectus based upon information relating to the Dealer Manager furnished
to the Company in writing by the Dealer Manager expressly for use therein;
(c) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
(d) this Agreement has been duly and validly authorized,
executed and delivered by the Company and is a valid and binding
obligation of the Company;
(e) except as disclosed in the Prospectus, the Exchange Offer
and the consummation of the transactions contemplated in this Agreement
and the Prospectus will comply with all applicable requirements of law,
including any applicable regulation of any governmental agency, authority
or instrumentality, and no consent, authorization, approval, order,
exemption or other action of, or filing with, any governmental agency,
authority or instrumentality of the United States or any jurisdiction in
the United States or any other jurisdiction is required in connection with
the Exchange Offer or the consummation by the Company of the transactions
contemplated herein or in the Prospectus except as have been obtained or
made;
(f) if applicable, the Company has duly filed, or will duly
file on or prior to the Commencement Date, with the Federal Traded
Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") the notification and report form (the
"Report") required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), with respect to the acquisition of
Subject Securities pursuant to the Exchange Offer, a copy of which Report
(including the documents referred to in Item 4 thereof) in the form so
filed or to be so filed has been or will be furnished to you, and the
Report complies or will comply in all material respects with the
requirements of the HSR Act;
(g) the Company has no knowledge of any material fact or
information concerning the issuer of the Subject Securities or any of its
subsidiaries, or the operations, assets, condition, financial or
otherwise, or prospects of the issuer of the Subject Securities or any of
its subsidiaries, which is required to be made generally available to the
public and which has not been, or is not being, or will not be, made
generally available to the public through the Exchange Offer Materials or
otherwise; and
(h) the Prospectus as amended or supplemented shall have been
filed with the Commission pursuant to Rule 424(b), if required, within the
applicable time period prescribed for such filing by the rules and
regulations under the Act;
(i) on or prior to the Commencement Date, the Company shall
have engaged SunTrust Bank, Atlanta, to act as exchange agent in
connection with the Exchange Offer, pursuant to an agreement (the
"Exchange Agent Agreement") in customary form which shall be in full force
and effect;
(j) the Offered Securities to be issued pursuant to the
Exchange Offer have been duly authorized under the Company's certificate
or articles of incorporation, and, when issued and delivered in accordance
with the terms of this Agreement in exchange for Subject Securities
pursuant to the Exchange Offer, will be duly and validly issued and fully
paid and nonassessable shares of the common stock, par value $.10 per
share of the Company, not subject to any preemptive or similar rights,
will conform in all material respects to all statements relating thereto
contained in the Prospectus, and have been approved for trading on the
NASDAQ National Market System ("NASDAQ"), subject to official notice of
issuance;
(k) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Georgia,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or to be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(l) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(m) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
issuance and delivery by the Company of the Offered Securities and the
consummation of the Exchange Offer and the fulfillment of the terms herein
contemplated will not contravene, violate, conflict with, result in the
breach of, or constitute a default under (i) any provision of applicable
law or regulation; (ii) the certificate (or articles) of incorporation or
by-laws of the Company; (iii) any agreement or other instrument binding
upon the Company or any of its subsidiaries; or (iv) any judgment,
determination, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any of its subsidiaries, and no
consent, approval, authorization or order of, or the qualification with,
any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, the issuance and delivery
of the Offered Securities and the consummation of the Exchange Offer,
except such as may be required by the Securities Act or the Exchange Act
and as may be required by the securities or Blue Sky laws of the various
states or the securities laws of non-U.S. jurisdictions in connection with
the Exchange Offer;
(n) There has not occurred any material adverse change or any
development involving a prospective material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement);
(o) there are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries
is subject that are required to be described in the Registration Statement
or the Prospectus and are not so described, or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that are not described or filed as required;
(p) none of the Company or any of its subsidiaries is, and
after giving effect to the consummation of the Exchange Offer none of the
Company or any of its subsidiaries will be, an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended;
(q) there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities
Act with respect to any securities of the Company or to require the
Company to include such securities with the Offered Securities registered
pursuant to the Registration Statement;
(r) except as described in the Prospectus the Company and its
subsidiaries are (x) in compliance with any and all applicable material
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (y) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (z) are in compliance with all terms and
conditions of any such material permit, license or approval except as
otherwise described in or contemplated in the Prospectus and except for
such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals which are not
likely, singly or in the aggregate, to have a material adverse effect on
the Company and its subsidiaries taken as a whole.
(s) in the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, capital or operating
expenditures required for clean-up, costs of closure of properties or
compliance with Environmental Laws or permits, licenses or approvals,
costs of related constraints on operating activities). The Company also
periodically reviews potential liabilities under Environmental Laws to
third parties. On the basis of such reviews, the Company has reasonably
concluded that such associated costs and liabilities are disclosed, in
accordance with the requirements of the Exchange Act and the Securities
Act, in all material respects.
9. Conditions to Dealer Manager's Obligations. The obligations of
the Dealer Manager hereunder are subject, to the accuracy of the
representations and warranties of the Company herein, to the performance
by the Company of its obligations hereunder and to the following
additional conditions:
(a) the Registration Statement shall have become effective on
or prior to the Commencement Date;
(b) on the Commencement Date and the Closing Date, the Dealer
Manager shall have received a signed opinion of Kilpatrick & Cody, L.L.P.,
counsel for the Company, dated as of such date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
Georgia, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which
the conduct of its business or the ownership or leasing of its property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(ii) such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included or
incorporated therein, as to which such counsel need not express an
opinion) comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder,
(B) does not believe that (except for financial statements and schedules
and other financial and statistical data, as to which such counsel need
not express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (C) does not believe that (except
for financial statements and schedules and other financial and statistical
data, as to which such counsel need not express any belief), the
Prospectus at the date of such opinion contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein in the light of the circumstances under which they
were made, not misleading;
(iii) the statements made in "Item 3-Legal Proceedings" of
the Company's most recent annual report on Form 10-K, in "Item 1-Legal
Proceedings" of any quarterly report on Form 10-Q and in "Item 5-Other
Events" of any current report on Form 8-K included or incorporated by
reference in the Prospectus, insofar as such statements constitute a
summary of legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents and proceedings and are accurate in all material
respects;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the Exchange Agent Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the Company has an authorized capitalization as set
forth in the Prospectus; the Offered Securities have been duly authorized
by all requisite action on the part of the Company for issuance and sale
pursuant to the terms of the Exchange Offer and, when issued and delivered
by the Company pursuant to the terms of the Exchange Offer against
delivery of the consideration set forth in the Prospectus, will be validly
issued, fully paid and non-assessable; the Offered Securities conform in
all material respects to all statements relating thereto contained in the
Registration Statement and the Prospectus; and the issuance of the Offered
Securities is not subject to any preemptive rights;
(vii) the statements made in the Prospectus under the
captions, "Description of Capital Stock of ELMG" and "Description of
Capital Stock of LXE; Comparison of ELMG Shares and LXE Shares" insofar as
such statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings and are
accurate in all material respects;
(viii) none of the Company or any of its subsidiaries is,
and after giving effect to the consummation of the Exchange Offer none of
the Company or any of its subsidiaries will be, an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended.
With respect to paragraph (ii) above, such counsel may state
that it has not independently verified the accuracy, completeness or
fairness of the statements made or included or incorporated by reference
therein and takes no responsibility therefor, and that such opinion is
based upon such counsel's examination of the Registration Statement, the
Prospectus and any documents incorporated by reference thereto, its
participation in the preparation of the Registration Statement and
Prospectus and its participation in conferences with certain officers and
employees of the Company and its subsidiaries and any others referred to
in such opinion.
(c) on the Commencement Date and on the Closing Date, the
Dealer Manager shall have received a signed opinion of William S. Jacobs,
Esq., General Counsel of the Company, dated as of such date, to the effect
that:
(i) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, and
the consummation of the Exchange Offer and the fulfillment of the terms
herein contemplated (including the issuance of the Offered Securities by
the Company) will not contravene any provision of applicable law or the
certificate (or articles) of incorporation or by-laws of the Company or
any of its subsidiaries or any material agreement or other instrument
binding upon the Company or any of its subsidiaries or any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval or
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement and the consummation of the Exchange Offer, except
such as may be required by the Securities Act, the Exchange Act or the
securities or Blue Sky laws of the various states or the securities laws
of non-U.S. jurisdictions in connection with the Exchange Offer;
(ii) such counsel (A) is of the opinion that the
Registration Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included or
incorporated therein, as to which such counsel need not express an
opinion) comply as to form in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder,
(B) has no reason to believe that (except for financial statements and
schedules and other financial and statistical data, as to which such
counsel need not express any belief) the Registration Statement and the
prospectus included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (C) has no reason to believe
that (except for financial statements and schedules and other financial
and statistical data, as to which such counsel need not express any
belief), the Prospectus at the date of such opinion contains any untrue
statement of a material fact or omits to state a material fact necessary
in order to make the statements therein in the light of the circumstances
under which they were made, not misleading;
(iii) the outstanding shares of the Company's Common Stock
have been duly authorized and are validly issued, fully paid and non-assessable
and conform in all material respects to the description thereof
in the Prospectus under the heading "Description of Capital Stock of
ELMG";
(iv) after due inquiry, to the best of such counsel's
knowledge, such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company
or any of its subsidiaries is subject that is required to be described in
the Registration Statement or the Prospectus and is not so described,
other than such proceedings that individually or in the aggregate would
not have a material adverse effect on the Company and its subsidiaries
taken as a whole, or of any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required;
(v) such counsel is of the opinion that the Company is (A)
in compliance with any and all applicable material Environmental Laws, (B)
has received all material permits, licenses or other approvals required of
it under applicable Environmental Laws to conduct its business and (C) is
in compliance with all terms and conditions of any such material permit,
license or approval, except as otherwise described in or contemplated in
the Prospectus and except for such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses
or approvals which such counsel believes, based on his evaluation of known
and anticipated claims, are not likely, singly or in the aggregate, to
have a material adverse effect on the Company and its subsidiaries taken
as a whole; and
(d) You shall have received, on the Commencement Date and the
Closing Date, letters, dated the Commencement Date and the Closing Date,
as the case may be, reasonably satisfactory to you of KPMG Peat Marwick
LLP, auditors for the Company, containing statements and information of
the type ordinarily included in accountants' "comfort letters" with
respect to the consolidated financial statements of the Company and
certain financial information contained in the Registration Statement and
the Prospectus. The Company will furnish you with such executed or
conformed copies of such opinions, certificates, letters and documents as
you may reasonably request.
10. Covenants of the Company. The Company covenants with the Dealer
Manager:
(a) to use its reasonable efforts to cause the
Registration Statement, including any post-effective amendment thereto, to
become effective promptly and to notify the Dealer Manager immediately
and, if requested by the Dealer Manager, to confirm the notice in writing,
(i) when the Registration Statement and any post-effective amendment to
the Registration Statement shall have become effective, or any supplement
to the Prospectus or any amended Prospectus or any amended or additional
Exchange Offer Materials shall have been filed, (ii) of the receipt of any
comments from the Commission relating to the Exchange Offer, (iii) of any
request by the Commission to amend the Registration Statement or amend or
supplement the Prospectus or the other Exchange Offer Materials or for
additional information relating to the Exchange Offer and (iv) of (A) the
issuance by the Commission of any stop order suspending the use of any
Exchange Offer Materials or any qualification of the Offered Securities
for offering or sale in connection with the Exchange Offer in any
jurisdiction, (B) the institution or threatening of any proceedings for
any of such purposes or (C) the occurrence of any event which could cause
the Company to withdraw, rescind, terminate or modify the Exchange Offer
or would permit the Company to exercise any right not to accept Subject
Securities tendered pursuant to the Exchange Offer, and use its reasonable
efforts to prevent the issuance of any such stop order, the issuance of
any order preventing or suspending such use and the suspension of any such
qualification and, if any such order is issued or qualification suspended,
to obtain the lifting of such order or suspension at the earliest
practicable time;
(b) to comply in all material respects with the Securities
Act and the Exchange Act in connection with the Exchange Offer, the
Exchange Offer Materials and the transactions contemplated hereby and
thereby, as applicable. If at any time when the Prospectus is required by
the Securities Act or Exchange Act to be delivered in connection with the
Exchange Offer, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the Dealer Manager
or counsel for the Company, to amend the Registration Statement or amend
or supplement the Prospectus or any other Exchange Offer Materials in
order that the Prospectus or such other Exchange Offer Materials will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements in the Prospectus or such
other Exchange Offer Materials, in the light of the circumstances under
which they were made, not misleading or if, in the opinion of either such
counsel, it shall be necessary to amend the Registration Statement or
amend or supplement the Prospectus or any other Exchange Offer Materials
to comply with the requirements of the Securities Act or Exchange Act, the
Company and the Trust will promptly prepare, file with the Commission,
subject to Section 4(b) hereof, and furnish, at its own expense, to the
Dealer Manager, such amendment or supplement as may be necessary to
correct such untrue statement or omission or to make the Registration
Statement or the Prospectus or such other Exchange Offer Materials comply
with such requirements;
(c) to endeavor, in cooperation with the Dealer Manager,
to qualify the Offered Securities for offering and sale in connection with
the Exchange Offer under the applicable securities or Blue Sky laws of
such jurisdictions as the Dealer Manager may reasonably request and to
maintain such qualifications in effect for such time as may be required
for the consummation of the Exchange Offer. In each jurisdiction in which
the Offered Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement;
(d) to make generally available to its security holders
and to the Dealer Manager as soon as practicable an earnings statement
covering a twelve-month period beginning not later than the first day of
the Company's fiscal quarter next following the effective date of the
Registration Statement that satisfies the provisions of Section 11(a) of
the Securities Act and the rules and regulations of the Commission
thereunder; and
(e) to use its best efforts to advise or cause the
Exchange Agent to advise the Dealer Manager at 5:00 P.M., New York City
time, or promptly thereafter, daily (or more frequently if requested), by
telephone or facsimile transmission, with respect to Subject Securities
tendered as follows: (i) the aggregate number of Subject Securities
validly tendered and represented by certificates physically held by the
Exchange Agent or confirmations of receipt of book-entry transfer of
Subject Securities pursuant to the procedures set forth in the Exchange
Offer on such day; (ii) the aggregate number of Subject Securities
represented by Notices of Guaranteed Delivery on such day; (iii) any
Subject Securities properly withdrawn on such day; and (v) the cumulative
totals of the number of Subject Securities in categories (i) through
(iii), inclusive, above.
11. Indemnification and Contribution; Settlement of Litigation;
Release.
(a) The Company agrees to:
(I) Indemnify and hold harmless the Dealer Manager, the
partners, the directors and officers of the Dealer Manager and each
person, if any, who controls the Dealer Manager ("Indemnified Persons")
within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act (A) from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by the Dealer Manager or any such controlling
person in connection with defending or investigating any such action or
claim) (1) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any related preliminary prospectus, the Prospectus, the Schedule
14D-1 or any Exchange Offer Materials (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading (except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon and in conformity with information
relating to the Dealer Manager furnished to the Company in writing by the
Dealer Manager expressly for use therein); or (2) which arises out of or
is based upon a withdrawal, rescission or modification of or a failure to
make or consummate the Exchange Offer; and (B) against any other loss,
claim, damage or liability which is related to, otherwise arises out of or
is based upon or asserted against you in connection with your acting as
Dealer Manager in connection with the Exchange Offer, or your rendering
financial advisory services to the Company in connection with the Exchange
Offer, or which arises in connection with any other matter referred to in
this Agreement, except to the extent any such losses, damages, liabilities
or claims referred to in this clause (B) result from the Dealer Manager's
gross negligence or bad faith in performing the services that are the
subject of this Agreement. The Company also agrees that neither you nor
any of your affiliates, nor any of your partners, officers, directors,
agents, employees or controlling persons (if any), as the case may be, of
you or any such affiliates, shall have any liability to the Company or any
person asserting claims on behalf of or in right of the Company for or in
connection with any matter referred to in this Agreement except to the
extent that any loss, damage, liability or claim incurred by the Company
results from the Dealer Manager's gross negligence or bad faith in
performing the services that are the subject of this Agreement.
(ii) Indemnify and hold harmless the Dealer Manager, the
directors and officers of the Dealer Manager and each person, if any, who
controls the Dealer Manager within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any
other losses, claims, damages or liabilities (including, without
limitation, any legal or other expenses reasonably incurred by the Dealer
Manager or any such controlling person in connection with defending or
investigating any such action or claim) which otherwise arise in
connection with the Exchange Offer, except to the extent any such loss,
damage, claim or liability referred to in this Section 11(b) which is
finally judicially determined to have resulted from the bad faith, gross
negligence or wilful misconduct of any Indemnified Person. The Company
also agrees that no person indemnified under this Section 11(b) shall have
any liability (whether direct or indirect, in contract or tort or
otherwise) to them for or in connection with the Exchange Offer except for
any such liability for losses, claims, damages or liabilities incurred by
the Company that are finally judicially determined to have resulted from
the bad faith, gross negligence or wilful misconduct of such indemnified
person.
(b) The Dealer Manager agrees to indemnify and hold harmless
the Company, its directors and officers who sign the Registration
Statement or the Schedule 14D-1, and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to the Dealer Manager contained in Section
11(a)(i)(A)(1) above, but only with reference to information relating to
the Dealer Manager furnished to the Company in writing by the Dealer
Manager expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus, the Schedule 14D-1, any other Exchange Offer
Material or any amendment or supplement thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to paragraphs (a) or (b) of this
Section 11, such person (the "indemnified party") shall promptly notify
the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees
and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnifying party
shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for above is
unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company, on the one hand, and the
Dealer Manager, on the other hand, from the Exchange Offer or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and of the Dealer Manager, on the other
hand, in connection with the statements or omissions or any other matter
that resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Dealer Manager, on the
other hand, in connection with the Exchange Offer shall be deemed to be in
the same respective proportions as the market value of the maximum
aggregate amount of the Offered Securities (determined as of the date
hereof) issuable pursuant to the Exchange Offer bears to the total Dealer
Manager's fee under the Engagement Letter attributable to the Exchange
Offer. The relative fault of the Company, on the one hand, and the Dealer
Manager, on the other hand, (a) in the case of any untrue statement of a
material fact or omission or alleged omission to state a material fact,
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Company, on the one hand, or by the Dealer Manager, on the other
hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission and (b)
in the case of any other action or omission, shall be determined by
reference to, among other things, whether such action or omission was
taken or omitted to be taken by the Company or its affiliates or by the
Dealer Manager, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action or omission.
(e) The Company and the Dealer Manager agree that it would
not be just and equitable if contribution pursuant to Section 11(d) above
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations
referred to in Section 11(d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 11(d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Agreement, the Dealer Manager shall not be required to
contribute any amount in excess of the fee paid to the Dealer Manager in
connection with the Exchange Offer as provided in the Engagement Letter.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(f) The remedies provided for in this Agreement are not
exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in
this Agreement and the representations and warranties of the Company
contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Dealer Manager or its officers,
directors, partners or any person controlling the Dealer Manager, or by or
on behalf of the Company, any of its officers or directors, or any person
controlling the Company or (iii) consummation of the Exchange Offer.
(h) With respect to the Exchange Offer (and for no other
purpose), this Section 11 shall supersede the indemnity agreement attached
to the Engagement Letter, and with respect to the Exchange Offer (and for
no other purpose) such indemnity agreement shall be of no further effect.
12. Termination.
(a) This Agreement shall terminate upon the earliest to
occur of (i) thirty days after the Closing Date, (ii) any of the
conditions specified in Section 9 has not been fulfilled as of any date
such condition is required to be fulfilled pursuant to Section 9 (and the
Dealer Manager shall have notified the Company thereof) or (iii) the date
on which the Company terminates or withdraws the Exchange Offer for any
reason (the earliest to occur of clauses (i), (ii) and (iii) being
referred to as the "Termination Date").
(b) Notwithstanding termination of this Agreement pursuant
to subsection (a) above, the obligations of the parties pursuant to
Sections 6, 7 and 11 shall survive any termination of this Agreement.
13. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal
substance of the agreements contained herein is not affected in any manner
adverse to any party.
14. Counterparts. This Agreement may be executed by the different
parties hereto in one or more separate counterparts, each of which when
executed shall be deemed an original, but all of which together shall
constitute one and the same agreement.
15. Binding Effect. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and the Indemnified Persons,
and nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
17. Consent to Jurisdiction.
The Company (i) agrees that any legal suit, action or proceeding brought
by the Dealer Manager arising out of or relating to this Agreement, the
Offered Securities, the Exchange Offer Materials or the transactions
contemplated hereby or thereby may be instituted in any federal or state
court sitting in New York City, (ii) irrevocably waives, to the fullest
extent it may effectively do so, any objection (x) which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any federal or state court in New York City or (y) that any
such suit, action or proceeding has been brought in an inconvenient forum,
and (iii) irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding.
(b) The Company agrees that a final judgment in any such
legal suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
18. Entire Agreement. This Agreement, together with the Engagement
Letter (including all attachments), constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter
hereof.
19. Amendment. This Agreement may not be amended except in a
writing signed by each party to be bound thereby.
20. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered in person, by cable, fax,
telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the parties hereto as follows (or, as to each
party, at such other address as shall be designated by such party in a
written notice complying as to delivery with the terms of this paragraph):
(a) If to you:
Oppenheimer & Co., Inc.
Oppenheimer Tower
One World Financial Center
New York, New York 10281
Phone No.: (212) 667-7000
Fax No.: (212) 667-5585
Attention: Robert M. Buxton
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Phone No.: (212) 878-8000
Fax No.: (212) 878-8375
Attention: John A. Healy, Esq.
(b) If to the Company:
Electromagnetic Sciences, Inc.
P.O. Box 7700
600 Engineering Drive
Technology Park/Atlanta
Norcross, Georgia 33091-7700
Tel. No.: (770) 263-9200
Fax No.: (770) 447-4397
Attention: Chief Financial Officer
with a copy to:
General Counsel
21. Subheadings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
Please indicate your willingness to act as Dealer Manager on the
terms set forth herein and your acceptance of the foregoing provisions by
signing in the space provided below for that purpose and returning to us a
copy of this letter, whereupon this letter and your acceptance shall
constitute a binding agreement among us.
Very truly yours,
ELECTROMAGNETIC SCIENCES, INC.
By:
--------------------------
Jerry H. Lassiter
Chairman, Special Committee
of the Board of Directors
Accepted and agreed as of
the date first above written:
Oppenheimer & Co., Inc.
By:
EXHIBIT 5.1
November 25, 1996
Electromagnetic Sciences, Inc.
660 Engineering Drive
Technology Park/Atlanta
Norcross, Georgia 30092
Re: Registration on Form S-4 of 793,583 Shares of Common Stock
Gentlemen:
This opinion is furnished to you in connection with your Registration
Statement No. 333-14235 on Form S-4 under the Securities Act of 1933, as
amended (the "Registration Statement"), with respect to 793,583 shares of
your common stock, $.10 par value per share (the "ELMG Shares"), to be
offered in exchange for outstanding shares of the common stock, $.01 par
value per share, of LXE Inc. (the"LXE Shares"). I have examined such
corporate records, certificates of public officials and of your officers,
and such other documents and records as I have considered necessary or
proper for purposes of this opinion.
Based upon the foregoing, and having regard to legal considerations that I
deem relevant, I am of the opinion that the 793,583 ELMG Shares covered by
the Registration Statement have been duly authorized and, upon issuance in
exchange for LXE Shares on the terms set forth in the prospectus contained
in the Registration Statement (the "Prospectus"), will be validly issued,
fully paid, and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to me under the caption
"Legal Matters" in the Prospectus.
Very truly yours.
/s/ William S. Jacobs
William S. Jacobs
General Counsel
EXHIBIT 8.1
November 25, 1996
Electromagnetic Sciences, Inc.
660 Engineering Drive
Norcross, Georgia 30092
Ladies and Gentlemen:
We have been requested, as counsel for Electromagnetic Sciences,
Inc., a Georgia corporation ("ELMG"), to render our opinions expressed
below in connection with the proposed exchange (the "Exchange") by ELMG of
shares of ELMG common stock, par value $.10 per share ("ELMG Shares"),
with shareholders of LXE Inc. ("LXE") for outstanding shares of common
stock of LXE, par value $.01 per share ("LXE Shares"), and the proposed
merger (the "Merger") of LXE with and into a newly-formed subsidiary
corporation of ELMG ("NewCo"), as described in that certain Offering
Circular/Prospectus regarding the Offer by Electromagnetic Sciences, Inc.
for all of the outstanding LXE Shares on the basis of .75 ELMG Shares for
each LXE Share, included in ELMG's filing on the date hereof of Amendment
No. 1 to its Registration Statement on Form S-4 No. 333-14235 (the
"Registration Statement")(the "Prospectus"). Unless otherwise indicated,
capitalized terms used in this letter shall have the same meanings as
defined in the Prospectus.
In rendering our opinions, we have examined copies of the draft
Prospectus. We also have considered such matters of applicable law and of
fact, together with such other regulations, rulings, decisions, records,
and documents as we have deemed appropriate for the opinions set forth in
this letter.
Our opinions set forth below are subject to the following
assumptions, qualifications, and exceptions:
A. During the course of all of the foregoing
examinations, we have assumed (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted
to us as originals, (iii) the legal capacity of all
individuals, (iv) the conformity to original documents of
all documents submitted to us as certified, conformed, or
photostatic copies, and (v) the authority of each person or
persons who executed any document on behalf of another
person.
B. As to various factual matters that are material to
our opinions set forth in this letter, we have relied upon
the factual representations set forth in the Prospectus. We
have not independently verified, nor do we assume any
responsibility for, the factual accuracy or completeness of
any such representations.
Based on and in reliance on the foregoing and the further
qualifications set forth below, and provided that the Exchange Offer and
the Merger are consummated consistent with the description in the
Prospectus, it is our opinion that for federal income tax purposes
(1) The Exchange Offer together with the Merger,
if consummated as described in the Prospectus, will
constitute a tax-free exchange under section 368 of the
Code.
(2) No income, gain or loss will be recognized by
LXE shareholders upon the receipt of ELMG Shares in
exchange for their LXE Shares pursuant to the Exchange
Offer and Merger.
(3) No income, gain or loss will be recognized by
ELMG or LXE pursuant to the Exchange Offer and Merger.
(4) The tax basis of the ELMG Shares received by
LXE shareholders pursuant to the Merger will be equal
to their tax basis of their LXE Shares immediately
before consummation of the Exchange Offer and Merger.
(5) The holding period of the ELMG Shares
received by LXE shareholders will include the period
for which such shareholder has held the LXE Shares
surrendered in exchange therefor.
(6) The payment of cash in lieu of fractional
share interests in ELMG will be treated for federal
income tax purposes as if the fractional shares were
issued as part of the overall transaction, and then
were redeemed by ELMG. The cash payments will be
treated as having been received as distributions in
full payment in exchange for the shares redeemed as
provided in section 302(a) of the Code.
We express no opinion as to the following: (a) the tax
consequences that might be relevant to a particular shareholder of LXE who
is subject to special treatment under certain federal income tax laws,
such as dealers in securities, banks, insurance companies, tax-exempt
organizations, non-United States persons, persons who do not hold their
shares of LXE Shares as "capital assets" within the meaning of section
1221 of the Code, and persons who acquired their LXE Shares pursuant to
the exercise of options or otherwise as compensation, (b) any consequences
arising under the laws of any state, locality, or foreign jurisdiction, or
(c) any federal estate or gift tax consequences.
This opinion has been delivered solely for the benefit of ELMG
and LXE in connection with the Exchange and the Merger and, except by any
LXE sh areholder, it may not be relied upon by any other person or entity
or for any other purpose without our express prior written permission. We
hereby consent to the filing of this opinion letter as part of the
Registration Statement and to the reference to us in the Prospectus under
the heading "THE EXCHANGE OFFER -- Certain Federal Income Tax
Consequences. We expressly disclaim any duty to update this letter in the
future in the event there are any changes in relevant fact or law that may
affect any of our opinions expressed herein.
KILPATRICK & CODY, L.L.P.
By: /s/ Lynn E. Fowler
-------------------------
Lynn E. Fowler
a partner
EXHIBIT 10.11
As amended through
October 3, 1996
ELECTROMAGNETIC SCIENCES, INC.
1992 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
(a) "Award" 1
(b) "Board" 1
(c) "Code" 1
(d) "Committee" 1
(e) "Company" 1
(f) "Director" 1
(g) "Disinterested Person" 2
(h) "Employee" 2
(i) "Employer" 2
(j) "Fair Market Value" 2
(k) "Grantee" 3
(l) "ISO" 3
(m) "1934 Act" 3
(n) "Officer" 3
(o) "Option" 3
(p) "Option Agreement" 3
(q) "Optionee" 3
(r) "Option Price" 4
(s) "Parent" 4
(t) "Plan" 4
(u) "Purchasable" 4
(v) "Qualified Domestic Relations Order" 4
(w) "Reload Option" 4
(x) "Restricted Stock" 4
(y) "Restriction Agreement" 5
(z) "Stock" 5
(aa) "Subsidiary" 5
ARTICLE II THE PLAN 5
Section 2.1 Name 5
Section 2.2 Purpose 5
Section 2.3 Effective Date 5
Section 2.4 Termination Date 5
ARTICLE III ELIGIBILITY 6
ARTICLE IV ADMINISTRATION 6
Section 4.1 Duties and Powers of the Committee 6
Section 4.2 Interpretation; Rules 7
Section 4.3 No Liability 7
Section 4.4 Majority Rule 7
Section 4.5 Company Assistance 7
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN 7
Section 5.1 Limitations 7
Section 5.2 Antidilution 8
ARTICLE VI OPTIONS 10
Section 6.1 Types of Options Granted 10
Section 6.2 Option Grant and Agreement 10
Section 6.3 Optionee Limitations 10
Section 6.4 $100,000 Limitation 11
Section 6.5 Option Price 11
Section 6.6 Exercise Period 12
Section 6.7 Option Exercise 12
Section 6.8 Nontransferability of Option 13
Section 6.9 Termination of Employment 13
Section 6.10 Employment Rights 14
Section 6.11 Certain Successor Options 14
Section 6.12 Conditions to Issuing Option Stock 14
Section 6.13 Automatic Option Grants to Certain
Directors 15
ARTICLE VII RESTRICTED STOCK 16
Section 7.1 Awards of Restricted Stock 16
Section 7.2 Non-Transferability 17
Section 7.3 Lapse of Restrictions 17
Section 7.4 Termination of Employment 17
Section 7.5 Treatment of Dividends 17
Section 7.6 Delivery of Shares 17
Section 7.7 Payment of Withholding Taxes 18
ARTICLE VIII TERMINATION, AMENDMENT AND MODIFICATION OF PLAN 19
ARTICLE IX MISCELLANEOUS 19
Section 9.1 Replacement or Amended Grants 20
Section 9.2 Forfeiture for Competition 20
Section 9.3 Plan Binding on Successors 20
Section 9.4 Gender 20
Section 9.5 Headings Not a Part of Plan 20
ELECTROMAGNETIC SCIENCES, INC.
1992 STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates to the
contrary:
(a) "Award" shall mean a grant of Restricted Stock.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Code" shall mean the United States Internal Revenue
Code of 1986, as amended, including effective date and transition rules
(whether or not codified). Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
(d) "Committee" shall mean a committee of at least two
Directors appointed from time to time by the Board, having the duties and
authority set forth herein in addition to any other authority granted by
the Board; provided, however, that with respect to any Options or Awards
granted to an individual who is also an Officer or Director, the Committee
shall consist of at least two Directors (who need not be members of the
Committee with respect to Options or Awards granted to any other
individuals) who are Disinterested Persons, and all authority and
discretion shall be exercised by such Disinterested Persons, and
references herein to the "Committee" shall mean such Disinterested Persons
insofar as any actions or determinations of the Committee shall relate to
or affect Options or Awards made to or held by any Officer or Director.
(e) "Company" shall mean Electromagnetic Sciences, Inc., a
Georgia corporation.
(f) "Director" shall mean a member of the Board.
(g) "Disinterested Person" shall have the meaning set
forth in Rule 16b-3 under the 1934 Act, as the same may be in effect from
time to time, or in any successor rule thereto, and shall be determined
for all purposes under the Plan according to interpretative or "no-action"
positions with respect thereto issued by the Securities and Exchange
Commission.
(h) "Employee" shall mean any employee of the Company or
any Subsidiary of the Company.
(i) "Employer" shall mean the corporation that employs a
Grantee.
(j) "Fair Market Value" of the shares of Stock on any date
shall mean
(i) the closing sales price, regular way, or
in the absence thereof the mean of the last reported bid
and asked quotations, on such date on the exchange having
the greatest volume of trading in the shares during the
thirty-day period preceding such date (or if such
exchange was not open for trading on such date, the next
preceding date on which it was open); or
(ii) if there is no price as specified in (i),
the final reported sales price, or if not reported in the
following manner, the mean of the closing high bid and
low asked prices, in the over-the-counter market for the
shares as reported by the National Association of
Securities Dealers Automatic Quotation System or, if not
so reported, then as reported by the National Quotation
Bureau Incorporated, or if such organization is not in
existence, by an organization providing similar services,
on such date (or if such date is not a date for which
such system or organization generally provides reports,
then on the next preceding date for which it does so); or
(iii) if there also is no price as specified
in (ii), the price determined by the Committee by
reference to bid-and-asked quotations for the shares
provided by members of an association of brokers and
dealers registered pursuant to subsection 15(b) of the
1934 Act, which members make a market in the shares, for
such recent dates as the Committee shall determine to be
appropriate for fairly determining current market value;
or
(iv) if there also is no price as specified in
(iii), the amount determined in good faith by the
Committee based on such relevant facts, which may include
opinions of independent experts, as may be available to
the Committee.
(k) "Grantee" shall mean an Employee, former employee or
other person who is an Optionee or who has received an Award of Restricted
Stock.
(l) "ISO" shall mean an Option that complies with and is
subject to the terms, limitations and conditions of Code section 422 and
any regulations promulgated with respect thereto.
(m) "1934 Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(n) "Officer" shall mean a person who constitutes an
officer of the Company for the purposes of Section 16 of the 1934 Act, as
determined by reference to such Section 16 and to the rules, regulations,
judicial decisions, and interpretative or "no-action" positions with
respect thereto of the Securities and Exchange Commission, as the same may
be in effect or set forth from time to time.
(o) "Option" shall mean a contractual right to purchase
Stock granted pursuant to the provisions of Article VI hereof.
(p) "Option Agreement" shall mean an agreement between the
Company and an Optionee setting forth the terms of an Option.
(q) "Optionee" shall mean a person to whom an Option has
been granted hereunder.
(r) "Option Price" shall mean the price at which an
Optionee may purchase a share of Stock pursuant to an Option.
(s) "Parent" shall mean any corporation (other than the
corporation with respect to which the determination is being made) in an
unbroken chain of corporations ending with the corporation with the
respect to which the determination is being made if, at the relevant time,
each of the corporations other than the corporation with respect to which
the determination is being made owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
(t) "Plan" shall mean the 1992 Stock Incentive Plan of the
Company.
(u) "Purchasable," when used to describe Stock, shall
refer to Stock that may be purchased by an Optionee under the terms of
this Plan on or after a certain date specified in the applicable Option
Agreement.
(v) "Qualified Domestic Relations Order" shall have the
meaning set forth in the Code or in the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations promulgated
under the Code or such Act.
(w) "Reload Option" shall mean an Option that is granted,
without further action of the Committee, (i) to an Optionee who surrenders
or authorizes the withholding of shares of Stock in payment of amounts
specified in paragraphs 6.7(c) or 6.7(d) hereof, (ii) for the same number
of shares as is so paid, (iii) as of the date of such payment and at an
Option Price equal to the Fair Market Value of the Stock on such date, and
(iv) otherwise on the same terms and conditions as the Option whose
exercise has occasioned such payment, subject to such contingencies,
conditions or other terms as the Committee shall specify at the time such
exercised Option is granted.
(x) "Restricted Stock" shall mean Stock issued, subject to
restrictions, to an Employee pursuant to Article VII hereof.
(y) "Restriction Agreement" shall mean the agreement
setting forth the terms of an Award, and executed by a Grantee as provided
in Section 7.1 hereof.
(z) "Stock" shall mean the $.10 par value common stock of
the Company or, in the event that the outstanding shares of such stock are
hereafter changed into or exchanged for shares of a different class of
stock or securities of the Company or some other corporation, such other
stock or securities.
(aa) "Subsidiary" shall mean any corporation (other than
the corporation with respect to which the determination is being made) in
an unbroken chain of corporations beginning with the corporation with
respect to which the determination is being made if, at the relevant time,
each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
ARTICLE II
THE PLAN
2.1 Name. This plan shall be known as the "Electromagnetic
Sciences, Inc. 1992 Stock Incentive Plan."
2.2 Purpose. The purpose of the Plan is to advance the
interests of the Company, its shareholders, and any Subsidiary of the
Company, by offering certain Employees and Directors an opportunity to
acquire or increase their proprietary interests in the Company. Options
and Awards will promote the growth and profitability of the Company, and
any Subsidiary of the Company, because Grantees will be provided with an
additional incentive to achieve the Company's objectives through
participation in its success and growth.
2.3 Effective Date. The Plan shall become effective on January
24, 1992.
2.4 Termination Date. No further Options or Awards shall be
granted hereunder on or after January 24, 1997, but all Options or Awards
granted prior to that time shall remain in effect in accordance with their
terms; provided, however, that the Plan shall terminate, and all Options
or Awards theretofore granted or awarded shall become void and may not be
exercised, on January 24, 1993, if the shareholders of the Company shall
not by that date have approved the Plan's adoption.
ARTICLE III
ELIGIBILITY
The persons eligible to participate in this Plan shall consist
only of Directors and those Employees whose participation the Committee
determines is in the best interests of the Company, together with any
persons holding options under the LXE Inc. 1989 Stock Incentive Plan at
such time as the outstanding shares of LXE Inc. common stock may be
converted by merger into Stock.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be
administered by the Committee. The Committee shall select one of its
members as its Chairman and shall hold its meetings at such times and
places as it may determine. The Committee shall keep minutes of its
meetings and shall make such rules and regulations for the conduct of its
business as it may deem necessary. The Committee shall have the power to
act by unanimous written consent in lieu of a meeting, and shall have the
right to meet telephonically. In administering the Plan, the Committee's
actions and determinations shall be binding on all interested parties.
The Committee shall have the power to grant Options or Awards in
accordance with the provisions of the Plan. Subject to the provisions of
the Plan, the Committee shall have the discretion and authority to
determine those individuals to whom Options or Awards will be granted and
whether such Options shall be accompanied by the right to receive Reload
Options, the number of shares of Stock subject to each Option or Award,
such other matters as are specified herein, and any other terms and
conditions of an Option Agreement or Restriction Agreement. To the extent
not inconsistent with the provisions of the Plan, the Committee shall have
the authority to amend or modify an outstanding Option Agreement or
Restriction Agreement, or to waive any provision thereof, provided that
the Grantee consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions
of the Plan, the Committee also shall have complete authority to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating
to it, and to make all other determinations necessary or advisable in the
administration of the Plan, including, without limitation, the amending or
altering of any Options or Awards granted hereunder as may be required to
comply with or to conform to any federal, state or local laws or
regulations.
4.3 No Liability. Neither any member of the Board nor any
member of the Committee shall be liable to any person for any act or
determination made in good faith with respect to the Plan or any Option or
Award granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee
shall constitute a quorum, and any action taken by a majority at a meeting
at which a quorum is present, or any action taken without a meeting
evidenced by a writing executed by all the members of the Committee, shall
constitute the action of the Committee.
4.5 Company Assistance. The Company shall supply full and
timely information to the Committee on all matters relating to eligible
persons, their employment, death, retirement, disability or other
termination of employment, and such other pertinent facts as the Committee
may require. The Company shall furnish the Committee with such clerical
and other assistance as is necessary in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment
pursuant to the provisions of Section 5.2 hereof, the maximum number of
shares of Stock that may be issued hereunder shall be 500,000 (of which a
maximum of 100,000 shares may be issued as Restricted Stock), plus that
number of shares issuable upon conversion by merger of options outstanding
under the LXE Inc. 1989 Stock Incentive Plan into Options for that same
number of shares of Stock as would have been issued in such merger, in
respect of the LXE Inc. Shares of common stock issuable upon exercise of
such options, had such LXE Inc. shares been outstanding at the time of the
Merger. Shares subject to an Option or issued as an Award may be either
authorized and unissued shares or shares issued and later acquired by the
Company. The shares covered by any unexercised portion of an Option that
has terminated for any reason (except as set forth in the following
paragraph), or any forfeited portion of an Award (except any portion as to
which the Grantee has received, and not forfeited, dividends or other
benefits of ownership other than voting rights) may again be optioned or
awarded under the Plan, and such shares shall not be considered as having
been optioned or issued in computing the number of shares of Stock
remaining available for option or award hereunder.
5.2 Antidilution.
(a) In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of merger, consolidation,
reorganization, recapitalization, reclassification, combination or
exchange of shares, stock split or stock dividend, or in the event that
any spin-off, spin-out or other distribution of assets materially affects
the price of the Company's stock:
(i) The aggregate number and kind of shares of
Stock for which Options or Awards may be granted
hereunder shall be adjusted proportionately by the
Committee; and
(ii) The rights of Optionees (concerning the
number of shares subject to Options and the Option Price)
under outstanding Options and the rights of the holders
of Awards(concerning the terms and conditions of the
lapse of any then-remaining restrictions), shall be
adjusted proportionately by The Committee.
(b) If the Company shall be a party to any reorganization
in which it does not survive, involving merger, consolidation, or
acquisition of the stock or substantially all the assets of the Company,
the Committee, in its discretion, may:
(i) notwithstanding other provisions hereof,
declare that all Options granted under the Plan shall
become exercisable immediately notwithstanding the
provisions of the respective Option Agreements regarding
exercisability, that all such Options shall terminate a
specified period of time after the Committee gives
written notice of the immediate right to exercise all
such Options and of the decision to terminate all Options
not exercised within such period, and that all then-
remaining restrictions pertaining to Awards under the
Plan shall immediately lapse; and/or
(ii) notify all Grantees that all Options or Awards
granted under the Plan shall be assumed by the successor
corporation or substituted on an equitable basis with
options or restricted stock issued by such successor
corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in paragraph 5.2(b), the
provisions of such paragraph shall apply. In all other instances, the
adoption of a plan of dissolution or liquidation of the Company shall,
notwithstanding other provisions hereof, cause all then-remaining
restrictions pertaining to Awards under the Plan to lapse, and shall cause
every Option outstanding under the Plan to terminate to the extent not
exercised prior to the adoption of the plan of dissolution or liquidation
by the shareholders, provided that, notwithstanding other provisions
hereof, the Committee may declare all Options granted under the Plan to be
exercisable at any time on or before the fifth business day following such
adoption notwithstanding the provisions of the respective Option
Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through
(c) of this Section 5.2, and the manner of their application, shall be
determined solely by the Committee, and any such adjustment may provide
for the elimination of fractional share interests. The adjustments
required under this Article V shall apply to any successors of the Company
and shall be made regardless of the number or type of successive events
requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. Within the limitations provided
herein, Options may be granted to one Employee at one or several times or
to different Employees at the same time or at different times, in either
case under different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of the Plan.
Without limitation of the foregoing, Options may be granted subject to
conditions based on the financial performance of the Company or any other
factor the Committee deems relevant.
6.2 Option Grant and Agreement. Each Option granted or
modified hereunder shall be evidenced (a) by either minutes of a meeting
or a written consent of the Committee, and (b) by a written Option
Agreement executed by the Company and the Optionee. The terms of the
Option, including the Option's duration, time or times of exercise,
exercise price, whether the Option is intended to be an ISO, and whether
the Option is to be accompanied by the right to receive a Reload Option,
shall be stated in the Option Agreement. Separate Option Agreements shall
be used for Options intended to be ISO's and those not so intended, but
any failure to use such separate Agreements shall not invalidate, or
otherwise adversely affect the Optionee's rights under and interest in,
the Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an ISO
to any person who, at the time the ISO would be granted:
(a) is not an Employee; or
(b) owns or is considered to own stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Employer, or any Parent or Subsidiary of the Employer; provided, however,
that this limitation shall not apply if at the time an ISO is granted the
Option Price is at least 110% of the Fair Market Value of the Stock
subject to such Option and such Option by its terms would not be
exercisable after the expiration of five years from the date on which the
Option is granted. For the purpose of this paragraph (b), a person shall
be considered to own (i) the stock owned, directly or indirectly, by or
for his brothers and sisters (whether by the whole or half blood), spouse,
ancestors and lineal descendants, (ii) the stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust in
proportion to such person's stock interest, partnership interest or
beneficial interest therein, and (iii) the stock which such person may
purchase under any outstanding options of the Employer or of any Parent or
Subsidiary of the Employer.
6.4 $100,000 Limitation. Except as provided below, the
Committee shall not grant an ISO to, or modify the exercise provisions of
outstanding ISO's held by, any person who, at the time the ISO is granted
(or modified), would thereby receive or hold any incentive stock options
(as described in Code section 422) of the Employer and any Parent or
Subsidiary of the Employer, such that the aggregate Fair Market Value
(determined as of the respective dates of grant or modification of each
option) of the stock with respect to which such incentive stock options
are exercisable for the first time during any calendar year is in excess
of $100,000; provided, that the foregoing restriction on modification of
outstanding ISO's shall not preclude the Committee from modifying an
outstanding ISO if, as a result of such modification and with the consent
of the Optionee, such Option no longer constitutes an ISO; and provided
that, if the $100,000 limitation described in this Section 6.4 is
exceeded, an Option that otherwise qualifies as an ISO shall be treated as
an ISO up to the limitation and the excess shall be treated as an Option
not qualifying as an ISO. The preceding sentence shall be applied by
taking options intended to be ISO's into account in the order in which
they were granted.
6.5 Option Price. The Option Price under each Option shall be
determined by the Committee. However, the Option Price shall not be less
than 50% of the Fair Market Value of the Stock, or in the case of an ISO
less than the Fair Market Value of the Stock, in each case on the date
that the Option is granted (or, in the case of an ISO that is subsequently
modified, on the date of such modification).
6.6 Exercise Period. The period for the exercise of each
Option granted hereunder shall be determined by the Committee, but the
Option Agreement with respect to each Option intended to be an ISO shall
provide that such Option shall not be exercisable after the expiration of
ten years from the date of grant (or modification) of the Option. In
addition, no Option granted to an Employee who is also an Officer or
Director shall be exercisable prior to the expiration of six months from
the date such Option is granted, other than in the case of the death or
disability of such Employee.
6.7 Option Exercise.
(a) Unless otherwise provided in the Option Agreement, an
Option may be exercised at any time or from time to time during the term
of the Option as to any or all whole shares that have become Purchasable
under the provisions of the Option, but not at any time as to less than
100 shares unless the remaining shares that have become so Purchasable are
less than 100 shares. The Committee shall have the authority to prescribe
in any Option Agreement that the Option may be exercised only in
accordance with a vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the
Treasurer of the Company at its principal office of written notice of
exercise with respect to a specified number of shares of Stock, and (ii)
payment to the Company at that office of the full amount of the Option
Price for such number of shares.
(c) The Option Price shall be paid in full upon the
exercise of the Option; provided, however, that the Committee may provide
in an Option Agreement that, in lieu of cash, all or any portion of the
Option Price may be paid by tendering to the Company shares of Stock duly
endorsed for transfer and owned by the Optionee, to be credited against
the Option Price at the Fair Market Value of such shares on the date of
exercise (however, no fractional shares may be so transferred, and the
Company shall not be obligated to make any cash payments in consideration
of any excess of the aggregate Fair Market Value of shares transferred
over the aggregate Option Price).
(d) In addition to and at the time of payment of the Option
Price, the Optionee shall pay to the Company in cash the full amount of
any federal, state and local income, employment or other taxes required to
be withheld from the income of such Optionee as a result of such exercise;
provided, however, that in the discretion of the Committee any Option
Agreement may provide that all or any portion of such tax obligations,
together with additional taxes not exceeding the actual additional taxes
to be owed by the Optionee as a result of such exercise, may, upon the
irrevocable election of the Optionee, be paid by tendering to the Company
whole shares of Stock duly endorsed for transfer and owned by the
Optionee, or by authorization to the Company to withhold shares of Stock
otherwise issuable upon exercise of the Option, in either case in that
number of shares having a Fair Market Value on the date of exercise equal
to the amount of such taxes thereby being paid, in all cases subject to
such restrictions as the Committee may from time to time determine,
including any such restrictions as may be necessary or appropriate to
satisfy the conditions of the exemption set forth in Rule 16b-3 under the
1934 Act.
(e) The holder of an Option shall not have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option until such shares have been issued upon the exercise of the Option.
6.8 Nontransferability of Option. No Option or any rights
therein shall be transferable by an Optionee other than by will or the
laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order. During the lifetime of an Optionee, an Option granted to
that Optionee shall be exercisable only by such Optionee (or by such
Optionee's guardian or other legal representative, should one be
appointed).
6.9 Termination of Employment. The Committee shall have the
power to specify, with respect to the Options granted to any particular
Optionee, the effect upon such Optionee's right to exercise an Option of
the termination of such Optionee's employment under various circumstances,
which effect may include immediate or deferred termination of such
Optionee's rights under an Option, or acceleration of the date at which an
Option may be exercised in full.
6.10 Employment Rights. Options granted under the Plan shall
not be affected by any change of employment so long as the Optionee
continues to be an Employee. Nothing in the Plan or in any Option
Agreement shall confer on any person any right to continue in the employ
of the Company or any Subsidiary of the Company, or shall interfere in any
way with the right of the Company or any such Subsidiary to terminate such
person's employment at any time.
6.11 Certain Successor Options. To the extent not inconsistent
with the terms, limitations and conditions of Code section 422, and any
regulations promulgated with respect thereto, an Option issued in respect
of an option held by an employee to acquire stock of any entity acquired,
by merger or otherwise, by the Company (or any Subsidiary of the Company)
may contain terms that differ from those stated in this Article VI, but
solely to the extent necessary to preserve for any such employee the
rights and benefits contained in such predecessor option, or to satisfy
the requirements of Code section 424(a).
6.12 Conditions to Issuing Option Stock. The Company shall not
be required to issue or deliver any Stock purchased upon the full or
partial exercise of any Option granted hereunder prior to fulfillment of
all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed;
(b) The completion of any registration or other
qualification of such shares that the Company shall determine to be
necessary or advisable under any federal or state law or under the rulings
or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, or the Company's determination that an
exemption is available from such registration or qualification;
(c) The obtaining of any approval or other clearance from
any federal or state governmental agency that the Company shall determine
to be necessary or advisable; and
(d) The lapse of such reasonable period of time following
exercise as shall be appropriate for reasons of administrative
convenience.
Unless the shares of Stock covered by the Plan shall be the
subject of an effective registration statement under the Securities Act of
1933, as amended, stock certificates issued and delivered to Optionees
shall bear such restrictive legends as the Company shall deem necessary or
advisable pursuant to applicable federal and state securities laws.
6.13 Automatic Option Grants to Certain Directors. Each person
who is elected as a Director at the Annual Meeting of the Shareholders of
the Company held in 1992, or who thereafter becomes a Director, and who is
not also an Employee, or an employee of any Parent or Subsidiary of the
Company, shall automatically, and without any action of the Board or the
Committee, be granted, on the date of such Annual Meeting, or thereafter
on the first day on which such person serves as a Director, as the case
may be, an Option for the purchase of 10,000 shares of Stock (subject to
automatic proportionate adjustment for stock splits or stock dividends,
and otherwise to proportionate adjustment by the Committee as provided in
Section 5.2). Each such Option shall not be an ISO, shall not include the
right to receive a Reload Option, shall have an Option Price equal to the
Fair Market Value of the Stock on the date of grant, and shall become
exercisable as to 2,000 shares on the date that is six months after the
date of grant, and as to an additional 2,000 shares on each of the first,
second, third and fourth anniversaries of such six-month date. However,
each such Option shall become immediately exercisable in the event a party
other than the Company or any Parent or Subsidiary of the Company
purchases or otherwise acquires shares of Stock pursuant to a tender offer
or exchange offer for such shares, or any person or group becomes the
beneficial owner (for the purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of 50% or more of the outstanding shares
of the Stock. To the extent such an Option shall have become exercisable,
it shall be non-forfeitable and shall remain exercisable until the tenth
anniversary of its date of grant, but if the Grantee ceases to be a
Director for any reason, any portion of such Option that is not at that
time exercisable shall immediately terminate and shall not thereafter
become exercisable. The Option Price for each such Option may be paid by
tendering to the Company shares of Stock duly endorsed for transfer and
owned by the Optionee, to be credited against the Option Price at the Fair
Market Value of such shares on the date of exercise, subject to the
parenthetical restriction set forth in paragraph 6.7(c) hereof. In
addition, any taxes related to the exercise of each such Option may be
paid in the manner contemplated in the proviso to paragraph 6.7(d) hereof.
ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock. The Committee may grant Awards
of Restricted Stock upon determination by the Committee, acting pursuant
to the delegation by the Board of authority to make such determinations,
that the value or other benefit to the Company of the services of a
Grantee theretofore performed or to be performed as a condition of the
lapse of restrictions applicable to such Restricted Stock, or the benefit
to the Company of the incentives created by the issuance thereof, is
adequate consideration for the issuance of such shares. Each such Award
shall be governed by a Restriction Agreement between the Company and the
Grantee. Each Restriction Agreement shall contain such restrictions,
terms and conditions as the Committee may, in its discretion, determine,
and may require that an appropriate legend be placed on the certificates
evidencing the subject Restricted Stock.
Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted, provided that the Grantee has
executed the Restriction Agreement governing the Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require as a
condition to the issuance of such shares. If a Grantee shall fail to
execute the foregoing documents, within any time period prescribed by the
Committee, the Award shall be null and void. At the discretion of the
Committee, shares of Restricted Stock issued in connection with an Award
shall be held by the Company or deposited together with the stock powers
with an escrow agent designated by the Committee. Unless the Committee
determines otherwise and as set forth in the Restriction Agreement, upon
issuance of such shares, the Grantee shall have all of the rights of a
shareholder with respect to such shares, including the right to vote the
shares and to receive all dividends or other distributions paid or made
with respect to them.
7.2 Non-Transferability. Until any restrictions upon
Restricted Stock awarded to a Grantee shall have lapsed in a manner set
forth in Section 7.3, such shares of Restricted Stock shall not be
transferable other than by will or the laws of descent and distribution,
or pursuant to a Qualified Domestic Relations Order, nor shall they be
delivered to the Grantee.
7.3 Lapse of Restrictions. Restrictions upon Restricted Stock
awarded hereunder shall lapse at such time or times (but, with respect to
any award to an Employee who is also a Director or Officer, not less than
six months after the date of the Award) and on such terms and conditions
as the Committee may, in its discretion, determine at the time the Award
is granted or thereafter.
7.4 Termination of Employment. The Committee shall have the
power to specify, with respect to each Award granted to any particular
Employee, the effect upon such Grantee's rights with respect to such
Restricted Stock of the termination of such Grantee's employment under
various circumstances, which effect may include immediate or deferred
forfeiture of such Restricted Stock or acceleration of the date at which
any then-remaining restrictions shall lapse.
7.5 Treatment of Dividends. At the time an Award of Restricted
Stock is made the Committee may, in its discretion, determine that the
payment to the Grantee of any dividends, or a specified portion thereof,
declared or paid on such Restricted Stock shall be (i) deferred until the
lapsing of the relevant restrictions, and (ii) held by the Company for the
account of the Grantee until such time. In the event of such deferral,
there shall be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a
rate per annum determined by the Committee. Payment of deferred
dividends, together with interest thereon, shall be made upon the lapsing
of restrictions imposed on such Restricted Stock, and any dividends
deferred (together with any interest thereon) in respect of Restricted
Stock shall be forfeited upon any forfeiture of such Restricted Stock.
7.6 Delivery of Shares. Within a reasonable period of time
following the lapse of the restrictions on shares of Restricted Stock, the
Committee shall cause a stock certificate or certificates to be delivered
to the Grantee with respect to such shares. Such shares shall be free of
all restrictions hereunder, except that if the shares of stock covered by
the Plan shall not be the subject of an effective registration statement
under the Securities Act of 1933, as amended, such stock certificates
shall bear such restrictive legends as the Company shall deem necessary or
advisable pursuant to applicable federal and state securities laws.
7.7 Payment of Withholding Taxes.
(a) The Restriction Agreement may authorize the Company to
withhold from compensation otherwise due to the Grantee the full amount of
any federal, state and local income, employment or other taxes required to
be withheld from the income of such Grantee as a result of the lapse of
the restrictions on shares of Restricted Stock, or otherwise as a result
of the recognition of taxable income with respect to an Award. At the
time of and as a condition to the delivery of a stock certificate or
certificates pursuant to Section 7.6, the Grantee shall pay to the Company
in cash any balance owed with respect to such withholding requirements.
(b) In the discretion of the Committee, any Restriction
Agreement may provide that all or any portion of the tax obligations
otherwise payable in the manner set forth in paragraph 7.7(a), together
with additional taxes not exceeding the actual additional taxes to be owed
by the Grantee with respect to the Award, may, upon the irrevocable
election of the Grantee, be paid by tendering to the Company whole shares
of Stock duly endorsed for transfer and owned by the Grantee, or by
authorizing the Company to withhold and cancel shares of Stock otherwise
deliverable pursuant to Section 7.6, in either case in that number of
shares having a Fair Market Value on the date that taxable income is
recognized equal to the amount of such taxes thereby being paid, in all
cases subject to such restrictions as the Committee may from time to time
determine, including any such restrictions as may be necessary or
appropriate to satisfy the conditions of the exemption set forth in Rule
16b-3 under the 1934 Act.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, (i) cause the Committee to cease
granting Options and Awards, (ii) terminate the Plan, or (iii) in any
respect amend or modify the Plan; provided, however, that the Board
(unless its actions are approved or ratified by the shareholders of the
Company within twelve months of the date the Board amends the Plan) may
not amend the Plan to:
(a) Materially increase the number of shares of Stock
subject to the Plan;
(b) Materially change or modify the class of persons that
may participate in the Plan; or
(c) Otherwise materially increase the benefits accruing to
participants under the Plan.
No termination, amendment or modification of the Plan shall
affect adversely an Optionee's rights under an Option Agreement or
Restriction Agreement without the consent of the Grantee or his legal
representative.
From and after the first date on which an Option is
automatically granted pursuant to Section 6.13, the provisions of such
Section 6.13 may not be amended in any manner more frequently than once
every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated under the Code or such Act.
ARTICLE IX
MISCELLANEOUS
9.1 Replacement or Amended Grants. At the sole discretion of
the Committee, and subject to the terms of the Plan, the Committee may
modify outstanding Options or Awards or accept the surrender of
outstanding Options or Awards and grant new Options or Awards in
substitution for them. However no modification of an Option or Award
shall adversely affect a Grantee's rights under an Option Agreement or
Restriction Agreement without the consent of the Grantee or his legal
representative.
9.2 Forfeiture for Competition. If a Grantee provides services
to a competitor of the Company or any of its Subsidiaries, whether as an
employee, officer, director, independent contractor, consultant, agent or
otherwise, such services being of a nature that can reasonably be expected
to involve the skills and experience used or developed by the Grantee
while an Employee, then that Grantee's rights under any Options
outstanding hereunder shall be forfeited and terminated, and any shares of
Restricted Stock held by such Grantee subject to remaining restrictions
shall be forfeited, subject in each case to a determination to the
contrary by the Committee.
9.3 Plan Binding on Successors. The Plan shall be binding upon
the successors of the Company.
9.4 Gender. Whenever used herein, the masculine pronoun shall
include the feminine gender.
9.5 Headings Not a Part of Plan. Headings of Articles and
Sections hereof are inserted for convenience and reference, and do not
constitute a part of the Plan.
EXHIBIT 11.1
(1 OF 2)
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
Statement re: Computation of Per Share Earnings
(In thousands, except net earnings per share)
Years Ended December 31
1995 1994 1993
Common equivalent shares:
Common stock - weighted average
shares outstanding 6,929 6,766 6,716
Dilutive effect of outstanding
common stock options (as determined
by the treasury stock method using
the average market price for the
period) 232 277 140
Total common and common equivalent
shares 7,161 7,043 6,856
For purposes of calculating primary
earnings per share, the Company's
proportionate share of the net earnings
of LXE Inc. Has been adjusted to reflect
the dilutive effect of LXE's outstand-
ing stock options. Following is a
summary of net earnings applicable to
earnings per common and common equiva-
lent share:
Net earnings excluding LXE Inc. $2,431 1,226 1,142
Adjusted proportionate share of
net earnings (loss) of LXE Inc. (121) 2,841 233
Total net earnings applicable to
earnings per common and common
equivalent share $2,310 4,067 1,375
Net earnings per common and
common equivalent share $ .32 .58 .20
EXHIBIT 11.1
(2 OF 2)
ELECTROMAGNETIC SCIENCES, INC.
AND SUBSIDIARIES
Statement re: Computation of Per Share Earnings
(In thousands, except per share data)
Three months ended Nine months ended
September 30 September 30
1996 1995 1996 1995
----- ----- ----- -----
Common and common equivalent
shares:
Common stock - weighted average
shares outstanding 7,494 6,984 7,340 6,906
Dilutive effect of outstanding
common stock options (as deter-
mined by the treasury stock
method using the average market
price for the period) 335 - 329 218
Total common and common
equivalent shares 7,808 6,984 7,669 7,124
For purposes of calculating
primary earnings per share
the Company's proportionate
share of the net earnings of
LXE Inc. has been adjusted
to reflect the dilutive
effect of LXE's outstanding
stock options. Following is
a summary of net earnings
applicable to earnings per
common and common equivalent
share:
Net earnings excluding LXE Inc. $ 810 510 2,616 1,650
Adjusted proportionate share
of net earnings (loss) of LXE
Inc. 411 (1,447) 163 (216)
Total net earnings
applicable to earnings
per common and common
equivalent share $1,221 (937) 2,779 1,434
Net earnings per common and
common equivalent share $ .16 (.13) .36 .20
EXHIBIT 22.1
ELECTROMAGNETIC SCIENCES, INC.
SUBSIDIARIES OF THE REGISTRANT
EMS Technologies, Inc.
660 Engineering Drive
Norcross, GA 30092
LXE Inc.
303 Research Drive
Norcross, GA 30092
CAL Corporation
1050 Morrison Drive
Ottawa, Ontario K2H 8K7
EXHIBIT 23.1
The Board of Directors
Electromagnetic Sciences, Inc.
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the Offering
Circular/Prospectus.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
November 25, 1996
The Board of Directors
LXE Inc.
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the Offering
Circular/Prospectus.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
November 25, 1996
<PAGE>
EXHIBIT 25.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas E. Sharon and Don T. Scartz,
jointly and severally, his attorneys-in-fact, each with power of substitution
for him in any and all capacities, to sign any amendments to this Registration
Statement, and to file the same, with the exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities indicated:
Signature Title Date
- --------- ----- ----
/s/ Thomas E. Sharon President and Chief October 14, 1996
- ---------------------- Executive Officer and
Thomas E. Sharon Director (Principal
Executive Officer)
/s/ John E. Pippin Chairman of the Board October 14, 1996
- ----------------------
John E. Pippin
/s/ Don T. Scartz Senior Vice President October 14, 1996
- ---------------------- Chief Financial Officer,
Don T. Scartz Treasurer, and Director
(Principal Financial
and Accounting Officer)
/s/ Anthony J. Iorillo Director October 14, 1996
- ----------------------
Anthony J. Iorillo
/s/ Jerry H. Lassiter Director October 14, 1996
- ----------------------
Jerry H. Lassiter
EXHIBIT 99.1
LETTER OF TRANSMITTAL
Offer by
ELECTROMAGNETIC SCIENCES, INC.
for all outstanding Shares of Common Stock of
LXE INC.
on the basis of .75
ELMG Shares for each LXE Share
- -----------------------------------------------------------------
THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT
(ATLANTA, GEORGIA, TIME) ON MONDAY, DECEMBER 30, 1996, UNLESS THE EXCHANGE
OFFER IS EXTENDED.
- -----------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
SUNTRUST BANK, ATLANTA
By Mail: Corporate Trust Department
P. O. Box 4625
Atlanta, Georgia 30302
By Facsimile Transmission: (404) 332-3875
By Hand: Corporate Trust Department
58 Edgewood Avenue
Room 225 Annex
Atlanta, Georgia 30303
For Information call: (404) 588-7815
(800) 568-3476
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION
OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION, OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL
WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders if
certificates for LXE Common Shares (as defined below) are to be forwarded
herewith or if delivery of LXE Common Shares are to be made by book-entry
transfer to the account maintained by the Exchange Agent at The Depository
Trust Company ("DTC" or the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth under "The Exchange Offer -- Procedures for Tendering LXE
Shares" in the Offering Circular/Prospectus (as defined below). Shareholders
whose certificates for LXE Common Shares are not immediately available or who
cannot deliver their certificates and all other documents required hereby to
the Exchange Agent on or prior to the Expiration Date (as defined in the
Offering Circular/Prospectus), or who cannot comply with the book-entry
transfer procedures on a timely basis, may tender their LXE Common Shares
according to the guaranteed delivery procedure set forth under "The Exchange
Offer -- Procedures for Tendering LXE Shares" in the Offering
Circular/Prospectus. See Instruction 2. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
[ ] CHECK HERE IF LXE COMMON SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
------------------------------
Account Number
---------------------------------------------
Transaction Code Number
-------------------------------------
[ ] CHECK HERE IF LXE COMMON SHARES ARE BEING TENDERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
-----------------------------
Date of Execution of Notice of Guaranteed Delivery
----------
Name of Institution which Guaranteed Delivery
--------------
-------------------------------------------------------------
If Delivery by Book-Entry Transfer, provide the following information:
Account Number
---------------------------------------------
Transaction Code Number
-------------------------------------
DESCRIPTION OF LXE COMMON SHARES TENDERED
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank,
exactly as name(s) appear(s) on the certificate)
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
LXE Common Share Certificates and LXE Common Shares Tendered (Attach
additional list if necessary)
Total Number
of Common Shares Number of
Certificate Evidenced by Common Shares
Number(s)* Certificate(s)* Tendered**
- ----------- ---------------- -------------
Total Common Shares:
* Need not be completed by shareholders delivering by book-
entry transfer.
** Unless otherwise indicated, it will be assumed that all
LXE Common Shares evidenced by any certificates(s) delivered
to the Exchange Agent are being tendered. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby delivers to Electromagnetic Sciences, Inc., a
Georgia corporation ("ELMG"), the above-described shares of common stock, par
value $.01 per share (the "LXE Common Shares"), of LXE Inc., a Georgia
corporation ("LXE"), pursuant to ELMG's offer to exchange .75 shares of common
stock, par value $.10 per share, of ELMG (the "ELMG Shares") equal to .75 ELMG
Shares for each LXE Common Share upon the terms and subject to the conditions
set forth in the Offering Circular/Prospectus dated November 27, 1996 (the
"Offering Circular/Prospectus"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which, together with the Offering
Circular/Prospectus and any amendments thereto and hereto constitute the
"Exchange Offer").
Upon the terms and subject to the conditions of the Exchange Offer,
subject to, and effective upon, acceptance of the LXE Common Shares tendered
herewith in accordance with the terms of the Exchange Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, ELMG, all right,
title and interest in and to all of the LXE Common Shares that are being
tendered hereby, and irrevocably constitutes and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such LXE Common Shares, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
the full extent of the undersigned's rights with respect to such LXE Common
Shares, to (a) deliver such Share Certificates (as defined herein) or transfer
ownership of such LXE Common Shares on the account books maintained by the
Book-Entry Transfer Facility, together in either such case with all
accompanying evidences of transfer and authenticity, to or upon the order of
ELMG; (b) present such LXE Common Shares for transfer on the books of LXE; and,
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such LXE Common Shares, all in accordance with the terms and the
conditions of the Exchange Offer.
The undersigned hereby irrevocably appoints the designees of ELMG,
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or any substitute thereof shall deem proper in the sole discretion of
such attorney-in-fact and proxy or such substitute, and otherwise act
(including pursuant to written consent) with respect to all the LXE Common
Shares tendered hereby which have been accepted by ELMG prior to the time of
such vote or action, which the undersigned is entitled to vote at any meeting
of shareholders (whether annual or special and whether or not an adjourned
meeting), of LXE or otherwise. This proxy and power of attorney is coupled
with an interest in the LXE Common Shares and is irrevocable and is granted in
consideration of, and is effective upon, the acceptance of such LXE Common
Shares by ELMG in accordance with the terms of the Exchange Offer. Such
acceptance for exchange shall revoke any other proxy granted by the undersigned
at any time with respect to such LXE Common Shares and no subsequent proxies
will be given (or, if given, will not be deemed effective) with respect to the
undersigned. The undersigned understands that in order for LXE Common Shares
to be deemed validly tendered, immediately upon ELMG's acceptance of such LXE
Common Shares for exchange ELMG or its designee must be able to exercise full
voting rights with respect to such LXE Common Shares.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the LXE
Common Shares tendered hereby and that when the same are accepted for exchange
by ELMG, ELMG will acquire good, marketable and unencumbered title thereto,
free and clear of all liens, restrictions, claims, charges and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or ELMG to be necessary or desirable to complete the sale,
assignment, and transfer of the LXE Common Shares tendered hereby.
All authority herein conferred or agreed to be conferred pursuant to
this Letter of Transmittal shall not be affected by and shall survive the death
or incapacity of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Subject to the withdrawal rights set forth
under "The Exchange Offer -- Withdrawal Rights" in the Offering
Circular/Prospectus, the tender of LXE Common Shares hereby made is
irrevocable.
The undersigned understands that tenders of LXE Common Shares
pursuant to any one of the procedures described under "The Exchange Offer --
Procedures for Tendering LXE Shares" in the Offering Circular/Prospectus and in
the instructions hereto and acceptance of such LXE Common Shares will
constitute a binding agreement between the undersigned and ELMG upon the terms
and subject to the conditions set forth in the Exchange Offer.
Unless otherwise indicated below under "Special Exchange
Instructions," please issue the ELMG Shares and/or any check to be issued for
cash in lieu of fractional shares of ELMG Shares in the name(s) of the
registered holder(s) appearing under "Description of LXE Common Shares
Tendered." Similarly, unless otherwise indicated under "Special Exchange
Instructions," please mail the ELMG Shares and/or any check to be issued for
cash in lieu of fractional shares of ELMG Shares to the address(es) of the
registered holder(s) appearing under "Description of LXE Common Shares
Tendered." The undersigned recognizes that ELMG has no obligation, pursuant to
the Special Exchange Instructions, to transfer any LXE Common Shares from the
name of the registered holder thereof if ELMG does not accept any of the LXE
Common Shares so tendered.
IMPORTANT
SIGN HERE
(Please Complete Substitute Form W-9
at the back of this Letter of Transmittal)
Signature(s) of Shareholder(s):
---------------------------------
---------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith.
Dated: , 1996
---------------
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please provide the following information and see
Instruction 5.
Name(s)
---------------------------------------------------------
---------------------------------------------------------
(Please Print)
Capacity (Full Title)
-------------------------------------------
Address --------------------------------------------------------
--------------------------------------------------------
(Include Zip Code)
--------------------------------
(Area Code and Telephone Number)
------------------------------------
Taxpayer Identification or Social
Security No. (See Substitute Form W-9)
IN CERTAIN CIRCUMSTANCES, SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. SEE INSTRUCTIONS 1 AND 5.
GUARANTEE OF SIGNATURE(S)
(If Required - See Instructions 1 and 5)
Space Below is For Use by Financial Institutions Only.
The undersigned Eligible Institution hereby guarantees the above
signature(s).
Authorized Signature
---------------------------------------------
Name ------------------------------------------------------------
(Please Type or Print)
Address ---------------------------------------------------------
(Include Zip Code)
Name of Firm Dated: , 1996
------------------------------ --------
SPECIAL EXCHANGE INSTRUCTIONS (See Instructions 1, 5, 6 and 7). To be
completed ONLY if certificate(s) for the ELMG Shares and/or any check to be
issued for cash in lieu of fractional shares of ELMG Shares are to be issued in
the name of someone other than the registered holder(s) of the tendered LXE
Common Shares.
Issue ELMG Shares and/or any check to be issued for cash in lieu of
fractional shares of ELMG Shares to:
Name
-----------------------------------------------------------
(Please Type or Print)
Address --------------------------------------------------------
- ----------------------------------------------------------------
(Include Zip Code)
- ----------------------------------------------------------------
(Tax Identification Number)
If this block is completed signatures must be guaranteed above. (See
Substitute Form W-9 at the end of this Letter of Transmittal)
SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 6 and 7).
To be completed ONLY if certificate(s) for the ELMG Shares and/or any
check to be issued for cash in lieu of fractional shares of ELMG Shares are to
be sent to someone other than the registered holder(s) of the tendered LXE
Common Shares, or to the registered holder(s) at an address other than that
shown above.
Mail ELMG Shares and/or any check to be issued for cash in lieu of
fractional shares of ELMG Shares to:
Name
-----------------------------------------------------------
(Please Type or Print)
Address --------------------------------------------------------
- ----------------------------------------------------------------
(Include Zip Code)
(See Substitute Form W-9 at the end of this Letter of Transmittal)
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Guarantee of Signatures. No signature guarantee is required on
this Letter of Transmittal in cases where (a) this Letter of Transmittal is
signed by the registered holder(s) of the LXE Common Shares (which term, for
purposes of this document, shall include any participant in the Book-Entry
Transfer Facility whose name appears on a security position listing as the
owner of LXE Common Shares) tendered herewith and such holder(s) has not
completed the instruction entitled "Special Exchange Instructions" on this
Letter of Transmittal or (b) such LXE Common Shares are tendered for the
account of an Eligible Institution (as defined below). Otherwise, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution, as defined in the Offering Circular/Prospectus. See Instruction
5.
2. Delivery of Letter of Transmittal and Certificates or Book-Entry
Confirmations. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in "The Exchange Offer
- --Procedures for Tendering LXE Shares" in the Offering Circular/Prospectus.
Certificates for all physically tendered LXE Common Shares ("Share
Certificates"), or confirmation of any book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility of LXE Common Shares
tendered by book-entry transfer, as well as this Letter of Transmittal or
facsimile thereof, properly completed and duly executed with any required
signature guarantees, and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at one of its addresses set
forth herein on or prior to the Expiration Date (as defined in the Offering
Circular/Prospectus).
Shareholders whose certificates are not immediately available or who
cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date or who cannot complete the
procedures for book-entry transfer on a timely basis may nevertheless tender
their LXE Common Shares by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in
"The Exchange Offer -- Procedures for Tendering LXE Shares" in the Offering
Circular/Prospectus. 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 made available
by ELMG must be received by the Exchange Agent on or prior to the Expiration
Date; and (iii) the Share Certificates for all tendered LXE Common Shares (or a
confirmation of a book-entry transfer of such securities into the Exchange
Agent's account at the Book-Entry Transfer Facility of LXE Common Shares
tendered by book-entry transfer), in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, and all other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within five NASDAQ trading days after the date of execution of such Notice of
Guaranteed Delivery.
If Share Certificates are forwarded separately to the Exchange Agent,
a properly completed and duly executed Letter of Transmittal must accompany
each such delivery.
The method of delivery of Share Certificates and all other required
documents, including delivery through the Book-Entry Transfer Facility, is at
the option and risk of the tendering shareholder, and the delivery will be
deemed made only when actually received by the Exchange Agent. If delivery is
by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
No alternative, conditional or contingent tenders will be accepted
and no fractional LXE Common Shares will be accepted. All tendering
shareholders, by execution of this Letter of Transmittal (or facsimile
thereof), waive any right to receive any notice of the acceptance of the LXE
Common Shares for exchange.
3. Inadequate Space. If the space provided herein in inadequate,
the certificate numbers and/or the number of LXE Common Shares should be listed
on a separate schedule attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by
book-entry transfer). If fewer than all the LXE Common Shares evidenced by any
certificate submitted are to be tendered, fill in the number of LXE Common
Shares which are to be tendered in the box entitled, "Number of LXE Common
Shares Tendered." Please note that if ELMG acquires sufficient LXE Common
Shares in the Exchange Offer to increase its ownership of LXE to at least 90%
of the then-outstanding LXE Common Shares, ELMG may cause the Merger as defined
in the Offering Circular/Prospectus (in which each remaining LXE Common Share
not owned by ELMG would be converted into .75 ELMG Shares) to occur without
further action by the LXE Board of Directors or by the shareholders of either
ELMG or LXE. See "The Exchange Offer -- Purpose of the Exchange Offer and
Merger" and "--Certain Conditions of the Exchange Offer" in the Offering
Circular/Prospectus. All LXE Common Shares represented by certificates
delivered to the Exchange Agent 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 LXE Common Shares tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificates without
alteration, enlargement or any change whatsoever.
If any of the LXE Common Shares tendered hereby are owned of record
by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any of the tendered LXE Common Shares are registered in different
names on several certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
ELMG of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s)
of the LXE Common Shares listed in the box entitled "Number of LXE Common
Shares Tendered" and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless ELMG Shares or certificates for LXE
Common Shares not tendered or accepted are to be issued in the name of a person
other than the registered holder(s). Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder of the certificate(s) listed, the certificate(s) 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
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. ELMG will pay or cause to be paid any
stock transfer taxes with respect to the transfer and sale of LXE Common Shares
to it or its order pursuant to the Exchange Offer to the extent such taxes are
a joint obligation of transferor and transferee. ELMG will not pay or cause to
be paid any stock transfer taxes to the extent such taxes are the obligation
solely of the transferor. If, however, delivery of the consideration in
respect of the Exchange Offer is to be made to, or (in the circumstances
permitted hereby) if certificates for LXE Common Shares not tendered or
accepted are to be registered in the name of any person other than the
registered holder, or if tendered certificates are registered in the name of
any person other than the person(s) signing this Letter of Transmittal, the
tendering holder must provide satisfactory evidence of the payment of any
applicable transfer taxes (whether imposed on the registered holder or such
person) payable on account of the transfer to such person prior to the delivery
of the consideration pursuant to the Exchange Offer.
Except as provided in this Instruction 6, it will not be necessary
for transfer tax stamps to be affixed to the certificates listed in this Letter
of Transmittal.
7. Special Exchange and Delivery Instructions. If certificates for
ELMG Shares and/or any check to be issued for cash in lieu of fractional shares
of ELMG Shares are to be issued in the name of a person other than the
registered holder(s) of the LXE Common Shares or if certificates for ELMG
Shares and/or any check to be issued for cash in lieu of fractional shares of
ELMG Shares are to be mailed to someone other than the registered holder(s) or
to an address other than that shown above, the boxes marked "Special Exchange
Instructions" or "Special Delivery Instructions" on this Letter of Transmittal
should be completed.
8. Requests for Assistance or Additional Copies. Questions or
requests for assistance may be directed to, or additional copies of the
Offering Circular/Prospectus, this Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may be obtained from, the
Information Agent or the Dealer Manager at their respective telephone numbers
and/or addresses set forth below or from your broker, dealer, commercial bank
or trust company.
9. Substitute Form W-9. Each tendering shareholder is required to
provide the Exchange Agent with a correct Taxpayer Identification Number
("TIN"), generally the shareholder's Social Security or federal Employer
Identification Number, on Substitute Form W-9 below. If a shareholder fails
to provide a TIN to the Exchange Agent, such shareholder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, payments of
cash in lieu of fractional shares of ELMG Shares that are made to such
shareholder with respect to LXE Common Shares accepted pursuant to the Exchange
Offer may be subject to backup withholding of 31%. The box in Part 3 of the
Substitute Form W-9 may be checked if the tendering shareholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. If the box in Part 3 is checked, the certificate appearing
below on Substitute Form W-9 must be completed; and, if the Exchange Agent is
not provided with a TIN within 60 days, the Exchange Agent will withhold 31% of
all payments of cash thereafter until a TIN is provided to the Exchange Agent.
The shareholder is required to give the Exchange Agent the Social Security or
Employer Identification Number of the record owner of the LXE Common Shares or
of the last transferee appearing on the stock powers attached to, or endorsed
on, the LXE Common Shares. If the LXE Common 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.
Important: This Letter of Transmittal or a facsimile copy hereof
(together with Share Certificates or confirmation of book-entry transfer and
all other required documents) or the Notice of Guaranteed Delivery must be
received by the Exchange Agent on or prior to the Expiration Date.
IMPORTANT TAX INFORMATION
Certain shareholders (including, among others, all corporations and
certain foreign individuals) are not subject to backup withholding. In order
for a foreign individual to qualify as an exempt recipient, that shareholder
must submit a Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
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.
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(See Instruction 9)
PAYER'S NAME: SUNTRUST BANK, ATLANTA
SUBSTITUTE FORM W-9
Department of the Treasury
Internal Revenue Service
Payer's Request for Taxpayer
Identification Number (TIN)
PART 1--PLEASE PROVIDE YOUR TIN Social Security Number or
IN THE BOX AT RIGHT AND Employer Identification Number
CERTIFY BY SIGNING AND
DATING BELOW. ------------------------------
PART 2--Certificates--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding because (i) I am exempt from
backup withholding; (ii) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends; or (iii) the IRS has notified me
that I am no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup withholding
because of under-reporting 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 stating that you are no longer
subject to backup withholding, do not cross out item (2).
PART 3-- Awaiting TIN [ ]
SIGNATURE DATE
--------------------------- --------------------
NAME (Please Print)
-------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH 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
CHECKED THE BOX IN PART 3 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 (i) 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
(ii) 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 60
days, 31% of all reportable payments made to me thereafter will be withheld
until I provide a number.
- --------------------------------- --------------------------
Signature Date
- ---------------------------------
Name (Please Print)
<PAGE>
The Information Agent for the Exchange Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Call Toll Free: (888) 776-9943
Banks and Brokers call: (201) 896-1900
The Dealer Manager for the Exchange Offer is:
OPPENHEIMER & CO., INC.
Oppenheimer Tower
One World Financial Center
39th Floor
New York, New York 10281
(212) 667-7000 or (800) 999-6726
EXHIBIT 99.2
Oppenheimer & Co., Inc.
Oppenheimer Tower
One World Financial Center
39th Floor
New York, New York 10281
Offer by
ELECTROMAGNETIC SCIENCES, INC.
For all outstanding Shares of Common Stock of
LXE INC.
on the basis of .75
ELMG Shares for each LXE Share
THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
ATLANTA, GEORGIA TIME, ON DECEMBER 30, 1996, UNLESS THE OFFER IS EXTENDED.
November 27, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Electromagnetic Sciences, Inc., a Georgia
corporation ("ELMG"), to act as Dealer Manager in connection with ELMG's offer
to exchange .75 shares of common stock, par value $.10 per share, of ELMG (the
"ELMG Shares") for each outstanding share of common stock, par value $.01 per
share (each, an "LXE Common Share" and collectively, the "the LXE Common
Shares"), of LXE Inc., a Georgia corporation ("LXE"), upon the terms and subject
to the conditions set forth in the Offering Circular/Prospectus, dated November
27, 1996 (the "Offering Circular/Prospectus"), and in the related Letter of
Transmittal (which together constitute the "Exchange Offer"), enclosed
herewith.
THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS, INCLUDING THE
CONDITIONS, WHICH CANNOT BE WAIVED, (i)THAT ELMG'S SHAREHOLDERS APPROVE CERTAIN
ASPECTS OF THE TRANSACTION, AND (ii) THAT ELMG RECEIVE SUFFICIENT TENDERS OF
LXE COMMON SHARES TO INCREASE ITS OWNERSHIP ABOVE 90%, AND THAT IT THEN CAUSE
THE MERGER (AS DEFINED IN THE OFFERING CIRCULAR/PROSPECTUS) TO OCCUR
IMMEDIATELY AFTER ACCEPTING SUCH TENDERED SHARES. TO SATISFY THE SECOND
CONDITION, NOT LESS THAN 473,993 LXE COMMON SHARES MUST BE TENDERED, SUBJECT TO
THE EFFECTS OF POSSIBLE EXERCISES OF LXE OPTIONS. ALL OF THE OTHER CONDITIONS
TO THE EXCHANGE OFFER MAY BE WAIVED IN WHOLE OR IN PART IN THE SOLE DISCRETION
OF ELMG. SEE "THE EXCHANGE OFFER -- CERTAIN CONDITIONS OF THE EXCHANGE OFFER"
IN THE OFFERING CIRCULAR/PROSPECTUS.
For your information and for forwarding to your clients for whom you
hold Common Shares registered in your name or in the name of your nominees, we
are enclosing the following documents:
1. Offering Circular/Prospectus dated November 27, 1996;
2. Letter of Transmittal (together with accompanying Substitute
Form W-9);
3. Notice of Guaranteed Delivery to be used to accept the
Exchange Offer if certificates for Common Shares are not immediately available,
if time will not permit all required documents to reach the Exchange Agent
prior to the Expiration Date (as defined in the Offering Circular/Prospectus)
or if the procedure for book-entry transfer cannot be completed on a timely
basis;
4. A "Dear Client" letter which may be sent to your clients;
5. Guidelines of the Internal Revenue Service for Certification
of Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Exchange Agent.
ELMG will not pay any fees or commissions to any broker or dealer or
any other person (other than the fees of the Dealer Manager and the Information
Agent as described in the Offering Circular/Prospectus) in connection with the
solicitation of tenders of LXE Common Shares pursuant to the Exchange Offer.
ELMG will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding the enclosed materials to your
clients. ELMG will pay or cause to be paid any stock transfer taxes with
respect to the transfer and sale of LXE Common Shares to it or its order
pursuant to the Exchange Offer, except as otherwise provided in Instruction 6
of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
AS PROMPTLY AS POSSIBLE. THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, ATLANTA, GEORGIA TIME, ON MONDAY, DECEMBER 30, 1996, UNLESS
THE EXCHANGE OFFER IS EXTENDED.
In order to take advantage of the Exchange Offer, a duly executed and
properly completed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, and any other required documents, should be sent
to the Exchange Agent, and certificates evidencing the tendered LXE Common
Shares should be delivered or such LXE Common Shares should be tendered by
book-entry transfer, all in accordance with the instructions set forth in the
Letter of Transmittal and the Offering Circular/Prospectus.
If holders of LXE Common Shares wish to tender LXE Common Shares, but
it is impracticable for them to forward their certificates or other required
documents prior to the Expiration Date, a tender may be effected by following
the guaranteed delivery procedures specified under "The Exchange Offer --
Procedures for Tendering LXE Shares" in the Offering Circular/Prospectus.
Any inquiries you may have with respect to the Exchange Offer should
be addressed to the Dealer Manager or the Information Agent at their respective
addresses and telephone numbers set forth on the back cover page of the
Offering Circular/Prospectus.
Additional copies of the enclosed materials may be obtained from the
undersigned, telephone (212) 667-7000, or by calling the Information Agent,
Corporate Investors Communications, Inc., at (888) 776-9943 (toll free), or
from brokers, dealers, commercial banks or trust companies.
Very truly yours,
Oppenheimer & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF ELMG, THE DEALER MANAGER, THE
EXCHANGE AGENT OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE
ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE EXCHANGE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS
CONTAINED THEREIN.
EXHIBIT 99.3
Offer by
ELECTROMAGNETIC SCIENCES, INC.
For all outstanding Shares of Common Stock of
LXE INC.
on the basis of .75
ELMG Shares for each LXE Share
THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
ATLANTA, GEORGIA TIME, ON DECEMBER 30, 1996, UNLESS THE OFFER IS EXTENDED.
November 27, 1996
To Our Clients:
Enclosed for your consideration are the Offering Circular/Prospectus
dated November 27, 1996 (the "Offering Circular/Prospectus"), and the related
Letter of Transmittal (which together constitute the "Exchange Offer") in
connection with the offer by Electromagnetic Sciences, Inc., a Georgia
corporation ("ELMG"), to exchange .75 shares of common stock, par value $.10
per share, of ELMG (the "ELMG Shares") for each outstanding share of common
stock, $.01 par value per share (each an "LXE Common Share" and collectively,
the "LXE Common Shares"), of LXE Inc., a Georgia corporation ("LXE"), upon the
terms and subject to the conditions set forth in the Exchange Offer.
This material is being forwarded to you as the beneficial owner of
LXE Common Shares held by us for your account but not registered in your name.
We are the holder of record of LXE Common Shares held by us for your account.
A tender of such LXE Common Shares can be made only by us as the holder of
record and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
LXE Common Shares held by us for your account.
Accordingly, we request instructions as to whether you wish to have
us tender on your behalf any or all of the LXE Common Shares held by us for
your account, upon the terms and subject to the conditions set forth in the
Exchange Offer.
Please note the following:
1. ELMG is offering to acquire each outstanding LXE Common
Share in exchange for .75 shares of ELMG Shares for each LXE Common Share.
2. The Exchange Offer is being made for all of the outstanding
LXE Common Shares.
3. The Exchange Offer and withdrawal rights will expire at
12:00 midnight, Atlanta, Georgia time, on December 30, 1996, unless the
Exchange Offer is extended.
4. The Exchange Offer is subject to certain conditions,
including the conditions, which cannot be waived, (i) that ELMG's shareholders
approve certain aspects of the transaction, and (ii) that ELMG receive
sufficient tenders of LXE Common Shares to increase its ownership above 90%,
and that it then cause the Merger (as defined in the Offering
Circular/Prospectus) to occur immediately after accepting such tendered LXE
Common Shares. To satisfy the second condition, not less than 473,993 LXE
Common Shares must be tendered, subject to the effects of possible exercises of
LXE options. All of the other conditions to the Exchange Offer may be waived
in whole or in part in the sole discretion of ELMG. See "The Exchange Offer --
Certain Conditions of the Exchange Offer" in the Offering Circular/Prospectus.
5. Tendering shareholders 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 transfer of LXE Common
Shares pursuant to the Exchange Offer.
The Exchange Offer is made solely by the Offering
Circular/Prospectus, dated November 27, 1996, and the related Letter of
Transmittal and any amendments or supplements thereto and is being made to all
holders of LXE Common Shares. The Exchange Offer is not being made to, nor
will tenders be accepted from or on behalf of, holders of LXE Common Shares in
any jurisdiction in which the making or acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, ELMG may, in its sole
discretion, take such action as it may deem necessary to make the Exchange
Offer in any such jurisdiction and extend the Exchange Offer to holders of LXE
Common Shares in such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Exchange Offer to be made by a licensed
broker or dealer, the Exchange Offer shall be deemed to be made on behalf of
ELMG by Oppenheimer & Co., Inc., as Dealer Manager, or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your LXE Common Shares,
please so instruct us by completing, executing, detaching and returning to us
the instruction form contained in this letter. An envelope in which to return
your instructions to us is enclosed. If you authorize the tender of your LXE
Common Shares, all such LXE Common Shares will be tendered unless otherwise
indicated in such instruction form. Please forward your instructions to us as
soon as possible to allow us ample time to tender LXE Common Shares on your
behalf prior to the expiration of the Exchange Offer.
Instructions with Respect to the
Offer by
ELECTROMAGNETIC SCIENCES, INC.
For all outstanding Shares of Common Stock of
LXE INC.
on the basis of .75
ELMG Shares for each LXE Share
The undersigned acknowledge(s) receipt of your letter and the
enclosed Offering Circular/Prospectus, dated November 27, 1996 (the "Offering
Circular/Prospectus"), and the related Letter of Transmittal (which together
constitute the "Exchange Offer") relating to the offer by Electromagnetic
Sciences, Inc., a Georgia corporation ("ELMG"), to exchange .75 shares of
common stock, par value $.10 per share, of ELMG for each outstanding share of
common stock, $.01 par value per share (collectively the "LXE Common Shares"),
of LXE Inc., a Georgia corporation.
You are instructed to tender to ELMG the number of LXE Common Shares
indicated below (or, if no number is indicated below, all LXE Common Shares)
that are held by you for the account of the undersigned, upon the terms and
subject to the conditions set forth in the Exchange Offer.
Number of LXE Common Shares to be tendered*
Shares SIGN HERE
- -----------
Account Number:
---------------- ----------------------------
Dated: , 1996 ----------------------------
Signature(s)
----------------------------
----------------------------
Please Print Name(s) and
Address(es) Here
---------------------------
---------------------------
---------------------------
Area Code and Telephone
Number(s)
----------------------------
Tax Identification or Social
Security Number(s)
* Unless otherwise indicated, it will be assumed that this form instructs
us to tender all of your LXE Common Shares held by us for your account.
EXHIBIT 99.4
THIS IS NOT A LETTER OF TRANSMITTAL
NOTICE OF GUARANTEED DELIVERY
Deposit of Common Shares
of
LXE INC.
This Notice must be used by a Shareholder to accept the offer upon
the terms and subject to the conditions set forth in the Offering
Circular/Prospectus dated December 30, 1996 (the "Offering
Circular/Prospectus") made by Electromagnetic Sciences, Inc. ("ELMG") for all of
the common shares (the "LXE Common Shares") of LXE Inc. ("LXE") if (i)
certificate(s) representing LXE Common Shares to be deposited are not
immediately available or (ii) the Shareholder cannot deliver the certificate(s)
and all other required documents to the Exchange Agent at one of the addresses
listed in the Letter of Transmittal on or prior to the Expiration Date (as
defined in the Offering/Circular Prospectus) or if the procedure for book-entry
transfer cannot be completed on a timely basis. The following conditions must
be met:
(a) the deposit must be made by or through a financial institution
(including most banks, savings and loan associations and
brokerage houses) which is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange
Signature Guarantee Program or the Stock Exchange Medallion
Program (each an "Eligible Institution");
(b) a properly completed and duly executed copy of this Notice
or a manually signed facsimile hereof must be received by
the Exchange Agent at the office of the Exchange Agent in
Atlanta, Georgia, on or prior to the Expiration Date; and
(c) the certificate(s) representing the deposited LXE
Common Shares, in proper form for transfer (or a confirmation of
a book-entry transfer of such LXE Common Shares into the Exchange
Agent's account at the Book Entry Transfer Facility), together
with a properly completed and duly executed Letter of Transmittal
or a manually signed facsimile thereof covering such LXE Common
Shares and all other documents required by the Letter of
Transmittal, must be received by the Exchange Agent at its office
in Atlanta, Georgia, specified in the Letter of Transmittal not
later than the fifth NASDAQ trading day after the date of execution
of this Notice.
This Notice may be delivered by hand or sent by facsimile
transmission or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set out herein.
Delivery of this Notice to an address or transmission of this Notice
via a facsimile number other than as set forth below does not constitute a
valid delivery.
This form is not to be used to guarantee signatures. If a signature
on the 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 Letter of Transmittal.
The terms, conditions and definitions used in the accompanying
Offering Circular/Prospectus are incorporated into and form part of this Notice
of Guaranteed Delivery.
TO: Electromagnetic Sciences, Inc.
AND TO: SunTrust Bank/Atlanta
The undersigned Shareholder hereby deposits with ELMG the LXE Common
Shares described below, upon the terms and subject to the conditions set forth
in the Exchange Offer, the Offering Circular/Prospectus and the related Letter
of Transmittal, receipt of which is hereby acknowledged, pursuant to the
guaranteed delivery procedures set forth in the Offering Circular/Prospectus
and Instruction 2 of the Letter of Transmittal.
Signature(s)
-----------------------------------------------------
-----------------------------------------------------
Address(es)
----------------------------------------------------
----------------------------------------------------
Name(s)
----------------------------------------------------
----------------------------------------------------
Area Code and Tel. No(s).
--------------------------------------
Dated: ,1996
-------------------
Number of LXE Common Shares Deposited:
-------------------------
Certificates to be delivered:
----------------------------------
Certificate Nos. (if available):
-------------------------------
-------------------------------
Please provide the following information if LXE Common Shares will be
tendered by book-entry transfer through The Depository Trust Company:
Account Number:
--------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR LXE COMMON SHARES WITH THIS NOTICE OF
GUARANTEED DELIVERY. CERTIFICATES FOR LXE COMMON SHARES SHOULD BE SENT WITH
YOUR LETTER OF TRANSMITTAL.
GUARANTEE
The undersigned Eligible Institution hereby guarantees to deliver to the
Exchange Agent at the office of the Exchange Agent in Atlanta, Georgia,
specified in the Letter of Transmittal the certificates representing the LXE
Common Shares deposited hereby, in proper form for transfer, or confirmation of
book-entry transfer of such LXE Common Shares into the Exchange Agent's
accounts at The Depository Trust Company, in each case with delivery of a
properly completed and duly executed Letter of Transmittal or manually signed
facsimile thereof covering such LXE Common Shares with any required signature
guarantees and all other documents required by such Letter of Transmittal, not
later than the fifth NASDAQ trading day after the date of execution of this
Notice of Guaranteed Delivery.
Name of Firm:
--------------------------------------------------
Address:
--------------------------------------------------
Postal or Zip Code:
--------------------------------------------
Area Code and Telephone No.:
-----------------------------------
Authorized Signature:
------------------------------------------
Name (Please Print):
------------------------------------------
Title:
---------------------------------------------------------
Dated: , 1996
------------------
This is Not a Letter of Transmittal
The Exchange Agent is:
SUNTRUST BANK/ATLANTA
For Delivery by Mail, Hand or Facsimile Transmission:
By Mail: Corporate Trust Department
Post Office Box 4625
Atlanta, Georgia 30302
By Hand: Corporate Trust Department
58 Edgewood Avenue
Room 225 Annex
Atlanta, Georgia 30303
By Facsimile Transmission: (404) 332-3875
For Information, call: (404) 588-7815
(800) 568-3476
EXHIBIT 99.6
November 27, 1996
Shareholders of LXE Inc.:
Electromagnetic Sciences, Inc. ("ELMG") is offering to acquire any and all
outstanding common shares of LXE Inc. (the LXE Shares"), not already owned by
ELMG, in exchange for .75 shares of the common stock of ELMG for each LXE Share
acquired. This Exchange Offer will be closed only if ELMG receives tenders of
sufficient LXE Shares to increase its ownership of LXE, currently at 81.4%, to
at least 90%. In that event, immediately following the acquisition of LXE
Shares under the Exchange Offer, ELMG will cause LXE, without further vote of
its shareholders or Board, to merge with a wholly owned subsidiary of ELMG; as a
result of such merger, LXE would become a wholly owned subsidiary of ELMG,
and all then-remaining LXE Shares would each be converted into .75 ELMG Shares.
The reasons for the Exchange Offer and subsequent merger, and the factors
considered by the ELMG Board of Directors in setting the exchange ratio, are
described in the attached Offering Circular/Prospectus. In general, ELMG
believes that if LXE is a wholly owned subsidiary, the combined companies can
more effectively share technical and marketing resources to address growing
commercial wireless communications opportunities, as well as realize significant
savings from the elimination of LXE's public-company expenses and potentially
from synergistic operating efficiencies. ELMG also believes that the proposed
transaction provides an opportunity for LXE shareholders to obtain a premium
over the market prices for the LXE Shares that were available prior to our
announcement of the Exchange Offer on October 3, 1996; it also provides the
opportunity to exchange LXE Shares for a security with greater liquidity and
trading volume, and narrower bid-asked spreads, while allowing LXE shareholders
to continue to participate in LXE's financial performance through ELMG's
ownership of LXE.
We urge that you promptly and thoroughly review the enclosed Offering
Circular/Prospectus. If you choose to tender your LXE Shares in the Exchange
Offer, and you are the record holder of your Shares, you should use the enclosed
Letter of Transmittal and follow the instructions appearing thereon; if your
LXE Shares are held in "street name," or in the name of any other nominee, the
tender must be made on your behalf by your broker or other nominee, and you
should contact that broker or nominee, or otherwise follow its instructions,
in order to tender your LXE Shares.
If you are uncertain as to how to respond to the Exchange Offer, you should
consult with your broker, investment advisor, attorney or other professional
advisor. For further information, or additional copies of the Exchange Offer
materials, you should contact the Dealer Manager, Oppenheimer, & Co., Inc., at
1-800-999-6726, or the Information Agent, Corporate Investor Communications,
Inc., at 1-888-776-9943.
Very truly yours,
ELECTROMAGNETIC SCIENCES, INC.
Thomas E. Sharon
President and Chief Executive Officer
