<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICROWAVE POWER DEVICES, INC.
AT
$8.70 NET PER SHARE
BY
ERICSSON MPD ACQUISITION CORP.
A DIRECT WHOLLY OWNED SUBSIDIARY OF
ERICSSON INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, NOVEMBER 17, 2000 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF
MERGER, DATED AS OF OCTOBER 12, 2000 (THE "MERGER AGREEMENT"), AMONG ERICSSON
INC. ("PARENT"), ERICSSON MPD ACQUISITION CORP. ("PURCHASER") AND MICROWAVE
POWER DEVICES, INC. (THE "COMPANY"). THE OFFER IS CONDITIONED UPON, AMONG OTHER
THINGS, (I) THERE HAVING BEEN VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE
EXPIRATION OF THE OFFER AT LEAST THE NUMBER OF SHARES (AS DEFINED HEREIN) THAT
SHALL CONSTITUTE 50.6% OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS
(DEFINED AS ALL OUTSTANDING SHARES TOGETHER WITH ALL SHARES ISSUABLE UPON THE
CONVERSION OF SHARES OF COMPANY PREFERRED STOCK OR ANY OTHER CONVERTIBLE
SECURITIES OR UPON THE EXERCISE OF ANY VESTED OPTIONS, WARRANTS, OR RIGHTS) (THE
"MINIMUM CONDITION") AND (II) ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), HAVING EXPIRED OR BEEN TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER
(THE "HSR CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTIONS 1 AND 14, WHICH SET FORTH IN
FULL THE CONDITIONS TO THE OFFER.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER (EACH AS DEFINED HEREIN), ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY'S STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND HAS
RECOMMENDED THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES IN THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the accompanying Letter of
Transmittal (or a manually signed facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it together with
the certificate(s) evidencing tendered Shares, and any other required documents,
to the Depositary or tender such Shares pursuant to the procedure for book-entry
transfer set forth in Section 3 or (ii) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A stockholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
GOLDMAN, SACHS & CO.
October 20, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 5
1. Terms of the Offer; Expiration Date................... 7
2. Acceptance for Payment and Payment for Shares......... 9
3. Procedures for Accepting the Offer and Tendering
Shares................................................. 9
4. Withdrawal Rights..................................... 12
5. Certain U.S. Federal Income Tax Consequences.......... 12
6. Price Range of Shares; Dividends...................... 14
7. Certain Information Concerning the Company............ 14
8. Certain Information Concerning Ericsson, the Purchaser
and Parent............................................. 16
9. Financing of the Offer and the Merger................. 17
10. Background of the Offer; Contacts with the Company;
the Merger Agreement................................... 17
11. Purpose of the Offer; Plans for the Company After the
Offer and the Merger................................... 28
12. Dividends and Distributions........................... 31
13. Possible Effects of the Offer on the Market for
Shares, Nasdaq Listing, Margin Regulations and
Exchange Act Registration............................. 31
14. Certain Conditions of the Offer....................... 32
15. Certain Legal Matters and Regulatory Approvals........ 34
16. Fees and Expenses..................................... 37
17. Miscellaneous......................................... 38
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule I -- Directors and Executive Officers of Ericsson, Parent and
Purchaser
Schedule II -- Schedule of Transactions in Shares During the Past 60 Days
</TABLE>
i
<PAGE> 3
SUMMARY TERM SHEET
This summary term sheet highlights selected information from this Offer to
Purchase, and may not contain all of the information that is important to you.
To better understand our offer to you and for a complete description of the
legal terms of the offer, you should read this entire Offer to Purchase and the
accompanying Letter of Transmittal carefully. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses and telephone numbers on the back cover of this Offer
to Purchase.
WHO IS OFFERING TO BUY MY SECURITIES?
- We are Ericsson MPD Acquisition Corp., a newly formed Delaware corporation and
a direct wholly owned subsidiary of Ericsson Inc. We have been organized in
connection with the offer and have not carried on any activities other than in
connection with the offer. See Section 8 -- "Certain Information Concerning
Ericsson, the Purchaser and Parent."
- Ericsson Inc. is an indirect wholly owned subsidiary of Telefonaktiebolaget LM
Ericsson (publ), a Swedish corporation, and the principal U.S. subsidiary of
Ericsson. See Section 8 -- "Certain Information Concerning Ericsson, the
Purchaser and Parent."
- Ericsson is the leading communications supplier, combining innovation in
mobility and Internet in creating the new era of Mobile Internet. Ericsson
provides total solutions covering everything from systems and applications to
mobile phones and other communications tools. The Series A and Series B shares
of Ericsson are listed on the OM Stockholm Stock Exchange under the symbol
"LMEA2/A-ST" and the American Depositary Shares of Ericsson are traded on the
Nasdaq National Market System under the symbol "ERICY". Each American
Depositary Receipt represents one Series B share. Ericsson's Series B shares
are also traded on the exchanges in Dusseldorf, Frankfurt, Hamburg, London and
Paris, and on the "Swiss" Exchange in Switzerland. See Section 8 -- "Certain
Information Concerning Ericsson, the Purchaser and Parent."
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THIS OFFER?
- We are seeking to purchase all the issued and outstanding shares of common
stock, par value $0.01 per share, of Microwave Power Devices, Inc. See the
"Introduction" and Section 1 -- "Terms of the Offer; Expiration Date".
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
- We are offering to pay $8.70 per share, net to each seller in cash (subject to
applicable withholding taxes) and without interest thereon. See the
"Introduction" and Section 1 -- "Terms of the Offer; Expiration Date".
- If you tender your shares in the offer, you will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction
6 of the Letter of Transmittal, stock transfer taxes with respect to the sale
of your shares. See the "Introduction."
HAVE YOU ENTERED INTO ANY AGREEMENTS WITH MICROWAVE POWER DEVICE'S PRINCIPAL
STOCKHOLDERS?
- We have entered into a Stockholders' Agreement with the principal stockholders
of Microwave Power Devices pursuant to which the principal stockholders have
agreed to tender into the offer the shares of Microwave Power Devices common
stock owned by each of them, representing approximately 50.6% of the
outstanding number of shares of common stock of Microwave Power Devices on a
fully diluted basis. See Section 10 -- "Background of the Offer; Contacts with
the Company; the Merger Agreement".
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WHAT ARE THE MOST SIGNIFICANT CONDITIONS OF THE OFFER?
- We are not obligated to purchase any shares unless at least 50.6% of the
outstanding shares on a fully diluted basis (defined as all outstanding
Microwave Power Devices shares together with all shares issuable upon the
conversion of shares of Microwave Power Devices preferred stock or any other
convertible securities or upon the exercise of any vested options, warrants or
rights) are validly tendered and not withdrawn prior to the expiration of the
offer. See Section 1 -- "Terms of the Offer" and Section 14 -- "Certain
Conditions of the Offer".
- We are not obligated to purchase any shares unless and until the applicable
waiting period under the HSR Act has expired or been terminated. See Section
15 -- "Certain Legal Matters and Regulatory Approvals".
These and other conditions to our obligation to purchase shares tendered in
the offer are described in greater detail in Sections 1 -- "Terms of the Offer;
Expiration Date", 14 -- "Certain Conditions of the Offer" and 15 -- "Certain
Legal Matters and Regulatory Approvals".
DO YOU HAVE FINANCIAL RESOURCES TO MAKE PAYMENT?
- Ericsson Inc. or one of its affiliates will provide us with the funds
necessary to purchase the shares in the offer. See Section 9 -- "Financing of
the Offer and the Merger".
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
- Because the form of payment consists solely of cash and all of the funding
which will be needed has already been arranged, and also because of the lack
of any relevant historical information concerning Ericsson MPD Acquisition
Corp., we do not think our financial condition is relevant to your decision to
tender in the offer.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
- You will have at least until 12:00 midnight, New York City time, on Friday,
November 17, 2000, to tender your shares of Microwave Power Devices common
stock in the offer. If you cannot deliver everything that is required in order
to make a valid tender by that time, you may be able to use a guaranteed
delivery procedure which is described in Section 3 of this Offer to Purchase.
See Section 3 -- "Procedures for Accepting the Offer and Tendering Shares".
CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
- We expressly reserve the right, in our sole discretion, but subject to the
terms of the Merger Agreement and applicable law, to extend the period of time
during which the offer remains open. We have agreed in the Merger Agreement
that we may extend the offer if certain conditions to the offer have not been
satisfied. See Section 1 -- "Terms of the Offer; Expiration Date".
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
- If we decide to extend the offer, we will inform ChaseMellon Shareholder
Services, L.L.C., the Depositary, of that fact, and will issue a press release
giving the new expiration date no later than 9:00 a.m., New York City time, on
the day after the day on which the offer was previously scheduled to expire.
See Section 1 -- "Terms of the Offer; Expiration Date".
HOW DO I TENDER MY SHARES?
To tender your shares in the offer, you must:
- complete and sign the accompanying Letter of Transmittal (or a manually signed
facsimile of the Letter of Transmittal) in accordance with the instructions in
the Letter of Transmittal and mail or deliver it together with your share
certificates, and any other required documents, to the Depositary; or
- tender your shares pursuant to the procedure for book-entry transfer set forth
in Section 3; or
2
<PAGE> 5
- if your share certificates are not immediately available or if you cannot
deliver your share certificates, and any other required documents, to
ChaseMellon Shareholder Services, L.L.C., prior to the expiration of the
offer, or you cannot complete the procedure for delivery by book-entry
transfer on a timely basis, you may still tender your shares if you comply
with the guaranteed delivery procedures described in Section 3 -- "Procedures
for Accepting the Offer and Tendering Shares".
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
- You may withdraw previously tendered shares any time prior to the expiration
of the offer, and, unless we have accepted the shares pursuant to the offer,
you may also withdraw any tendered shares at any time after December 18, 2000.
See Section 4 -- "Withdrawal Rights".
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
- To withdraw previously tendered shares, you must deliver a written or
facsimile notice of withdrawal with the required information to ChaseMellon
Shareholder Services, L.L.C. while you still have the right to withdraw. If
you tendered shares by giving instructions to a broker or bank, you must
instruct the broker or bank to arrange for the withdrawal of your shares. See
Section 4 -- "Withdrawal Rights".
WHAT DOES THE BOARD OF DIRECTORS OF MICROWAVE POWER DEVICES THINK OF THE OFFER?
- The Board of Directors of Microwave Power Devices has unanimously determined
that the Merger Agreement and the transactions contemplated thereby, including
the offer and the merger, are fair to, and in the best interests of, Microwave
Power Devices' stockholders, has approved the Merger Agreement and the
transactions contemplated thereby, including the offer and the merger, and has
recommended that Microwave Power Devices' stockholders accept the offer and
tender their shares in the offer. See the "Introduction".
WILL MICROWAVE POWER DEVICES CONTINUE AS A PUBLIC COMPANY?
- No. If the merger occurs, Microwave Power Devices will no longer be publicly
owned. Even if the merger does not occur, if we purchase all the tendered
shares, there may be so few remaining stockholders and publicly held shares
that the shares may no longer be eligible to be traded through the Nasdaq
National Market System or any other securities market, there may not be a
public trading market for the shares and Microwave Power Devices may cease
making filings with the SEC or otherwise cease being required to comply with
SEC rules relating to publicly held companies. See Section 13 -- "Possible
Effects of the Offer on the Market for Shares, Nasdaq Listing, Margin
Regulations and Exchange Act Registration".
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE SHARES ARE NOT
TENDERED?
- If we accept for payment and pay for at least 50.6% of the outstanding shares
on a fully diluted basis, we will merge with and into Microwave Power Devices.
If the merger occurs, Microwave Power Devices will become a direct wholly
owned subsidiary of Ericsson Inc., and each share that remains outstanding
(other than any shares held in the treasury of Microwave Power Devices, or
owned by Ericsson Inc., Ericsson MPD Acquisition Corp. or any direct or
indirect wholly owned subsidiary of Ericsson Inc. or of Microwave Power
Devices, and any shares held by stockholders who have demanded and perfected
appraisal rights under Delaware law for their shares) will be canceled and
converted automatically into the right to receive $8.70 net per share, in cash
or any higher price that may be paid per share in the offer (subject to
applicable withholding taxes), without interest. See the "Introduction".
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
- If you decide not to tender your shares in the offer and the merger occurs,
you will receive in the merger the same amount of cash per share as if you
would have tendered your shares in the offer.
3
<PAGE> 6
- If you decide not to tender your shares in the offer and the merger does not
occur, if we purchase all the tendered shares, there may be so few remaining
stockholders and publicly held shares that the shares will no longer be
eligible to be traded through the Nasdaq National Market or other securities
market, there may not be a public trading market for the shares and Microwave
Power Devices may cease making filings with the SEC or otherwise cease being
required to comply with SEC rules relating to publicly held companies. See
Section 13 -- "Possible Effects of the Offer on the Market for Shares, Nasdaq
Listing, Margin Regulations and Exchange Act Registration".
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
- On October 12, 2000, the last full trading day before we announced our offer,
the last reported closing price per share reported on the Nasdaq National
Market System was $6.00 per share. See Section 7 -- "Certain Information
Concerning the Company".
WITH WHOM MAY I TALK IF I HAVE QUESTIONS ABOUT THE OFFER?
- You can call Innisfree M&A Incorporated, the Information Agent, at (212)
750-5833 or (888) 750-5834 or Goldman, Sachs & Co., the Dealer Manager, at
(212) 902-1000 or (800) 323-5678. See the back cover of this Offer to
Purchase.
4
<PAGE> 7
To the Holders of Common Stock of
Microwave Power Devices, Inc.:
INTRODUCTION
Ericsson MPD Acquisition Corp., a Delaware corporation ("Purchaser") and a
direct wholly owned subsidiary of Ericsson Inc., a Delaware corporation
("Parent"), hereby offers to purchase all the shares of common stock, par value
$0.01 per share (the "Shares"), of Microwave Power Devices, Inc., a Delaware
corporation (the "Company"), that are issued and outstanding, for $8.70 per
Share, net to the seller in cash (subject to applicable withholding taxes),
without interest, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
this Offer to Purchase and any amendments or supplements hereto or thereto,
collectively constitute the "Offer").
Purchaser is a newly incorporated Delaware corporation formed by Parent in
connection with the Offer and the transactions contemplated hereby. Parent is an
indirect wholly owned subsidiary of Telefonaktiebolaget LM Ericsson (publ), a
corporation organized under the laws of the Kingdom of Sweden ("Ericsson"). See
Section 8 for additional information concerning Ericsson, Parent and Purchaser.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. However, any tendering stockholder or other
payee who fails to complete and sign the Substitute Form W-9 that is included in
the Letter of Transmittal may be subject to a required back-up U.S. federal
income tax withholding of 31% of the gross proceeds payable to such stockholder
or other payee pursuant to the Offer. See Section 5. Purchaser or Parent will
pay all charges and expenses of Goldman, Sachs & Co. ("Goldman, Sachs" or the
"Dealer Manager"), which is acting as Dealer Manager for the Offer, ChaseMellon
Shareholder Services, L.L.C. (the "Depositary"), which is acting as the
Depositary, and Innisfree M&A Incorporated (the "Information Agent"), which is
acting as the Information Agent, incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN) ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, HAS APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND HAS RECOMMENDED THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES IN THE OFFER.
CIBC World Markets Corp. ("CIBC World Markets") has delivered to the Board
a written opinion dated October 12, 2000 to the effect that, as of the date of
the opinion and based upon and subject to the matters described in such opinion,
the $8.70 per Share cash consideration to be received in the Offer and the
Merger, taken together, by the holders of Shares was fair, from a financial
point of view, to such holders (other than Parent and its affiliates). A copy of
the written opinion of CIBC World Markets is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which has been filed with the Securities and Exchange Commission (the "SEC") in
connection with the Offer and which is being mailed to stockholders concurrently
herewith. Holders of Shares are urged to read such opinion carefully in its
entirety for a description of the assumptions made, matters considered and
limitations on the review undertaken by CIBC World Markets.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
THE NUMBER OF SHARES THAT SHALL CONSTITUTE 50.6% OF THE THEN OUTSTANDING SHARES
ON A FULLY DILUTED BASIS (DEFINED AS ALL OUTSTANDING SHARES TOGETHER WITH ALL
SHARES ISSUABLE UPON THE CONVERSION OF SHARES OF COMPANY PREFERRED STOCK OR ANY
OTHER CONVERTIBLE SECURITIES OR UPON THE
5
<PAGE> 8
EXERCISE OF ANY VESTED OPTIONS, WARRANTS, OR RIGHTS) (THE "MINIMUM CONDITION"),
AND (II) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), HAVING EXPIRED OR BEEN
TERMINATED, PRIOR TO THE EXPIRATION OF THE OFFER (THE "HSR CONDITION"). THE
OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE SECTIONS 1 AND 14, WHICH SET FORTH IN FULL THE CONDITIONS TO THE
OFFER.
Parent and Purchaser have entered into a Stockholders' Agreement, dated as
of October 12, 2000 (the "Stockholders' Agreement"), with certain stockholders
of the Company, namely George Sbordone, James Silver, Lee Leong, Alfred Weber
and Charter Technologies Limited Liability Company, the Company's largest
stockholder (collectively, the "Principal Stockholders"), pursuant to which,
among other things, the Principal Stockholders have agreed to (i) tender their
Shares in the Offer (which Shares currently represent in the aggregate
approximately 50.6% of the outstanding Shares on a Fully Diluted Basis), (ii)
vote such Shares in favor of the Merger and (iii) grant to Purchaser an option
to purchase such Shares at $8.70 per share (such amount, or any greater amount
per Share paid pursuant to the Offer, being the "Per Share Amount") upon the
terms and subject to the conditions set forth in the Stockholders' Agreement.
See Section 10.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 12, 2000 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that as promptly as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger"). As a result of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation") and will become a direct
wholly owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held in the treasury of the Company and Shares
owned by Purchaser, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company, and other than Shares held by stockholders who shall
have demanded and perfected appraisal rights under Delaware Law) shall be
canceled and converted automatically into the right to receive $8.70 net in
cash, or any higher price that may be paid per Share in the Offer (subject to
applicable withholding taxes), without interest (the "Merger Consideration").
Stockholders who demand and fully perfect appraisal rights under Delaware Law
will be entitled to receive, in connection with the Merger, cash for the fair
value of their Shares as determined pursuant to the procedures prescribed by
Delaware Law. See Section 11. The Merger Agreement is more fully described in
Section 10. Certain federal income tax consequences of the sale of Shares
pursuant to the Offer and the Merger, as the case may be, are described in
Section 5.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board as shall give Purchaser representation on the
Board equal to the product of the total number of directors on the Board (giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Purchaser
or any affiliate of Purchaser following such purchase bears to the total number
of Shares then outstanding. In the Merger Agreement, the Company has agreed, at
such time, to promptly take all actions necessary to cause Purchaser's designees
to be elected as directors of the Company, including increasing the size of the
Board or securing the resignations of incumbent directors or both.
The obligations of each party to effect the Merger are subject to the
satisfaction of certain conditions, including the consummation of the Offer,
and, if necessary, the approval and adoption of the Merger Agreement and the
Merger by the requisite vote of the stockholders of the Company. For a more
detailed description of the conditions to the Merger, see Section 10. Under
Delaware Law and the Company's Amended and Restated By-laws, the affirmative
vote of the holders of a majority of the outstanding Shares present at the
meeting of stockholders and entitled to vote is required to approve and adopt
the Merger Agreement and the Merger. Consequently, if Purchaser acquires
(pursuant to the Offer or otherwise) at least
6
<PAGE> 9
a majority of the outstanding Shares, then Purchaser will have sufficient voting
power to approve and adopt the Merger Agreement and the Merger without the vote
of any other stockholder. See Sections 10 and 11.
Under Delaware Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, Purchaser will be able
to approve and adopt the Merger Agreement and the Merger without a vote of the
Company's stockholders. In such event, Parent, Purchaser and the Company have
agreed to take all necessary and appropriate action to cause the Merger to
become effective in accordance with Section 253 of Delaware Law, as promptly as
reasonably practicable after such acquisition, without a meeting of the
Company's stockholders. If, however, Purchaser does not acquire at least 90% of
the then outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Delaware Law, a significantly longer
period of time will be required to effect the Merger. See Section 11.
The Company has advised Purchaser that as of October 19, 2000, 10,709,064
shares of Common Stock were issued, consisting of 10,709,064 shares of Common
Stock outstanding and no shares of Common Stock held in the treasury of the
Company. In addition, the Company has advised Parent that as of October 19,
2000, 1,383,996 shares of Common Stock were reserved for issuance pursuant to
employee stock options and 613,457 options have vested as of October 19, 2000.
As a result, as of such date, the Minimum Condition would be satisfied if
Purchaser acquired 5,729,196 Shares. Also, as of such date, Purchaser could
cause the Merger to become effective in accordance with Delaware Law, without a
meeting of the Company's stockholders, if Purchaser acquired 9,638,158 Shares.
Purchaser does not intend to offer any subsequent offering period in
connection with the Offer unless Purchaser comes to a written agreement with the
Company that would provide for such subsequent offering period.
No appraisal rights are available in connection with the Offer; however,
stockholders may have appraisal rights in connection with the Merger regardless
of whether the Merger is consummated with or without a vote of the Company's
stockholders. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered (and not withdrawn in accordance with the procedures set forth in
Section 4) on or prior to the Expiration Date. "Expiration Date" means 12:00
midnight, New York City time, on Friday, November 17, 2000, unless and until
Purchaser (subject to the terms and conditions of the Merger Agreement) shall
have extended the period during which the Offer is open, in which case
Expiration Date shall mean the latest time and date at which the Offer, as it
may be extended by Purchaser, shall expire.
The Offer is subject to the conditions set forth under Section 14,
including the satisfaction of the Minimum Condition and the HSR Condition.
Subject to the applicable rules and regulations of the SEC and subject to the
terms and conditions of the Merger Agreement, Purchaser expressly reserves the
right to waive any such condition (other than the Minimum Condition). Subject to
the applicable rules and regulations of the SEC and subject to the terms and
conditions of the Merger Agreement, Purchaser expressly reserves the right to
increase the cash price per Share payable in the Offer and to make any other
changes in the terms and conditions of the Offer; provided, however, that no
change may be made which decreases the cash price per Share payable in the
Offer, reduces the maximum number of Shares to be purchased in the Offer,
imposes conditions to the Offer in addition to those set forth in the Merger
Agreement or otherwise adversely affects the holders of Shares.
The Merger Agreement also provides that, without the consent of the
Company, Purchaser may extend the Offer beyond the scheduled initial expiration
date, which shall be the twentieth business day from and after the date the
Offer is commenced, in the following circumstances: (i) from time to time for
the shortest
7
<PAGE> 10
time periods which Purchaser reasonably believes are necessary until the
consummation of the Offer; (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer; or (iii) for an aggregate period of not more than 10 business days beyond
the latest applicable date that would otherwise be permitted under clause (i) or
(ii) of this sentence, if, as of such date, all of the conditions to Purchaser's
obligations to accept for payment Shares are satisfied or waived, but the number
of Shares validly tendered and not withdrawn pursuant to the Offer equals 80% or
more, but less than 90%, of the outstanding Shares on a Fully Diluted Basis. In
addition, pursuant to the Merger Agreement, if on the then applicable expiration
date of the Offer, the sole condition(s) remaining unsatisfied are (i) the
failure of the waiting period under the HSR Act or under any applicable material
non-United States statutes or regulations, (ii) the process pursuant to
requirements of Section 271 of Title VII, of the Defense Production Act of 1950,
as amended and the regulations promulgated thereunder (the "Exon-Florio
Provision") has not been completed, and/or (iii) any waiting period applicable
to the consummation of the Offer under the applicable International Traffic in
Arms Regulations of the U.S. Department of State (the "Arms Regulations") shall
not have expired or been terminated, then, Purchaser shall extend the Offer from
time to time until the earlier to occur of (x) January 31, 2001 and (y) the
fifth business day after the latest to occur of the expiration or termination of
the applicable waiting period under the HSR Act or under any applicable material
non-United States statutes or regulations, the satisfaction of any requirements
under the Exon-Florio Provision, as applicable, and the expiration or
termination of the waiting period under the Arms Regulations.
Purchaser shall pay for all Shares validly tendered and not withdrawn
promptly following the acceptance of Shares for payment pursuant to the Offer.
Notwithstanding the immediately preceding sentence and subject to the applicable
rules of the SEC and the terms and conditions of the Offer and the Merger
Agreement, Purchaser also expressly reserves the right to delay payment for
Shares in order to comply in whole or in part with applicable laws. Any such
delay shall be effected in compliance with Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to stockholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release to the Dow Jones News Service or the Public
Relations Newswire.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules l4d-4(c),
l4d-6(d) and 14e-1 under the Exchange Act. Subject to the terms of the Merger
Agreement, if, prior to the Expiration Date, Purchaser should decide to increase
the consideration being offered in the Offer, such increase in the consideration
being offered will be applicable to all stockholders whose Shares are accepted
for payment pursuant to the Offer and, if at the time notice of any such
increase in the consideration being offered is first published, sent or given to
holders of such Shares, the Offer is scheduled to expire at any time earlier
than the period ending on the tenth business day from and including the date
that such notice is first so published, sent or given, the Offer will be
extended at least until the expiration of such ten business day period.
For purposes of the Offer, a "business day" means any day on which the
principal offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on which
banks are not required or authorized to close in the City of New York, and
consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings, including the most recent list of names, addresses
and security positions of non-objecting beneficial owners in the possession of
the Company, for the purpose of disseminating the Offer to holders of Shares.
This Offer to
8
<PAGE> 11
Purchase and the related Letter of Transmittal will be mailed by Purchaser to
record holders of Shares whose names appear on the Company's stockholder list
and will be furnished, for subsequent transmittal to beneficial owners of
Shares, to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment all Shares validly tendered
(and not properly withdrawn in accordance with Section 4) prior to the
Expiration Date promptly after the occurrence of the Expiration Date. Purchaser
shall pay for all Shares validly tendered and not withdrawn promptly following
the acceptance of Shares for payment pursuant to the Offer. If Shares are not
accepted for any reason, Purchaser will promptly after the Expiration Date
return such Shares. Notwithstanding the immediately preceding sentence and
subject to applicable rules and regulations of the SEC and the terms of the
Merger Agreement, Purchaser expressly reserves the right to delay payment for
Shares in order to comply in whole or in part with applicable laws. See Sections
1 and 15.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined below), in connection with the book-entry
transfer and (iii) any other documents required under the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
Letter of Transmittal and that Purchaser may enforce such agreement against such
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE
FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
In order for a holder of Shares validly to tender Shares pursuant to the
Offer, the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message, and any
other documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and either (i) the Share Certificates evidencing tendered Shares must
9
<PAGE> 12
be received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary (including an Agent's
Message if the tendering stockholder has not delivered a Letter of Transmittal),
in each case prior to the Expiration Date, or (ii) the tendering stockholder
must comply with the guaranteed delivery procedures described below.
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 STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Security Transfer Agent Medallion
Signature Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing
being referred to as an "Eligible Institution"), except in cases where Shares
are tendered (i) by a registered holder of Shares who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made, or a Share Certificate not accepted for payment or not tendered is to
be returned, to a person other than the registered holder(s), then the Share
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear on
the Share Certificate, with the signature(s) on such Share Certificate or stock
powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the
Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(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 made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message,
and any other documents required by the Letter of
10
<PAGE> 13
Transmittal are received by the Depositary within three Nasdaq National
Market ("Nasdaq") trading days after the date of execution of such Notice
of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or by
facsimile transmission to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the form of Notice of Guaranteed
Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by the Letter of Transmittal.
Determination of Validity. ALL QUESTIONS AS TO THE FORM OF DOCUMENTS AND
THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF RECEIPT) AND ACCEPTANCE FOR
PAYMENT OF ANY TENDER OF SHARES WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHICH DETERMINATION SHALL BE FINAL AND BINDING ON ALL PARTIES.
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. Purchaser also reserves the absolute
right to waive any condition of the Offer to the extent permitted by applicable
law and the Merger Agreement or any defect or irregularity in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. NO TENDER OF SHARES
WILL BE DEEMED TO HAVE BEEN VALIDLY MADE UNTIL ALL DEFECTS AND IRREGULARITIES
HAVE BEEN CURED OR WAIVED. NONE OF PURCHASER, PARENT OR ANY OF THEIR RESPECTIVE
AFFILIATES OR ASSIGNS, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT
OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS
OR IRREGULARITIES IN TENDERS OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH
NOTIFICATION. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
Purchaser that (i) such stockholder has the full power and authority to tender,
sell, assign and transfer the tendered Shares (and any and all other Shares or
other securities issued or issuable in respect of such Shares), and (ii) when
the same are accepted for payment by Purchaser, Purchaser will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Appointment as Proxy. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's agents, attorneys-in-fact and proxies, each with full power
of substitution, in the manner set forth in the Letter of Transmittal, to the
full extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by Purchaser (and with respect to any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after October 12, 2000). All such powers of attorney and proxies
shall be considered irrevocable and coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
Purchaser accepts such Shares for payment. Upon such acceptance for payment, all
prior powers of attorney and proxies given by such stockholder with respect to
such Shares (and such other Shares and securities) will be revoked, without
further action, and no subsequent powers of attorney or proxies may be given nor
any subsequent written consent executed by such stockholder (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of Purchaser will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be
11
<PAGE> 14
deemed validly tendered, immediately upon Purchaser's payment for such Shares,
Purchaser must be able to exercise full voting rights with respect to such
Shares (and such other Shares and securities).
UNDER THE "BACKUP WITHHOLDING" PROVISIONS OF U.S. FEDERAL INCOME TAX LAW,
THE DEPOSITARY MAY BE REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS OF CASH PURSUANT
TO THE OFFER. TO PREVENT IMPOSITION OF BACKUP WITHHOLDING WITH RESPECT TO
PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED
PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH
SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH
STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF
TRANSMITTAL.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after December 18, 2000. If Purchaser extends the
Offer, is delayed in its acceptance for payment of Shares or is unable to accept
Shares for payment pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer, the Depositary may, nevertheless, on
behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as described in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act. Any such delay will be by an extension of the Offer to the
extent required by law.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover page of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
ALL QUESTIONS AS TO THE FORM AND VALIDITY (INCLUDING TIME OF RECEIPT) OF
ANY NOTICE OF WITHDRAWAL WILL BE DETERMINED BY PURCHASER, IN ITS SOLE
DISCRETION, WHOSE DETERMINATION WILL BE FINAL AND BINDING. NONE OF PURCHASER,
PARENT OR ANY OF THEIR RESPECTIVE AFFILIATES OR ASSIGNS, THE DEALER MANAGER, THE
DEPOSITARY, THE INFORMATION AGENT OR ANY OTHER PERSON WILL BE UNDER ANY DUTY TO
GIVE ANY NOTIFICATION OF ANY DEFECTS OR IRREGULARITIES IN ANY NOTICE OF
WITHDRAWAL OR INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain U.S. federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive cash in the
Merger (whether upon receipt of the Merger Consideration or pursuant to the
proper exercise of dissenter's rights). The discussion applies only to holders
of Shares that are U.S. persons within the meaning of the U.S. Internal Revenue
Code of 1986 (including U.S. citizens or resident alien individuals, and
corporations or partnerships organized under the laws of the United States or
any political subdivision thereof), and that hold Shares as capital assets
(generally assets held for investment). The discussion does not address all of
the U.S. federal income tax considerations that may be relevant to the
particular circumstances of a holder of Shares, or to holders subject to special
tax rules (including holders of Shares received pursuant to the exercise of
employee stock options or otherwise as compensation).
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<PAGE> 15
THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION PURPOSES
ONLY AND IS BASED UPON PRESENT U.S. FEDERAL INCOME TAX LAW (WHICH MAY BE SUBJECT
TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS). BECAUSE INDIVIDUAL CIRCUMSTANCES
MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR
TO DETERMINE THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER TO SUCH
HOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of the offer price and the receipt of cash pursuant to the
Merger (whether as Merger Consideration or pursuant to the proper exercise of
dissenter's rights) will be a taxable transaction under U.S. federal income tax
law (and also may be a taxable transaction under applicable state, local and
other income tax laws). In general, for U.S. federal income tax purposes, a
holder of Shares will recognize gain or loss equal to the difference between
such holder's adjusted tax basis in the Shares sold pursuant to the Offer or
converted to cash in the Merger and the amount of cash received in exchange
therefor. Such gain or loss generally will be capital gain or loss. Certain
non-corporate holders (including individuals) will be subject to U.S. federal
income tax on the net amount of such capital gain at a maximum rate of 20%,
provided that the Shares were held for more than 12 months prior to their
disposition. The deduction of capital losses is subject to certain limitations
under U.S. federal income tax law. Holders of Shares should consult their own
tax advisors in this regard.
Payments in connection with the Offer or the Merger may be subject to
backup withholding at a 31% rate. Backup withholding generally applies if a
holder (i) fails to furnish such holder's social security number or taxpayer
identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii) fails
properly to report interest or dividends or (iv) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN provided is such holder's correct number and that such holder is not
subject to backup withholding. Backup withholding is not an additional tax but
merely an advance payment, which may be refunded to the extent it results in an
overpayment of U.S. federal income tax, provided that certain information is
furnished to the Internal Revenue Service. Certain persons, including
corporations and financial institutions, generally are exempt from backup
withholding. Certain penalties apply for failure to furnish correct information
and for failure to include reportable payments in income. Each holder of Shares
should consult with such holder's own tax advisor as to such holder's
qualifications for exemption from withholding and the procedure for obtaining
such exemption.
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<PAGE> 16
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and principally traded on Nasdaq. The following table
sets forth, for the quarters indicated, the high and low closing prices per
Share on Nasdaq as reported by http://finance.yahoo.com and the amount of cash
dividends paid or declared per Share according to published financial sources.
SHARES MARKET DATA
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ----- ---------
<S> <C> <C> <C>
1998:
First Quarter............................................ $ 8.81 $5.00 $0
Second Quarter........................................... 8.88 5.75 0
Third Quarter............................................ 6.81 2.56 0
Fourth Quarter........................................... 11.13 2.25 0
1999:
First Quarter............................................ $12.81 $6.69 $0
Second Quarter........................................... 18.00 9.31 0
Third Quarter............................................ 21.25 8.44 0
Fourth Quarter........................................... 16.13 7.00 0
2000:
First Quarter............................................ $11.63 $7.50 $0
Second Quarter........................................... 8.63 4.94 $0
Third Quarter............................................ 8.38 4.06 $0
Fourth Quarter (through October 12, 2000)................ $ 7.03 $5.50 $0
</TABLE>
On October 12, 2000, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on Nasdaq was $6.00. On
October 19, 2000, the last full trading day prior to the commencement of the
Offer, the closing price per Share as reported on Nasdaq was $8.53. As of
October 19, 2000, the approximate number of holders of record of the Shares was
38.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth in this Offer to Purchase, all of the
information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the SEC and other public sources. Neither Purchaser nor Parent assumes any
responsibility for the accuracy or completeness of the information concerning
the Company furnished by the Company or contained in such documents and records
or for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Purchaser or Parent.
General. The Company designs, manufactures and sells highly linear power
amplifiers and related subsystems to the worldwide wireless telecommunications
market. These amplifiers, which are a key component in wireless base stations
and other wireless telecommunications networks, increase the power of radio
frequency ("RF") and microwave signals with low distortion for both wireless
data and voice applications. The Company's wireless telecommunications products
consist of solid-state, RF and microwave, single and multi-channel power
amplifiers that support a broad range of analog and digital transmission
protocols including AMPS, CDMA, TDMA, TACS, GSM, W-CDMA and cdma2000. These
products are marketed to the cellular, personal communications services, paging
and wireless local loop segments of the wireless telecommunications industry.
The Company's largest wireless telecommunications customers are integrated
wireless telecommunications original equipment manufacturers. The Company is
also pursuing
14
<PAGE> 17
opportunities with emerging wireless telecommunications infrastructure equipment
manufacturers and service providers.
In addition to its presence in the wireless telecommunications industry,
the Company designs and manufactures high-power, solid-state amplifiers for
satellite communications and medical applications. The Company also designs and
manufactures amplifiers and other products for the military market.
The Company was incorporated in Delaware in July 1991 to acquire the stock
of MPD Technologies, Inc., the Company's operating subsidiary. MPD Technologies,
Inc. was incorporated in New York in 1967. The Company's common stock, par value
$.01, trades on the Nasdaq National Market System under the symbol "MPDI". Its
principal executive offices are located at 49 Wireless Boulevard, Hauppauge, New
York and its telephone number is (631) 231-1400.
Certain Projected Financial Data of the Company. Prior to entering into
the Merger Agreement, Parent conducted a due diligence review of the Company and
in connection with such review received certain projections of the Company's
future operating performance. The Company does not in the ordinary course
publicly disclose projections and these projections were not prepared with a
view to public disclosure. The Company has advised Parent and Purchaser that
these projections were prepared by the Company's management based on numerous
assumptions including, among others, projections of revenues, operating income,
benefits and other expenses, and depreciation and amortization. No assurances
can be given with respect to any such assumptions. These projections do not give
effect to the Offer or the potential combined operations of Parent and the
Company or any alterations Parent may make to the Company's operations or
strategy after the consummation of the Offer. The information set forth below is
presented for the limited purpose of giving the stockholders access to the
material financial projections prepared by the Company's management that were
made available to Parent and Purchaser in connection with the Merger Agreement
and the Offer.
INCOME STATEMENT
(AMOUNTS IN $ THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PROJECTIONS
---------------------------------------
QUARTER ENDING
---------------------------------------
SEPTEMBER 30, 2000 DECEMBER 31, 2000
------------------ -----------------
<S> <C> <C>
Wireless Sales............................................. $ 5,821 $ 15,043
Satellite, Medical, Other Comm............................. 2,359 2,711
Military Sales............................................. 5,707 7,301
-------- --------
NET SALES.................................................. 13,887 25,055
COST OF SALES.............................................. (11,266) (18,498)
GROSS PROFIT............................................... 2,620 6,557
OPERATING EXPENSES......................................... (3,059) (3,912)
-------- --------
OPERATING INCOME........................................... (439) 2,645
Int Exp, Net............................................... (360) (405)
Income Before Taxes........................................ (799) 2,240
Tax Provision.............................................. 318 (896)
-------- --------
Net Income................................................. (481) 1,344
======== ========
Earnings Per Share -- BASIC................................ (0.04) 0.13
Earnings Per Share -- DILUTED.............................. (0.04) 0.12
</TABLE>
Certain matters discussed herein, including, but not limited to these
projections, are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include the information set forth
above under "Certain Projected Financial Data of the Company". While presented
with numerical specificity, these projections are based upon a variety of
estimates and hypothetical assumptions which may not be
15
<PAGE> 18
accurate, may not be realized, and are also inherently subject to significant
business, economic and competitive uncertainties and contingencies, all of which
are difficult to predict, and most of which are beyond the control of the
Company. Accordingly, there can be no assurance that any of the projections will
be realized and the actual results for the fiscal year ended December 31, 2000
may vary materially from that shown above.
In addition, these projections were not prepared in accordance with
generally accepted accounting principles, and neither the Company's, Parent's
nor Ericsson's independent accountants has examined or compiled any of these
projections or expressed any conclusion or provided any other form of assurance
with respect to these projections and accordingly assume no responsibility for
these projections. These projections were prepared with a limited degree of
precision, and were not prepared with a view to public disclosure or compliance
with the published guidelines of the Commission or the guidelines established by
the American Institute of Certified Public Accountants regarding projections,
which would require a more complete presentation of data than as shown above.
The inclusion of these projections herein should not be regarded as a
representation by the Company, Parent and Purchaser or any other person to whom
these projections were provided that the projected results will be achieved.
None of Parent, Purchaser, or any other person to whom these projections were
provided assumes any responsibility for the accuracy or validity of the
foregoing projections. Forward-looking statements also include those preceded
by, followed by or that include the words "believes", "expects", "anticipates"
or similar expressions.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the SEC
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in proxy statements distributed to
the Company's stockholders and filed with the SEC. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and also should be available for
inspection at the SEC's regional offices located at Seven World Trade Center,
13th Floor, New York, New York 10048 and the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials may also be obtained by mail, upon payment of the SEC's customary
fees, by writing to its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. The SEC also maintains a World Wide Website on the
Internet at http://www.sec.gov that contains reports and other information
regarding issuers that file electronically with the SEC.
8. CERTAIN INFORMATION CONCERNING ERICSSON, THE PURCHASER AND PARENT.
General. Purchaser is a newly incorporated Delaware corporation organized
in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the Merger. The principal
offices of Purchaser are located at 740 E. Campbell Road, Richardson, Texas
75081 and its telephone number is (972) 583-0000. Purchaser is a direct wholly
owned subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is a corporation organized under the laws of the State of Delaware.
Parent is an indirect wholly owned subsidiary of Ericsson and the principal U.S.
subsidiary of Ericsson. Its principal offices are located at 740 E. Campbell
Road, Richardson, Texas 75081, and its telephone number is (972) 583-0000.
Ericsson is a corporation organized under the laws of the Kingdom of
Sweden. Ericsson is the leading communications supplier, combining innovation in
mobility and Internet in creating the new era of Mobile Internet. Ericsson
provides total solutions covering everything from systems and applications to
mobile phones
16
<PAGE> 19
and other communications tools. Its principal offices are located at
Telefonvagen 30, S-126 25 Stockholm, Sweden and its telephone number is +46 8
719 00 00.
The name, citizenship, business address, business telephone number,
principal occupation or employment, and five-year employment history for each of
the directors and executive officers of Ericsson, Purchaser and Parent and
certain other information are set forth in Schedule I hereto. Except as
described in this Offer to Purchase and in Schedule I hereto, none of Ericsson,
Parent, Purchaser or, to the best knowledge of such corporations, any of the
persons listed on Schedule I to the Offer of Purchase has during the last five
years (i) been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) been a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
Except as described in this Offer to Purchase and in Schedule II hereto,
(i) none of Ericsson, Purchaser, Parent nor, to the best knowledge of Ericsson,
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase or any associate or majority owned subsidiary of Ericsson, Purchaser,
Parent or any of the persons so listed, beneficially owns or has any right to
acquire any Shares and (ii) none of Ericsson, Purchaser, Parent nor, to the best
knowledge of Ericsson, Purchaser and Parent, any of the persons or entities
referred to above nor any director, executive officer or subsidiary of any of
the foregoing has effected any transaction in the Shares during the past 60
days.
Except as provided in the Merger Agreement, the Stockholders' Agreement and
as otherwise described in this Offer to Purchase, none of Ericsson, Purchaser,
Parent nor, to the best knowledge of Ericsson, Purchaser and Parent, any of the
persons listed in Schedule I to this Offer to Purchase, has any agreement,
arrangement, understanding, whether or not legally enforceable, with any other
person with respect to any securities of the Company, including, but not limited
to, the transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations. Except as set
forth in the Merger Agreement, the Stockholders' Agreement and as otherwise
described in this Offer to Purchase, since January 1, 1998, none of Ericsson,
Purchaser, Parent nor, to the best knowledge of Ericsson, Purchaser and Parent,
any of the persons listed on Schedule I hereto, has had any transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the SEC applicable to
the Offer. Except as set forth in this Offer to Purchase, since January 1, 1998,
there have been no negotiations, transactions or material contacts between any
of Ericsson, Purchaser, Parent, or any of their respective subsidiaries or, to
the best knowledge of Ericsson, Purchaser and Parent, any of the persons listed
in Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer for or other acquisition of any class of the Company's
securities, an election of the Company's directors or a sale or other transfer
of a material amount of assets of the Company.
9. FINANCING OF THE OFFER AND THE MERGER.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$100,000,000. Purchaser will obtain all of such funds from Parent or one of
Parent's affiliates. Parent and its affiliates will provide such funds from
existing resources. Assuming 10,907,054 Shares outstanding as of October 19,
2000, the total amount of funds required by Purchaser to purchase the maximum
amount of Shares sought by Purchaser in the Offer is $93,168,857.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER
AGREEMENT.
In February 2000, Parent started in-depth discussions regarding sourcing
activity with the Company. A project was initiated where the Company was
provided with a specification for a Multi Carrier Power Amplifier intended
mainly for the United States market.
On April 27, 2000, two representatives from Ericsson Radio Access AB (a
wholly owned subsidiary of Ericsson) Carl-Magnus Mansson, General Manager for
the TDMA Product Line, and Jan Bohult, General Manager for Multi-Standard Radio
Development, met with Alfred Weber, Chief Executive Officer of the Company in
Hauppauge, New York to discuss the possibility of forming a strategic alliance
between Parent
17
<PAGE> 20
and the Company with respect to the development of next generation amplifiers.
Parent also expressed an interest in having Parent make an investment in the
Company. Parent and the Company agreed to further discuss possible alternatives
in the future.
On May 16, 2000, Mr. Mansson telephoned Mr. Weber to discuss the Company's
interest in a potential transaction with Ericsson in which Ericsson would
acquire all of the Company's outstanding Shares. The discussion resulted in a
meeting on May 22, 2000 in London at Ericsson's headquarters among Rolf
Eriksson, Vice President of Strategic Alliances of Ericsson, Ake Karman,
Financial Officer and Deputy President of Ericsson Radio Access AB, Mr. Mansson
and Eric Berthels, Marketing Director of Ericsson Radio Access AB, and Mr.
Weber. At such meeting, no understanding was reached.
On July 6, 2000, Messrs. Eriksson, Karman, Mansson, and Berthels met in
Hauppauge, Long Island with Mr. Weber, Thomas V. Gilboy, Chief Financial Officer
of the Company, and Mr. Scover for further discussions on strategic cooperation.
At this time, representatives of Ericsson visited certain facilities of the
Company.
On July 6, 2000, Ericsson and the Company entered into a Non-Disclosure
Agreement.
On August 17, 2000, Messrs. Weber, and Gilboy and a representative of the
Company's legal advisor met in Stockholm, Sweden with Messrs. Eriksson, Karman,
Mansson, Berthels and Mikael Sundstrom, Vice President Corporate Legal Affairs
of Ericsson and a representative of Ericsson's legal advisor for further
discussion of a potential acquisition transaction.
On August 24, 2000, Ericsson and the Company entered into a
Non-Solicitation Agreement (as extended on September 14, 2000 and October 4,
2000).
On August 24, 2000, Ericsson's Board of Directors authorized its officers
and the officers of Ericsson's subsidiaries to proceed with a transaction.
During the period from August 26 to October 12, 2000, Parent conducted
extensive legal and financial due diligence on the Company's business and
operations, including site visits to the Company's facilities. On September 1,
2000, counsel to Parent distributed to the Company and the Company's counsel
initial drafts of the Merger Agreement and Stockholders' Agreement. During the
first weeks of September, Parent and its legal and financial advisors held
several negotiations with the Company and its legal advisor regarding the
proposed offer price, terms and conditions of the Merger Agreement and
Stockholders' Agreement.
On September 5, 2000, Messrs. Weber and Gilboy, other employees of the
Company and representatives of the Company's legal advisor met in New York with
Messrs. Eriksson, Karman, Mansson, Berthels, Sundstrom, and representatives of
Ericsson's legal and financial advisors for further discussion of terms of the
potential acquisition transaction. Parent stated that the execution of the
Stockholders' Agreement, pursuant to which the Principal Stockholders would,
among other things, agree to support the acquisition transaction with Parent,
would be a condition to Parent's willingness to effect the proposed acquisition
transaction.
During the period from September 12 to October 12, 2000, the Company, with
advice from its legal counsel, participated in several negotiation sessions with
Parent and its legal counsel with respect to the Merger Agreement and
Stockholders' Agreement. Parent also continued its due diligence efforts on the
Company's business and operations.
In the evening of October 12, 2000, Parent, Purchaser and the Company
executed the Merger Agreement and Parent, Purchaser and the Principal
Stockholders executed the Stockholders' Agreement.
On the morning of October 13, 2000, the Company and Ericsson issued a joint
press release announcing the execution of the Merger Agreement. A copy of this
press release has been filed as an Exhibit to the Tender Offer Statement on
Schedule TO (the "Schedule TO") filed by Purchaser, Parent and Ericsson with the
SEC in connection with the Offer and is incorporated herein by reference.
18
<PAGE> 21
CONTACTS WITH THE COMPANY
During the past two years, Ericsson and its present affiliates have had a
generally continuous relationship with the Company as both a vendor and a
customer. The Company has purchased transistors from Ericsson and its present
affiliates for an aggregate amount of approximately $7,800,000 during 1999 and
$1,700,000 during the first three fiscal quarters of 2000. The Company has sold
high power amplifiers to Ericsson and its present affiliates for an aggregate
amount of $678,000 during the first three fiscal quarters of 2000.
MPD Technologies, Inc. ("MPD"), a wholly owned subsidiary of the Company,
and Ericsson Wireless Communications, Inc. ("Ericsson Wireless"), an affiliate
of Parent, are in the process of negotiating a Development and Supply Agreement
(the "Development and Supply Agreement"). It is anticipated that the term of the
Development and Supply Agreement will run through December 31, 2002 and,
pursuant to the terms of such agreement, MPD will develop and supply, at the
request of Ericsson Wireless or one of its affiliates and in accordance with
Ericsson Wireless's specifications, power amplifier systems. Each party will
retain its full ownership rights and interests in and to its respective
intellectual property and neither party shall assign any rights under the
agreement without the other party's prior written consent. The Company and
Ericsson Wireless are currently parties to certain purchase orders for the
purchase of Ericsson Wireless's products and have, in the past, been parties to
certain purchase orders for the purchase of the Company's products. The terms
and conditions of a finalized Development and Supply Agreement executed between
the parties will supersede the terms and conditions of certain purchase orders.
THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT,
WHICH IS INCORPORATED HEREIN BY REFERENCE, AND A COPY OF WHICH HAS BEEN FILED AS
AN EXHIBIT TO THE SCHEDULE TO FILED BY PURCHASER, PARENT AND ERICSSON WITH THE
SEC IN CONNECTION WITH THE OFFER. THE MERGER AGREEMENT MAY BE EXAMINED AND
COPIES MAY BE OBTAINED AT THE PLACES SET FORTH IN SECTION 7. DEFINED TERMS USED
HEREIN AND NOT DEFINED HEREIN SHALL HAVE THE RESPECTIVE MEANINGS ASSIGNED TO
THOSE TERMS IN THE MERGER AGREEMENT.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than 10 business
days after the initial public announcement of the execution and delivery of the
Merger Agreement. The obligation of Purchaser to accept for payment Shares
tendered pursuant to the Offer is subject to the satisfaction of the Minimum
Condition and certain other conditions that are described in Section 14 hereof.
Purchaser has agreed that it shall not, without the Company's prior written
consent, (i) decrease the price per Share payable in the Offer, (ii) decrease
the maximum number of Shares to be purchased in the Offer, (iii) impose
conditions to the Offer in addition to those set forth in Section 14 hereof, or
(iv) otherwise change any term or condition of the Offer in a manner adverse to
the holders of Shares.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware Law, Purchaser will
be merged with and into the Company. As a result of the Merger, the Company will
continue as the Surviving Corporation and will become a direct wholly owned
subsidiary of Parent, and the separate corporate existence of Purchaser will
cease in accordance with Delaware Law. Upon consummation of the Merger, each
issued and outstanding Share (other than any Shares held in the treasury of the
Company, or owned by Parent, Purchaser or any direct or indirect wholly owned
subsidiary of Parent or of the Company and any Shares which are held by
stockholders who have properly exercised appraisal rights for such Shares in
accordance with Section 262 of Delaware Law) will be converted into the right to
receive the Merger Consideration.
Pursuant to the Merger Agreement, each share of common stock, par value
$0.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into and become one fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation, and that the officers of the Company immediately
19
<PAGE> 22
prior to the Effective Time will be the initial officers of the Surviving
Corporation. Subject to the Merger Agreement, the Certificate of Incorporation
and By-laws of the Surviving Corporation will be identical to the Certificate of
Incorporation and By-laws of Purchaser in effect immediately prior to the
Effective Time provided, however, that the name of the Surviving Corporation
shall be Microwave Power Devices, Inc.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company,
acting through the Board, shall, if required by applicable law to consummate the
Merger, duly call, give notice of, convene and hold an annual or special meeting
of its stockholders as promptly as practicable following the consummation of the
Offer for the purpose of considering and taking action upon the Merger Agreement
and the Merger (the "Stockholders' Meeting"). At the Stockholders' Meeting,
Parent and Purchaser shall cause all Shares then owned by them and their
subsidiaries to be voted in favor of the approval and adoption of the Merger
Agreement and the Transactions. If Purchaser acquires at least a majority of the
outstanding Shares on a Fully Diluted Basis in the Offer or otherwise, Purchaser
will have sufficient voting power to approve the Merger, even if no other
stockholder votes in favor of the Merger.
Proxy Statement. The Merger Agreement provides that the Company shall, if
approval of the Company's stockholders is required by applicable law to
consummate the Merger, promptly following consummation of the Offer, prepare and
file with the SEC the Proxy Statement relating to the Merger Agreement and the
Merger and shall use its reasonable best efforts to have the Proxy Statement
cleared by the SEC promptly. The Merger Agreement provides that, in the event
that Purchaser shall acquire at least 90% of the then outstanding Shares,
Parent, Purchaser and the Company will take all necessary and appropriate action
to cause the Merger to be effective, as promptly as reasonably practicable after
such acquisition, without a meeting of the stockholders of the Company.
Conduct of Business by the Company Pending the Merger. Pursuant to the
Merger Agreement, between the date of the Merger Agreement and the Effective
Time, unless Parent shall otherwise agree in writing, the businesses of the
Company and the Subsidiaries shall be conducted only in, and the Company and the
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and the Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other persons with which the Company
or any Subsidiary has significant business relations. The Merger Agreement
provides that, by way of amplification and not limitation, except as expressly
contemplated by the Merger Agreement and Section 6.01 of the Disclosure Schedule
to the Merger Agreement, neither the Company nor any of the Subsidiaries shall,
between the date of the Merger Agreement and the Effective Time, directly or
indirectly, do, or initiate any significant step to do any of the following
without the prior written consent of Parent: amend or otherwise change its
Certificate of Incorporation or By-laws or equivalent organizational documents;
issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance,
sale, pledge, disposition, grant or encumbrance of (i) any shares of any class
of capital stock of the Company or any Subsidiary, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest) of the Company or any Subsidiary (except for the issuance
of a maximum of 1,394,166 Shares issuable pursuant to employee stock options
outstanding on the date of the Merger Agreement) or (ii) any assets of the
Company or any Subsidiary, except in the ordinary course of business are in a
manner consistent with past practice; declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock; reclassify, combine, split, subdivide
or redeem, or purchase or otherwise acquire, directly or indirectly, any of its
capital stock; (a) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any
division thereof or any significant amount of assets, (b) except in the ordinary
course of business and consistent with past practice incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or endorse, or
otherwise become responsible for, the obligations of any person, or make any
loans or advances, or grant any security interest in any of its assets, (c)
enter into any customer contract related to the Company's military and medical
businesses, (d) enter into any other contract or
20
<PAGE> 23
agreement other than in the ordinary course of business and consistent with past
practice, (e) authorize, or make any commitment with respect to, any single
capital expenditure which is in excess of $500,000 or capital expenditures which
are, in the aggregate, in excess of $1,000,000 for the Company and the
Subsidiaries taken as a whole or (f) enter into or amend any contract,
agreement, commitment or arrangement with respect to any matter set forth in the
foregoing clauses (a)-(f); increase the compensation payable or to become
payable or the benefits provided to its directors, officers or employees, except
for increases in the ordinary course of business and consistent with past
practice in salaries, wages, bonuses, incentives or pension benefits of
employees of the Company or any Subsidiary who are not directors or officers of
the Company, or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or other employee
of the Company or of any Subsidiary, or establish, adopt, enter into or amend
(other than as may be required by applicable law) any collective bargaining,
bonus, profit-sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee; change any of the accounting methods used by
it unless required by GAAP or applicable law; make any tax election or settle or
compromise any material United States federal, state, local or non-United States
income tax liability; pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or reserved
against in the 1999 Balance Sheet or subsequently incurred in the ordinary
course of business and consistent with past practice; amend, modify or consent
to the termination of any Material Contract, or amend, waive, modify or consent
to the termination of the Company's or any of the Company's subsidiaries'
material rights thereunder; commence or settle any Action; or publicly announce
an intention, enter into any formal or informal agreement or otherwise make a
commitment, to do any of the foregoing.
Company Board Representation. The Merger Agreement provides that, promptly
upon the purchase by Purchaser of Shares pursuant to the Offer and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the election of any directors
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, take all actions necessary to cause
Purchaser's designees to be elected as directors of the Company including
increasing the size of the Board or securing the resignations of incumbent
directors or both. The Merger Agreement also provides that, at such time, the
Company shall use its reasonable best efforts to cause persons designated by
Purchaser to constitute the same percentage of (i) each committee of the Board
(ii) the board of directors of each Subsidiary and (iii) each committee of each
such board as the percentage of persons designated by Purchaser shall constitute
of the Board. Notwithstanding the foregoing, until the Effective Time, the
Company shall use its reasonable best efforts to ensure that at least two
members of the Board and each committee of the Board and such boards and
committees of the Subsidiaries, as of the date hereof, who are not employees of
the Company shall remain members of the Board and of such boards and committees.
The Merger Agreement provides that, following the election of Purchaser's
designees, and prior to the Effective Time, the concurrence of a majority of the
directors of the Company then in office who neither were designated by Purchaser
nor are employees of the Company or any Subsidiary shall be required to
authorize any termination of the Merger Agreement by the Company, any amendment
of the Merger Agreement, the Certificate of Incorporation or By-laws of the
Company, any extension of the time for the performance of any obligations or
other acts of Parent or Purchaser or any waiver of the Company's rights under
the Merger Agreement.
Access to Information. Pursuant to the Merger Agreement, upon reasonable
notice and at reasonable times, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser complete access to the officers, employees, agents,
properties, officers, plants and other facilities, books and records of the
Company and each Subsidiary, shall furnish Parent and Purchaser with such
21
<PAGE> 24
financial, operating and other data and information as Parent or Purchaser,
through its officers, employees or agents, may reasonably request. The Company
shall permit Parent and/or Purchaser to have one or more observers on the
premises of the Company daily until the earlier of the Effective Time or the
termination of the Merger Agreement.
No Solicitation of Transactions. The Company has agreed that it and each
of its subsidiaries shall not, directly or indirectly, through any officer,
director, agent or otherwise, (i) solicit, initiate or encourage the submission
of, any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person, any information with respect
to, or otherwise cooperate in any way with respect to, or assist or participate
in, facilitate or encourage, any unsolicited proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal. Neither the Board
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board of the Offer, the Merger or any other Transaction,
(ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal or (iii) enter into any agreement with respect to any Acquisition
Proposal. Notwithstanding the foregoing, in the event that, prior to the time of
acceptance for payment of Shares pursuant to the Offer, the Board determines in
good faith that it is required to do so by its fiduciary duties under applicable
law after having received advice from outside legal counsel, the Board may
withdraw or modify its approval or recommendation of the Offer and the Merger.
The Company has agreed that it shall, and shall direct or cause its
directors, officers, employees, representatives and agents to, immediately cease
and cause to be terminated any discussions or negotiations with any parties that
may be ongoing with respect to any Acquisition Proposal. The Company has also
agreed that it shall advise Parent orally (within one business day) and in
writing (as promptly as possible thereafter) of (i) any Acquisition Proposal or
any request for information with respect to any Acquisition Proposal, the
material terms and conditions of such Acquisition Proposal or request and the
identity of the person making such Acquisition Proposal or request and (iii) any
changes in any such Acquisition Proposal or request.
Employee Stock Options and Other Employee Benefits. Effective as of the
Effective Time, the Company shall take all necessary action, including obtaining
the consent of the individual option holders, if necessary, to (i) terminate the
Company's 1995 Stock Option Plan, the Company's 1996 Stock Option Plan and the
Company's 1999 Stock Option Plan, each as amended through the date of the Merger
Agreement (the "Company Stock Option Plans"), and (ii) cancel, at the Effective
Time, each outstanding option to purchase Shares granted under the Company Stock
Option Plans (each, a "Company Stock Option") that is outstanding and
unexercised as of such date. Each holder of a Company Stock Option that is
outstanding and unexercised at the Effective Time, whether vested or unvested,
shall be entitled to receive from the Surviving Corporation immediately after
the Effective Time, in exchange for the cancellation of such Company Stock
Option, an amount in cash equal to the excess, if any, of (x) the Per Share
Amount over (y) the per share exercise price of such Company Stock Option,
multiplied by the number of Shares subject to such Company Stock Option as of
the Effective Time. Any such payment shall be subject to all applicable federal,
state and local tax withholding requirements.
The Merger Agreement also provides that Parent and Surviving Corporation
shall have no obligation to continue after the Effective Time any plan or
arrangement in effect immediately before the Effective Time (except as otherwise
required by applicable law, including without limitation ERISA and the Code) for
current or former employees, officers or directors of the Company or any
Subsidiary, and shall have the discretion to continue or terminate any of such
programs, or to merge any of them into plans or arrangements in effect for other
employees of Parent or Surviving Corporation; provided, however, that Parent and
Surviving Corporation shall provide substantially comparable plans or
arrangements in effect immediately before the Effective Time for current or
former employees, officers or directors of the Company or any Subsidiary, after
the Effective Time, in a manner determined in the sole discretion of Parent.
Employees of the Company or any Subsidiary shall receive credit for purposes of
eligibility to participate and vesting (but not for benefit accruals) under any
employee pension benefit plan or program or arrangement established or
maintained by the Surviving Corporation or any of its subsidiaries or for the
purpose of eligibility and determining the amount of any benefit with respect to
any employee welfare benefit plan, program or arrangement established or
maintained by Surviving Corporation for service accrued or deemed accrued prior
to the Effective Time
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with the Company or any Subsidiary; provided, however, that such crediting of
service shall not operate to duplicate any benefit or the funding of any such
benefit. Parent shall also cause the Surviving Corporation to perform the
Company's obligations under certain change in control and other agreements
between the Company and certain of its officers and employees unless any such
officer or employee agrees otherwise.
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement further provides that the By-laws of the Surviving Corporation shall
contain provisions granting the same rights to indemnification that are set
forth in the By-laws of the Company which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who, at or prior to the Effective Time, were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be required
by law.
The Merger Agreement also provides that each of Parent and the Surviving
Corporation shall use its reasonable best efforts to maintain in effect for six
years from the Effective Time, if available, the current directors' and
officers' liability insurance policies maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions that are not materially less favorable)
with respect to matters occurring prior to the Effective Time; provided,
however, that in no event shall the Surviving Corporation be required to expend
pursuant to the Merger Agreement more than an amount per year equal to two times
the current annual premiums paid by the Company for such insurance (such amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained, or can
only be obtained at an annual premium in excess of the Maximum Premium, Parent
shall cause the Surviving Corporation to maintain the most advantageous policies
of directors' and officers' insurance obtainable for an annual premium equal to
the Maximum Premium; provided further, that, if such insurance coverage cannot
be obtained at all, Parent shall purchase all available run-off insurance
policies with respect to pre-existing insurance in an amount that, together with
all other insurance purchased pursuant to the Merger Agreement, does not exceed
the Maximum Premium.
The Merger Agreement also provides that from and after the consummation of
the Offer, Parent shall cause the Surviving Corporation (including the provision
of funds to the Surviving Corporation, if necessary) to indemnify, defend and
hold harmless any person who is now, or has been at any time prior to the
Effective Time, an officer, director, employee or agent (the "Indemnified
Party") of the Company or any of its Subsidiaries against all losses, claims,
damages, liabilities, costs and expenses (including attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any actual or threatened action, suit, claim, proceeding or investigation (each,
a "Claim") to the extent that any such Claim is based on, or arises out of, (i)
the fact that such person is or was a director, officer, employee or agent of
the Company or any of its Subsidiaries or is or was serving at the request of
the Company or any of its Subsidiaries as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
or (ii) the Merger Agreement, or any of the transactions contemplated thereby,
in each case to the extent that any such Claim pertains to any matter or fact
arising, existing, or occurring prior to or at the Effective Time, regardless of
whether such Claim is asserted or claimed prior to, at or after the Effective
Time, to the full extent permitted under Delaware law or the Company's
Certificate of Incorporation, By-laws or indemnification agreements in effect at
the date of the Merger Agreement, including provisions relating to advancement
of expenses incurred in the defense of any action or suit. In the event any
Indemnified Party becomes involved in any capacity in any Claim of the type
described above, then from and after consummation of the Offer, Parent shall
cause the Company (or the Surviving Corporation if after the Effective Time)
(including the provision of funds to the Surviving Corporation, if necessary) to
periodically advance to such Indemnified Party its legal and other expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to the provision by such Indemnified Party of an undertaking
to reimburse the amounts so advanced in the event of a final non-appealable
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto.
Consents; Approvals; Reasonable Best Efforts. (a) Upon the terms and
subject to the conditions of the Merger Agreement, Parent, Purchaser and the
Company shall (i) make promptly its respective filings, and thereafter make any
other required submissions, under the HSR Act with respect to the Transactions
and (ii) use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be
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<PAGE> 26
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions, including,
without limitation, using its reasonable best efforts to obtain all Permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Authorities and parties to contracts with the Company and the Subsidiaries as
are necessary for the consummation of the Transactions and to fulfill the
conditions to the Offer and the Merger; provided that neither Purchaser nor
Parent will be required by the Merger Agreement to take any action, including
entering into any consent decree, hold separate orders or other arrangements,
that (A) requires the divestiture of any assets of any of the Purchaser, Parent,
the Company or any of their respective subsidiaries or (B) limits Parent's
freedom of action with respect to, or its ability to retain, the Company and the
Subsidiaries or any portion thereof or any of Parent's or its affiliates' other
assets or businesses, provided further that the Company shall be required to use
its reasonable best efforts to obtain Permits, consents, approvals,
authorizations, qualifications and orders only of such Governmental Authorities
and parties to contracts with the Company and the Subsidiaries that are
requested by Parent and/or Purchaser. Without limiting the foregoing, the
Company, Parent and Purchaser shall file as soon as practicable notifications
under the HSR Act and respond as promptly as practicable to any inquiries
received from the Federal Trade Commission ("FTC") or the Antitrust Division of
the United States Department of Justice ("Antitrust Division") for additional
information or documentation and respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or other
Governmental Authority in connection with antitrust matters. Concurrently with
the filing of notifications under the HSR Act, the Company and Parent shall each
request early termination of the HSR Act waiting period. Purchaser and the
Company shall as soon as reasonably practicable after the date of the Merger
Agreement jointly give notice of the Transactions promptly to the Chairman of
the Committee on Foreign Investment in the United States ("CFIUS") pursuant to
the Exon-Florio Provision, and Parent shall have the sole discretion with
respect to a decision as to whether or not to withdraw the filings or
notifications made by the parties under the Exon-Florio Provision. In addition,
the Company, Parent and Purchaser agree to make as soon as practicable such
other filings as may be necessary or required by any non-United States
Governmental Authority. In case, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of the Merger
Agreement, the proper officers and directors of each party to the Merger
Agreement shall use their reasonable best efforts to take all such action.
Other Cooperation and Further Assurances. Each of Parent, Purchaser and
the Company has also agreed to cooperate and use its reasonable best efforts to
vigorously contest and resist any Action, including administrative or judicial
Action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or prohibits
consummation of the Transactions, including, without limitation, by vigorously
pursuing all available avenues of administrative and judicial appeal.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning the Company's business, compliance with law, litigation, employee
benefit plans, labor matters, intellectual property, environmental matters,
taxes, material contracts and brokers.
Conditions to the Merger. The obligations of each party to effect the
Merger shall be subject to the satisfaction, at or prior to the Effective Time,
of the following conditions: (a) the approval and adoption of the Merger
Agreement and the Merger by the affirmative vote of the stockholders of the
Company, if and to the extent required by Delaware Law, provided, however, that
Parent and Purchaser may not assert this condition unless all Shares purchased
in the Offer by them and all other Shares owned by them or their affiliates are
voted in favor of the Merger Agreement and the Merger; (b) no Governmental
Authority or court of competent jurisdiction shall have issued an order, decree,
injunction or ruling or taken any other action (which order, decree, injunction,
ruling or other action the parties hereto shall use their respective reasonable
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, injunction, ruling or
other action shall have become final and non-appealable; provided, however, that
the party seeking to terminate the Merger Agreement as a result of the
non-satisfaction of this condition shall have used all reasonable best efforts
to challenge such order, decree, injunction or ruling; (c) no Governmental
Authority in the United States or in the Kingdom of Sweden or the European Union
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<PAGE> 27
shall have enacted, issued, promulgated, enforced or entered any Law (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making the acquisition of Shares by Parent or Purchaser or any affiliate of
either of them illegal or otherwise materially restricting, preventing or
prohibiting consummation of the Transactions; and (d) Purchaser or its permitted
assignee shall have purchased all Shares validly tendered and not withdrawn
pursuant to the Offer; provided, however, that this condition shall not be
applicable to the obligations of Parent or Purchaser if, in breach of the Merger
Agreement or the terms of the Offer, Purchaser fails to purchase any Shares
validly tendered and not withdrawn pursuant to the Offer.
Termination. The Merger Agreement provides that it may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company: (a) by mutual written consent duly authorized by
the Boards of Directors of Parent, Purchaser and the Company; or (b) by Parent,
Purchaser or the Company if the Effective Time shall not have occurred on or
prior to January 31, 2001, provided, however, that the right to terminate the
Merger Agreement pursuant to this clause (b) shall not be available to any party
whose failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or prior
to such date and provided, further, that the Merger Agreement may not be
terminated pursuant to this clause (b) after Purchaser accepts Shares for
payment pursuant to the Offer; or (c) by Parent, Purchaser or the Company if any
Governmental Authority in the United States, the Kingdom of Sweden or the
European Union shall have enacted, issued, promulgated, enforced or entered any
injunction, order, decree or ruling (whether temporary, preliminary or
permanent) which has become final and nonappealable and has the effect of making
consummation of the Offer or the Merger illegal or otherwise materially
preventing or prohibiting consummation of the Offer or the Merger; or (d) by
Purchaser, Parent or the Company if Parent or Purchaser shall have terminated
the Offer because of a failure of a condition set forth in the Merger Agreement
and any option granted in the Stockholders' Agreement has not been exercised and
is not exercisable, provided, however, that the right to terminate the Merger
Agreement under this clause (d) shall not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the cause
of, or resulted in, the failure of Purchaser to purchase Shares in the Offer; or
(e) by the Company, if, prior to the purchase of Shares pursuant to the Offer,
there shall be a material breach by Parent or Purchaser of any of the material
covenants applicable to it contained in the Merger Agreement that is not cured
within 15 business days after receipt of written notice from the Company of the
occurrence of such breach; or (f) by the Company if Parent, Purchaser or any of
their affiliates shall have failed to commence the Offer on or prior to 10
business days following the date of the initial public announcement of the
Offer; or (g) by Parent or Purchaser, if, due to an occurrence that if occurring
after the commencement of the Offer, would result in a failure to satisfy the
conditions set forth in the Merger Agreement, Parent, Purchaser, or any of their
affiliates shall have failed to commence the Offer on or prior to 10 business
days following the date of the initial public announcement of the Offer and any
option granted in the Stockholders' Agreement has not been exercised and is not
exercisable; provided, however, that Parent may not terminate the Merger
Agreement pursuant to this clause (g) if Parent or Purchaser is in material
breach of the Merger Agreement.
Effect of Termination. In the event of the termination of the Merger
Agreement, the Merger Agreement shall forthwith become void and there shall be
no liability on the part of any party thereto except for any obligation of the
Company or Parent set forth below under the section entitled "Fees and
Expenses". Notwithstanding the foregoing, nothing in the Merger Agreement shall
relieve Parent, Purchaser or the Company from liability for any breach thereof
and the Confidentiality Agreement shall survive any termination of the Merger
Agreement.
Fees and Expenses. The Merger Agreement provides that all fees and
expenses incurred in connection with the Merger Agreement and the Transactions
shall be paid by the party incurring such expenses, whether or not any
Transaction is consummated. In the event that (i) the Merger Agreement is
terminated because the Board of Directors of the Company has withdrawn or
modified, in a manner adverse to Parent or Purchaser, the approval or
recommendation of the Offer, the Merger, the Merger Agreement or the
Stockholders' Agreement, or approved or recommended any Acquisition Proposal and
(ii) any option granted in the Stockholders' Agreement has not been exercised
and is not exercisable, then, in any such event, the Company shall pay Parent
promptly (but in no event later than one business day after termination) a fee
of $3
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million and the Company shall reimburse Parent and Purchaser (not later than one
business day after submission of statements therefor) for all Reimbursable
Expenses of Parent and Purchaser.
THE STOCKHOLDERS' AGREEMENT
THE FOLLOWING IS A SUMMARY DESCRIPTION OF THE STOCKHOLDERS' AGREEMENT. THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE STOCKHOLDERS'
AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH HAS
BEEN FILED AS AN EXHIBIT TO THE SCHEDULE TO FILED BY PURCHASER, PARENT AND
ERICSSON WITH THE SEC IN CONNECTION WITH THE OFFER. DEFINED TERMS USED HEREIN
AND NOT DEFINED HEREIN HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THOSE TERMS IN
THE STOCKHOLDERS' AGREEMENT.
Parent and Purchaser have also entered into the Stockholders' Agreement
with certain stockholders of the Company, namely George Sbordone, James Silver,
Lee Leong, Alfred Weber and Charter Technologies Limited Liability Company, the
Company's largest stockholder (collectively, the "Principal Stockholders"),
pursuant to which the Principal Stockholders have agreed (i) to tender their
Shares in the Offer, (ii) to vote their Shares in favor of the Merger, if
applicable, in each case subject to the conditions set forth in the
Stockholders' Agreement, and (iii) to grant to Purchaser an option to purchase
their Shares at the Per Share Amount, subject to the conditions set forth in the
Stockholders' Agreement.
Tender of Shares. Each Principal Stockholder, severally and not jointly,
has agreed to tender, pursuant to and in accordance with the terms of the Offer,
as soon as practicable after commencement of the Offer but in no event later
than ten business days after the date of commencement of the Offer, and not
withdraw, all such Principal Stockholder's Shares.
Voting Agreement. Each Principal Stockholder, severally and not jointly,
has also agreed that, from and after the date of the Merger Agreement and until
the earlier to occur of the consummation of the Offer or the termination of the
Shareholders' Agreement, at any meeting of the stockholders of the Company,
however called, and in any action by consent of the stockholders of the Company,
such Principal Stockholder will vote (or cause to be voted) such Principal
Stockholder's Shares (a) in favor of the approval and adoption of the Merger
Agreement, the Merger and all the transactions contemplated by the Merger
Agreement and the Stockholders' Agreement and otherwise in such manner as may be
necessary to consummate the Merger, (b) except as otherwise agreed to in writing
in advance by Parent against any action, proposal, agreement or transaction that
would result in a breach of any covenant, obligation, agreement, representation
or warranty of the Company contained in the Merger Agreement or of the Principal
Stockholders contained in the Stockholders' Agreement, and (c) against any
action, proposal, agreement or transaction, including, but not limited to, any
Acquisition Proposal (other than the Merger Agreement or the Transactions) that
could result in any of the conditions to the Company's obligations under the
Merger Agreement (whether or not theretofore terminated) not being fulfilled or
that could reasonably be expected to materially impede, interfere with, delay,
postpone, discourage or adversely affect the Merger Agreement, the Offer or the
Merger or the Stockholders' Agreement.
Irrevocable Proxy. The Stockholders' Agreement also provides that each
Principal Stockholder irrevocably grants to and appoints Rolf Eriksson and
Mikael Sundstrom acting jointly and Lawrence Lyles and John Moore acting
jointly, as such Principal Stockholder's attorney and proxy pursuant to the
provisions of Section 212(c) of Delaware Law, with full power of substitution,
to vote and otherwise act (by written consent or otherwise) with respect to such
Principal Stockholder's Shares at any meeting of stockholders of the Company, or
consent in lieu of any such meeting, or otherwise, on the matters and in the
manner specified in the foregoing paragraph.
Grant of Option. The Stockholders' Agreement provides that each Principal
Stockholder, severally and not jointly, grants to Purchaser an irrevocable
option (each, an "Option" and, collectively, the "Options") to purchase all, and
not less than all, of such Principal Stockholder's Shares at the applicable Per
Share Amount, net to such Principal Stockholder in cash. The Stockholders'
Agreement provides further that each Option shall be exercisable only upon the
occurrence of a Triggering Event and shall expire if not exercised prior to the
close of business on the tenth business day following termination of the Merger
Agreement. Purchaser may exercise all but not less than all of the Options as to
all Principal Stockholders, at any time prior to the
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expiration of such Options only if one of the following occur: (i) the Offer is
terminated without Purchaser purchasing Shares thereunder solely because the
Minimum Condition has not been met or (ii) the Offer is consummated without that
Principal Stockholder having tendered all its Shares in accordance with the
Stockholders' Agreement.
Option Closing. Under the Stockholders' Agreement, if Purchaser wishes to
exercise an Option, Purchaser shall send a written notice to the applicable
Principal Stockholder of its irrevocable intention to exercise the Option,
specifying the place, and, if then known, the time and the date of the closing
(the "Option Closing") of the purchase. At the Option Closing, (i) each
Principal Stockholder whose Shares are being purchased shall deliver to
Purchaser (or its designee) all of such Principal Stockholder's Shares by
delivery of a certificate or certificates evidencing such Shares duly endorsed
to Purchaser or accompanied by stock powers duly executed in favor of Purchaser,
with all necessary stock transfer stamps affixed, and (ii) Purchaser shall pay
to each such Principal Stockholder the aggregate Per Share Amount for such
Principal Stockholder's Shares.
Conditions to Option Closing. The Option Closing is subject to the
conditions that (i) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the acquisition
of Shares by Purchaser pursuant to the exercise of the Options illegal, or
otherwise materially restricting, preventing or prohibiting consummation of the
purchase and sale of the Shares pursuant to the exercise of the Options, (ii) no
Governmental Authority or court of competent jurisdiction shall have issued an
order, decree, injunction or ruling or taken any other action (which order,
decree, injunction, ruling or other action Purchaser and Parent shall have used
their respective best efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the purchase by Purchaser of the Shares to be
sold to it pursuant to the exercise of the Options and such order, decree,
injunction, ruling or other action shall have become final and non-appealable,
(iii) any waiting period applicable to the consummation of the purchase and sale
of the Shares pursuant to the exercise of the Options under the HSR Act or under
any applicable material non-United States statutes or regulations shall have
expired or been terminated, (iv) any waiting period applicable to the
consummation of the purchase and sale of the Shares under the Arms Regulations
shall have expired or been terminated and (v) CFIUS shall have issued a written
notice of determination not to conduct a full investigation pursuant to the
Exon-Florio Provision or CFIUS shall have conducted a full investigation of the
notification pursuant to the Exon-Florio Provision and recommended that the
President of the United States permit the Transactions, unless Parent shall have
determined not to file or has withdrawn the filing of notifications made by the
parties to CFIUS.
No Solicitation of Transactions. Each Principal Stockholder, severally and
not jointly, has agreed that between the date of the Stockholders' Agreement and
the date of termination of the Merger Agreement, such Principal Stockholder will
not, directly or indirectly, through any officer, director, employee, agent or
otherwise, (a) solicit, initiate, accept or encourage the submission of any
Acquisition Proposal, or (b) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
otherwise cooperate in any way with respect to, or assist or participate in,
facilitate or encourage any proposal that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal. Each Principal Stockholder has
agreed to, and has agreed to direct or cause its directors, officers, employees,
representatives and agents to, immediately cease and cause to be terminated any
discussions or negotiations with any parties that may be ongoing with respect to
any proposal, discussion, negotiation or enquiry received by such Principal
Stockholder regarding any Acquisition Proposal. Each Principal Stockholder has
agreed to promptly advise Parent orally and in writing of any Acquisition
Proposal or any request for information with respect to any Acquisition
Proposal, the material terms and conditions of any proposal, discussion,
negotiation or enquiry received by such Principal Stockholder regarding any
Acquisition Proposal or request and the identity of the person making such
Acquisition Proposal or request.
Termination. The Stockholders' Agreement and all rights and obligations of
the parties thereunder shall terminate upon the earlier of (a) the date upon
which Purchaser shall have purchased and paid for all of the Shares of the
Principal Stockholders in accordance with the terms of the Offer or pursuant to
the exercise of the Options granted by the Principal Stockholders pursuant to
the Stockholders' Agreement, (b) the date on
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<PAGE> 30
which the Options have expired in accordance with the Stockholders' Agreement
and (c) the termination of the Merger Agreement in accordance with its terms.
Nothing in the Stockholders' Agreement shall relieve any party of liability for
any breach of the Stockholders' Agreement.
THE NON-DISCLOSURE AGREEMENT AND THE NON-SOLICITATION AGREEMENT
THE FOLLOWING IS A SUMMARY DESCRIPTION OF THE NON-DISCLOSURE AGREEMENT AND
THE NON-SOLICITATION AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE NON-DISCLOSURE AGREEMENT AND THE NON-SOLICITATION AGREEMENT,
WHICH ARE INCORPORATED HEREIN BY REFERENCE AND COPIES OF WHICH HAVE BEEN FILED
AS EXHIBITS TO THE SCHEDULE TO FILED BY PURCHASER, PARENT AND ERICSSON WITH THE
SEC IN CONNECTION WITH THE OFFER.
Ericsson and the Company entered into a Non-Disclosure Agreement dated July
6, 2000 (the "Non-Disclosure Agreement"). The Non-Disclosure Agreement provides
that, for a period of 3 years from the date of the Non-Disclosure Agreement,
Ericsson agrees not to reveal, make known, make available, furnish or permit
access to, whether or not intentionally ("Disclose"), any oral, written, or
other information whatsoever, including information in documents and other
recording media and information embodied in any item, which in connection with
potential acquisition by Ericsson of a controlling interest in capital stock of
the Company, is (i) obtained by Ericsson from or through the Company, (ii)
obtained by or through the Company by an examination of any Item (as defined in
the Non-Disclosure Agreement) or (iii) created by or through the Company with
the use of the information in subclauses (i) or (ii) (the "Confidential
Information"). Such Confidential Information includes ideas, inventions,
discoveries, formulas, methods, designs, drawings, specifications, engineering
and manufacturing data. Disclosure of Confidential Information shall not be
made, whether directly or indirectly, in whole or in part, without the prior
written consent of the Company, except solely to an officer, director or
employee of Ericsson who has a need to know of such information for purposes
related to the proposed transaction by Ericsson. Furthermore, for a period of 2
years from the date of the Non-Disclosure Agreement, Ericsson is prohibited from
engaging in discussions with any person who is employed by the Company or
becomes subsequently employed by the Company regarding employment opportunities
with Ericsson or any of its affiliates.
Ericsson and the Company entered into a Non-Solicitation Agreement, dated
August 24, 2000 (as extended on September 14, 2000 and October 4, 2000) (the
"Non-Solicitation Agreement"). The Non-Solicitation Agreement provides that,
from the date of such agreement until the earlier to occur of (i) the execution
of a definitive acquisition agreement and (ii) September 29, 2000 (as extended
on September 14, 2000 and October 4, 2000), neither the Company nor any of its
affiliates, officers, directors, employees, representatives or agents will (a)
solicit, initiate, knowingly encourage or accept any other inquiries, proposals
or offers from any person, (A) relating to any acquisition or purchase, directly
or indirectly, of all or any significant portion of the Company or its assets or
properties (other than the sale of products by the Company in the ordinary
course of business), (B) enter into any merger, consolidation or other business
combination with the Company, (C) enter into any other extraordinary business
transaction involving or otherwise relating to the Company or (b) participate in
any discussions, conversations, negotiations or other communications with any
other person regarding, or furnish any information with respect to, or otherwise
cooperate in any way, assist or participate in, facilitate or encourage to do
any of the foregoing; provided, however, in the event the Company receives an
unsolicited proposal, the Company may, to the extent the Company's Board, after
obtaining advice from counsel, determines in good faith that it is necessary to
do so in order to fulfill its fiduciary duties, enter into discussions or
transactions with or provide information to such entity. Furthermore, from the
date of the Non-Solicitation Agreement, the Company agreed to cease all existing
discussions, conversations, negotiations and other communications with respect
to the forgoing transactions set forth in (a) and (b) above.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER.
Purpose of the Offer. The Offer is being made pursuant to the Merger
Agreement. The purpose of the Offer and the Merger is for Parent to acquire
control of, and the entire equity interest in, the Company. The
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<PAGE> 31
purpose of the Merger is for Parent to acquire all Shares not purchased pursuant
to the Offer. Upon consummation of the Merger, the Company will become a direct
wholly owned subsidiary of Parent.
Under Delaware Law and the Company's Amended and Restated Certificate of
Incorporation, the approval of the Board and the affirmative vote of the holders
of a majority of the outstanding Shares is required to approve and adopt the
Merger Agreement and the transactions contemplated thereby, including the
Merger. The Board of Directors of the Company has unanimously determined that
the Merger Agreement and the Transactions contemplated thereby, including the
Offer and the Merger, are fair to, and in the best interests of, the Company's
stockholders, has approved the Merger (such approval having been made in
accordance with Delaware Law, including, without limitation, Section 203
thereof) and has recommended that the Company's stockholders accept the Offer
and tender their Shares in the Offer. Unless the Merger is consummated pursuant
to the short-form merger provisions under Delaware Law described below, the only
remaining required corporate action of the Company is the approval and adoption
of the Merger Agreement and the Merger by the affirmative vote of the holders of
a majority of the Shares present and entitled to vote thereon. Accordingly, if
the Minimum Condition is satisfied, Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger Agreement and the Merger
without the affirmative vote of any other stockholder.
The Merger Agreement provides that the Company, acting through the Board,
shall, in accordance with applicable law and the Company's Certificate of
Incorporation and By-laws, duly call, give notice of, convene and hold an annual
or special meeting of its stockholders as promptly as practicable following
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the Merger, if such action is required by Delaware Law.
Parent and Purchaser have agreed that all Shares owned by them and their
subsidiaries will be voted in favor of the approval and adoption of the Merger
Agreement and the Transactions.
The Merger Agreement provides that, promptly following the purchase by
Purchaser of a number of Shares that satisfies the Minimum Condition, Purchaser
will be entitled to designate representatives to serve on the Board in
proportion to Purchaser's ownership of Shares following such purchase. See
Section 10. Purchaser expects that such representation would permit Purchaser to
exert substantial influence over the Company's conduct of its business and
operations.
Short-Form Merger. Under Delaware Law, if Purchaser acquires, pursuant to
the Offer or otherwise, at least 90% of the then outstanding Shares, Purchaser
will be able to approve the Merger without a vote of the Company's stockholders.
In such event, Parent, Purchaser and the Company have agreed to take all
necessary and appropriate action to cause the Merger to become effective as
promptly as reasonably practicable after such acquisition, without a meeting of
the Company's stockholders. If, however, Purchaser does not acquire at least 90%
of the outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Delaware Law, a significantly longer
period of time would be required to effect the Merger.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders who have not tendered
their Shares will have certain rights under Delaware Law to dissent from the
Merger and demand appraisal of, and to receive payment in cash of the fair value
of, their Shares. Stockholders who perfect such rights by complying with the
procedures set forth in Section 262 of the Delaware Law ("Section 262") will
have the "fair value" of their Shares (exclusive of any element of value arising
from the accomplishment or expectation of the Merger) determined by the Delaware
Court of Chancery and will be entitled to receive a cash payment equal to such
fair value for the Surviving Corporation. In addition, such dissenting
stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. In determining the fair value of the Shares, the
court is required to take into account all relevant factors. Accordingly, such
determination could be based upon considerations other than, or in addition to,
the market value of the Shares, including, among other things, asset values and
earning capacity. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated,
among other things, that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in
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court" should be considered in an appraisal proceeding. The Weinberger court
also noted that under Section 262, fair value is to be determined "exclusive of
any element of value arising from the accomplishment or expectation of the
merger." In Cede & Co. v. Technicolor, Inc., however, the Delaware Supreme Court
stated that, in the context of a two-step cash merger, "to the extent that value
has been added following a change in majority control before cash-out, it is
still value attributable to the going concern," to be included in the appraisal
process. As a consequence, the value so determined in any appraisal proceeding
could be the same, more or less than the Per Share Amount in the Offer or the
Merger Consideration.
In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of procedural unfairness,
including fraud, misrepresentation or other misconduct.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than or equal to the Merger Consideration. In this regard, stockholders
should be aware that opinions of investment banking firms as to the fairness
from a financial point of view of the consideration to be received in a
transaction are not necessarily opinions as to "fair value" under Section 262.
The foregoing summary of the rights of dissenting stockholders under
Delaware Law does not purport to be a complete statement of the procedures to be
followed by stockholders desiring to exercise any dissenters' rights under
Delaware Law. The preservation and exercise of dissenters' rights require strict
adherence to the applicable provisions of Delaware Law.
Going Private Transactions. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may, under certain circumstances, be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes that Rule 13e-3 will not be applicable to the Merger. Rule 13e-3
requires, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the SEC and disclosed to stockholders prior to
consummation of the transaction.
Plans for the Company. It is expected that, initially following the
Merger, the business and operations of the Company will, except as set forth in
this Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management with a view to
optimizing exploitation of the Company's potential in conjunction with Parent's
businesses.
Parent believes that the core business of the Company is high power linear
amplifier techniques and plans to make major investments in this technology with
an emphasis on commercial wireless applications. If possible and feasible,
certain ongoing businesses of the Company that do not fit into this core
business may be divested to an entity that can better take care of the needs of
the relevant customers, but Parent has no concrete plans in this regard. Parent,
however, plans to honor all of the Company's existing contracts. At this time,
Parent does not intend to (i) reduce, eliminate or sell any of the Company's
research and development
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facilities, (ii) change the quality of the Company's products or (iii) shut down
or move offshore any of the Company's facilities in the United States.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation of the Company or any of its subsidiaries, (ii) any purchase, sale
or transfer of a material amount of assets involving the Company or any of its
subsidiaries, (iii) any material change in the Company's present indebtedness,
capitalization or dividend rate or policy, (iv) any change in the present board
of directors or management of the Company, (v) any other material change in the
Company's corporate structure or business, (vi) any class of equity securities
of the Company being delisted from a national stock exchange or ceasing to be
authorized to be quoted in an automated quotation system operated by a national
securities association or (vii) any class of equity securities of the Company
becoming eligible for termination of registration under Section 12(g)(4) of the
Exchange Act.
12. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that the Company shall not, between the date
of the Merger Agreement and the Effective Time, without the prior written
consent of Parent, (a) amend or otherwise change its Certificate of
Incorporation or By-laws or equivalent organizational documents; (b) issue,
sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of (i) any shares of any class of
capital stock of the Company or any Subsidiary, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or any Subsidiary (except for the issuance
of Shares issuable pursuant to employee stock options outstanding on the date of
the Merger Agreement); or (ii) any assets of the Company or any Subsidiary,
except in the ordinary course of business and in a manner consistent with past
practice; (c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise with respect to any
of its capital stock; or (d) split, combine, reclassify, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its capital stock.
13. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR SHARES, NASDAQ
LISTING, MARGIN REGULATIONS AND EXCHANGE ACT REGISTRATION.
Possible Effects of the Offer on the Market for the Shares. The purchase
of Shares by Purchaser pursuant to the Offer will reduce the number of Shares
that might otherwise trade publicly and will reduce the number of holders of
Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by the public.
Parent intends to cause the delisting of the Shares by Nasdaq following
consummation of the Offer.
Nasdaq Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued listing on
Nasdaq. According to Nasdaq's published guidelines, the Shares would not be
eligible to be included for listing if, among other things, the number of Shares
publicly held falls below 100,000, the number of holders of Shares falls below
300 or the market value of such publicly held Shares is not at least $200,000.
If, as a result of the purchase of Shares pursuant to the Offer, the Merger or
otherwise, the Shares no longer meet the requirements of Nasdaq for continued
listing, the listing of the Shares will be discontinued. In such event, the
market for the Shares would be adversely affected. In the event the Shares were
no longer eligible for listing on Nasdaq, quotations might still be available
from other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders of such Shares remaining at such time, the interest in maintaining a
market in such Shares on the part of securities firms, the possible termination
of registration of such Shares under the Exchange Act as described below and
other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the SEC if the Shares are not listed on a "national securities
exchange" and there are fewer than 300 record holders. The termination of the
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by
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the Company to holders of Shares and to the SEC and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with stockholders' meetings pursuant to Section 14(a) or 14(c) of the
Exchange Act and the related requirements of an annual report, and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. In addition,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be eligible
for Nasdaq reporting. Purchaser currently intends to seek to cause the Company
to terminate the registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of registration
are met.
Margin Regulations. The Shares are currently "margin securities", as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer constitute
"margin securities."
14. CERTAIN CONDITIONS OF THE OFFER.
THE FOLLOWING IS A SUMMARY OF PROVISIONS OF THE MERGER AGREEMENT REGARDING
CONDITIONS TO THE OFFER. DEFINED TERMS USED HEREIN AND NOT DEFINED HEREIN SHALL
HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THOSE TERMS IN THE MERGER AGREEMENT.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment any Shares tendered pursuant to the Offer, and
may, subject to and to the extent permitted in the Merger Agreement, extend,
terminate or amend the Offer, if (i) immediately prior to the expiration of the
Offer, the Minimum Condition shall not have been satisfied, (ii) any applicable
waiting period under the HSR Act or under any applicable material non-United
States statutes or regulations shall not have expired or been terminated
immediately prior to the expiration of the Offer, (iii) CFIUS shall have
conducted a full investigation of the notification pursuant to the Exon-Florio
Provision and shall not have recommended that the President of the United States
permit the Transactions, unless Parent has withdrawn the filing of notification
made by the parties with CFIUS, (iv) any waiting period applicable to the
consummation of the Offer under the Arms Regulations shall not have expired or
been terminated immediately prior to the expiration of the offer (it being
agreed that Purchaser shall not be entitled to terminate the Offer on account of
the failure of a condition set forth in clause (ii), (iii) or (iv) of this
paragraph before February 1, 2001), or (v) at any time on or after the date of
the Merger Agreement and immediately prior to the expiration of the Offer, any
of the following conditions shall exist and continue to exist:
(a) there shall have been instituted and be pending any Action
instituted by any Governmental Authority (other than (w) any such Action in
which a motion for a temporary restraining order, a preliminary injunction
or a permanent injunction shall have been denied or shall have expired, or
a judicial order granting any such temporary restraining order, preliminary
injunction or permanent injunction shall have been reversed on appeal and
not reinstated, (x) any such Action or proceeding in the United States in
which the United States Department of Justice, or the Federal Trade
Commission or any applicable state or authority does not file within 10
business days after commencement of such Action a motion seeking injunctive
relief of the type referred to in clauses (1) through (5) of this paragraph
(a), (y) an Action filed with consent of Parent or Purchaser, or (z) any
Action that Parent and Purchaser shall not have used reasonable efforts to
have dismissed) (1) seeking to make illegal or otherwise, directly or
indirectly, restrain or prohibit, the making of the Offer, the acceptance
for payment of any Shares by Parent, Purchaser or any other affiliate of
Parent, or the purchase of Shares pursuant to the Stockholders' Agreement,
or the consummation of any other Transaction, or seeking to obtain
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material damages in connection with any Transaction; (2) seeking to
prohibit or materially limit (for reasons other than United States
Department of Defense Facility Security Clearance) the ownership or
operation, as a result of the Transactions, by the Company, Parent or any
of their subsidiaries of all or any of the business or assets of the
Company, Parent or any of their subsidiaries that is material to either
Parent and its subsidiaries or the Company and the Subsidiaries, in either
case, taken as a whole, or to compel the Company, Parent or any of their
affiliates, as a result of the Transactions, to dispose of or to hold
separate all or any portion of the business or assets of the Company,
Parent or any of their subsidiaries that is material to either Parent and
its subsidiaries or the Company and the Subsidiaries, in each case, taken
as a whole; (3) seeking to impose any material limitation on the ability of
Parent, Purchaser or any other affiliate of Parent to exercise effectively
full rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer or the
Stockholders' Agreement or otherwise on all matters properly presented to
the Company's stockholders, including, without limitation, the approval and
adoption of the Merger Agreement and the Transactions; (4) seeking to
require divestiture, as a result of the Transactions, by Parent, Purchaser
or any other affiliate of Parent of any Shares; or (5) which otherwise
would prevent or materially delay consummation of the Offer or the Merger
or otherwise prevent or materially delay the Company from performing its
obligations under the Merger Agreement or would have a Material Adverse
Effect;
(b) if any Governmental Authority or court of competent jurisdiction
shall have issued an order, decree, injunction or ruling or taken any other
action (which order, decree, injunction, ruling or other action Purchaser
and Parent shall have used their respective best efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting or
materially delaying or preventing the Transactions and such order, decree,
injunction, ruling or other action shall have become final and
non-appealable;
(c) there shall have been any statute, rule, regulation, legislation
or interpretation enacted, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any Transaction, in each case, by any United
States or non-United States legislative body or Governmental Authority with
appropriate jurisdiction, other than the routine application of the waiting
period provisions of the HSR Act to the Offer, the waiting period under the
Arms Regulations to the Offer, the Stockholders' Agreement or the Merger,
that results, directly or indirectly, in any of the consequences referred
to in clauses (1) through (5) of paragraph (a) above;
(d) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or Sweden that materially and adversely affects the ability of
Parent to pay for the Shares for more than five business days after the
expiration of the Offer or (ii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or Sweden that materially and
adversely affects the ability of Purchaser and Parent to consummate the
Offer or, in the case of any such calamity existing on the date hereof, a
material acceleration or worsening thereof;
(e) the Board, or any committee thereof, shall have withdrawn or
modified, in a manner adverse to Parent or Purchaser, the approval or
recommendation of the Offer, the Merger, the Merger Agreement or the
Stockholders' Agreement, or approved or recommended any Acquisition
Proposal or any other acquisition of Shares other than the Offer, the
Merger and the Stockholders' Agreement or the Board, or any committee
thereof, shall have resolved to do any of the foregoing;
(f) any representation or warranty of the Company in the Merger
Agreement, or of any Stockholder in the Stockholders' Agreement shall not
have been true and correct at the time of the execution of the Merger
Agreement (provided, however, that if any representation or warranty is
qualified by "materiality", "Material Adverse Effect", or similar
qualifier, for purposes of determining whether such representation is true
and correct for this paragraph (f) such portion of such representation or
warranty shall be read as if not so qualified), if any such failure to be
true and correct, individually or in the aggregate, would be reasonably
likely to result in a loss or diminution in value in an amount equal to or
greater than $10,000,000; provided, however, that in determining whether
any representation or warranty is not true or correct or the loss of
diminution that is reasonably likely to result from such inaccuracy, the
effect of any
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of the matters described in (ii)(B) and (ii)(C) of the definition of
Excluded Matters shall be disregarded; provided, further, that in
determining whether the representation and warranty contained in Section
4.08(b) is not true or correct or the loss of diminution that is reasonably
likely to result from such inaccuracy, the effect of any Excluded Matters
shall be disregarded;
(g) the Company shall have failed to perform, in any material respect,
any obligation or to comply, in any material respect, with any material
agreement or covenant of the Company that is then required to be performed
or complied with by it under the Merger Agreement, such material agreements
or covenants consisting only of those agreements or covenants listed in
Annex B to the Merger Agreement, or the Stockholders shall have failed to
perform in any material respect, any obligation or to comply, in any
material respect, with any agreement or covenant of the Stockholders that
is then required to be performed or complied with by them under the
Stockholders' Agreement;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of Shares
thereunder;
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion,
provided that the Minimum Condition may not be waived to be less than 50.6% of
the total issued and outstanding Shares on a Fully Diluted Basis. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and other 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 that may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions between representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
Section 10), neither Purchaser nor Parent is aware of (i) except as set forth
below, any license or other regulatory permit that appears to be material to the
business of the Company or any of its subsidiaries, taken as a whole, which
might be adversely affected by the acquisition of Shares by Purchaser pursuant
to the Offer or (ii) except as set forth below, of any approval or other action
by any domestic (federal or state) or foreign governmental entity which would be
required prior to the acquisition of Shares by Purchaser pursuant to the Offer.
Should any such approval or other action be required, it is Purchaser's present
intention to seek such approval or action. Purchaser does not currently intend,
however, to delay the purchase of Shares tendered pursuant to the Offer pending
the outcome of any such action or the receipt of any such approval (subject to
Purchaser's right to decline to purchase Shares if any of the conditions in
Section 14 shall have occurred). There can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the business of the
Company, Purchaser or Parent or that certain parts of the businesses of the
Company, Purchaser or Parent might not have to be disposed of or held separate
or other substantial conditions complied with in order to obtain such approval
or other action or in the event that such approval was not obtained or such
other action was not taken. Purchaser's obligation under the Offer to accept for
payment and pay for Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 15. See
Section 14 for certain conditions of the Offer.
Foreign Approvals. According to publicly available information, the
Company conducts business in a number of other foreign countries and
jurisdictions. In connection with the acquisition of the Shares in the Offer or
the Merger, a notification is required by German competition law which Ericsson
will make shortly to the Federal Cartel Office. The purchase of Shares in the
Offer may not be completed until (i) the transaction
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has been declared compatible with the German market by the Federal Cartel
Office, (ii) the Federal Cartel Office has failed to initiate an in-depth
investigation within one month from the notification, or (iii) the Federal
Cartel Office has failed to make a decision within four months of the
notification. The laws of other of those foreign countries and jurisdictions
where the Company owns property and conducts business may also require the
filing of information with, or the obtaining of the approval or consent of,
governmental authorities in such other countries and jurisdictions. The
governments in those countries and jurisdictions might attempt to impose
additional conditions on the Surviving Corporation's operations conducted in
those countries and jurisdictions as a result of the acquisition of the Shares
in the Offer or the Merger. If such approvals or consents are found to be
required, the parties intend to make the appropriate filings and applications.
In the event such a filing or application is made for the requisite foreign
approvals or consents, Purchaser cannot be certain that such approvals or
consents will be granted, and, if such approvals or consents are received,
Purchaser cannot be certain as to the date of those approvals or consents. In
addition, Purchaser cannot be certain that it will be able to cause the Company
or its subsidiaries to satisfy or comply with those laws or that compliance or
noncompliance will not have adverse consequences for the Company or any of its
subsidiaries after purchase of the Shares pursuant to the Offer or the Merger.
Government Approvals. According to publicly available information, the
Company is engaged in the manufacturing and developing of certain products that
require the licensing and approvals of certain government entities. Purchaser
cannot be certain that the Company or its subsidiaries will receive all required
approvals or licenses or that the failure to do so will not have adverse
consequences for the Company or any of its subsidiaries after purchase of the
Shares pursuant to the Offer or the Merger. According to publicly available
information, MPD currently has a facility security clearance from the U.S.
Department of Defense which will automatically terminate upon consummation of
the Offer. Purchaser cannot be certain that loss of the facility security
clearance will have adverse consequences for the Company or any of its
subsidiaries.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of three years following the date such person became an interested
stockholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. On October 12, 2000, prior to the execution of the Merger
Agreement, the Board by unanimous vote determined that the Merger Agreement and
the Transactions contemplated thereby, including the Offer and the Merger, are
fair to, and in the best interest of, the Company's stockholders. Accordingly,
Section 203 is inapplicable to the Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through its subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an
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appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, Purchaser might be required to file certain information
with, or receive approvals from, the relevant state authorities. In addition, if
enjoined, Purchaser might be unable to accept for payment any Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer,
and the Merger. In such case, Purchaser may not be obligated to accept for
payment any Shares tendered. See Section 14.
HSR Filing. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer are subject to such requirements.
See Section 2.
Pursuant to the HSR Act, on October 17, 2000, Ericsson filed a Premerger
Notification and Report Form in connection with the purchase of Shares pursuant
to the Offer with the Antitrust Division and the FTC. Under the provisions of
the HSR Act applicable to the Offer, the purchase of Shares pursuant to the
Offer may not be consummated until the expiration of a 15-calendar day waiting
period following the filing by Ericsson. Accordingly, the waiting period under
the HSR Act applicable to the purchase of Shares pursuant to the Offer will
expire at 11:59 p.m., New York City time, on November 1, 2000, unless such
waiting period is earlier terminated by the FTC and the Antitrust Division or
extended by a request from the FTC or the Antitrust Division for additional
information and documentary material prior to the expiration of the waiting
period. Pursuant to the HSR Act, Ericsson has requested early termination of the
waiting period applicable to the Offer. There can be no assurance, however, that
the 15-day HSR Act waiting period will be terminated early. If either the FTC or
the Antitrust Division were to request additional information and documentary
material from Ericsson and/or the Company with respect to the Offer, the waiting
period with respect to the Offer would expire at 11:59 p.m., New York City time,
on the tenth calendar day after the date of substantial compliance with such
request. Thereafter, the waiting period could be extended only by court order or
by consent of Ericsson. If the acquisition of Shares is delayed pursuant to a
request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the Offer may, but need not, be
extended and, in any event, the purchase of and payment for Shares will be
deferred until 10 days after the request is substantially complied with, unless
the waiting period is sooner terminated by the FTC and the Antitrust Division.
Only one extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law. See
Section 4. It is a condition to the Offer that the waiting period applicable
under the HSR Act to the Offer expire or be terminated. See Section 1 and
Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Ericsson, Parent, the
Company or their respective subsidiaries. Private parties and state attorneys
general may also bring legal action under federal or state antitrust laws under
certain circumstances. Based upon an examination of information available to
Parent relating to the businesses in which Ericsson, Parent, the Company and
their respective subsidiaries are engaged, Parent and Purchaser believe that the
Offer will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, what the result would be. See Section 14 for
certain conditions to the Offer, including conditions with respect to
litigation.
Exon-Florio. The Purchaser and the Company expect, as soon as practicable
after the date hereof, to jointly file with the Committee on Foreign Investment
in the United States ("CFIUS") a voluntary notice pursuant to the Exon-Florio
Amendment to the Defense Production Act of 1950 and the regulations thereunder
(the "Exon-Florio Provision") with respect to the Offer and the Merger. Under
the Exon-Florio Provision, the President of the United States is authorized to
prohibit or suspend an acquisition, merger or takeover by a foreign person of a
person engaged in interstate commerce in the United States if the President
36
<PAGE> 39
determines, after investigation, that (i) there is credible evidence that leads
him to believe that such a foreign person in exercising control of such an
acquired person might take action that threatens to impair the national security
of the United States and (ii) other provisions of existing law do not provide
adequate authority to protect national security. Pursuant to the Exon-Florio
Provision, notice of an acquisition, merger or takeover by a foreign person may
be made to CFIUS either voluntarily by the parties to such proposed transaction
or by any member of CFIUS. CFIUS comprises representatives of the Departments of
the Treasury, State, Commerce, Defense, and Justice, the Offices of Management
and Budget and Science and Technology Policy, the United States Trade
Representative and the Council of Economic Advisors, as well as the Assistants
to the President for National Security Affairs and for Economic Policy.
A determination that a formal investigation is called for must be made
within 30 days after notification of a proposed acquisition, merger, or takeover
is first filed with CFIUS. If CFIUS decides to initiate a formal investigation,
it must complete the investigation and make a recommendation to the President
within 45 calendar days after the commencement thereof. Thereafter, the
President must reach his decision within 15 calendar days. If CFIUS declines to
investigate, it will send a letter to the parties stating that action under the
Exon-Florio Provision is concluded. The Exon-Florio Provision does not require
the filing of a notification, nor does it prohibit the consummation of an
acquisition, merger or takeover if a notification is not made. If no
notification is made, however, such an acquisition, merger or takeover may
remain indefinitely subject to divestment should the President subsequently
determine that the national security of the United States may be threatened or
impaired.
Although Purchaser believes that the Offer and the Merger should not raise
any national security concerns, there can be no assurance that CFIUS will not
determine to conduct an investigation thereof, and if an investigation is
commenced, there can be no assurance regarding the outcome of such
investigation.
ITAR. The International Traffic in Arms Regulations require companies,
like the Company, that are registered with the Office of Defense Trade Controls
of the United States Department of State (the "ODTC") to manufacture defense
articles to notify the ODTC 60 days in advance of a transfer of ownership or
control to a foreign person. On September 22, 2000, the Company filed with the
ODTC of the United States Department of State a notification of the proposed
change in the ownership and control of the Company.
16. FEES AND EXPENSES.
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
Goldman, Sachs is acting as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Ericsson and Parent in
connection with the acquisition of the Company. Ericsson has agreed to pay
Goldman, Sachs reasonable and customary compensation for such services. Ericsson
has also agreed to reimburse Goldman, Sachs for all reasonable out-of-pocket
expenses incurred by Goldman, Sachs, including the reasonable fees and expenses
of legal counsel, and to indemnify Goldman, Sachs against certain liabilities
and expenses in connection with its engagement, including certain liabilities
under the federal securities laws.
Purchaser and Parent have retained Innisfree M&A Incorporated, as the
Information Agent, and ChaseMellon Shareholder Services, L.L.C., as the
Depositary, in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy, telegraph and personal
interview and may request banks, brokers, dealers and other nominee stockholders
to forward materials relating to the Offer to beneficial owners. Purchaser will
pay the Information Agent reasonable and customary compensation for its services
in connection with the Offer, plus reimbursement for out-of-pocket expenses, and
may be indemnified against certain liabilities and expenses in connection with
the Offer, including certain liabilities under the federal securities laws.
Purchaser will pay the Depositary reasonable and customary compensation for
its services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including under federal securities laws.
Brokers,
37
<PAGE> 40
dealers, commercial banks and trust companies will be reimbursed by Purchaser
for customary handling and mailing expenses incurred by them in forwarding
material to their customers.
17. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Shares. Purchaser is not
aware of any jurisdiction where the making of the Offer is prohibited by any
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or
by one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the SEC the Schedule TO,
together with exhibits, furnishing certain additional information with respect
to the Offer. The Schedule TO and any amendments thereto, including exhibits,
may be inspected at, and copies may be obtained from, the same places and in the
same manner as set forth in Section 7 (except that they will not be available at
the regional offices of the SEC).
ERICSSON MPD ACQUISITION CORP.
Dated: October 20, 2000
38
<PAGE> 41
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.
The following table sets forth the name, current business address,
citizenship and current principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Purchaser.
Unless otherwise indicated under such person's name, such person is a citizen of
the United States. Unless otherwise indicated, the current business address of
each person is 740 E. Campbell Road, Richardson, Texas 75081.
<TABLE>
<CAPTION>
Name, Citizenship and Current Principal Occupation or Employment; Material Positions
Current Business Address Held During the Past Five Years and Business Addresses Thereof
------------------------ --------------------------------------------------------------
<S> <C>
Lawrence Lyles President and Chairman of Purchaser. He is presently a
director of Parent and has served as Vice President and
General Counsel of Parent since 1 September 1997 and has been
employed by Parent since 1986.
John Moore Treasurer and Secretary of Purchaser. He has been Associate
General Counsel of Parent since 1997 and has been employed by
Parent since 1993.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT.
The following table sets forth the name, current business address,
citizenship and current principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Parent. Unless
otherwise indicated under such person's name, such person is a citizen of the
United States. Unless otherwise indicated, the current business address of each
person is 740 E. Campbell Road, Richardson, Texas 75081.
<TABLE>
<CAPTION>
Name, Citizenship and Current Principal Occupation or Employment; Material Positions
Current Business Address Held During the Past Five Years and Business Addresses Thereof
------------------------ --------------------------------------------------------------
<S> <C>
Michael Gillert Vice President, Treasurer. He has served as Vice President,
Treasurer of Parent since 1985.
Lawrence Lyles Vice President and General Counsel and Director of Parent
since September 1, 1997. He has been employed by Parent since
1986.
Per-Arne Sandstrom President and CEO of Parent since March 2000. He has been
employed by Ericsson in various senior positions since 1993.
Citizenship: Sweden In 1998 he was Managing Director of Division Cellular Systems
(Ericsson Ltd.) UK for 6 months.
</TABLE>
<PAGE> 42
3. DIRECTORS AND EXECUTIVE OFFICERS OF ERICSSON
The following table sets forth the name, current business address,
citizenship and current principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Ericsson.
Unless otherwise indicated under such person's name, such person is a citizen of
Sweden.
<TABLE>
<CAPTION>
Name, Citizenship and Current Principal Occupation or Employment; Material Positions
Current Business Address Held During the Past Five Years and Business Addresses Thereof
------------------------ --------------------------------------------------------------
<S> <C>
Karl-Arne Ingemar Alsmar Executive Vice-President of Ericsson since June 2000. He was
previously President of Ericsson GmbH (Fritz-Vomfelde Str 26,
Ericsson Ltd. D40547 Dusseldorf, Germany) from 1997 to 2000; and
1 St James' Square Vice-President and General Manager of Ericsson Business
London SW14 4ER Networks AB (Landsvagen 66, 17287 Sundbyberg, Sweden) from
United Kingdom 1993 to 1997.
Ragnar Back Executive Vice-President of Ericsson since 2000. He has been
responsible for Ericsson Ltd. market activities since March
Ericsson Ltd. 2000. He was President of Ericsson Italy (Via Anagnina 203, CP
1 St James' Square 4235 Rome) from 1997 to 2000, and President of Ericsson
London SW14 4ER Enterprise AB (Augustendalsvagen 21, SE-131 89 Stockholm,
United Kingdom Sweden) from 1995 to 1997. He has been employed by various
Ericsson entities since 1969.
Monica Bergstrom Deputy Director of Ericsson since 1998 (employee
representative). She has been employed by Ericsson Telecom AB
Ericsson Telecom AB since 1996, and was previously employed by Ericsson Radio
SE-14980 Nynashamn Messaging AB (Rissneleden 6, 17298 Sundbyberg, Sweden) from
Sweden 1994.
Christer Binning Deputy Director of Ericsson since 1994 (employee
representative). He has been employed by Ericsson Mobile
Ericsson Mobile Communications AB since 1990.
Communications AB
Box 901
SE-69229 Kumla
Sweden
Mats Dahlin Executive Vice-President of Ericsson since 1998 and President
of Ericsson Radio Systems AB. He has been employed by Ericsson
Ericsson Radio Systems AB since 1980.
Torshamnsgat. 23
SE-164 80 Stockholm
Sweden
Goran Engstrom Director of Ericsson since 1994 (employee representative). He
is Marketing Manager of Ericsson Microwave Systems AB, where
Ericsson Microwave Systems AB he has been employed since 1973.
Flojelbergsgatan 2a
SE-43184 Molndal
Sweden
Niall FitzGerald Director of Ericsson since 2000. He is Chairman of Unilever
plc where he has been employed since 1967.
Unilever plc
Unilever House, Blackfriars,
London EC4P 4BQ
United Kingdom
Citizenship: Ireland
Sten Fornell Executive Vice-President and Chief Financial Officer of
Ericsson since 1999. He has been employed by Ericsson since
SE-126 25 Stockholm 1982.
Sweden
</TABLE>
2
<PAGE> 43
<TABLE>
<CAPTION>
Name, Citizenship and Current Principal Occupation or Employment; Material Positions
Current Business Address Held During the Past Five Years and Business Addresses Thereof
------------------------ --------------------------------------------------------------
<S> <C>
Bengt Forssberg Executive Vice-President of Ericsson responsible for market
area Latin America since 1998. He has been employed by
Ericsson Latin America, Inc. Ericsson since 1960.
601 Brickell Key Drive
Courvoiser Center II, Suite 511
Miami, Florida 33131
Tom Hedelius Deputy Chairman and Director of Ericsson since 1991. He is
Chairman of Svenska Handelsbanken, where he has been employed
Svenska Handelsbanken, since 1967. He is also Chairman of the Board of Bergman &
SE-10670 Stockholm Beving, Svenska Le Carbone, and the Foundation of Anders
Sweden Sandrew; Deputy Chairman of Industivarden, member of the
Boards of Volvo and SCA and member of the SAS Assembly of
Representatives.
Jan Hedlund Director of Ericsson since 1994 (employee representative). He
is a metal worker and has been employed Ericsson Radio Access
Ericsson Radio Access AB AB since 1996, and previously worked for Ericsson Telecom AB
Torshamnsgatan 21-23 from 1993.
SE-16480 Stockholm
Sweden
Kurt Hellstrom President of Ericsson since July 1999. He has been employed by
Ericsson since 1984, holding various senior positions. From
Telefonaktiebolaget LM Ericsson 1990 to 1998 he was head of Ericsson Business Area Radio
SE-126 25 Stockholm Communication and President of Ericsson Radio Systems AB. In
Sweden 1999 he was appointed Executive Vice President of Ericsson and
President of Ericsson Asia Pacific Limited, Hong Kong.
Goran Lindahl Director of Ericsson since 1999. He is President and CEO of
ABB Ltd, where he has been employed since 1988. He is a member
ABB Ltd. of the Board of DuPont and a member of the Salomon Smith
Postfach 8131 Barney International Advisory Board.
CH-8050 Zurich
Switzerland
Per Lindh Director of Ericsson since 1995 (employee representative,
Deputy from 1994). He has been employed by Ericsson since
Ericsson Enterprise AB August 1978.
Augustendalsvagen 21
SE-131 89 Stockholm
Sweden
Einar Lindqvist Executive Vice-President of Ericsson since 2000 and President
of Ericsson Telecom AB since 1998. He was Vice-President and
Ericsson Telecom AB General Manager of Ericsson Telecom AB (Wireline Systems) from
SE-126 25 Stockholm 1998 to 2000, President of Allgon Enterprises (US) from 1996
Sweden to 1997 and Vice-President of Ericsson, Inc. (Private Radio
Systems) from 1995 to 1997.
Sverker Martin-Lof Director of Ericsson since 1993 (Deputy from 1991). He is
President and CEO of SCA, where he has been employed since
Box 7827 1986; and a Member of the Boards of the Federation of Swedish
SE-103 97 Stockholm Industries and the Swedish Forest Industries' Association.
Sweden
Bert Nordberg Executive Vice-President of Ericsson since 2000. He has been
employed by Ericsson since 1996. He was previously employed by
Telefonaktiebolaget LM Ericsson Digital Systems Services AB (Allen 6, SE-172 87 Sundbyberg),
SE-126 25 Stockholm where he served as President from 1986 to 1996.
Sweden
</TABLE>
3
<PAGE> 44
<TABLE>
<CAPTION>
Name, Citizenship and Current Principal Occupation or Employment; Material Positions
Current Business Address Held During the Past Five Years and Business Addresses Thereof
------------------------ --------------------------------------------------------------
<S> <C>
Eckhard Pfeiffer Director of Ericsson since 2000. He has been Chairman of
Intershop Communications AG since 1999. He is also Chairman of
7 Saddlebrook Lane, the Board of Ricardo AG, and member of the Boards of General
Houston, Texas 77024 Motors, Hughes Electronics, IFCO Systems, NxView Technologies
Citizenship: Germany and the Advisory Board of Deutsche Bank. From 1983 to 1999 he
was employed by the Compaq Computer Corp. Since 1999 he has
been employed by Intershop Comm. (303 Second St, 10th Floor N,
San Francisco CA 94107).
Haijo Pietersma Executive Vice-President of Ericsson since 2000. He has been
employed in various positions by various Ericsson entities
Ericsson Enterprise AB since 1978, and was President of Ericsson Telecommunicatie
SE-131 89 Stockholm B.V. (Ericssonstraat 2, P.O. Box 8, NL-5120 AA Rijen, The
Sweden Netherlands) from 1994 to 1998. In 1998 he was also Executive
Citizenship: The Netherlands Vice President of Ericsson Telecom AB for three months.
Lars Ramqvist Chairman and CEO of Ericsson, and Director since 1990. He is
also chairman of the board of directors of Skandia and Volvo.
Telefonaktiebolaget LM Ericsson He is also a member of the board of directors of AstraZeneca
SE-126 25 Stockholm plc and SCA, deputy chairman of the Federation of Swedish
Sweden Industries and a member of the Royal Swedish Academy of
Sciences, the Royal Swedish Academy of Engineering Sciences
and the European Round Table of Industrialists.
Clas Reuterskiold Director of Ericsson since 1994. He is CEO of AB
Industrivarden, of which he has been an employee since 1994.
AB Industrivarden He is also a member of the board of directors of
Box 5403 Handelsbanken, SCA, Sandvik and Skanska.
SE-114 84 Stockholm
Sweden
Per-Arne Sandstrom Executive Vice President of Ericsson since 2000. He has been
President and CEO of Parent since March 2000 and was
Ericsson, Inc. previously employed by Ericsson Radio Systems AB, Stockholm,
740 East Campbell Road since 1993. He joined Ericsson in 1988. In 1998 he was
Richardson, Texas 75081 Managing Director of Division Cellular Systems (Ericsson Ltd)
UK for 6 months. He is a member of the board of the Cellular
Telephone Industry Association.
Kjell Sorme Executive Vice-President of Ericsson since 2000. Since 1999,
he has been President of Ericsson Asia Pacific. From 1990 to
Ericsson Asia Pacific Limited 1999 he was Managing Director of Ericsson Australia Pty. Ltd
12/F & 15/F Devon House, (360 Elizabeth Street, PO Box 256C, Melbourne, Victoria 3000,
Talkoo Place, 979 King's Road Australia).
Quarry Bay
Hong Kong
Peter Sutherland Director of Ericsson since 1996. He has been Chairman of BP
Amoco and Goldman Sachs International, UK, since 1995. He is
Goldman Sachs International also a member of the board of directors of Investor, ABB Ltd.
Peterborough Court and the Foundation of World Economic Forum. He is employed by
133 Fleet Street Goldman Sachs and has been since before 1995.
London EC4A 2BB
United Kingdom
Citizenship: Ireland
</TABLE>
4
<PAGE> 45
<TABLE>
<CAPTION>
Name, Citizenship and Current Principal Occupation or Employment; Material Positions
Current Business Address Held During the Past Five Years and Business Addresses Thereof
------------------------ --------------------------------------------------------------
<S> <C>
AAke Svenmarck Deputy Director of Ericsson since 2000 (employee
representative). He is a senior specialist in antenna systems
Ericsson Radio Systems AB with Ericsson Radio Systems, where he has been employed since
Torshamnsgatan 21-23 1995.
SE-16480 Stockholm
Sweden
Michael Thurk Executive Vice President of Ericsson since 2000 and President
of Ericsson Datacom, Inc. since 1998. He was previously
Ericsson Datacom, Inc. employed by Xyplex Networks from 1996 to 1998 (295 Foster St.,
77 South Bedford St Littleton, MA) and by General Datacom Inc. from 1994 to 1996
Burlington, MA 01803 (Middlesex Turnpike, Middlebury, CT). He is a member of the
Citizenship: United States board of directors of the Massachusetts Telecommunication
Council and Mariposa Technology (1129 N. McDowell Boulevard,
Petaluma, CA 94954-110).
Marcus Wallenberg Deputy Chairman of Ericsson and Director since 1996. He is
President and CEO of Investor AB by whom he has been employed
Investor AB since 1993. He is also deputy chairman of Saab and a member of
Arsenalsgatan 8c the board of directors of AstraZeneca AB, AstraZeneca plc,
SE-103 32 Stockholm Investor AB, Scania AB, Stora Enso Oy, SAS Assembly of
Sweden Representatives and the Foundation of Knut and Alice
Wallenberg.
Jan Wareby Executive Vice President of Ericsson since 1998. He has been
President of Ericsson Consumer Products Ltd since mid-2000. He
Ericsson Consumer Products Ltd. has been employed in various senior positions by Ericsson
1 St James' Square since 1980.
London SW14 4ER
United Kingdom
</TABLE>
5
<PAGE> 46
SCHEDULE II
SCHEDULE OF TRANSACTIONS IN SHARES
DURING THE PAST 60 DAYS
None.
<PAGE> 47
Manually signed facsimiles of the Letter of Transmittal, properly
completed, will be accepted. The Letter of Transmittal and certificates
evidencing Shares and any other required documents should be sent or delivered
by each stockholder or his broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
[ChaseMellon Shareholder Services Logo]
By Facsimile Transmission:
(for Eligible Institutions only):
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
<TABLE>
<S> <C> <C>
By Overnight Courier: By Mail: By Hand:
Reorganization Department Reorganization Department Reorganization Department
85 Challenger Road P.O. Box 3301 120 Broadway
Mail Stop -- Reorg. South Hackensack, NJ 07606 13th Floor
Ridgefield Park, NJ 07660 New York, NY 10271
</TABLE>
Other Information:
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A stockholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
[Innisfree M&A Incorporated Logo]
501 Madison Avenue, 20th Floor
New York, New York 10022
Bankers and Brokers Call Collect: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
The Dealer Manager for the Offer is:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
Call Collect: (212) 902-1000 or (800) 323-5678
