<PAGE> 1
[LETTERHEAD OF CIBC WORLD MARKETS CORP.]
October 12, 2000
The Board of Directors
Microwave Power Devices, Inc.
49 Wireless Boulevard
Hauppauge, New York 11788-3935
Members of the Board:
You have asked CIBC World Markets Corp. ("CIBC World Markets") to render a
written opinion ("Opinion") to the Board of Directors as to the fairness, from a
financial point of view, to the holders of the common stock of Microwave Power
Devices, Inc. ("MPDI"), other than Ericsson Inc. ("Ericsson") and its
affiliates, of the Cash Consideration (defined below) provided for pursuant to
the Agreement and Plan of Merger, dated as of October 12, 2000 (the "Merger
Agreement"), among Ericsson, Ericsson MPD Acquisition Corp., a wholly owned
direct subsidiary of Ericsson ("Sub"), and MPDI. The Merger Agreement provides
for, among other things, (i) the commencement by Sub of a tender offer to
purchase all outstanding shares of the common stock, par value $0.01 per share,
of MPDI ("MPDI Common Stock" and, such tender offer, the "Tender Offer") at a
purchase price of $8.70 per share, net to the seller in cash (the "Cash
Consideration"), and (ii) subsequent to the Tender Offer, the merger of Sub with
and into MPDI (the "Merger" and, together with the Tender Offer, the
"Transaction") pursuant to which each outstanding share of MPDI Common Stock not
previously tendered will be converted into the right to receive the Cash
Consideration.
In arriving at our Opinion, we:
(a) reviewed the Merger Agreement;
(b) reviewed audited financial statements of MPDI for the fiscal years
ended December 31, 1997, December 31, 1998 and December 31, 1999;
(c) reviewed unaudited financial statements of MPDI for the six months
ended June 30, 2000;
(d) reviewed financial projections of MPDI prepared by the management
of MPDI;
(e) reviewed historical market prices and trading volume for MPDI
Common Stock;
(f) held discussions with the senior management of MPDI with respect
to the business and prospects for future growth of MPDI;
(g) reviewed and analyzed certain publicly available financial data
for certain companies we deemed comparable to MPDI;
(h) reviewed and analyzed certain publicly available information for
transactions that we deemed comparable to Transaction;
(i) performed a discounted cash flow analysis of MPDI using certain
assumptions of future performance provided to or discussed with us by the
management of MPDI;
(j) reviewed public information concerning MPDI; and
(k) performed such other analyses, reviewed such other information and
considered such other factors as we deemed appropriate.
In rendering our Opinion, we relied upon and assumed, without independent
verification or investigation, the accuracy and completeness of all the
financial and other information provided to or discussed with us by MPDI and its
employees, representatives and affiliates. With respect to forecasts of the
future financial condition and operating results of MPDI provided to or
discussed with us, we assumed, at the direction of the
<PAGE> 2
The Board of Directors
Microwave Power Devices, Inc.
October 12, 2000
Page 2
management of MPDI, without independent verification or investigation, that such
forecasts were reasonably prepared on bases reflecting the best available
information, estimates and judgments of the management of MPDI. We also have
assumed, with your consent, that in the course of obtaining the necessary
regulatory approvals for the Transaction, no limitations, restrictions or
conditions will be imposed that would have a material adverse effect on the
contemplated benefits of the Transaction to MPDI. We have neither made nor
obtained any independent evaluations or appraisals of the assets or liabilities
(contingent or otherwise) of MPDI or its affiliated entities. In connection with
our engagement with respect to the Transaction, we were not requested to, and we
did not, solicit third party indications of interest in the acquisition of all
or a part of MPDI nor were we requested to, and we did not, participate in the
negotiation or structuring of the Transaction. We are not expressing any opinion
as to the underlying valuation, future performance or long-term viability of
MPDI, or the price at which MPDI Common Stock will trade subsequent to
announcement or upon consummation of the Transaction. Our Opinion is necessarily
based on the information available to us and general economic, financial and
stock market conditions and circumstances as they exist and can be evaluated by
us on the date hereof. It should be understood that, although subsequent
developments may affect this Opinion, we do not have any obligation to update,
revise or reaffirm the Opinion.
As part of our investment banking business, we are regularly engaged in
valuations of businesses and securities in connection with acquisitions and
mergers, underwritings, secondary distributions of securities, private
placements and valuations for other purposes.
We have been retained by MPDI solely for purposes of rendering this Opinion
and will receive a fee for our services, a portion of which is contingent upon
consummation of the Transaction. We also will receive a fee upon delivery of
this Opinion. CIBC World Markets and its affiliates have in the past provided
services to MPDI unrelated to the proposed Transaction, for which services CIBC
World Markets and such affiliates have received compensation. In the ordinary
course of business, CIBC World Markets and its affiliates may actively trade
securities of MPDI or Ericsson for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Cash Consideration is fair, from a financial point of view, to
the holders of MPDI Common Stock (other than Ericsson and its affiliates). This
Opinion is for the use of the Board of Directors of MPDI in connection with its
evaluation of the Transaction, and does not constitute a recommendation to any
stockholder as to whether such stockholder should tender shares of MPDI Common
Stock in the Tender Offer or how such stockholder should vote on any matters
relating to the Transaction.
Very truly yours,
/s/ CIBC World Markets Corp.
CIBC WORLD MARKETS CORP.
