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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
OCTEL COMMUNICATIONS CORPORATION
(NAME OF SUBJECT COMPANY)
MEMO ACQUISITION CORP.
LUCENT TECHNOLOGIES INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(INCLUDING THE ASSOCIATED RIGHTS)
(TITLE OF CLASS OF SECURITIES)
675724108
(CUSIP NUMBER OF CLASS OF SECURITIES)
PAMELA F. CRAVEN, ESQ.
MEMO ACQUISITION CORP.
C/O LUCENT TECHNOLOGIES INC.
600 MOUNTAIN AVENUE
MURRAY HILL, NEW JERSEY 07974
(908) 582-8500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
ROBERT A. KINDLER, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$1,755,781,224...................................................... $351,157
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* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 56,638,104 shares of Common Stock, par value $.001 per share,
together with the associated preferred share purchase rights (collectively,
the "Shares"), at a price per Share of $31 in cash. Such number of shares
represents all the Shares outstanding as of July 15, 1997, plus the number of
Shares issuable upon the exercise of outstanding options or other rights to
acquire Shares that have or will have vested prior to December 31, 1997.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
Page 1 of 5 pages.
Exhibit Index on page 5.
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ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Octel Communications Corporation, a
Delaware corporation (the "Company"), which has its principal executive offices
at 1001 Murphy Ranch Road, Milpitas, California, 95035-7912.
(b) This Schedule 14D-1 relates to the offer by Memo Acquisition Corp. (the
"Purchaser"), to purchase all outstanding Shares at a price of $31 per Share,
net to the seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively. Information concerning the number of
outstanding Shares is set forth in "Introduction" of the Offer to Purchase and
is incorporated herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of Shares for each quarterly period
during the past two years is set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser, a
Delaware corporation, and Lucent Technologies Inc., a Delaware corporation
("Parent"). The Purchaser is a wholly owned subsidiary of Parent. Information
concerning the principal business and the address of the principal offices of
the Purchaser and Parent is set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase and is
incorporated herein by reference. The names, business addresses, present
principal occupations or employment, material occupations, positions, offices or
employments during the last five years and citizenship of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I to
the Offer to Purchase and are incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 11 ("Contacts with the
Company; Background of the Offer") and Section 12 ("Purpose of the Offer; The
Merger Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement") of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in "Introduction," Section 9
("Certain Information Concerning the Purchaser and Parent") and Section 12
("Purpose of the Offer; The Merger Agreement") of the Offer to Purchase is
incorporated herein by reference.
2
<PAGE> 3
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
The Merger Agreement") of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Agreement and Plan of Merger dated as of July 17, 1997,
among the Purchaser, Parent and the Company, copies of which are attached hereto
as Exhibits (a)(1), (a)(2) and (c), respectively, is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated July 23, 1997.
(a)(8) Text of Press Release dated July 17, 1997, issued by the Company and
Parent.
(b) None.
(c) Agreement and Plan of Merger dated as of July 17, 1997, among the
Purchaser, Parent and the Company.
(d) None.
(e) Not applicable.
(f) None.
3
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: July 23, 1997
MEMO ACQUISITION CORP.
By: /s/ PAMELA F. CRAVEN
------------------------------------
Name: Pamela F. Craven
Title: Vice President and Secretary
LUCENT TECHNOLOGIES INC.
By: /s/ PAMELA F. CRAVEN
------------------------------------
Name: Pamela F. Craven
Title: Vice President-Law
4
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EXHIBIT INDEX
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EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
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(a)(1) Offer to Purchase...........................................................
(a)(2) Letter of Transmittal.......................................................
(a)(3) Notice of Guaranteed Delivery...............................................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.......
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies and
Other Nominees..............................................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9....................................................................
(a)(7) Form of Summary Advertisement dated July 23, 1997...........................
(a)(8) Text of Press Release dated July 17, 1997, issued by the Company and
Parent......................................................................
(b) None........................................................................
(c) Agreement and Plan of Merger dated as of July 17, 1997, among the Purchaser,
Parent and the Company......................................................
(d) None........................................................................
(e) Not applicable..............................................................
(f) None........................................................................
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<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
OCTEL COMMUNICATIONS CORPORATION
AT
$31 NET PER SHARE
BY
MEMO ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
AUGUST 29, 1997, UNLESS EXTENDED
THE BOARD OF DIRECTORS OF OCTEL COMMUNICATIONS CORPORATION HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE OUTSTANDING SHARES
(DETERMINED ON A FULLY DILUTED BASIS FOR ALL OUTSTANDING STOCK OPTIONS AND ANY
OTHER RIGHTS TO ACQUIRE SHARES THAT ARE OR WOULD BE VESTED PRIOR TO DECEMBER 31,
1997) AND (II) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal or a facsimile copy thereof in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon guaranteed
if required by Instruction 1 to the Letter of Transmittal, mail or deliver the
Letter of Transmittal or such facsimile, or in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2, an Agent's Message
(as defined herein), and any other required documents, to the Depositary and
either deliver the certificates for such Shares to the Depositary along with the
Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (2) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such stockholder desires
to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at its address and telephone
number set forth on the back cover of this Offer to Purchase.
------------------------
The Information Agent for the Offer is:
MORROW & CO., INC.
July 23, 1997
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TABLE OF CONTENTS
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PAGE
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Introduction......................................................................... 1
1. Terms of the Offer................................................................ 2
2. Procedure for Tendering Shares.................................................... 4
3. Withdrawal Rights................................................................. 7
4. Acceptance for Payment and Payment................................................ 7
5. Certain Federal Income Tax Consequences........................................... 8
6. Price Range of the Shares; Dividends on the Shares................................ 9
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act
Registration; Margin Regulations.................................................. 9
8. Certain Information Concerning the Company........................................ 10
9. Certain Information Concerning the Purchaser and Parent........................... 13
10. Source and Amount of Funds........................................................ 14
11. Contacts with the Company; Background of the Offer................................ 14
12. Purpose of the Offer; The Merger Agreement........................................ 15
13. Dividends and Distributions....................................................... 23
14. Certain Conditions of the Offer................................................... 23
15. Certain Legal Matters............................................................. 25
16. Fees and Expenses................................................................. 26
17. Miscellaneous..................................................................... 26
Schedule I -- Directors and Executive Officers........................................ 28
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<PAGE> 3
To the Holders of Common Stock
of Octel Communications Corporation:
INTRODUCTION
Memo Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Lucent Technologies Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares (the "Shares") of
Common Stock, par value $.001 per share ("Company Common Stock"), of Octel
Communications Corporation, a Delaware corporation (the "Company"), together
with the associated rights (the "Rights") to purchase preferred shares issued
pursuant to the Company's Second Amended and Restated Rights Agreement dated May
13, 1997 (as amended, the "Rights Agreement"), at $31 per Share (the "Offer
Price"), net to the seller in cash, upon the terms and subject to the conditions
set forth in this Offer to Purchase dated July 23, 1997 and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). Unless the context otherwise
requires, all references to Shares include the associated Rights, and all
references to the Rights include the benefits that may enure to holders of the
Rights pursuant to the Rights Agreement.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of The Bank of New York, which is
acting as the Depositary (the "Depositary") and Morrow & Co., Inc., which is
acting as Information Agent (the "Information Agent"), incurred in connection
with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
Goldman, Sachs & Co. has delivered to the Board of Directors of the Company
its written opinion to the effect that, as of the date of such opinion, the $31
per Share in cash to be received by the holders of Shares in the Offer and the
Merger is fair to such holders. Hambrecht & Quist LLC has also delivered to the
Board of Directors of the Company its written opinion to the effect that, as of
the date of such opinion, the consideration to be received by the holders of
Shares in each of the Offer and the Merger is fair to such holders from a
financial point of view. Such opinions are set forth in full as an exhibit to
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to stockholders of the Company
herewith. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ SUCH OPINIONS CAREFULLY IN
THEIR ENTIRETIES.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1) such number of Shares that would constitute at least a majority of the
outstanding Shares (determined on a fully diluted basis for all outstanding
stock options and any other rights to acquire Shares that are or would be vested
prior to December 31, 1997) (the "Minimum Condition") and (2) any waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the regulations thereunder (the "HSR Act") applicable to the purchase of Shares
pursuant to the Offer having expired or been terminated. The Purchaser reserves
the right (subject to obtaining the consent of the Company and the applicable
rules and regulations of the Securities and Exchange Commission (the
"Commission")), which it presently has no intention of exercising, to waive or
reduce the Minimum Condition and to elect to purchase, pursuant to the Offer,
less than the Minimum Number of Shares (as hereinafter defined). See Sections 1
and 14.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 17, 1997 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
the Company, with the Company surviving the merger (as such, the "Surviving
Corporation") as a wholly owned subsidiary of Parent (the "Merger"). In the
Merger, each outstanding Share (other than Shares owned by the Company or by any
subsidiary of the Company, Parent, the Purchaser or any other subsidiary of
1
<PAGE> 4
Parent or by stockholders, if any, who are entitled to and who properly exercise
dissenters' rights under Delaware law) will be converted into the right to
receive the per Share price paid in the Offer in cash, without interest (the
"Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including approval by
stockholders of the Company, if such approval is required by applicable law. In
the event the Purchaser acquires 90% or more of the outstanding Shares pursuant
to the Offer or otherwise, the Purchaser will effect the Merger pursuant to the
short-form merger provisions of the Delaware General Corporation Law (the
"DGCL"), without prior notice to, or any action by, any other stockholder of the
Company. See Section 12.
The Company has informed the Purchaser that as of the close of business on
July 15, 1997, there were 52,120,585 Shares issued and outstanding and 9,391,953
Shares reserved for issuance upon the exercise of outstanding options or other
rights to acquire Shares, of which 4,517,519 Shares are covered by options or
other rights to acquire Shares that are or will have vested prior to December
31, 1997. Based upon the foregoing, the Purchaser believes that the Minimum
Condition will be satisfied if at least 28,319,052 Shares (the "Minimum Number
of Shares") are validly tendered and not withdrawn prior to the Expiration Date.
If the Minimum Condition is satisfied and the Purchaser accepts for payment
Shares tendered pursuant to the Offer, the Purchaser will be able to elect a
majority of the members of the Company's Board of Directors and to effect the
Merger without the affirmative vote of any other stockholder of the Company.
The Merger Agreement is more fully described in Section 12. Certain Federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 5:00 p.m., New York City time, on Friday, August
29, 1997, unless and until the Purchaser shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
Subject to the terms of the Merger Agreement (see Item 12) and the
applicable rules and regulations of the Commission, the Purchaser expressly
reserves the right, in its sole discretion, at any time and from time to time,
and regardless of whether or not any of the events set forth in Section 14
hereof shall have occurred or shall have been determined by the Purchaser to
have occurred, to (1) extend the period of time during which the Offer is open,
and thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (2) amend
the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If by 5:00 p.m., New York City time, on Friday, August 29, 1997 (or any
other date or time then set as the Expiration Date), any or all conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger Agreement and to the applicable rules and regulations of the
Commission, to (1) terminate the Offer and not accept for payment any Shares and
return all tendered Shares to tendering stockholders, (2) waive all the
unsatisfied conditions (other than the Minimum Condition and the condition with
respect to the HSR Act) and, subject to complying with the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not theretofore withdrawn, (3) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (4) amend the Offer.
2
<PAGE> 5
There can be no assurance that the Purchaser will exercise its right to
extend the Offer (other than as required by the Merger Agreement). Any
extension, waiver, amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule 14e-l(d)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that the announcement be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that any material change in the
information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
In the Merger Agreement the Purchaser has agreed that it will not, without
the prior consent of the Company, extend the Offer, except that, without the
consent of the Company, the Purchaser may extend the Offer (1) if at the
Expiration Date any of the conditions to the Purchaser's obligations to accept
Shares for payment are not satisfied or waived, until such time as such
conditions are satisfied or waived, (2) for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
applicable to the Offer and (3) on one or more occasions for an aggregate period
of not more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (1) or (2) of this sentence, if on such
expiration date there shall not have been tendered at least 90% of the
outstanding Shares. The Merger Agreement further provides that if all of the
conditions to the Offer are not satisfied on any scheduled expiration date of
the Offer then, provided that all such conditions are reasonably capable of
being satisfied, Purchaser will extend the Offer from time to time until such
conditions are satisfied or waived, provided that Purchaser will not be required
to extend the Offer beyond December 31, 1997. As used in this Offer to Purchase,
"business day" has the meaning set forth in Rule 14d-1 under the Exchange Act.
In addition, the Purchaser has agreed in the Merger Agreement that it will
not, without the consent of the Company, (1) reduce the number of Shares subject
to the Offer, (2) reduce the Offer Price, (3) amend or add to the Offer
conditions, (4) extend the Offer, except as provided above, (5) change the form
of consideration payable in the Offer or (6) amend any other term of the Offer
in any manner adverse to the holders of the Shares.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 under the Exchange
Act, which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including, with the Company's consent, a waiver of the Minimum Condition), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-l under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the offer or information concerning
the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the expiration or termination of all waiting periods imposed by the
HSR Act and the other conditions set forth in Section 14.
3
<PAGE> 6
Subject to the terms and conditions contained in the Merger Agreement, the
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and will be furnished by the Purchaser to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), 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 prior to
the Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedure for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (2) the tendering stockholder must comply
with the guaranteed delivery procedure set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (each a
"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 a Book-Entry Transfer Facility's system may make book-entry
delivery of Shares by causing such Book-Entry Transfer Facility to transfer such
Shares into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
transmitted to, and 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. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED 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.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in a
Book-Entry Transfer Facility's system whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith unless such
registered holder has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of
4
<PAGE> 7
Transmittal or (2) such Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (such participant, an "Eligible
Institution"). In all other cases, all signatures on the Letters of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not tendered or not accepted for payment
are to be issued to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
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 (3) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Distribution of Rights. Holders of Shares will be required to tender one
Right for each Share tendered to effect a valid tender of such Share. Unless and
until the Distribution Date (as defined in the Rights Agreement) occurs, the
Rights are represented by and transferred with the Shares. Accordingly, if the
Distribution Date does not occur prior to the Expiration Date of the Offer (and
under the terms of the Rights Agreement, a Distribution Date will not occur by
reason of the Offer), a tender of Shares will constitute a tender of the
associated Rights. If, however, pursuant to the Rights Agreement or otherwise, a
Distribution Date does occur, certificates representing a number of Rights equal
to the number of Shares being tendered
5
<PAGE> 8
must be delivered to the Depositary in order for such Shares to be validly
tendered. If a Distribution Date has occurred, a tender of Shares without Rights
constitutes an agreement by the tendering stockholder to deliver certificates
representing a number of Rights equal to the number of Shares tendered pursuant
to the Offer to the Depositary within three trading days after the date such
certificates are distributed. The Purchaser reserves the right to require that
it receive such certificates prior to accepting Shares for payment. Payment for
Shares tendered and purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of, among other things, such certificates, if
such certificates have been distributed to holders of Shares. The Purchaser will
not pay any additional consideration for the Rights tendered pursuant to the
Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after July 17, 1997. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be given
(and, if given, will not be deemed effective). The designees of the Purchaser
will thereby be empowered to exercise all voting and other rights with respect
to such Shares or other securities or rights in respect of any annual, special
or adjourned meeting of the Company's stockholders, or otherwise, as they in
their sole discretion deem proper. The Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able to
exercise full voting and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of stockholders then
scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of, or payment for, which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, Parent, 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. The
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.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalty of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. Certain
stockholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter or
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proven in a
manner satisfactory to the Purchaser and the Depositary). Noncorporate foreign
stockholders should complete and sign the main signature form and a
6
<PAGE> 9
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after September 20, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. Withdrawals of tenders of Shares may not be rescinded, and
any Shares properly withdrawn will thereafter be deemed not validly tendered for
any purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
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), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. Any determination
concerning the satisfaction of such terms and conditions will be within the sole
discretion of the Purchaser, and such determination will be final and binding on
all tendering stockholders. See Sections 1 and 14. The Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of
or payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
the Purchaser's obligation to pay for or return tendered Shares promptly after
the termination or withdrawal of the Offer).
Parent will file a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after the
date such form is filed, unless early termination of the waiting period is
granted. In addition, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend the
waiting period by requesting additional information or documentary material from
Parent. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the 10th day after substantial compliance by Parent
with such request. See Section 15 hereof for additional information concerning
the HSR Act and the applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
(3) any other documents required
7
<PAGE> 10
by the Letter of Transmittal. The per Share consideration paid to any
stockholder pursuant to the Offer will be the highest per Share consideration
paid to any other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. 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 payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares. Any such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at such
Book-Entry Transfer Facility), as promptly as practicable after the expiration
or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer. Any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by stockholders of the Company pursuant to the Merger) will be
taxable transactions for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For Federal income
tax purposes, a tendering stockholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer (or canceled pursuant to the Merger). If tendered Shares are held
by a tendering stockholder as capital assets, gain or loss recognized by the
tendering stockholder will be capital gain or loss, which will be long-term
capital gain or loss if the tendering stockholder's holding period for the
Shares exceeds one year.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct or properly certifies that it is
awaiting a TIN. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup
8
<PAGE> 11
withholding can be credited against the Federal income tax liability of the
person subject to the backup withholding, provided that the required information
is given to the IRS. If backup withholding results in an overpayment of tax, a
refund can be obtained by the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded in the over-the-counter market and prices are quoted
on The Nasdaq Stock Market's National Market System under the symbol "OCTL." The
following table sets forth, for each of the periods indicated, the high and low
reported last sale prices per Share, as adjusted for the 2-for-1 stock split
effected on May 10, 1996, as reported by the Nasdaq National Market and the Dow
Jones News Retrieval Service.
<TABLE>
<CAPTION>
SALES PRICE
------------
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year 1996
First Quarter (ended September 30, 1995)..................... $21 1/16 $14 21/32
Second Quarter............................................... 17 7/16 14 39/64
Third Quarter................................................ 24 1/8 13 1/4
Fourth Quarter............................................... 25 3/4 19 3/4
1997
First Quarter................................................ $31 1/2 $16
Second Quarter............................................... 31 3/4 13 1/2
Third Quarter................................................ 21 1/4 15 1/2
Fourth Quarter............................................... 24 1/4 15 5/8
1998
First Quarter (through July 22, 1997)........................ $30 5/16 $22 9/16
</TABLE>
On July 16, 1997, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported last sale
price of the Shares on the Nasdaq National Market was $26 3/4 per Share. On July
22, 1997, the last full day of trading before the commencement of the Offer, the
reported last sale price of the Shares on the Nasdaq National Market was
$30 9/32 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996 (the "Form 10-K") the Company has not paid cash dividends on
its Common Stock to date and does not plan to pay cash dividends to its
stockholders in the foreseeable future.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market (the top tier market of The Nasdaq Stock Market), which requires
9
<PAGE> 12
that an issuer have at least 200,000 publicly held shares, held by at least 400
stockholders or 300 stockholders of round lots, with a market value of
$1,000,000, and have net tangible assets of at least either $2,000,000 or
$4,000,000, depending on profitability levels during the issuer's four most
recent fiscal years. If these standards are not met, the Shares might
nevertheless continue to be included in The Nasdaq Stock Market with quotations
published in the Nasdaq "additional list" or in one of the "local lists," but if
the number of holders of the Shares were to fall below 300, or if the number of
publicly held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq Stock Market reporting
and The Nasdaq Stock Market would cease to provide any quotations. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose.
According to the Company, as of July 15, 1997, there were approximately 3,615
holders of record of Shares and 52,120,585 Shares were outstanding. If, as a
result of the purchase of Shares pursuant to the Offer, the Shares no longer
meet the requirements of the NASD for continued inclusion in The Nasdaq Stock
Market or the Nasdaq National Market, as the case may be, the market for Shares
could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for quotation through any tier of The Nasdaq Stock Market, it is possible that
the Shares would continue to trade in the over-the-counter market and that price
quotations would be reported by 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 Shares remaining at such time, the interests in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the shortswing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, may be impaired or eliminated. The Purchaser
intends to seek to cause the Company to apply for termination of registration of
the Shares under the Exchange Act as soon after the completion of the Offer as
the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on The Nasdaq Stock Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for Nasdaq reporting.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
at 1001 Murphy Ranch Road, Milpitas, California, 95035-7912. According to the
Form 10-K, the Company's principal line of business is in
10
<PAGE> 13
voice processing technology and voice messaging outsourcing services. The
Company sells and supports hardware and software and is a major provider of
voice messaging services in both the public and private sectors.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Form 10-K and the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997. More comprehensive financial
information is included in such reports and other documents filed by the Company
with the Commission, and the following summary is qualified in its entirety by
reference to such reports and such other documents and all the financial
information (including any related notes) contained therein. Such reports and
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information."
OCTEL COMMUNICATIONS CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, YEAR ENDED JUNE 30,
--------------------- ----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total net revenues.................. $448,180 $390,276 $563,602 $472,592 $406,225
Operating income.................... 45,221 46,035 76,534 42,745(1) 18,813(2)
Net income.......................... 31,755 30,577 50,784 31,132(1) 13,543(2)
Net income per share (Primary)...... $ 0.58 $ 0.58 $ 0.95 $ 0.63(1) $ 0.27(2)
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, AT JUNE 30,
--------------------- ---------------------
1997 1996 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets................ $314,690 $261,748 $301,717 $216,123
Total assets........................ 495,846 417,284 469,218 368,276
Total current liabilities........... 95,799 90,793 103,852 92,731
Long-term obligations............... 248 325 374 602
Total stockholders' equity.......... $399,799 $326,166 $364,992 $274,943
</TABLE>
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(1) Includes non-recurring charges for the write-off of in-process research and
development of $4.7 million ($3.2 million net of taxes) and integration
costs of $2.8 million ($1.9 million net of taxes).
(2) Includes total non-recurring charges for the VMX, Inc. merger and
integration costs of $24.1 million ($18.8 million net of taxes).
Recent Developments.
On July 22, 1997, the Company issued the following press release:
OCTEL COMMUNICATIONS ANNOUNCES FOURTH QUARTER RESULTS
MILPITAS, CALIF -- JULY 22, 1997 -- Octel Communications
Corporation (NASDAQ: OCTL) today announced that for the fourth
quarter of fiscal year 1997, ended June 30, 1997, net revenues
were $182,935,000, an increase of 6 percent over $173,326,000 for
the same three-month period in fiscal 1996. Net income for the
fourth quarter of fiscal 1997 was $21,905,000, up from $20,207,000
for the same period last year. Earnings per share were $0.41
compared to $0.37 per share for the fourth quarter of fiscal year
1996.
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<PAGE> 14
Net revenues for the fiscal year ended June 30, 1997 were
$631,115,000, an increase of 12 percent from $563,602,000 for the
same period of fiscal 1996. Net income for fiscal 1997 was
$53,660,000, an increase of 6 percent compared to the same period
of fiscal 1996. Earnings per share were $0.98 compared to $0.95
for the fiscal year ended June 30, 1996.
Lucent Technologies announced on July 17(th) that it will be
purchasing Octel for $31 a share, or about $1.8 billion in an
all-cash tender offer.
ABOUT OCTEL COMMUNICATIONS CORPORATION
Octel Communications Corporation (NASDAQ: OCTL) is the leading
Voice Messaging Company. Its worldwide leadership extends to over
70 countries and includes 50 million Octel mailboxes. The company
holds numerous patents, including the pioneering patents in voice
mail, automated attendant and unified messaging. Octel's products
are bought and used by businesses of all sizes, governments,
educational institutions, telephone companies and cellular service
providers. Octel is also the world's largest outsourcer of voice
mail providing a wide range of outsourcing services to phone
companies and businesses. Founded in 1982, the company is
headquartered in Milpitas, California. It has development centers
in California, Texas, the U.K., France and Israel, and major
operations centers in California and Texas.
Additional information is available at http://www.octel.com. For
copies of recent Octel press releases, call 1-800-76-OCTEL.
Certain Company Estimates. During the course of discussions between Parent
and the Company, the Company provided Parent with certain estimates showing
estimated earnings per share for the Company of $1.39, $1.74 and $2.21 for
fiscal 1998, fiscal 1999 and fiscal 2000, respectively. The Company does not as
a matter of course make public any estimates as to future performance or
earnings, and the estimates set forth above are included in this Offer to
Purchase only because the information was provided to Parent. The estimates 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 or forecasts.
The estimates were based on a number of assumptions that are beyond the control
of the Company, the Purchaser or Parent or their respective advisors, including
economic forecasting (both general and specific to the Company's business),
which is inherently uncertain and subjective. None of the Company, the Purchaser
or Parent or their respective advisers assumes any responsibility for the
accuracy of any of the estimates. The inclusion of the foregoing estimates
should not be regarded as an indication that the Company, the Purchaser, Parent
or any other person who received such information considers it an accurate
prediction of future events. Neither the Company nor Parent intends to update,
revise or correct such estimates if they become inaccurate (even in the short
term).
Available Information. The Company is subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission 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 Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located in the Northwestern
Atrium Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661 and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies should be
obtainable, by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxy
and information statements and other information may be found on the
Commission's web site, the address of which is: http://www.sec.gov. Such
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<PAGE> 15
information should also be on file at The Nasdaq National Market, 1735 K Street,
N.W., Washington, D.C. 20006.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 600 Mountain Avenue, Murray Hill, New Jersey, 07974. All outstanding
shares of capital stock of the Purchaser are owned by Parent.
Parent designs, builds and delivers a wide range of public and private
networks, communications systems and software, consumer and business telephone
systems and microelectronics components. Bell Labs is the research and
development arm for Parent. Parent is a Delaware corporation with its principal
office located at 600 Mountain Avenue, Murray Hill, New Jersey, 07974.
Financial information with respect to Parent and its subsidiaries is
included in Parent's Transition Report on Form 10-K for the transition period
ended September 30, 1996, Parent's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996, Parent's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, as amended, and other documents filed by Parent with the
Commission. Such reports and other documents should be available for inspection
and copies thereof should be obtainable in the manner set forth below under
"Available Information."
Except as described in this Offer to Purchase, neither the Purchaser nor
Parent (together, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of the Corporate Entities or any of the persons so
listed, beneficially owns any equity security of the Company, and none of the
Corporate Entities or, to the best knowledge of the Corporate Entities, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (2) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Except as described in this Offer to Purchase, during the last five years,
none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I (1) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(2) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws. The name, business address, present principal occupation or
employment, five-year employment history and citizenship of each of the
directors and executive officers of the Purchaser and Parent are set forth in
Schedule I.
Available Information. Parent is subject to the reporting requirements of
the Exchange Act and, in accordance therewith, is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
Parent's
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<PAGE> 16
directors and officers, their remuneration, stock options granted to them, the
principal holders of Parent's securities and any material interest of such
persons in transactions with Parent is disclosed in proxy statements distributed
to Parent's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
Commission, and copies thereof should be obtainable from the Commission, in the
same manner as set forth with respect to information concerning the Company in
Section 8. Such material should also be available for inspection at the library
of the NYSE, 20 Broad Street, New York, New York 10005.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $1.8 billion. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution which will be made by Parent to the Purchaser. Parent
plans to use funds it has available in its cash accounts and pursuant to
short-term borrowings for such capital contribution.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
On March 3, 1997, the Company's Chairman and Chief Executive Officer,
Robert Cohn, met with Parent's President and Chief Operating Officer, Richard A.
McGinn, and expressed an interest in exploring some form of business arrangement
involving Parent's messaging business. On April 3, 1997, Mr. Cohn met with the
President of Parent's Business Communications Systems Business Unit, William T.
O'Shea, to discuss possible approaches to partner with or combine the operations
of the Company's and Parent's messaging businesses, including various joint
venture alternatives or an acquisition of Parent's messaging business by the
Company. During the month of April 1997, Parent evaluated the implications of a
broad range of strategic alternatives for its messaging business. In the process
of this evaluation, representatives of the two companies had discussions on a
number of occasions.
On April 22, 1997, Parent communicated to the Company that it was
interested in exploring in more detail the possibility of a strategic business
arrangement. On April 29, 1997, the two companies entered into a confidentiality
agreement for the exchange of non-public information between them.
On May 1, 1997, representatives of Parent and representatives of the
Company met to discuss overall approaches and to initiate the exchange of
information. During this meeting, representatives of Parent stated that they had
tentatively decided that an acquisition of the Company was a possible
alternative. Representatives of the Company responded that the Company was not
for sale. On May 8, 1997, Mr. Cohn called Mr. O'Shea and told him that while the
Company's position had not changed, the Company was willing to consider the
possibility of a sale. During the rest of the month of May, representatives of
each of the companies met on numerous occasions to exchange information.
On June 2, 1997, Mr. O'Shea and another Parent representative had a
telephone conversation with Mr. Cohn and told him that Parent was seriously
interested in pursuing an acquisition but needed additional information on the
Company's operations and products to determine if the combined businesses would
be able to operate effectively together. Mr. Cohn responded that it would only
be appropriate to proceed further once it appeared that there was a significant
possibility that an agreement on an acquisition could be reached.
On June 17, 1997, Mr. Cohn, Mr. O'Shea, and other representatives of the
two companies met to discuss the valuation of the Company and how to proceed
with a possible acquisition of the Company by Parent. No agreement as to value
was reached. On June 20, 1997, Mr. Cohn called Mr. O'Shea and suggested that the
Company's financial advisors get together with representatives of Parent the
following week to attempt to resolve the valuation differences. Mr. O'Shea
agreed, and the Company's financial advisors and certain representatives of
Parent met on June 24, and 25, 1997. Price negotiations continued throughout the
following week. On July 2, 1997, the parties discussed exploring a transaction
at $31 per Share, subject to completion of due diligence and negotiation of a
definitive Merger Agreement.
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<PAGE> 17
From July 6, 1997, through the evening of July 16, 1997, Parent conducted
additional due diligence, and there were additional meetings between
representatives of the companies during that time. In addition, ongoing
discussions were held concerning, among other things, post-acquisition
organizational structure and the terms of the Merger Agreement. The issues under
the Merger Agreement were resolved during the night of July 16.
On July 16, 1997, the Board of Directors of the Company approved the
transaction. On July 16, 1997, the Board of Directors of Parent, after being
briefed on the transaction and the remaining open issues, delegated authority to
take further action regarding the transaction to a sub-committee of the Board.
The sub-committee approved the transaction Thursday morning, July 17, after
which the Merger Agreement was executed and delivered and the transaction was
publicly announced.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT
Purpose. The purpose of the Offer is to enable Parent to acquire control
of and the entire equity interest in the Company. Following the Offer, the
Purchaser and Parent intend to acquire any remaining equity interest in the
Company not acquired in the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
the Merger," the Purchaser will be merged with the Company, and each then
outstanding Share (other than Shares owned by the Company or by any subsidiary
of the Company, Parent, the Purchaser or any other subsidiary of Parent or by
stockholders, if any, who are entitled to and who properly exercise dissenters'
rights under Delaware law), will be converted into the right to receive an
amount in cash equal to the price per Share paid pursuant to the Offer.
VOTE REQUIRED TO APPROVE MERGER. The DGCL requires, among other
things, that the adoption of any plan of merger or consolidation of the
Company must be approved by the Board of Directors of the Company and, if
the "short form" merger procedure described below is not available, by the
holders of a majority of the Company's outstanding Shares. The Board of
Directors of the Company has approved the Offer, the Merger and the Merger
Agreement; consequently, the only additional action of the Company that may
be necessary to effect the Merger is approval by such stockholders if the
"short-form" merger procedure described below is not available. Under the
DGCL, the affirmative vote of holders of a majority of the outstanding
Shares (including any Shares owned by the Purchaser), is generally required
to approve the Merger. If the Purchaser acquires, through the Offer or
otherwise, voting power with respect to at least a majority of the
outstanding Shares (which would be the case if the Minimum Condition were
satisfied and the Purchaser were to accept for payment Shares tendered
pursuant to the Offer), it would have sufficient voting power to effect the
Merger without the vote of any other stockholder of the Company. However,
the DGCL also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect a short-form
merger with that subsidiary without the action of the other stockholders of
the subsidiary. Accordingly, if, as a result of the Offer or otherwise, the
Purchaser acquires or controls the voting power of at least 90% of the
outstanding Shares, the Purchaser could (and, under the Merger Agreement,
is required to) effect the Merger using the "short-form" merger procedures
without prior notice to, or any action by, any other stockholder of the
Company.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the
Merger is subject to the satisfaction of certain conditions, including the
following: (1) if required by applicable law, the Merger Agreement having
been approved and adopted by the affirmative vote of holders of a majority
of the outstanding Shares, (2) no statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other Federal, state or local government or any court, administrative
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), or other legal restraint or prohibition
preventing the consummation of the Merger being in effect; provided,
however, that each of the parties shall have used reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered and
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<PAGE> 18
(3) the Purchaser shall have previously accepted for payment and paid for
the Shares pursuant to the Offer.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated at any time prior to the effective time of the Merger (the
"Effective Time"), whether before or after approval by the stockholders of
the Company (provided, however, that if Shares are purchased pursuant to
the Offer, neither Parent nor Purchaser may in any event terminate the
Merger Agreement), (1) by mutual written consent of Parent and the Company,
(2) by either Parent or the Company (a) if the Purchaser has not accepted
for payment any Shares pursuant to the Offer prior to December 31, 1997,
provided, however, that the right to terminate the Merger Agreement
pursuant to this sentence will not be available to (i) Parent, if Purchaser
has breached its obligations under the Merger Agreement or (ii) any party
whose failure to perform any of its obligations under the Merger Agreement
results in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute a willful
breach of a representation or warranty under the Merger Agreement by such
party, or (b) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree or ruling or
other action has become final and nonappealable, (3) by Parent or the
Purchaser prior to the purchase of Shares pursuant to the Offer in the
event of a breach or failure to perform by the Company of any
representation, warranty, covenant or other agreement contained in the
Merger Agreement which (i) would give rise to the failure of a condition
set forth in paragraph (e) or (f) under "Certain Conditions of the Offer"
and (ii) cannot be or has not been cured within 30 days after the giving of
written notice to the Company, (4) by Parent or the Purchaser if either
Parent or the Purchaser is entitled to terminate the Offer as a result of
the occurrence of any event set forth in paragraph (d) under "Certain
Conditions of the Offer" (5) by the Company in accordance with the terms of
the Merger Agreement described below in "Takeover Proposals," provided that
it has complied with all provisions thereof, including the notice
provisions therein, and that it complies with applicable requirements
relating to the payment (including the timing of any payment) of the
Termination Fee (as defined below) as provided in the terms of the Merger
Agreement described below in "Fees and Expenses" (it being understood that
as provided in the terms of the Merger Agreement described below in the
second paragraph of "Takeover Proposals" the Company will be required to
terminate the Merger Agreement) or (6) by the Company in the event of a
material breach or failure to perform in any material respect by Parent or
the Purchaser of any representation, warranty, covenant or other agreement
contained in the Merger Agreement which cannot be or has not been cured
within 30 days after the giving of written notice to Parent and the
Purchaser.
TAKEOVER PROPOSALS. The Merger Agreement provides that the Company
will not, nor will it permit any of it subsidiaries to, nor will it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any subsidiary to, directly or indirectly,
(1) solicit, initiate or knowingly encourage the submission of any Takeover
Proposal (as defined below) or (2) participate in any discussions or
negotiations regarding, or furnish to any person any nonpublic information
with respect to, or take any other action designed or reasonably likely to
facilitate any inquiries or the making of any proposal that constitutes any
Takeover Proposal; provided, however, that if, at any time prior to the
acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is reasonably advisable to do so in order to
comply with its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response to a Takeover Proposal which
was not solicited subsequent to the date of the Merger Agreement, and
subject to compliance with the notification provisions discussed below, (a)
furnish information with respect to the Company to any person pursuant to a
customary confidentiality agreement and (b) participate in discussions and
negotiations regarding such Takeover Proposal. The Merger Agreement
provides that any violation of the restrictions set forth in the preceding
sentence by any director, officer or employee of the Company or any of its
subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative or agent of the Company or any of its
subsidiaries will be deemed to be a breach of the Company's obligations
under the Merger Agreement. The Merger Agreement defines "Takeover
Proposal" as any
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<PAGE> 19
inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of the
Company and its subsidiaries, taken as a whole (other than the purchase of
the Company's products in the ordinary course of business), or more than a
20% interest in the total voting securities of the Company or any of its
subsidiaries or any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement.
The Merger Agreement provides further that unless the Board of
Directors of the Company has terminated the Merger Agreement as described
above, neither the Board of Directors of the Company nor any committee
thereof may (1) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by such Board of
Directors or such committee of the Offer, the Merger or the Merger
Agreement, (2) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal or (3) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to any
Takeover Proposal. Notwithstanding the foregoing, in the event that prior
to the acceptance for payment of Shares pursuant to the Offer the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is reasonably advisable to do so in order to
comply with its fiduciary duties to the Company's stockholders under
applicable law, the Board of Directors of the Company may, in response to
an unsolicited Superior Proposal (as defined below) (subject to the
following proviso), (a) withdraw or modify its approval or recommendation
of the Offer, the Merger or the Merger Agreement or (b) approve or
recommend any such Superior Proposal if concurrently with such approval or
recommendation the Company terminates the Merger Agreement and enters into
an Acquisition Agreement with respect to a Superior Proposal; provided,
that in the case of this clause (b), only at a time that is after the later
of (i) the third business day following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company has received a
Superior Proposal, specifying the material terms of such Superior Proposal
and identifying the person making such Superior Proposal and (ii) in the
event of an amendment to the price or any material term of a Superior
Proposal, one business day following Parent's receipt of written notice
containing the material terms of such amendment, including any change in
price (it being understood that each further amendment to the price or any
material terms of a Superior Proposal will necessitate an additional
written notice to Parent and an additional one business day period prior to
which the Company can take the actions set forth in clause (b) above). The
Merger Agreement defines a "Superior Proposal" as any bona fide Takeover
Proposal made by a third party (1) that is on terms which the Board of
Directors of the Company determines in its good faith judgment (based on
consultation with the Company's financial advisor) to be more favorable to
the Company's stockholders than the Offer and the Merger and (2) for which
financing, to the extent required, is then committed or which, in the good
faith judgment of the Board of Directors of the Company, is capable of
being obtained by such third party.
In addition to the obligations of the Company set forth in the
preceding paragraphs, the Merger Agreement provides that the Company must
promptly advise Parent orally and in writing of any request for nonpublic
information (except in the ordinary course of business and not in
connection with a possible Takeover Proposal) or of any Takeover Proposal
known to it, the material terms and conditions of such request or Takeover
Proposal and the identity of the person making such request or Takeover
Proposal. The Company must promptly inform Parent of any material change in
the details (including amendments or proposed amendments) of any such
request or Takeover Proposal.
The Merger Agreement provides that nothing contained therein will
prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders
if, in the good faith judgment of the Board of Directors of the Company,
after consultation with outside counsel, failure to so disclose would be
inconsistent with applicable law; provided, however, that neither
17
<PAGE> 20
the Company nor its Board of Directors nor any committee thereof may,
except as permitted by the Merger Agreement, withdraw or modify, or propose
to withdraw or modify, its position with respect to the Offer, the Merger
or the Merger Agreement or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
FEES AND EXPENSES. The Merger Agreement provides that except as
provided below, all fees and expenses incurred in connection with the
Offer, the Merger, the Merger Agreement and the transactions contemplated
by the Merger Agreement will be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated. The Merger
Agreement further provides that the Company will pay, or cause to be paid,
in same day funds to Parent the amount of $50 million (the "Termination
Fee") under the circumstances and at the times set forth as follows: (1) if
the Company terminates the Merger Agreement in accordance with the
provisions described above in clause 5 of "Termination of the Merger
Agreement," the Company must pay 50% of the Termination Fee simultaneously
with such termination, and 50% of the Termination Fee upon consummation of
the transactions contemplated by the Superior Proposal giving rise to the
Company's right to terminate the Merger Agreement in accordance with the
provisions described above in clause 5 of "Termination of the Merger
Agreement," or upon the earlier consummation of another Company Acquisition
(as defined below); provided that such other Company Acquisition is
consummated within twelve months following termination of the Merger
Agreement, (2) if Parent or the Purchaser terminates the Merger Agreement
in accordance with the provisions described above in clause 4 of
"Termination of the Merger Agreement" and in addition, if within twelve
months after such termination the Company enters into an Acquisition
Agreement providing for a Company Acquisition or the Company recommends to
its stockholders that they accept a Company Acquisition of the type
referred to in clause 3 of the definition of Company Acquisition described
below, the Company must pay (a) 50% of the Termination Fee simultaneously
with the entering into of such Acquisition Agreement or making of such
recommendation and (b) 50% of the Termination Fee upon consummation of the
Company Acquisition which was the subject of such Acquisition Agreement or
recommendation, or upon the consummation, prior to the expiration of such
twelve month period, of any other Company Acquisition (it being understood
that if any Company Acquisition is consummated within such twelve month
period and the Company shall not have paid any amount pursuant to clause
(a) above, that upon consummation of such Company Acquisition the Company
must pay 100% of the Termination Fee) and (3) if, at the time of any
termination of the Merger Agreement in accordance with the provisions
described above in clause 2(a) of "Termination of the Merger Agreement" (as
a result of a failure to obtain the Minimum Condition) or in accordance
with the provisions described above in clause 3 of "Termination of the
Merger Agreement," any person shall have publicly announced a proposal to
effect a Company Acquisition and if, within twelve months after such
termination, the Company shall enter into an Acquisition Agreement
providing for a Company Acquisition or the Company shall recommend to its
stockholders that they accept a Company Acquisition of the type referred to
in clause 3 of the definition of Company Acquisition described below, the
Company must pay (a) 50% of the Termination Fee simultaneously with the
entering into of such Acquisition Agreement or making of such
recommendation and (b) 50% of the Termination Fee upon consummation of the
Company Acquisition which was the subject of such Acquisition Agreement or
recommendation, or upon the consummation, prior to the expiration of such
twelve month period, of any other Company Acquisition (it being understood
that if any Company Acquisition is consummated within such twelve month
period and the Company shall not have paid any amount pursuant to clause
(a) above, that upon consummation of such Company Acquisition the Company
must pay 100% of the Termination Fee). The Merger Agreement defines a
"Company Acquisition" as any of the following transactions: (1) a merger,
consolidation, business combination or a recapitalization pursuant to which
the stockholders of the Company immediately preceding such transaction hold
less than 60% of the equity interests in the surviving or resulting entity
of such transaction (other than the transactions contemplated by the Merger
Agreement); (2) a sale by the Company of assets (excluding the sale of the
Company's products in the ordinary course of business) representing in
excess of 40% of the fair market value of the Company immediately prior to
such sale or the issuance by the Company to any person or group of shares
representing in excess of 40% of the then outstanding shares of capital
stock of the
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Company (other than in connection with an underwritten public offering); or
(3) the acquisition by any person or group, by way of a tender offer,
exchange offer, or by way of open market purchases, of beneficial ownership
of 40% or more of the then outstanding shares of capital stock of the
Company.
CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides
that until the earlier of termination of the Merger Agreement and
consummation of the Offer, the Company will, and will cause its
subsidiaries to, carry on their respective businesses in the ordinary
course consistent with the manner conducted prior to the execution of the
Merger Agreement and, to the extent consistent therewith, use commercially
reasonable efforts to preserve intact their current business organization,
keep available the services of their current officers and employees and
preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them.
Without limiting the generality of the foregoing, during the period from
the date of the Merger Agreement until the earlier termination of the
Merger Agreement and consummation of the Offer, except as otherwise
contemplated by the Merger Agreement (or for certain matters disclosed in
connection therewith), the Company will not, and will not permit any of its
subsidiaries to, without Parent's prior written consent (which will not be
unreasonably withheld): (1) other than dividends and distributions by a
direct or indirect wholly owned subsidiary of the Company to its parent or
pursuant to the Rights Agreement, (a) declare, set aside or pay any
dividends on, or make any other distributions (whether in cash, stock or
property), in respect of, any of its capital stock, (b) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock (other than the issuance of shares of Company
Common Stock upon the exercise of Stock Options (as defined below)
outstanding on the date of the Merger Agreement and in accordance with
their present terms) or (c) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities; (2) issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities (other than (a) pursuant to the Rights Agreement or (b) the
issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of the Merger Agreement and in accordance
with their present terms); (3) amend its Amended and Restated Certificate
of Incorporation, By-Laws or other comparable charter or organizational
documents; (4) acquire or agree to acquire (including, without limitation,
by merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof; (5) sell, lease, license, mortgage or otherwise encumber
or otherwise dispose of any of its properties or assets, other than in the
ordinary course of business consistent with past practice; (6) (a) incur
any indebtedness for borrowed money or guarantee any such indebtedness of
another person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its
subsidiaries, or guarantee any debt securities of another person, other
than short-term bank financing in the ordinary course of business
consistent with past practice or (b) make any loans, advances or capital
contributions to, or investments in, any other person, other than in the
ordinary course of business consistent with past practice; (7) make or
agree to make any new capital expenditure or expenditures; (8) except as
required to comply with applicable law or agreements, plans or arrangements
existing on the date of the Merger Agreement, (a) adopt, enter into,
terminate or amend in any material respect any employment contract,
collective bargaining agreement or Benefit Plan (as defined in the Merger
Agreement), (b) increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer or employee (except for
normal increases of cash compensation or cash bonuses in the ordinary
course of business consistent with past practice), (c) pay any benefit not
provided for under any Benefit Plan or any other benefit plan or
arrangement of the Company or its subsidiaries, (d) increase in any manner
the severance or termination pay of any officer or employee, (e) except as
permitted in clause (b), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights, stock
based or stock related awards, performance units or restricted stock or the
removal of existing restrictions in any Benefit Plans or agreements or
awards made thereunder), (f) take
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any action to fund or in any other way secure the payment of compensation
or benefits under any employee plan, agreement, contract or arrangement or
Benefit Plan or (g) take any action to accelerate the vesting of, or cash
out rights associated with, any Stock Options; (9) enter into any agreement
of a nature that would be required to be filed as an exhibit to Form 10-K
under the Exchange Act, other than contracts for the sale of the Company's
products in the ordinary course of business; (10) except as required by
GAAP, make any material change in accounting methods, principles or
practices; (11) make any material tax election or enter into any settlement
or compromise with respect to any material income tax liability; or (12)
authorize any of, or commit or agree to take any of, the foregoing actions.
BOARD OF DIRECTORS. The Merger Agreement provides that promptly upon
the acceptance for payment of, and payment for, Shares by the Purchaser
pursuant to the Offer, the Purchaser will be entitled to designate such
number of directors on the Board of Directors of the Company as will give
the Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, a majority of such directors, and the Company will, at such time,
cause the Purchaser's designees to be so elected by its existing Board of
Directors. Subject to applicable law, the Company has agreed to take all
action requested by Parent necessary to effect any such election, including
mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, which Information Statement is attached as Appendix
A to the Schedule 14D-9. The Merger Agreement further provides that in the
event that the Purchaser's designees are elected to the Board of Directors
of the Company, until the effective time of the Merger the Board of
Directors of the Company will have at least two directors who are directors
on the date of Merger Agreement and who are not officers of the Company or
any of its subsidiaries.
STOCK OPTIONS. The Merger Agreement provides that as soon as
practicable following the date of the Merger Agreement, the Board of
Directors of the Company (or, if appropriate, any committee administering
the Company Stock Plans, as defined below) will adopt such resolutions or
take such other actions if any, as may be reasonably required to: (1)
adjust the terms of all outstanding options to purchase Company Common
Stock (the "Stock Options") granted under any plan or arrangement providing
for the grant of options to purchase Company Common Stock to current or
former directors, officers, employees or consultants of the Company or its
subsidiaries (the "Company Stock Plans"), whether vested or unvested, as
necessary to provide that, at the Effective Time, each Stock Option
outstanding immediately prior to the Effective Time will be amended and
converted into an option to acquire, on the same terms and conditions as
were applicable under the Stock Option, the number of shares of common
stock of Parent ("Parent Common Stock") determined by multiplying the
number of shares of Company Common Stock subject to such Stock Option by a
fraction, the numerator of which is $31 and the denominator of which is the
average closing price of Parent Common Stock on the New York Stock Exchange
for three trading days immediately preceding (but not including) the date
of the Effective Time, rounded down to the nearest whole share, at a price
per share of Parent Common Stock equal to (a) the aggregate exercise price
for the shares of Company Common Stock otherwise purchasable pursuant to
such Stock Option divided by (b) the aggregate number of shares of Parent
Common Stock deemed purchasable pursuant to such Stock Option, rounded up
to the nearest whole cent, (2) adjust the terms of each Stock Option
granted under the Company's 1988 Directors' Stock Option Plan (each a
"Director Stock Option") so that if, following consummation of the Offer,
the holder of such Director Stock Option is terminated from his or her
position as a director of the Company, each such Director Stock Option will
vest and become exercisable in full, and (3) make such other changes to the
Company Stock Plans as Parent and the Company may agree to are appropriate
to give effect to the Merger.
The Merger Agreement further provides that the Company will terminate
the Company's 1987 Employee Stock Purchase Plan (the "ESPP") by having its
Board of Directors amend the ESPP as necessary to provide that (1) any
Shares to be purchased under the ESPP on a new "Exercise Date" (as such
term is defined in the ESPP) set by the Board of Directors, which Exercise
Date will be on the last trading day immediately prior to consummation of
the Offer, or such earlier time as the Board may specify and (2)
immediately following such purchase of Shares, the ESPP will terminate.
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INDEMNIFICATION. From and after the consummation of the Offer, Parent
will, and will cause the Surviving Corporation to, fulfill and honor in all
respects the obligations of the Company pursuant to (1) each
indemnification agreement in effect at such time between the Company and
each person who is or was a director or officer of the Company at or prior
to the Effective Time and (2) any indemnification provisions under the
Company's Restated Certificate of Incorporation or By-laws as each was in
effect on the date of the Merger Agreement (the persons to be indemnified
pursuant to the agreements or provisions referred to in clauses (1) and (2)
of this sentence are referred to as, collectively, the "Indemnified
Parties"). Pursuant to the Merger Agreement, the Certificate of
Incorporation and By-laws of the Surviving Corporation will contain the
provisions with respect to indemnification and exculpation from liability
set forth in the Company's Certificate of Incorporation and By-laws on the
date of the Merger Agreement, which provisions will not be amended,
repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights
thereunder of any Indemnified Party. The Merger Agreement also provides
that, from and after the date of the Merger Agreement, the Company may
enter into indemnification agreements, or amend existing indemnification
agreements, with current directors and officers of the Company providing
for customary provisions under Delaware law.
REASONABLE EFFORTS. Upon and subject to the terms and subject to the
conditions set forth in the Merger Agreement, Parent, the Purchaser and the
Company have each agreed to use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with each other in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated
by the Merger Agreement, including using reasonable efforts to take the
following actions: (1) the taking of all reasonable acts necessary to cause
the conditions of the Offer to be satisfied, (2) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings (including filings with Governmental Entities, if any) and the
taking of all reasonable steps as may be necessary to avoid an action or
proceeding by any Governmental Entity, (3) the obtaining of all necessary
consents, approvals or waivers from third parties, (4) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging the Merger Agreement or the consummation of the transactions
contemplated thereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated
or reversed, and (5) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and
to fully carry out the purposes of, the Merger Agreement. In connection
with and without limiting the foregoing, but subject to the terms and
conditions of the Merger Agreement, the Company and its Board of Directors
will, if any state takeover statute or similar statute or regulation is or
becomes applicable to the Offer, the Merger, the Merger Agreement or any
other transactions contemplated by the Merger Agreement, use all reasonable
efforts to ensure that the Offer, the Merger and the other transactions
contemplated by the Merger Agreement may be consummated as promptly as
practicable on the terms contemplated by the Merger Agreement and the
otherwise to minimize the effect of such statute or regulation on the
Offer, the Merger, the Merger Agreement and the other transactions
contemplated by the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties.
PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. The Merger
Agreement provides that in the event the Purchaser's designees are
appointed or elected to the Board of Directors of the Company as described
above under "Board of Directors," after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time, the
affirmative vote of the directors of the Company not designated by the
Purchaser or Parent is required for the Company to (1) amend or terminate
the Merger Agreement, (2) exercise or waive any of its rights or remedies
under the Merger Agreement, (3) extend the time for performance of Parent
and the Purchaser's respective obligations under the Merger Agreement and
(4) take any action to amend or otherwise modify the Company's Certificate
of
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Incorporation or By-laws (or similar governing instruments of the Company's
subsidiaries) in violation of the provisions of the Merger Agreement
described above under "Indemnification."
RIGHTS AGREEMENT. The Rights Agreement has been amended to (1) render
the Rights Agreement inapplicable to the Offer, the Merger, the Merger
Agreement, the acquisition of Shares by Purchaser pursuant to the Offer and
the other transactions contemplated by the Merger Agreement and (2) ensure
that (a) none of Parent, the Purchaser or any of their respective
affiliates is an Acquiring Person (as defined in the Rights Agreement)
pursuant to the Rights Agreement solely by virtue of the execution of the
Merger Agreement, commencement and consummation of the Offer, the
acquisition of Shares by the Purchaser pursuant to the Offer and the
consummation of the Merger and (b) a Distribution Date or a Shares
Acquisition Date (as defined in the Rights Agreement) does not occur by
reason of the Offer, the Merger, the execution of the Merger Agreement, the
acquisition of Shares by Purchaser pursuant to the Offer or the other
transactions contemplated by the Merger Agreement and (c) provide that the
Final Expiration Date (as defined in the Rights Agreement) will occur
immediately prior to the Effective Time, and such amendment will not be
further amended by the Company without the prior consent of Parent in its
sole discretion.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit (c) to
Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the Commission
on the date hereof (the "Schedule 14D-1"). The Merger Agreement should be read
in its entirety for a more complete description of the matters summarized above.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the Shares,
including asset values and the investment value of the Shares. The value so
determined could be more or less than the Offer Price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to Parent of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
stockholders be filed with the Commission and disclosed to minority stockholders
prior to consummation of the Merger.
Other Matters. Except as otherwise described in this Offer to Purchase,
the Purchaser and Parent have no current plans or proposals that would relate
to, or result in, any extraordinary corporate transaction involving the Company
or any of its subsidiaries, such as a merger, reorganization or liquidation
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any change
in the present Board of Directors of the Company or management of the
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Company, any material change in the Company's capitalization or dividend policy
or any other material change in the Company's business, corporate structure or
personnel.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
If, on or after the date of the Merger Agreement, the Company should (1)
split, combine or otherwise change the Shares or its capitalization, (2) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (3) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, to acquire any of the foregoing, other
than Shares issued pursuant to the exercise of Stock Options outstanding as of
the date of the Merger Agreement, then, subject to the provisions of Section 14
below, the Purchaser, in its sole discretion, may make such adjustments as it
deems appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 14 below, (1) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (2) the whole of any
such noncash dividend, distribution or issuance to be received by the tendering
stockholders will (a) be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (b) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
Price or deduct from the Offer Price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay for
any Shares tendered pursuant to the Offer unless (1) the Minimum Condition shall
have been satisfied and (2) any waiting period under the HSR Act applicable to
the purchase of Shares pursuant to the Offer shall have expired or been
terminated. Furthermore, Purchaser will not be required to accept for payment
or, subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may, in accordance with the provisions of the Merger
Agreement described in the subsection entitled "Termination of the Merger
Agreement" in Item 12 above, terminate the Merger Agreement or amend the Offer
with the consent of the Company, if, upon the scheduled expiration date of the
Offer and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists and is continuing and does not
result principally from the breach by Parent or the Purchaser of any of their
obligations under the Merger Agreement:
(a) there shall be instituted or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent or
the Purchaser of any Shares under the Offer, seeking to
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restrain or prohibit the making or consummation of the Offer or the Merger,
(ii) seeking to prohibit or materially limit the ownership or operation by
the Company, Parent or any of Parent's subsidiaries of a material portion
of the business or assets of the Company or Parent and its subsidiaries,
taken as a whole, or to compel the Company or Parent to dispose of or hold
separate any material portion of the business or assets of the Company or
Parent and its subsidiaries, taken as a whole, in each case as a result of
the Offer or the Merger or (iii) seeking to impose material limitations on
the ability of Parent or the Purchaser to acquire or hold, or exercise full
rights of ownership of, any Shares to be accepted for payment pursuant to
the Offer including, without limitation, the right to vote such Shares on
all matters properly presented to the stockholders of the Company or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or court, other than
the application to the Offer or the Merger of applicable waiting periods
under the HSR Act, that would result in any of the consequences referred to
in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred any material adverse change with respect
to the Company since the date of the Merger Agreement;
(d) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer or the Merger or its
adoption of the Merger Agreement, or approved or recommended any Takeover
Proposal;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case at the date of the Merger Agreement and at the scheduled or extended
expiration of the Offer;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement, which failure to perform or
comply has not been cured within 30 business days after the giving of
written notice to the Company; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the good faith judgment of Parent or the Purchaser, in its sole
discretion, make it inadvisable to proceed with such acceptance of Shares for
payment or the payment therefor.
The Merger Agreement provides that the condition set forth in clause (e)
above (except as it relates to the representation and warranty in the Merger
Agreement as to the Company not being subject to any non-competition agreements)
will be deemed not fulfilled only if the respects in which the representations
and warranties made by the Company in the Merger Agreement (without giving
effect to any "materiality" limitations or references to "material adverse
effect" set forth therein) are inaccurate would have a material adverse effect
on the Company.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Parent and the Purchaser and (except for the Minimum Condition)
may, subject to the terms of the Merger Agreement, be waived by Parent and the
Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances and
each such right will be deemed an ongoing right that may be asserted at any time
and from time to time.
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15. CERTAIN LEGAL MATTERS
Based on a review of publicly available filings made by the Company with
the Commission and other publicly available information concerning the Company,
neither the Purchaser nor Parent is aware of any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action,
except as otherwise described in this Section 15, by any Governmental Entity
that would be required for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser and Parent currently contemplate that such approval or
other action will be sought, except as described below under "State Takeover
Laws." While, except as otherwise expressly described in this Section 15, the
Purchaser does not presently intend to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places or business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law, and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders; provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting stock
of the corporation) unless, among other things, the corporation's board of
directors has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Merger Agreement
and the Purchaser's acquisition of Shares pursuant to the Offer and, therefore,
Section 203 of the DGCL is inapplicable to the Offer and the Merger.
Based on information supplied by the Company, the Purchaser does not
believe that any state takeover statutes purport to apply to the Offer or the
Merger. Neither the Purchaser nor Parent has currently complied with any state
takeover statute or regulation. The Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, the Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in consummating the Offer or the Merger. In such case, the Purchaser may
not be obliged to accept for payment or pay for any Shares tendered pursuant to
the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early
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<PAGE> 28
termination of the waiting period is granted. Parent is in the process of making
such filing. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC 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 the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. 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, of the results thereof.
16. FEES AND EXPENSES
The Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent and The Bank of New York to serve as the Depositary in connection with the
Offer. The Information Agent and the Depositary each will receive reasonable and
customary compensation for their services, be reimbursed for certain reasonable
out-of-pocket expenses and be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary) in connection with the solicitation of tenders of Shares pursuant to
the Offer. Brokers, dealers, banks and trust companies will be reimbursed by the
Purchaser upon request for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. None of the Purchaser or Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
26
<PAGE> 29
The Purchaser or Parent has filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Sections 8 and 9 (except that they will not be available at the regional offices
of the Commission).
MEMO ACQUISITION CORP.
July 23, 1997
27
<PAGE> 30
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of Parent are set forth
below. Unless otherwise indicated, the business address of each such director
and each such executive officer is 600 Mountain Avenue, Murray Hill, New Jersey
07974. All directors and executive officers listed below are citizens of the
United States except for Gerald J. Butters, who is a citizen of Canada.
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
- ------------------------------------- ------------------------------------------------------
<S> <C>
Paul A. Allaire...................... Director of Parent since October 1996. Chairman and
Xerox Corporation Chief Executive Officer of Xerox Corporation (document
800 Long Ridge Road processing services and products) since 1991. Director
P.O. Box 1600 of Rank Xerox Ltd., Fuji Xerox Co. Ltd., Sara Lee
Stamford, CT 06904 Corp., J. P. Morgan & Co., Inc., SmithKline Beecham
p.l.c. and consultant to Parent Board of Directors
(1996). Committees: member of the Audit and Finance,
Corporate Governance and Compensation, and Technology
Committees. Age: 59.
Curtis R. Artis...................... Senior Vice President, Human Resources of Parent since
February 1996. Prior thereto, employed by AT&T Corp.
("AT&T") in various positions beginning in 1970,
including Vice President, Human Resources for the AT&T
Network Systems Group (1994-1996) and Vice President
of Corporate Human Resources (1993-1994). Age: 48.
Gerald J. Butters.................... President, North America, Network Systems of Parent
since February 1996. Between 1994 and 1996, held
various executive positions within the AT&T Network
Systems Group. Between 1991 and 1994, held various
executive positions at Northern Telecom, Inc.,
including President (1993-1994). Age: 54.
Joseph S. Colson, Jr. ............... President, Network Systems International Regions and
Professional Services of Parent since June 1997 and
President, AT&T Customer Business Unit, Network
Systems of Parent from February 1996 through June
1997. President, AT&T Customer Business Unit for the
AT&T Network Systems Group (1993-1996) and Switching
Systems Vice President, United States, AT&T Network
Systems Group (1990-1993). Age: 49.
Curtis J. Crawford................... President, Microelectronics Group of Parent since
February 1996. President, AT&T Microelectronics
(1993-1996) and Vice President, AT&T Microelectronics
(1991-1993). Age: 49.
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
- ------------------------------------- ------------------------------------------------------
<S> <C>
Carleton S. Fiorina.................. President, Consumer Products business unit of Parent
since October 1996 and Executive Vice President,
Corporate Operations for Parent from February 1996
through October 1996. President, North America
(1995-1996) and President, Atlantic and Canadian
Region (1994-1995) within the AT&T Network Systems
Group. Between 1993 and 1994, Vice President, Strategy
and Marketing Development for the AT&T Network Systems
Group. Prior thereto, held various senior positions
with AT&T in business development and marketing. Age:
42.
Carla A. Hills....................... Director of Parent since April 1996. Chairman and
Hills & Company Chief Executive Officer of Hills & Company (international
1200 Nineteenth St., N.W. consultants) since 1993 and United States Trade
Suite 201 Representative (1989-1993). Director of American
Washington, DC 20036 International Group, Inc., Chevron Corp., and Time
Warner Inc. Committees: member of the Corporate
Governance and Compensation Committee. Age: 63.
Drew Lewis........................... Director of Parent since April 1996. Retired Chairman
Box 70 and Chief Executive Officer of Union Pacific Corporation
Lederach, PA 19450 (rail transportation, natural resources and trucking)
(1987-January 1, 1997). Director of American Express
Company, FPL Group, Inc., Gannett Co., Inc., Union
Pacific Resources Group Inc., and Gulfstream Aerospace
Corporation. Committees: member of the Audit and
Finance and Corporate Governance and Compensation
Committees. Age: 65.
Richard A. McGinn.................... President and Chief Operating Officer of Parent since
February 1996 and Director since April 1996. Executive
Vice President of AT&T and Chief Executive Officer of
the AT&T Network Systems Group (1994-1996), President
and Chief Operating Officer of the AT&T Network
Systems Group (1993-1994), Senior Vice President of
AT&T Network Systems Group (1991-1993). Director of
Oracle Corporation. Age: 50.
Paul H. O'Neill...................... Director of Parent since October 1996. Chairman of the
ALCOA Board and Chief Executive Officer of Aluminum Company
425 Sixth Avenue of America (ALCOA) (production of aluminum) since
31st Floor 1987. Committees: member of the Audit and Finance,
Pittsburgh, PA 15219-1850 Corporate Governance and Compensation, and Technology
Committees. Age: 61.
William T. O'Shea.................... President, Business Communications Systems business
unit of Parent since January 1997 and President,
International, Network Systems of Parent from February
1996 through January 1997. President, International
Regions and Professional Services of the AT&T Network
Systems Group (1995-1996). Acting Chief Executive
Officer of AT&T Global Information Solutions Company
(now NCR Corporation) (1995). Prior thereto, held
various senior positions at AT&T Global Information
Solutions Company. Age: 49.
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
- ------------------------------------- ------------------------------------------------------
<S> <C>
Donald S. Perkins.................... Director of Parent since April 1996. Retired Chairman
One First National Plaza and Chief Executive Officer of Jewel Companies, Inc.
Suite 2530 (diversified retailer) (1970-1980). From January
21 South Clark Street through June 1995, Mr. Perkins served as Non-Executive
Chicago, IL 60603-2006 Chairman of Kmart Corp. Director of Aon Corp., Cummins
Engine Company, Inc., Current Assets, LaSalle Street
Fund, Inc., LaSalle U.S. Realty Income and Growth
Fund, Inc., The Putnam Funds, Ryerson Tull Inc.,
Springs Industries, Inc., and Time Warner Inc.
Committees: Chairman of the Audit and Finance
Committee, member of the Corporate Governance and
Compensation Committee. Age: 70.
Donald K. Peterson................... Executive Vice President and Chief Financial Officer
of Parent since February 1996. Joined AT&T in 1995 as
Vice President and Chief Financial Officer of AT&T's
Communications Services Group. Joined Northern
Telecom, Inc. in 1976 and served in various executive
positions there including President of Nortel
Communications Systems, Inc. (1993-1995). Age: 47.
Richard J. Rawson.................... Senior Vice President, General Counsel and Secretary
of Parent since February 1996. Joined AT&T Law
Division in 1984 and was appointed Vice President,
Law -- AT&T Network Systems Group in 1992. Age: 44.
Patricia F. Russo.................... Executive Vice President, Chief Staff Officer of
Parent since December 1996 and President, Business
Communications Systems business unit of Parent from
February 1996 through December 1996. President, Global
Business Communications Systems of AT&T (1993-1996)
and Vice President, National Sales and Service of AT&T
Global Business Communications Systems (1992-1993).
Age: 45.
Henry B. Schacht..................... Chief Executive Officer of Parent since February 1996
and Chairman of the Board of Parent since April 1996.
Chairman (1977-1995) and Chief Executive Officer
(1973-1994) of Cummins Engine Company, Inc. Director
of The Chase Manhattan Corporation and The Chase
Manhattan Bank, N.A., the Aluminum Company of America
(ALCOA), and Cummins Engine Company, Inc. Age: 62.
Daniel C. Stanzione.................. President, Bell Laboratories and Network Systems
business unit of Parent since February 1996.
President, AT&T Bell Laboratories (1995-1996);
President, Global Public Networks (1994-1995) and
President, Switching Systems (1993-1994), both units
of the AT&T Network Systems Group; and Group Technical
Officer and Corporate Information Officer, AT&T
Network Systems Group (1992-1993). Age: 52.
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
- ------------------------------------- ------------------------------------------------------
<S> <C>
Franklin A. Thomas................... Director of Parent since April 1996. Consultant to the
TFF Study Group TFF Study Group since April 1996 (a non-profit
Fuller Building initiative assisting development in southern Africa).
595 Madison Avenue Retired President of The Ford Foundation (1979-1996).
33rd Floor Director of the Aluminum Company of America (ALCOA),
New York, NY 10022 Citicorp and its subsidiary, Citibank, N.A., Cummins
Engine Company, Inc., and PepsiCo, Inc. Committees:
Chairman of the Corporate Governance and Compensation
Committee and member of the Audit and Finance
Committee. Age: 63.
John A. Young........................ Director of Parent since October 1996. Retired
c/o Hewlett-Packard Company President and Chief Executive Officer of
Mail Stop 16AB Hewlett-Packard Company (manufacturer of measurement
3200 Hillview Avenue and computation products) (1978-1992). Director of
Palo Alto, CA 94304 Wells Fargo Bank, Wells Fargo & Co., Chevron Corp.,
Shaman Pharmaceuticals, Inc., SmithKline Beecham
p.1.c., Affymetrix, Inc., and Novell, Inc. Consultant
to Parent Board of Directors (1996). Committees:
Chairman of the Technology Committee; member of the
Audit and Finance and Corporate Governance and
Compensation Committees. Age: 65.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of the Purchaser are set
forth below except for such information relating to William T. O'Shea (director
and President of Purchaser) and Richard J. Rawson (director and Treasurer of
Purchaser) that is set forth above. The business address of the director and
executive officer listed below is 600 Mountain Avenue, Murray Hill, New Jersey
07974. The director and executive officer listed below is a citizen of the
United States.
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY
- ------------------------------------- ------------------------------------------------------
<S> <C>
Pamela F. Craven..................... Since February 1996, Vice President-Law of Parent and
since July 1997, Vice President and Secretary of the
Purchaser. Joined AT&T Corp. Law Division in January
1992. Age 43.
</TABLE>
31
<PAGE> 34
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Courier:
(For Eligible Institutions
Tender & Exchange Only) Tender & Exchange
Department (212) 815-6213 Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm by Telephone: Receive and Deliver Window
New York, New York 1-800-507-9357 New York, New York 10286
10286-1248
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number 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:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 206-5879
Banks and Brokerage Firms
Please call:
(800) 662-5200
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
OCTEL COMMUNICATIONS CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 23, 1997
BY
MEMO ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON FRIDAY, AUGUST 29, 1997 UNLESS EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Courier:
Tender & Exchange (For Eligible Institutions Only) Tender & Exchange
Department (212) 815-6213 Department
P.O. Box 11248 101 Barclay Street
Church Street Station Confirm by Telephone: Receive and Deliver Window
New York, New York 1-800-507-9357 New York, New York 10286
10286-1248
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at a Book-Entry Transfer Facility as
defined in and pursuant to the procedures set forth in Section 2 of the Offer to
Purchase. Stockholders who deliver Shares by book-entry transfer are referred to
herein as "Book-Entry Stockholders" and other Stockholders are referred to
herein as "Certificate Stockholders." Stockholders whose certificates for Shares
are not immediately available or who cannot deliver either the certificates for,
or a Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase)
with respect to, their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares in accordance with the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Holders of Shares will be required to tender one Right (as defined below)
for each Share tendered to effect a valid tender of such Share. Unless and until
the Distribution Date (as defined in the Offer to Purchase) occurs, the Rights
are represented by and transferred with the Shares. Accordingly, if the
Distribution Date does not occur prior to the Expiration Date (and under the
terms of the Rights Agreement (as defined below), a Distribution Date will not
occur by reason of the Offer (as defined below)), a tender of Shares will
constitute a tender of the associated Rights. If, however, pursuant to the
Rights Agreement or otherwise, a Distribution Date does occur, certificates
representing a number of Rights equal to the number of Shares being tendered
must be delivered to the Depositary in order for such Shares to be validly
tendered. If a Distribution Date has occurred, a tender of Shares without Rights
constitutes an agreement by the tendering stockholder to deliver certificates
representing a number of Rights equal to the number of Shares tendered pursuant
to the Offer to the Depositary within three trading days (as defined herein)
after the date such certificates are distributed. The Purchaser (as defined
herein) reserves the right to require that it receive such certificates prior to
accepting Shares for payment. Payment for Shares tendered and purchased pursuant
to the Offer will be made only after timely receipt by the Depositary of, among
other things, such certificates, if such certificates have been distributed to
holders of Shares. The Purchaser will not pay any additional consideration for
the Rights tendered pursuant to the Offer.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL SHARES
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
herein are being tendered. See Instruction 4.
================================================================================
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
-----------------------------------------------------------------------------
Check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
-----------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------------------------------------------------------
If delivered by book-entry transfer check box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
-----------------------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Memo Acquisition Corp., a Delaware
corporation (the "Purchaser") which is a wholly owned subsidiary of Lucent
Technologies Inc., a Delaware corporation, the above-described shares of Common
Stock, par value $.001 per share (the "Shares"), of Octel Communications
Corporation, a Delaware corporation (the "Company"), together with the
associated rights (the "Rights") to purchase preferred shares issued pursuant to
the Company's Second Amended and Restated Rights Agreement dated May 13, 1997
(as amended, the "Rights Agreement"), upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated July 23, 1997
(the "Offer to Purchase"), and this Letter of Transmittal (which, together with
any amendments or supplements thereto or hereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged. Unless the context otherwise
requires, all references to Shares include the associated Rights, and all
references to the Rights include the benefits that may enure to holders of the
Rights pursuant to the Rights Agreement.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer, the undersigned hereby sells, assigns and transfers to, or
upon the order of, the Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities or rights issued or issuable in respect thereof on or after July 17,
1997), and irrevocably constitutes and appoints The Bank of New York (the
"Depositary"), the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full extent
of the undersigned's rights with respect to such Shares (and any such other
Shares or securities or rights), (a) to deliver certificates for such Shares
(and any such other Shares or securities or rights) or transfer ownership of
such Shares (and any such other Shares or securities or rights) on the account
books maintained by a Book-Entry Transfer Facility together, in any such case,
with all accompanying evidences of transfer and authenticity to, or upon the
order of, the Purchaser, (b) to present such Shares (and any such other Shares
or securities or rights) for transfer on the Company's books and (c) to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any such other Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all other shares or other securities or rights issued or
issuable in respect of such Shares on or after July 17, 1997) and, when the same
are accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances, and
the same will not be subject to any adverse claim. The undersigned will, upon
request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any and all such other Shares or securities
or rights).
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints William T. O'Shea, Richard J.
Rawson and Pamela F. Craven, and each of them, and any other designees of the
Purchaser, the attorneys-in-fact and proxies of the undersigned, each with full
power of substitution, to vote at any annual, special or adjourned meeting of
the Company's stockholders or otherwise in such manner as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, to execute any written consent concerning any matter as
each such attorney-in-fact and proxy or his substitute shall in his sole
discretion deem proper with respect to, and to otherwise act as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, the Shares tendered hereby that have been accepted for
payment by the Purchaser prior to the time any such action is taken and with
respect to which the undersigned is entitled to vote (and any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after July 17, 1997). This appointment is effective when, and only
to the extent that, the Purchaser accepts for payment such Shares as provided in
the Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by the undersigned with
respect to such Shares (and any such other Shares or securities or rights) will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE> 4
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both "Special Delivery Instructions" and "Special
Payment Instructions" are completed, please issue the check for the purchase
price and/or return any certificates for Shares not tendered or accepted for
payment (and any accompanying documents, as appropriate) in the name of, and
deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. Please credit
any Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book-Entry Transfer Facility designated
above. The undersigned recognizes that the Purchaser has no obligation pursuant
to "Special Payment Instructions" to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:-------------
<PAGE> 5
<TABLE>
<S> <C> <C>
- ------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for
Shares not tendered or not accepted for
payment and/or the check for the purchase
price of Shares accepted for payment are to be
issued in the name of someone other than the
undersigned.
Issue: [ ] Check
[ ] Certificate(s) to:
Name:
----------------------------------------------
(PLEASE PRINT)
Address:
----------------------------------------------
----------------------------------------------
(INCLUDE ZIP CODE)
----------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY
NUMBER)
======================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for
Shares not tendered or not accepted for
payment and/or the check for the purchase
price of Shares accepted for payment are to be
sent to someone other than the undersigned, or
to the undersigned at an address other than
that above.
Mail: [ ] Check
[ ] Certificate(s) to:
Name:
----------------------------------------------
(PLEASE PRINT)
Address:
----------------------------------------------
----------------------------------------------
(INCLUDE ZIP CODE)
----------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY
NUMBER)
- ------------------------------------------------------
</TABLE>
<PAGE> 6
- --------------------------------------------------------------------------------
SIGN SIGN HERE SIGN
HERE (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) HERE
--------------------------------------------------------
--------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
--------------------------------------------------- , 1997
(Must be signed by registered holder(s) as name(s)
appear(s) on the certificate(s) for the Shares or on a
security position listing or by person(s) authorized to
become registered holder(s) by certificates and
documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please
provide the following information and see Instruction
5.)
Name(s)-------------------------------------------------
--------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title)
----------------------------------------
Address
--------------------------------------------------
--------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.
----------------------------
Employer Identification or Social Security
Number -------------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
----------------------------------------
Name ---------------------------------------------------
--------------------------------------------------------
(PLEASE PRINT)
Name of Firm
---------------------------------------------
Address
--------------------------------------------------
--------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.
----------------------------
Dated:
--------------------------------------------------- , 1997
- --------------------------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS
AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(such participant, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares is to
be made pursuant to the procedures for book-entry transfer set forth in Section
2 of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or 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 required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either certificates
for tendered Shares must be received by the Depositary at one of such addresses
or such Shares must be delivered pursuant to the procedures for book-entry
transfer set forth herein (and a Book-Entry Confirmation received by the
Depositary), in each case prior to the Expiration Date, or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below
and in Section 2 of the Offer to Purchase.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's certificates for Shares are not immediately available or the
procedures for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase.
Pursuant to such procedures, (a) such tender must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares in proper form for transfer (or a
Book-Entry Confirmation with respect to all such Shares), together with a Letter
of Transmittal (or 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 required documents, must be received
by the Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery as provided in Section 2 of the Offer to Purchase.
A "trading day" is any day on which the New York Stock Exchange, Inc. is open
for business.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile hereof), waive any right to receive any
notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE> 8
4. Partial Tenders (Applicable to Certificate Stockholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered." In any such case, new certificate(s) for the remainder of
the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the acceptance for payment
of, and payment for, the Shares tendered herewith. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be guaranteed
by an Eligible Institution.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered owner(s), or
if tendered certificates are registered in the name(s) of any person(s) other
than the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered owner(s) or such person(s))
payable on account of the transfer to such person(s) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, and/or certificates for Shares not accepted for payment are to
be returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a person
other than the signer of this Letter of Transmittal or to an address other than
that shown above, the appropriate boxes on this Letter of Transmittal should be
completed.
8. Waiver of Conditions. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares tendered.
9. 31% Backup Withholding. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below in this Letter of Transmittal and certify under
penalty of perjury that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the U.S. federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
<PAGE> 9
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W9" for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address set forth below.
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the certificate. This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
<PAGE> 10
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- ---------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW ----------------------------
DEPARTMENT OF THE TREASURY Social Security Number(s)
INTERNAL REVENUE SERVICE
OR
PAYER'S REQUEST FOR ----------------------------
TAXPAYER IDENTIFICATION Employer Identification
NUMBER (TIN) Number(s)
-----------------------------------------------------------------------------
PART 2 -- Certification -- Under penalties of
perjury, I certify that: PART 3 --
(1) the number shown on this form is my correct
Taxpayer Identification Number (or I am waiting Awaiting TIN
for a number to be issued to me) and [ ]
(2) I am not subject to backup withholding
because (a) I am exempt from backup withholding ---------------------
or (b) I have not been notified by the
Internal Revenue Service ("IRS") that I am PART 4 --
subject to backup withholding as a result of
a failure to report all interest or EXEMPT TIN
dividends or (c) the IRS has notified me [ ]
that I am no longer subject to backup
withholding.
-----------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup withholding
because of under reporting interest or dividends on your tax returns.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you
are no longer subject to backup withholding, do not cross out such item (2).
If you are exempt from backup withholding, check the box in Part 4 above.
- ---------------------------------------------------------------------------------------------------------
Signature------------------------------------------ Date------------ , 1997
- ---------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
- -------------------------------------------------------------------------, 1997
Signature Date
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 206-5879
Banks and Brokerage Firms
please call:
(800) 662-5200
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
OCTEL COMMUNICATIONS CORPORATION
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for shares of Common Stock, par value $.001 per
share (the "Shares"), of Octel Communications Corporation, a Delaware
corporation (the "Company"), together with the associated rights (the "Rights")
to purchase preferred shares issued pursuant to the Company's Second Amended and
Restated Rights Agreement dated May 13, 1997, are not immediately available or
if the procedure for book-entry transfer cannot be completed on a timely basis
or time will not permit all required documents to reach the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase). This
form may be delivered by hand to the Depositary or transmitted by telegram,
facsimile transmission or mail to the Depositary and must include a guarantee by
an Eligible Institution (as defined in Section 2 of the Offer to Purchase). See
Section 2 of the Offer to Purchase. Unless the context otherwise requires, all
references to Shares shall include the associated Rights, and all references to
the Rights include the benefits that may enure to holders of the Rights pursuant
to the Rights Agreement.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Courier:
Tender & Exchange (For Eligible Institutions Tender & Exchange
Department Only) Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York Confirm by Telephone: New York, New York 10286
10286-1248 1-800-507-9357
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Memo Acquisition Corp., a Delaware
corporation (the "Purchaser") which is a wholly owned subsidiary of Lucent
Technologies Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated July 23, 1997
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, the number of Shares set
forth below, all pursuant to the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares Name(s) of Record Holder(s)
- ---------------------------------------- ----------------------------------------------
Certificate Nos. ----------------------------------------------
(if available): ----------------------------------------------
- ---------------------------------------- PLEASE PRINT
- ---------------------------------------- Address(es)
- ---------------------------------------- ---------------------------------------------
(Check one box if Shares ---------------------------------------------
will be tendered by book-entry transfer) ZIP CODE
[ ] The Depository Trust Company Daytime Area Code
[ ] Philadelphia Depository Trust Company and Tel. No.:
Account Number ---------------------------------------------
- ---------------------------------------- Signature(s):
Dated: ----------------------------------------------
- ---------------------------------------- ----------------------------------------------
</TABLE>
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to such Shares, in any such case together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and any other required documents, within
three trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
- --------------------------------------------- ----------------------------------------------
Address: AUTHORIZED SIGNATURE
- --------------------------------------------- Name:
- --------------------------------------------- ----------------------------------------------
ZIP CODE PLEASE PRINT
Area Code and Tel No.: Title:
- --------------------------------------------- ----------------------------------------------
Dated:
----------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
MORROW & CO., INC.
909 THIRD AVENUE
20TH FLOOR
NEW YORK, NEW YORK 10022
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
OCTEL COMMUNICATIONS CORPORATION
AT
$31 NET PER SHARE
BY
MEMO ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON FRIDAY, AUGUST 29, 1997, UNLESS EXTENDED.
July 23, 1997
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been appointed by Memo Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Lucent Technologies Inc., a
Delaware corporation ("Parent"), to act as Information Agent in connection with
the Purchaser's offer to purchase all outstanding shares of common stock, par
value $.001 per share (the "Shares"), of Octel Communications Corporation, a
Delaware corporation (the "Company") together with the associated rights (the
"Rights") to purchase preferred shares issued pursuant to the Company's Second
Amended and Restated Rights Agreement dated May 13, 1997 (the "Rights
Agreement"), at $31 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
July 23, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any supplements or amendments thereto, collectively
constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Unless the context otherwise requires, all references to Shares include the
associated Rights, and all references to the Rights include the beneifts that
may enure to holders of the Rights pursuant to the Rights Agreement. Enclose
herewith are copies of the following documents:
1. Offer to Purchase dated July 23, 1997;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman and Chief
Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
<PAGE> 2
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with space
provided for obtaining such client's instructions with regard to the Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to The Bank of New York, the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE OUTSTANDING SHARES
(DETERMINED ON A FULLY DILUTED BASIS FOR ALL OUTSTANDING STOCK OPTIONS AND ANY
OTHER RIGHTS TO ACQUIRE SHARES THAT ARE OR WOULD BE VESTED PRIOR TO DECEMBER 31,
1997) AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY,
AUGUST 29, 1997, UNLESS EXTENDED.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the stockholders of the Company and
unanimously recommends that stockholders of the Company accept the Offer and
tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 17, 1997 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the Company surviving the merger as a wholly owned
subsidiary of Parent (the "Merger"). In the Merger, each outstanding Share
(other than Shares owned by the Company or any subsidiary of the Company or by
Parent, the Purchaser or any other subsidiary of Parent or by stockholders, if
any, who are entitled to and who properly exercise dissenters' rights under
Delaware law) will be converted into the right to receive $31 per Share, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by The Bank of New York (the
"Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, an Agent's Message (as defined in the Offer to Purchase), and (c) any
other documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CURCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSTION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
2
<PAGE> 3
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent at the address and telephone number set
forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
MORROW & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
OCTEL COMMUNICATIONS CORPORATION
AT
$31 NET PER SHARE
BY
MEMO ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON FRIDAY, AUGUST 29, 1997, UNLESS EXTENDED.
July 23, 1997
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated July 23, 1997
(the "Offer to Purchase"), and a related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the "Offer")
relating to an offer by Memo Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Lucent Technologies Inc., a
Delaware corporation ("Parent"), to purchase shares of Common Stock, par value
$.001 per share (the "Shares"), of Octel Communications Corporation, a Delaware
corporation (the "Company"), together with the associated rights (the "Rights")
to purchase preferred shares issued pursuant to the Company's Second Amended and
Restated Rights Agreement dated May 13, 1997 (the "Rights Agreement"), at $31
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer. Also enclosed is the Letter to Stockholders
of the Company from the Chairman and Chief Executive Officer of the Company
accompanied by the Company's Solicitation/Recommendation Statement on Schedule
14D-9. Unless the context otherwise requires, all references to Shares include
the associated Rights, and all references to the Rights include the benefits
that may enure to holders of the Rights pursuant to the Rights Agreement.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The tender price is $31 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
stockholders of the Company and unanimously recommends that the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
<PAGE> 2
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of July 17, 1997 (the "Merger Agreement"), among Parent,
the Purchaser and the Company pursuant to which, following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company, with the Company
surviving the merger as a wholly owned subsidiary of Parent (the "Merger").
In the Merger, each outstanding Share (other than Shares owned by the
Company or by any subsidiary of the Company or by Parent, the Purchaser or
any other subsidiary of Parent or by stockholders, if any, who are entitled
to and who properly exercise dissenters' rights under Delaware law) will be
converted into the right to receive $31 per Share, without interest, as set
forth in the Merger Agreement and described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which would represent at least a majority of the
outstanding Shares (determined on a fully diluted basis for all outstanding
stock options and any other rights to acquire Shares that are or would be
vested prior to December 31, 1997) and (2) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder applicable to the purchase of Shares pursuant to the
Offer having expired or been terminated.
6. The Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on Friday, August 29, 1997, unless the Offer is extended by the
Purchaser.
7. The Purchaser will pay any stock transfer taxes with respect to
the transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified below. Your instructions to us should be forwarded promptly
to permit us to submit a tender on your behalf prior to the expiration of the
Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by The Bank of New York (the
"Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2 of the Offer to
Purchase, an Agent's Message (as defined in the Offer to Purchase), and (c) any
other documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF
THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK OF
OCTEL COMMUNICATIONS CORPORATION
(TOGETHER WITH THE ASSOCIATED RIGHTS)
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated July 23, 1997, of Memo Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Lucent Technologies Inc., a Delaware
corporation, and the related Letter of Transmittal, relating to shares of Common
Stock, par value $.001 per share of Octel Communications Corporation, a Delaware
corporation (the "Shares"), together with the associated rights to purchase
preferred shares pursuant to the Company's Second Amended and Restated Rights
Agreement dated May 13, 1997. Unless the context otherwise requires, all
references to Shares include the associated rights, and all references to the
Rights include the benefit that may enure to holders of the Rights pursuant to
the Rights Agreement.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set forth
in such Offer to Purchase and the related Letter of Transmittal.
<TABLE>
<S> <C>
Dated: _____________________ 1997 ___________________________________
SIGNATURE(S)
___________________________________
Number of Shares
to be Tendered
___________________________________
_____________________ Shares PLEASE PRINT NAME(S)
Address ___________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.
Taxpayer Identification or Social
Security No.___________________
</TABLE>
_____________
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
=========================================================
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the
minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. (a) The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
(b) So-called trust account The actual owner(1)
that is not a legal or valid
trust under State law
- ---------------------------------------------------------
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state
or local government, school
district, or prison) that
receives
agricultural program payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 (PAGE 2)
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan or a custodial account under Section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE--Section 6019 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to wilful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an under
payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated July 23,
1997, and the related Letter of Transmittal and is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
OCTEL COMMUNICATIONS CORPORATION
AT
$31 NET PER SHARE
BY
MEMO ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
LUCENT TECHNOLOGIES INC.
Memo Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Lucent Technologies Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of Common Stock, par
value $.001 per share (the "Shares"), of Octel Communications Corporation, a
Delaware corporation (the "Company"), together with the associated rights (the
"Rights") to purchase Preferred Shares issued pursuant to the Company's Second
Amended and Restated Rights Agreement dated May 13, 1997 (as amended, the
"Rights Agreement"), at $31 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated July 23,
1997 and in the related Letter of Transmittal (which together with any
amendments or supplements thereto, collectively constitute the "Offer"). Unless
the context otherwise requires, all references to Shares include the associated
Rights, and all references to the Rights include the benefits that may enure to
holders of the Rights pursuant to the Rights Agreement.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON FRIDAY, AUGUST 29, 1997 UNLESS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares that would constitute at least a majority of the outstanding Shares
(determined on a fully diluted basis for all outstanding stock options and any
other rights to acquire Shares that are or would be vested prior to December 31,
1997) (the "Minimum Condition") and (ii) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to
the purchase of Shares pursuant to the Offer having expired or been terminated.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of July 17, 1997 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer, the
Purchaser will be merged with and into the Company (the "Merger"). On the
effective date of the Merger, each outstanding Share (other than Shares owned by
the Company or by any subsidiary of the Company, Parent, the Purchaser or any
other subsidiary of Parent or by stockholders, if any, who are entitled to and
who properly exercise appraisal rights under Delaware Law) will be converted
into the right to receive $31, in cash, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares purchased 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 payment from the Purchaser and
transmitting payment to tendering stockholders whose Shares have been accepted
for payment. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
such Shares or timely confirmation of book-entry transfer of such Shares into
the Depositary's account at a Book-Entry Transfer Facility (as defined in the
Offer to Purchase) pursuant to the procedures set forth in Section 2 of the
Offer to Purchase, (b) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees, or,
in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase) and (c) any other documents required by the Letter of
Transmittal. Under no circumstances will interest be paid by the Purchaser on
the purchase price of the Shares to be paid by the Purchaser, regardless of any
extension of the Offer or any delay in making such payment.
The term "Expiration Date" means 5:00 P.M., New York City time, on Friday,
August 29, 1997, unless and until the Purchaser, in its sole discretion but
subject to the terms of the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date on which the Offer, as so extended by the
Purchaser, shall expire. The Purchaser expressly reserves the right, in its sole
discretion (but subject to the terms of the Merger Agreement), at any time or
from time to time, and regardless of whether or not any of the events set forth
in Section 14 of the Offer to Purchase shall have occurred, (i) to extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and the payment for, any Shares, by giving oral or written notice of
such extension to the Depositary and (ii) to amend the Offer in any other
respect by giving oral or written notice of such amendment to the Depositary.
The Purchaser shall not have any obligation to pay interest on the purchase
price for tendered Shares, whether or not the Purchaser exercises its right to
extend the Offer. There can be no assurance that the Purchaser will exercise the
right to extend the Offer. Any such extension will be followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
September 20, 1997. For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution as defined in Section 2 of the Offer to Purchase, the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the stockholder lists or, if applicable, who
are listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal
and all other tender offer materials may be directed to the Information Agent as
set forth below, and copies will be furnished promptly at the Purchaser's
expense.
The Information Agent is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 206-5879
Banks and Brokerage Firms Please Call:
(800) 662-5200
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Courier:
Tender & Exchange
Department (for Eligible Institutions only) Tender & Exchange
P.O. Box 11248 (212) 815-6213 Department
Church Street Station Confirm by Telephone: 101 Barclay Street
New York, New York 10286-1248 1-800-507-9357 Receive and Deliver Window
New York, New York 10286
</TABLE>
July 23, 1997
<PAGE> 1
NEWS RELEASE LUCENT TECHNOLOGIES
BELL LABS INNOVATIONS
Jane Moulton
Lucent Technologies
908-582-7658 office
973-763-7017 home
Email:[email protected]
John Callahan
Lucent Technologies
908-582-3060 (7/17/97 only)
202-530-7045 (after 7/18/97)
Email:[email protected]
Gregory Klaben
Octel
408-324-6571 office
408-255-2126 home
Email:[email protected]
LUCENT TECHNOLOGIES TO PURCHASE OCTEL
COMMUNICATIONS FOR $1.8 BILLION
COMBINATION WILL DELIVER INNOVATIVE VOICE, FAX, AND
ELECTRONIC MESSAGING CAPABILITIES TO BUSINESS, SERVICE
PROVIDER AND RESIDENTIAL CUSTOMERS
FOR IMMEDIATE RELEASE: Thursday, July 17, 1997
MURRAY HILL, N.J.-To expand the growth of its core business, Lucent
Technologies today said it is purchasing Octel Communications, a leader in
voice, fax and electronic messaging technologies, for $31 a share, or about $1.8
billion in an all-cash tender offer. Combining Octel with Lucent's messaging
unit will create a business with more than $1 billion in revenues serving an
industry growing at more than 20 percent a year.
The transaction is expected to be completed by the end of August. The
purchase is expected to be neutral to earnings in the first full year of
operation and additive to earnings thereafter.
"With this move, we can take advantage of the tremendous growth we're
already seeing in our core
<PAGE> 2
2
business," said Rich McGinn, president, Lucent Technologies. "We will be able to
immediately address the rapidly-growing global demand for the technologies that
support products like voice mail for wireless service providers and telephone
companies and networked messaging systems for large corporations."
"And it provides a fresh opportunity to deliver exciting new
capabilities to customers around the world, who are demanding easy,
'round-the-clock' access to their phone, fax and e-mail messages," McGinn said.
Robert Cohn, Octel's founder, chairman and CEO, will join Lucent's
senior executive team as president of the new messaging unit. He will report to
Bill O'Shea, President of Lucent's Business Communications Systems unit.
"Cohn has helped define and lead the messaging industry with the
delivery of advanced voice mail products and services and with his vision of
unified messaging, the next generation in messaging services," O'Shea said.
"We are very excited to become part of Lucent," said Cohn. "The
Lucent/Octel combination will allow us to do many more things for our customers.
And Lucent's commitment to messaging means that we will be an important part of
its future-and that is a strong opportunity for Octel employees."
"We're delighted to have Octel employees joining us," McGinn said.
"They have a well-deserved reputation for delivering innovative solutions to
customers around the world and that position will only get better in partnership
with Lucent."
Messaging, including voice, fax and electronic mail, has become a major
growth area in recent years among business and personal users. According to
market research estimates, the total messaging market is currently worth more
than $5 billion annually and is expected to double to $10 billion by 2000.
"Lucent and Octel have complementary strengths in messaging," Cohn
said. "Octel's technologies enable its enterprise voice mail products, for
instance, to work behind almost all types and models of PBX, central office and
wireless switches and excel at being networked together. And Octel has a
comprehensive offer for wireless and
<PAGE> 3
3
telephone company customers as messaging services demand increases."
"Lucent, on the other hand, has unparalleled relationships with those
network service operators and has delivered a complete portfolio of advanced
messaging products globally, including the IntuityTM Multimedia Messaging
System," he added. "Equally important, Lucent brings technological know-how that
will support the delivery of the next generation of advanced messaging
products."
"Providing outsourcing and professional services is an increasingly
important element of being successful in the messaging industry, O'Shea noted.
"Octel has a rapidly-growing professional services and outstanding
business-expanding at more than 25 percent a year-and the is a great fit with
Lucent's recently announced NetCare Services strategy," O'Shea said. NetCare is
a professional and network support services business that helps customers better
manage their increasingly sophisticated communications networks.
Cohn said both companies' can be assured of ongoing support and
service. "Investments in existing systems will be preserved as we introduce new
messaging capabilities to deliver compelling new applications and services."
Lucent said the acquisition would result in a significant one-time,
non-cash charge against its earnings. The charge involves an accounting writeoff
assigned to in-process research and development and will be taken in the fourth
fiscal quarter of 1997. The amount of the charge cannot be specifically
determined at this time, but Lucent expects it will have a significant effect on
net earnings for the fourth fiscal quarter of 1997 as well as the company's net
earnings for the fiscal year ending September 30, 1997.
O'Shea said there will be some efficiency and cost reduction
opportunities in corporate general and administrative functions and in other
parts of the business.
Founded in 1982, Octel sells voice mail systems in more than 70
countries. The company holds numerous patents in voice mail, automated attendant
and unified messaging. Octel's products are bought and used by businesses of all
sizes, governments, educational institutions, telephone
<PAGE> 4
4
companies and cellular service providers. It is one of the world's leading
outsourcers of voice mail, providing a wide range of outsourcing services to
phone companies and businesses. The company is headquartered in Milpitas, CA.,
and has development centers in California, Texas, the United Kingdom, France,
Israel and major operations centers in Texas and California. More information
about Octel is available on the company's Web sit at http://www.octel.com.
Lucent Technologies designs, builds and delivers a wide range of pubic
and private networks, communications systems and software, consumer and business
telephone systems and microelectronics components. Bell Labs is the research and
development arm for the company. More information about Lucent Technologies,
headquartered in Murray Hill, NJ, is available on its Web sire at
http://www.lucent.com.
Under the terms of the definitive agreement, Lucent will begin a cash
tender offer for all outstanding shares of Octel common stock for $31 per share.
The offer is expected to commence on July 23 and will be scheduled to close on
August 29. Any shares not purchased in the offer will be acquired for the same
price in cash, in a second-step merger.
The boards of directors of both companies have approved the
acquisition. The offer and merger are subject to the purchase of a majority of
the outstanding shares of Octel common stock, as well as other customary legal
requirements.
<PAGE> 1
EXHIBIT C
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
LUCENT TECHNOLOGIES INC.,
MEMO ACQUISITION CORP.
and
OCTEL COMMUNICATIONS CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I
The Offer
SECTION 1.01. The Offer......................................................... 2
SECTION 1.02. Company Actions .................................................. 4
ARTICLE II
The Merger
SECTION 2.01. The Merger ....................................................... 5
SECTION 2.02. Closing .......................................................... 6
SECTION 2.03. Effective Time ................................................... 6
SECTION 2.04. Effects of the Merger ............................................ 6
SECTION 2.05. Certificate of Incorporation
and Bylaws................................................... 6
SECTION 2.06. Directors ........................................................ 7
SECTION 2.07. Officers.......................................................... 7
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock........................................... 7
SECTION 3.02. Exchange of Certificates ......................................... 8
ARTICLE IV
Representations and Warranties of the Company
SECTION 4.01. Organization, Standing and Corporation
Power.............................................................10
SECTION 4.02. Subsidiaries .....................................................11
SECTION 4.03. Capital Structure ................................................11
SECTION 4.04. Authority; Noncontravention.......................................12
SECTION 4.05. SEC Documents; Financial
Statements ..................................................14
SECTION 4.06. Information Supplied .............................................14
SECTION 4.07. Absence of Certain Changes
or Events ...................................................15
SECTION 4.08. Litigation .......................................................16
SECTION 4.09. Contracts ........................................................16
</TABLE>
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Contents, p. 2
<TABLE>
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<S> <C>
SECTION 4.10. Compliance with laws .............................................17
SECTION 4.11. Absence of Changes in Benefit
Plans; Labor Relations.......................................18
SECTION 4.12. ERISA Compliance .................................................19
SECTION 4.13. Taxes ............................................................20
SECTION 4.14. No Excess Parachute Payments .....................................21
SECTION 4.15. Intellectual Property ............................................21
SECTION 4.16. State Takeover Statutes ..........................................21
SECTION 4.17. Rights Agreement .................................................22
SECTION 4.18. Brokers; Schedule of Fees
and Expenses.................................................22
SECTION 4.19. Opinion of Financial Advisor .....................................22
ARTICLE V
Representations and Warranties
of Parent and Sub
SECTION 5.01. Organization, Standing and
Corporate Power .............................................23
SECTION 5.02. Authority; Noncontravention.......................................23
SECTION 5.03. Information Supplied..............................................24
SECTION 5.04. Interim Operations of Sub ........................................25
SECTION 5.05. Brokers ..........................................................25
SECTION 5.06. Financing ........................................................25
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company..........................................25
SECTION 6.02. No Solicitation ..................................................28
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation
of Proxy Statement...........................................31
SECTION 7.02. Access to Information.............................................31
SECTION 7.03. Reasonable Efforts................................................32
SECTION 7.04. Company Stock Options.............................................33
SECTION 7.05. Directors.........................................................35
SECTION 7.06. Fees and Expenses.................................................36
SECTION 7.07. Indemnification...................................................38
SECTION 7.08. Certain Litigation................................................39
SECTION 7.09. Rights Agreement..................................................39
</TABLE>
<PAGE> 4
Contents, p. 3
<TABLE>
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<S> <C>
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation
To Effect The Merger.........................................39
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination.......................................................40
SECTION 9.02. Effect of Termination.............................................41
SECTION 9.03. Amendment.........................................................42
SECTION 9.04. Extension; Waiver.................................................42
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations,
Warranties and Agreements....................................42
SECTION 10.02. Notices..........................................................43
SECTION 10.03. Interpretation...................................................44
SECTION 10.04. Counterparts.....................................................45
SECTION 10.05. Entire Agreement; Third Party
Beneficiaries..................................................45
SECTION 10.06. Governing Law....................................................45
SECTION 10.07. Publicity........................................................45
SECTION 10.08. Assignment.......................................................45
SECTION 10.09. Enforcement......................................................46
SECTION 10.10. Severability.....................................................46
Exhibit A Conditions of the Offer
</TABLE>
<PAGE> 5
AGREEMENT AND PLAN OF MERGER dated as of
July 17, 1997, among LUCENT TECHNOLOGIES INC., a
Delaware corporation ("Parent"), MEMO ACQUISITION
CORP., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and OCTEL
COMMUNICATIONS CORPORATION, a Delaware corporation
(the "Company").
WHEREAS, in furtherance of the acquisition of the Company by
Parent on the terms and subject to the conditions set forth in this Agreement,
Parent proposes to cause Sub to make a tender offer (as it may be amended from
time to time as permitted under this Agreement, the "Offer") to purchase all the
outstanding shares of Common Stock, par value $.001 per share, of the Company
(together with any associated Rights (as defined in the Rights Agreement (as
defined)), the "Company Common Stock"; the shares of Company Common Stock being
hereinafter collectively referred to as the "Shares"), at a purchase price (the
"Offer Price") of $31.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the Offer and the merger of Sub with the Company (the
"Merger") upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding Share, other than Shares owned
directly or indirectly by Parent or the Company and Dissenting Shares (as
defined in Section 3.01(d)), will be converted into the right to receive the
price per Share paid in the Offer; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained,
<PAGE> 6
2
and intending to be legally bound hereby, Parent, Sub and the Company hereby
agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
initial expiration date for the Offer shall be August 29, 1997. The obligation
of Sub to, and of Parent to cause Sub to, accept for payment, and pay for, any
Shares tendered pursuant to the Offer shall be subject only to the conditions
set forth in Exhibit A (the "Offer Conditions") (any of which may be waived in
whole or in part by Sub in its sole discretion, provided that, without the
consent of the Company, Sub shall not waive the Minimum Condition (as defined in
Exhibit A)) and to the terms and conditions of this Agreement. Sub expressly
reserves the right to modify the terms of the Offer, except that, without the
consent of the Company, Sub shall not (i) reduce the number of Shares subject to
the Offer, (ii) reduce the Offer Price, (iii) amend or add to the Offer
Conditions, (iv) except as provided in the next sentence, extend the Offer, (v)
change the form of consideration payable in the Offer or (vi) amend any other
term of the Offer in any manner adverse to the holders of the Shares.
Notwithstanding the foregoing, Sub may, without the consent of the Company, (A)
extend the Offer, if at the scheduled or extended expiration date of the Offer
any of the Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (B) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer
and (C) extend the Offer on one or more occasions for an aggregate period of not
more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (A) or (B) of this sentence, if on such
expiration date there shall not have been tendered at least 90% of the
outstanding Shares. Parent and Sub agree that if all of the Offer Conditions are
not satisfied on any scheduled expiration date of the Offer then, provided that
all such conditions are reasonably capable of being satisfied, Sub shall extend
the Offer from time to time until such conditions are satisfied or waived,
provided that Sub shall not be required to extend the Offer beyond
<PAGE> 7
3
December 31, 1997. Subject to the terms and conditions of the Offer and this
Agreement, Sub shall, and Parent shall cause Sub to, accept for payment, and pay
for, all Shares validly tendered and not withdrawn pursuant to the Offer that
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer
as promptly as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1 and the documents included therein pursuant to which the Offer
will be made, together with any supplements or amendments thereto, the "Offer
Documents"). Parent and Sub agree that the Offer Documents shall comply as to
form in all material respects with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Sub with respect to information
supplied by the Company or any of its stockholders specifically for inclusion or
incorporation by reference in the Offer Documents. Each of Parent, Sub and the
Company agree promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and Parent and Sub further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment upon the Offer Documents prior to
their filing with the SEC or dissemination to the stockholders of the Company.
Parent and Sub agree to provide the Company and its counsel any comments Parent,
Sub or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for
<PAGE> 8
4
payment, and pay for, any Shares that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents that the Board of Directors of the
Company, at a meeting duly called and held, duly and unanimously adopted
resolutions adopting this Agreement, approving the Offer and the Merger,
determining, as of the date of such resolutions, that the terms of the Offer and
the Merger are fair to, and in the best interests of, the Company's
stockholders, recommending that the Company's stockholders accept the Offer,
tender their shares pursuant to the Offer and approve this Agreement (if
required) and approving the acquisition of Shares by Sub pursuant to the Offer
and the other transactions contemplated by this Agreement. The Company has been
advised by each of its directors and executive officers that each such person
currently intends to tender all Shares (other than Shares, if any, held by such
person that, if tendered, could cause such person to incur liability under the
provisions of Section 16(b) of the Exchange Act) owned by such person pursuant
to the Offer.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as supplemented
or amended from time to time, the "Schedule 14D-9") containing, subject to the
terms of this Agreement, the recommendation described in paragraph (a) and shall
mail the Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9
shall comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation or
warranty is made by the Company with respect to information supplied by Parent
or Sub specifically for inclusion in the Schedule 14D-9. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to
<PAGE> 9
5
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Sub and their agents shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will deliver, and will use their
reasonable efforts to cause their agents to deliver, to the Company all copies
and any extracts or summaries from such information then in their possession or
control.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Subject to the last two sentences of
this Section 2.01, upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), Sub shall be merged with and into the Company at the Effective Time (as
defined in Section 2.03). Following the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the DGCL. At the election
of Parent, to the
<PAGE> 10
6
extent that any such action would not cause a failure of a condition to the
Offer or the Merger, (i) any direct or indirect wholly owned subsidiary (as
defined in Section 10.03) of Parent may be substituted for and assume all of the
rights and obligations of Sub as a constituent corporation in the Merger or (ii)
the Company may be merged with and into Sub with Sub continuing as the Surviving
Corporation with the effects set forth above and in Section 2.04. In either such
event, the parties agree to execute an appropriate amendment to this Agreement
in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger will take
place at 10:00 a.m. (New York City time) on a date to be specified by Parent or
Sub, which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019, unless another date, time or place is agreed to in writing
by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time as Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and Bylaws. (a) The
Certificate of Incorporation of the Company as in effect immediately prior to
the Effective Time shall be amended as of the Effective Time so that Article
Fourth thereof shall read in its entirety as follows:
"FOURTH: Section 1. The total number of shares which
the Corporation shall have authority to issue
is 1,000 shares of common stock, par value
$1.00 per share."
<PAGE> 11
7
As so amended, such certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation, until thereafter changed or amended,
subject to Section 7.07, as provided therein or by applicable law.
(b) The Bylaws of the Company as in effect immediately prior
to the Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended, subject to Section 7.07, as provided therein or
by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or their respective successors
are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or their
respective successors are duly elected and qualified, as the case may be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $1.00 per share, of
the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent Owned Stock. Each
Share that is owned by the Company or by any subsidiary of the Company
and each Share that is owned by Parent, Sub or any other subsidiary of
Parent shall automatically be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Subject to Section 3.01(d), each
issued and outstanding Share
<PAGE> 12
8
(other than Shares to be canceled in accordance with Section 3.01(b))
shall be converted into the right to receive from the Surviving
Corporation in cash, without interest, the price per share paid in the
Offer (the "Merger Consideration"). As of the Effective Time, all such
Shares shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding
Shares held by a person (a "Dissenting Stockholder") who objects to the
Merger and complies with all the provisions of Delaware law concerning
the right of holders of Shares to dissent from the Merger and require
appraisal of their Shares ("Dissenting Shares") shall not be converted
as described in Section 3.01(c), but shall be converted into the right
to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to Delaware law. If, after the
Effective Time, such Dissenting Stockholder withdraws his demand for
appraisal or fails to perfect or otherwise loses his right to
appraisal, in any case pursuant to the DGCL, his Shares shall be deemed
to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice
of any demands for appraisal of Shares received by the Company and (ii)
the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate a bank or trust company to
act as paying agent in the Merger (the "Paying Agent"), and, from time to time
on, prior to or after the Effective Time, Parent shall make available, or cause
the Surviving Corporation to make available, to the Paying Agent cash in amounts
and at the times necessary for the prompt payment of the Merger Consideration
upon surrender of certificates representing Shares as part of the Merger
pursuant to Section 3.01 (it being understood that any and all interest earned
on funds
<PAGE> 13
9
made available to the Paying Agent pursuant to this Agreement shall be turned
over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Paying Agent or to such other agent or agents
as may be appointed by Parent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the Shares theretofore represented by
such Certificate shall have been converted pursuant to Section 3.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, payment may be made to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of such Certificate
or establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 3.01. No interest will
be paid or will accrue on the cash payable upon the surrender of any
Certificate.
(c) No Further Ownership Rights in Shares. All cash paid upon
the surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed, and there shall
be no further registration
<PAGE> 14
10
of transfers on the stock transfer books of the Surviving Corporation of the
Shares that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article III.
(d) No Liability. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered immediately
prior to such date on which any payment pursuant to this Article III would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.04), the cash payment in respect of such Certificate shall,
to the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
(e) Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing Shares shall have been lost, stolen or destroyed, the
Paying Agent shall pay to such holder the Merger Consideration required pursuant
to Section 3.01, in exchange for such lost, stolen or destroyed certificates,
upon the making of an affidavit of that fact by the holder thereof with such
assurances as the Paying Agent, in its discretion and as a condition precedent
to the payment of the Merger Consideration, may reasonably require of the holder
of such lost, stolen or destroyed certificates.
ARTICLE IV
Representations and Warranties of the Company
Except as set forth on the disclosure schedule delivered by
the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to Parent and Sub as
follows:
SECTION 4.01. Organization, Standing and Corporate Power. Each
of the Company and its subsidiaries (as defined in Section 10.03) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has all requisite corporate
power and authority to carry on its business as now being conducted. Each of the
Company and
<PAGE> 15
11
its subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate would not have a material
adverse effect (as defined in Section 10.03) on the Company. The Company has
delivered or made available to Parent complete and correct copies of its Amended
and Restated Certificate of Incorporation and By-Laws, in each case as amended
to the date hereof.
SECTION 4.02. Subsidiaries. Exhibit 21 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1996, includes all the
subsidiaries of the Company which as of the date of this Agreement are
Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC).
All the outstanding shares of capital stock of, or other equity interests in,
each such Significant Subsidiary have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens") and free of
any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
SECTION 4.03. Capital Structure. The authorized capital stock
of the Company consists of 200,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock, par value $.001 per share ("Preferred
Stock"). At the close of business on July 15, 1997, (i) 52,120,585 shares of
Company Common Stock and no shares of Preferred Stock were issued and
outstanding, (ii) no shares of Company Common Stock were held by the Company in
its treasury, (iii) 9,101,953 shares of Company Common Stock were reserved for
issuance pursuant to outstanding Stock Options under Stock Option Plans (as
defined in Section 7.04), (iv) shares of Company Common Stock were reserved for
issuance pursuant to the Company's 1987 Employee Stock Purchase Plan (the
"ESPP") and (v) shares of Series A Junior Participating Preferred Stock, par
value $.001 per share (the "Series A Preferred Stock") were reserved for
issuance in connection with the Company's Second Amended and Restated Rights
Agreement dated May 13, 1997 (the "Rights Agreement"). Except as set forth
above, at the close of business on July 15, 1997, no shares of capital stock or
other voting securities of the Company were issued, reserved for issuance or
outstanding. All
<PAGE> 16
12
outstanding shares of capital stock of the Company are, and all shares which may
be issued pursuant to the Stock Option Plans and the ESPP will be, when issued
in accordance with the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth above, there are
no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party, or by which the Company or any of its subsidiaries is
bound, obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. The Company is not a party to any voting
agreement with respect to the voting of any of its securities. There are not any
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries.
SECTION 4.04. Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to, if required by law, approval of the Merger by an affirmative vote of
the holders of a majority of the Shares (the "Company Stockholder Approval"), to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
this Agreement, to the Company Stockholder Approval if such approval is required
by law. This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation
<PAGE> 17
13
or to loss of a material benefit under, or result in the creation of any Liens
in or upon any of the properties or assets of the Company or any of its
subsidiaries under any provision of (i) the Amended and Restated Certificate of
Incorporation or By laws of the Company or the comparable organizational
documents of any of its subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or any of their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or (B) judgment,
order or decree applicable to the Company or any of its subsidiaries or any of
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a material adverse effect on
the Company, (y) impair in any material respect the ability of the Company to
perform its obligations under this Agreement or (z) prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court, administrative
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with respect to the Company
or any of its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the Merger or the
transactions contemplated by this Agreement, except for (1) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and filings under similar laws of certain foreign jurisdictions as may be
required ("Foreign Filings"), (2) the filing with the SEC and the Nasdaq Stock
Market, Inc. of (A) the Schedule 14D-9, (B) a proxy statement relating to the
Company Stockholder Approval, if such approval is required by law (as amended or
supplemented from time to time, the "Proxy Statement") and (C) such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (3) the
filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business and (4) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained
<PAGE> 18
14
or made would not, individually or in the aggregate, have a material adverse
effect on the Company or prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement.
SECTION 4.05. SEC Documents; Financial Statements. The Company
has filed all required reports, schedules, forms, statements and other documents
with the SEC since July 1, 1996 (the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act of 1933 (the "Securities Act"), or the Exchange Act, as
the case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents at the time they
were filed contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
presented the financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments and the absence of footnotes). Except as
set forth in the Filed SEC Documents (as defined in Section 4.07) or as incurred
in the ordinary course of business since the date of the most recent financial
statements included in the Filed SEC Documents, neither the Company nor any of
its subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be required under GAAP
to be set forth on a consolidated balance sheet of the Company and its
subsidiaries taken as a whole and which, individually or in the aggregate, would
have a material adverse effect on the Company.
SECTION 4.06. Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9
or (iii) the information to be filed by the Company in connection with the Offer
pursuant to Rule 14f-1 promulgated
<PAGE> 19
15
under the Exchange Act (the "Information Statement"), will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Schedule 14D-9 and the Information Statement will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Parent or Sub specifically
for inclusion or incorporation by reference therein.
SECTION 4.07. Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed and publicly available prior to the date of
this Agreement (the "Filed SEC Documents"), since the date of the most recent
financial statements included in the Filed SEC Documents and, in the case of the
following clause and clauses (ii), (iii), (iv), (vi) and (vii) until the date
hereof, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and there
has not been (i) any material adverse change (as defined in Section 10.03) in
the Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock (other than the Rights issued or to be issued
pursuant to the Rights Agreement), (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (w) any granting by the
Company or any of its subsidiaries to any director or officer of the Company or
its subsidiaries of any increase in compensation, except in the ordinary course
of business consistent with prior practice or as was required under employment
agreements in effect as of the date of the most recent financial statements
included in the Filed SEC Documents, (x) any granting by the Company or any of
its subsidiaries to any director or officer of any stock options, except as was
required under employment agreements in effect as of the date of the most recent
financial statements included in the Filed SEC Documents, (y) any granting by
the Company or any of its subsidiaries to any officer of any increase in
<PAGE> 20
16
severance or termination pay, except as was required under any employment,
severance or termination agreements, plans or arrangements in effect as of the
date of the most recent financial statements included in the Filed SEC Documents
or (z) any entry by the Company or any of its subsidiaries into any employment,
severance or termination agreement with any officer, (v) any damage, destruction
or loss, whether or not covered by insurance, that individually or in the
aggregate would have a material adverse effect on the Company, (vi) any change
in accounting methods, principles or practices having a material adverse effect
on the Company, except insofar as may have been required by a change in GAAP or
(vii) any tax election that individually or in the aggregate would have a
material adverse effect on the Company.
SECTION 4.08. Litigation. There is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries as to which there is a
reasonable likelihood of an adverse determination that individually or in the
aggregate would have a material adverse effect on the Company, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against, or, to the knowledge of the Company,
investigation by any Governmental Entity involving, the Company or any of its
subsidiaries that individually or in the aggregate would have a material adverse
effect on the Company.
SECTION 4.09. Contracts. Except as disclosed in the Filed SEC
Documents, as of the date hereof, there are no contracts or agreements that are
of a nature required to be filed as an exhibit under the Exchange Act and the
rules and regulations promulgated thereunder. Neither the Company nor any of its
subsidiaries is in violation of nor in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under) any lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that individually or in the
aggregate would not have a material adverse effect on the Company. As of the
date hereof, the Company is not bound by any contract, agreement, arrangement or
understanding with any affiliate of the Company that is currently in effect
other than (i) agreements that are disclosed in the Filed SEC Documents or (ii)
not of a nature required to be disclosed in the SEC Documents. The Company is
not a party to or otherwise bound by any agreement or
<PAGE> 21
17
covenant not to compete or by any agreement or covenant restricting in any
material respect the development, marketing or distribution of the Company's
products and services.
SECTION 4.10. Compliance with Laws. (i) Each of the Company
and its subsidiaries are in compliance with all applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees and orders of any
Governmental Entity (collectively, "Legal Provisions") applicable to their
business or operations, except for instances of possible noncompliance that
individually or in the aggregate would not have a material adverse effect on the
Company or prevent or materially delay the consummation of the Merger or the
transactions contemplated by this Agreement. Each of the Company and its
subsidiaries has in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights, including all authorizations under Environmental Laws (as
hereinafter defined) ("Permits"), necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under, or violation of, any such Permit, except for the
lack of Permits and for defaults under, or violations of, Permits, which lack,
default or violation individually or in the aggregate would not have a material
adverse effect on the Company.
(ii) The term "Environmental Laws" means any Federal, state or
local statute, ordinance, rule, regulation, policy, permit, consent,
approval, license, judgment, order, decree or injunction relating to:
(A) Releases (as defined in 42 U.S.C. Section 9601(22)) or threatened
Releases of Hazardous Material (as hereinafter defined) into the
environment, (B) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of Hazardous
Material or (C) the health or safety of employees in the workplace
environment. The term "Hazardous Material" means (1) hazardous
substances (as defined in 42 U.S.C. Section9601(14)), (2) petroleum,
including crude oil and any fractions thereof, (3) natural gas,
synthetic gas and any mixtures thereof, (4) asbestos and/or asbestos
containing material, (5) PCBs or materials containing PCBs and (6) any
material regulated as a medical waste or infectious waste.
(iii) During the period of ownership or operation by the
Company and its subsidiaries of any of their
<PAGE> 22
18
current or previously owned or leased properties, there have been no
Releases of Hazardous Material by the Company or any of its
subsidiaries in, on, under or affecting such properties or any
surrounding site, and neither the Company nor any of its subsidiaries
has disposed of any Hazardous Material in a manner that has led, or
could reasonably be anticipated to lead to a Release, except in each
case for those which individually or in the aggregate would not have a
material adverse effect on the Company, and except as disclosed in the
Filed SEC Documents. The Company and its subsidiaries have not received
any written notice of, or entered into any order, settlement or decree
relating to: (A) any violation of any Environmental Laws or the
institution or pendency of any suit, action, claim, proceeding or
investigation by any Governmental Entity or any third party in
connection with any alleged violation of Environmental Laws, (B) the
response to or remediation of Hazardous Material at or arising from any
of the Company's properties or any subsidiary's properties or (C)
payment for, response to or remediation of Hazardous Material at or
arising from any of the Company's properties or any subsidiary's
properties, except in each case for any such notices, orders,
settlements or decrees which individually or in the aggregate would not
have a material adverse effect on the Company.
SECTION 4.11. Absence of Changes in Benefit Plans; Labor
Relations. Except as disclosed in the Filed SEC Documents, since the date of the
most recent financial statements included in the Filed SEC Documents, until the
date hereof, there has not been any adoption or amendment (or any agreement to
adopt or amend) in any material respect by the Company or any of its
subsidiaries of any material employment contract, material collective bargaining
agreement or any material bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other material plan, arrangement or understanding
(whether or not legally binding) providing material benefits to any current
employee, officer or director of the Company or any subsidiary (collectively,
"Benefit Plans"). Except as disclosed in the Filed SEC Documents, there exist,
as of the date hereof, no material employment, consulting, severance,
termination or indemnification agreements, arrangements or understandings
between the Company or any of its subsidiaries, and any current employee,
officer or director of the Company. There
<PAGE> 23
19
are no collective bargaining or other labor union agreements to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound. Since July 1, 1995, neither the Company nor any of
its subsidiaries has encountered any labor union organizing activity, nor had
any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts.
SECTION 4.12. ERISA Compliance. (i) Schedule 4.12(i) to the
Company Disclosure Schedule contains a list and brief description of all
material "employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Pension Plans"), material "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit Plans
maintained, or contributed to, by the Company or any of its subsidiaries or any
person or entity that, together with the Company and its subsidiaries, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code") (the Company and each
such other person or entity, a "Commonly Controlled Entity") for the benefit of
any current employees, officers or directors of the Company or any of its
subsidiaries. The Company has made available to Parent true, complete and
correct copies of (1) each Benefit Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), (2) the most recent annual report on Form
5500 filed with the Internal Revenue Service with respect to each Benefit Plan
(if any such report was required), (3) the most recent summary plan description
for each Benefit Plan for which such summary plan description is required and
(4) each trust agreement and group annuity contract relating to any Benefit
Plan. Except as would not have a material adverse effect on the Company, each
Benefit Plan has been administered in accordance with its terms. Except as would
not have a material adverse effect on the Company, the Company, each of its
subsidiaries and all the Benefit Plans are all in compliance with applicable
provisions of ERISA and the Code.
(ii) Except as would not have a material adverse effect on the
Company, all Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such
Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any event occurred since
the date of its most recent determination letter or application
therefor
<PAGE> 24
20
that would adversely affect its qualification or materially increase
its costs.
(iii) Neither the Company, nor any of its subsidiaries, nor
any Commonly Controlled Entity has maintained, contributed or been
obligated to contribute to any Benefit Plan that is subject to Title IV
of ERISA.
(iv) Schedule 4.12(iv) to the Company Disclosure Schedule
lists all outstanding Stock Options as of July 11, 1997, showing for
each such option: (1) the number of shares issuable, (2) the number of
vested shares, (3) the date of expiration and (4) the exercise price.
(v) Except as provided by this Agreement, no employee of the
Company or any of its subsidiaries will be entitled to any additional
compensation or benefits or any acceleration of the time of payment or
vesting of any compensation or benefits under any Benefit Plan as a
result of the transactions contemplated by this Agreement.
(vi) The deduction of any amount payable pursuant to the terms
of the Benefit Plans will not be subject to disallowance under Section
162(m) of the Code.
SECTION 4.13. Taxes. Except to the extent that failure to do
so would not have a material adverse effect on the Company, each of the Company
and its subsidiaries has filed all tax returns and reports required to be filed
by it and has paid, or established adequate reserves for, all taxes required to
be paid by it. Except as would not have a material adverse effect on the
Company, no deficiencies for any taxes have been proposed, asserted or assessed
against the Company, and no requests for waivers of the time to assess any such
taxes are pending. The Federal income tax returns of the Company and each of its
subsidiaries consolidated in such returns have been examined by and settled with
the United States Internal Revenue Service for all years through the fiscal year
ended June 30, 1992. The statute of limitations on assessment or collection of
any Federal income taxes due from the Company or any of its subsidiaries has
expired for all taxable years of the Company or such subsidiaries through the
fiscal year ended June 30, 1991. As used in this Agreement, "taxes" shall
include all Federal, state, local and foreign income, property, sales, excise
and other taxes, tariffs or governmental charges of any nature whatsoever.
<PAGE> 25
21
SECTION 4.14. No Excess Parachute Payments. No amount that
could be received (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company or any of its subsidiaries who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.28OG-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Plan currently in effect
would be an "excess parachute payment" (as such term is defined in Section
28OG(b)(1) of the Code). No such person is entitled to receive any additional
payment from the Company or any of its subsidiaries, the Surviving Corporation
or any other person (a "Parachute Gross-Up Payment") in the event that the
excise tax of Section 4999(a) of the Code is imposed on such person. The Board
of Directors of the Company has not granted to any officer, director or employee
of the Company any right to receive any Parachute Gross-Up Payment.
SECTION 4.15. Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trade secrets, trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights and
other proprietary intellectual property rights and computer programs which are
material to the conduct of the business of the Company taken as a whole
(collectively, "Intellectual Property Rights"). Except as would not have a
material adverse effect on the Company, the Company will continue to own or be
licensed to the Intellectual Property Rights after consummation of the Offer and
the Merger. Except as would not have a material adverse effect on the Company,
no claim of any infringement of any Intellectual Property Rights of any third
party has been made or asserted against the Company or any of its subsidiaries
in respect of the operation of the Company's or any subsidiary's business. To
the knowledge of the Company, no person is infringing the rights of the Company
or any subsidiary with respect to any Intellectual Property Right that
individually or in the aggregate would have a material adverse effect on the
Company. Neither the Company nor any subsidiary has licensed, or otherwise
granted, to any third party, any material rights in or to any Intellectual
Property Rights.
SECTION 4.16. State Takeover Statutes. The Board of Directors
of the Company has approved the Offer, the Merger and this Agreement, and such
approval is sufficient to render inapplicable to the Offer, the Merger, this
Agreement and the transactions contemplated by this
<PAGE> 26
22
Agreement the provisions of Section 203 of the DGCL to the extent, if any, such
Section is applicable to the Offer, the Merger, this Agreement and the
transactions contemplated by this Agreement.
SECTION 4.17. Rights Agreement. The Board of Directors of the
Company has adopted resolutions providing that the Rights Agreement shall be
amended, and the Rights Agreement shall be so amended, within two business days
following the date hereof, to (i) render the Rights Agreement inapplicable to
the Offer, the Merger, this Agreement and the acquisition of Shares by Sub
pursuant to the Offer, (ii) ensure that (y) none of Parent, Sub or any of their
respective affiliates is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement solely by virtue of the execution of
this Agreement, commencement and consummation of the Offer, the acquisition of
Shares by Sub pursuant to the Offer and the consummation of the Merger and (z) a
Distribution Date or a Shares Acquisition Date (as such terms are defined in the
Rights Agreement) does not occur by reason of the Offer, the Merger, the
execution of this Agreement, the acquisition of the Shares by Sub pursuant to
the Offer, or the consummation of the Merger and (iii) provide that the Final
Expiration Date (as defined in the Rights Agreement) shall occur immediately
prior to the Effective Time, and such amendment will not be further amended by
the Company without the prior consent of Parent in its sole discretion.
SECTION 4.18. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than
Goldman, Sachs & Co. and Hambrecht & Quist LLC, the fees and expenses of which
will be paid by the Company, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The Company has furnished to Parent true and complete copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the persons to
whom such fees are payable.
SECTION 4.19. Opinion of Financial Advisor. The Company has
received the opinions of Goldman, Sachs & Co. and Hambrecht & Quist LLC, dated
the date hereof, to the effect that, as of such date, the consideration to be
received in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders (in the case of Hambrecht & Quist, from a financial
point of view),
<PAGE> 27
23
a signed copy of which opinion will be promptly delivered to Parent.
ARTICLE V
Representations and Warranties
of Parent and Sub
Parent and Sub represent and warrant to the Company as
follows:
SECTION 5.01. Organization, Standing and Corporate Power. Each
of Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed individually or in the aggregate would
not have a material adverse effect on Parent. Parent has delivered to the
Company complete and correct copies of its Certificate of Incorporation and
By-Laws and the Certificate of Incorporation and By-Laws of Sub, in each case as
amended to the date hereof.
SECTION 5.02. Authority; Noncontravention. Parent and Sub have
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Sub. This Agreement has been duly executed and delivered
by Parent and Sub, and constitutes a valid and binding obligation of each such
party, enforceable against each such party in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancelation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of Parent or Sub under, any provision of (i) the
Certificate of Incorporation or By-Laws
<PAGE> 28
24
of Parent or Sub, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or Sub or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
the following sentence, any (A) statute, law, ordinance, rule or regulation or
(B) judgment, order or decree applicable to Parent or Sub or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not (x) have a material adverse effect on Parent, (y) impair
in any material respect the ability of each of Parent and Sub to perform its
obligations under this Agreement, as the case may be, or (z) prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Parent or Sub in connection with the execution and delivery
of this Agreement by Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated by this Agreement, except for (1) Foreign Filings and
the filing of a premerger notification and report form under the HSR Act, (2)
the filing with the SEC of (A) the Offer Documents and (B) such reports under
Sections 13(a), 13(d) and 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement (3) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and (4) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the "blue sky" laws of various states, the
failure of which to be obtained or made would not, individually or in the
aggregate, have a material adverse effect on Parent or prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
SECTION 5.03. Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the Information Statement or (iv) the Proxy Statement will, in the case of
the Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy
<PAGE> 29
25
Statement, at the time the Proxy Statement is first mailed to the Company's
stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that (other than
with respect to the Proxy Statement) no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
SECTION 5.04. Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
SECTION 5.05. Brokers. No broker, investment banker, financial
advisor or other person, other than Deutsche Morgan Grenfell Inc., the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
SECTION 5.06. Financing. At the expiration of the Offer and
the Effective Time, Parent and Sub will have available all the funds necessary
for the acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all shares of Company Common Stock validly tendered into the
Offer or outstanding at the Effective Time.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of the Company. (a) Conduct of the
Business by the Company. Until the earlier of termination of this Agreement and
consummation of the Offer, the Company shall, and shall cause its subsidiaries
to, carry on their respective businesses in the ordinary course consistent with
the manner as heretofore conducted
<PAGE> 30
26
and, to the extent consistent therewith, use commercially reasonable efforts to
(x) preserve intact their current business organization, (y) keep available the
services of their current officers and employees and (z) preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them. Without limiting the generality of
the foregoing, during the period from the date of this Agreement until the
earlier termination of this Agreement and consummation of the Offer, other than
as set forth in Section 4.01 of the Company Disclosure Schedule or as otherwise
contemplated by this Agreement, the Company shall not, and shall not permit any
of its subsidiaries to, without Parent's prior written consent (which shall not
be unreasonably withheld):
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent or
pursuant to the Rights Agreement, (x) declare, set aside or pay any
dividends on, or make any other distributions (whether in cash, stock
or property), in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock (other than the issuance
of shares of Company Common Stock upon the exercise of Stock Options
outstanding on the date of this Agreement and in accordance with their
present terms) or (z) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than (y) pursuant to the Rights Agreement or (z) the issuance of
shares of Company Common Stock upon the exercise of Stock Options
outstanding on the date of this Agreement and in accordance with their
present terms);
(iii) amend its Amended and Restated Certificate of
Incorporation, By-Laws or other comparable charter or organizational
documents;
<PAGE> 31
27
(iv) acquire or agree to acquire (including, without
limitation, by merger, consolidation or acquisition of stock or assets)
any business, including through the acquisition of any interest in any
corporation, partnership, joint venture, association or other business
organization or division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or
otherwise dispose of any of its properties or assets, other than in the
ordinary course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, or guarantee any
debt securities of another person, other than short-term bank financing
in the ordinary course of business consistent with past practice or (z)
make any loans, advances or capital contributions to, or investments
in, any other person, other than in the ordinary course of business
consistent with past practice;
(vii) except as disclosed on Schedule 6.01(a)(vii) to the
Company Disclosure Schedule, make or agree to make any new capital
expenditure or expenditures;
(viii) except as required to comply with applicable law or
agreements, plans or arrangements existing on the date hereof, (A)
adopt, enter into, terminate or amend in any material respect any
employment contract, collective bargaining agreement or Benefit Plan,
(B) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee (except for normal
increases of cash compensation or cash bonuses in the ordinary course
of business consistent with past practice), (C) pay any benefit not
provided for under any Benefit Plan or any other benefit plan or
arrangement of the Company or its subsidiaries, (D) increase in any
manner the severance or termination pay of any officer or employee, (E)
except as permitted in clause (B), grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or
Benefit Plan (including the grant of stock options, stock appreciation
rights, stock based or stock related awards, performance units or
restricted stock or the removal of existing restrictions in any Benefit
Plans or agreements or awards made thereunder), (F) take any action to
fund or in any other way secure the payment
<PAGE> 32
28
of compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan or (G) take any action to
accelerate the vesting of, or cash out rights associated with, any
Stock Options;
(ix) enter into any agreement of a nature that would be
required to be filed as an exhibit to Form 10-K under the Exchange Act,
other than contracts for the sale of the Company's products in the
ordinary course of business;
(x) except as required by GAAP, make any material change in
accounting methods, principles or practices;
(xi) make any material tax election or enter into any
settlement or compromise with respect to any material income tax
liability; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.02. No Solicitation. (a) The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or permit any
of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative or agent retained by it or
any subsidiary to, directly or indirectly, (i) solicit, initiate or knowingly
encourage the submission of any Takeover Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any nonpublic information with respect to, or take any other action
designed or reasonably likely to facilitate any inquiries or the making of any
proposal that constitutes any Takeover Proposal; provided, however, that if, at
any time prior to the acceptance for payment of Shares pursuant to the Offer,
the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that it is reasonably advisable to do so in
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response to a Takeover Proposal which was
not solicited subsequent to the date hereof, and subject to compliance with
Section 6.02(c), (x) furnish information with respect to the Company to any
person pursuant to a customary confidentiality agreement and (y) participate in
discussions and negotiations regarding such Takeover Proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by any director, officer or employee of the Company or
any of its subsidiaries or any investment banker, financial advisor, attorney,
accountant
<PAGE> 33
29
or other representative or agent of the Company or any of its subsidiaries shall
be deemed to be a breach of this Section 6.02(a) by the Company. For purposes of
this Agreement, "Takeover Proposal" means any inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company and its subsidiaries, taken as a
whole (other than the purchase of the Company's products in the ordinary course
of business), or more than a 20% interest in the total voting securities of the
Company or any of its subsidiaries or any tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its subsidiaries or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Except as set forth in this Section 6.02, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Offer, the Merger or this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal or (iii) cause the
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement") related
to any Takeover Proposal. Notwithstanding the foregoing, in the event that prior
to the acceptance for payment of Shares pursuant to the Offer the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is reasonably advisable to do so in order to comply
with its fiduciary duties to the Company's stockholders under applicable law,
the Board of Directors of the Company may, in response to an unsolicited
Superior Proposal (as defined below) (subject to the following proviso), (x)
withdraw or modify its approval or recommendation of the Offer, the Merger or
this Agreement or (y) approve or recommend any such Superior Proposal if
concurrently with such approval or recommendation the Company terminates this
Agreement and enters into an Acquisition Agreement with respect to a Superior
Proposal; provided, that in the case of this clause (y), only at a time that is
after the later of (i) the third business day following Parent's receipt of
written notice advising Parent that the Board of Directors of the Company has
received a Superior Proposal, specifying
<PAGE> 34
30
the material terms of such Superior Proposal and identifying the person making
such Superior Proposal and (ii) in the event of any amendment to the price or
any material term of a Superior Proposal, one business day following Parent's
receipt of written notice containing the material terms of such amendment,
including any change in price (it being understood that each further amendment
to the price or any material terms of a Superior Proposal shall necessitate an
additional written notice to Parent and an additional one business day period
prior to which the Company can take the actions set forth in clause (y) above).
For purposes of this Agreement, a "Superior Proposal" means any bona fide
Takeover Proposal made by a third party (i) that is on terms which the Board of
Directors of the Company determines in its good faith judgment (based on
consultation with the Company's financial advisor) to be more favorable to the
Company's stockholders than the Offer and the Merger and (ii) for which
financing, to the extent required, is then committed or which, in the good faith
judgment of the Board of Directors of the Company, is capable of being obtained
by such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall promptly advise
Parent orally and in writing of any request for nonpublic information (except in
the ordinary course of business and not in connection with a possible Takeover
Proposal) or of any Takeover Proposal known to it, the material terms and
conditions of such request or Takeover Proposal and the identity of the person
making such request or Takeover Proposal. The Company will promptly inform
Parent of any material change in the details (including amendments or proposed
amendments) of any such request or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment of
the Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with applicable law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.02(b), withdraw or modify, or
propose to withdraw or modify, its position with respect to the Offer, the
Merger or this Agreement or approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
<PAGE> 35
31
ARTICLE VII
Additional Agreements
SECTION 7.01. Stockholder Approval; Preparation of Proxy
Statement. (a) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Company Stockholder
Approval. The Company shall, through its Board of Directors, recommend to its
stockholders that the Company Stockholder Approval be given. Notwithstanding the
foregoing, if Sub or any other subsidiary of Parent shall acquire at least 90%
of the outstanding Shares, the parties shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a Stockholders Meeting in accordance with
Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law,
the Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and shall use its
best efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and will supply Parent with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the Stockholders Meeting there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall
promptly prepare and mail to its stockholders such an amendment or supplement.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. The Company shall, and
shall cause each of its subsidiaries to, afford to Parent and to the officers,
employees, accountants,
<PAGE> 36
32
counsel and other representatives of Parent reasonable access, during normal
business hours during the period prior to the Effective Time, to all their
properties, books, contracts, commitments and records and, during such period,
the Company shall, and shall cause each of its subsidiaries to, make available
promptly to Parent upon request (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of the federal or state securities laws or
the federal tax laws, or state, local or foreign tax laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request (including the Company's outside accountants' work papers).
Except as otherwise agreed to by the Company, and notwithstanding termination of
this Agreement, the terms of the Confidentiality Agreement dated April 29, 1997,
between Parent and the Company (the "Confidentiality Agreement") shall apply to
all information about the Company which has been furnished under this Agreement
by the Company to Parent or Sub.
SECTION 7.03. Reasonable Efforts. Upon and subject to the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other transactions contemplated by this Agreement, including
using reasonable efforts to take the following actions: (i) the taking of all
reasonable acts necessary to cause the Offer Conditions to be satisfied, (ii)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Govern mental Entities, if
any) and the taking of all reasonable steps as may be necessary to avoid an
action or proceeding by any Governmental Entity, (iii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iv) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (v)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In
<PAGE> 37
33
connection with and without limiting the foregoing, but subject to the terms and
conditions hereof, the Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or becomes applicable to
the Offer, the Merger, this Agreement or any other transactions contemplated by
this Agreement, use all reasonable efforts to ensure that the Offer, the Merger
and the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger, this Agreement and the other transactions contemplated by this
Agreement.
(b) The Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
SECTION 7.04. Company Stock Options. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of the
Company (or, if appropriate, any committee administering the Company Stock
Plans, as defined below) shall adopt such resolutions or take such other
actions, if any, as may reasonably be required to effect the following:
(i) adjust the terms of all outstanding options to purchase
Company Common Stock (the "Stock Options") granted under any plan or
arrangement providing for the grant of options to purchase Company
Common Stock to current or former directors, officers, employees or
consultants of the Company or its subsidiaries (the "Company Stock
Plans"), whether vested or unvested, as necessary to provide that, at
the Effective Time, each Stock Option outstanding immediately prior to
the Effective Time shall be amended and converted into an option to
acquire, on the same terms and conditions as were applicable under the
Stock Option, the number of
<PAGE> 38
34
shares of common stock of Parent ("Parent Common Stock") determined by
multiplying the number of shares of Company Common Stock subject to
such Stock Option by a fraction, the numerator of which is $31.00 and
the denominator of which is the average closing price of Parent Common
Stock listed on the New York Stock Exchange for three (3) trading days
immediately preceding (but not including) the date of the Effective
Time, rounded down to the nearest whole share, at a price per share of
Parent Common Stock equal to (A) the aggregate exercise price for the
shares of Company Common Stock otherwise purchasable pursuant to such
Stock Option divided by (B) the aggregate number of shares of Parent
Common Stock deemed purchasable pursuant to such Stock Option (each, as
so adjusted, an "Adjusted Option"), rounded up to the nearest whole
cent;
(ii) adjust the terms of each Stock Option granted under the
Company's 1988 Directors' Stock Option Plan (each a "Director Stock
Option") so that if, following consummation of the Offer, the holder of
such Director Stock Option is terminated from his or her position as a
director of the Company, each such Director Stock Option shall vest and
become exercisable in full and shall remain exercisable through the
Effective Time; and
(iii) make such other changes to the Company Stock Plans as
Parent and the Company may agree to are appropriate to give effect to
the Merger,
(b) The adjustments provided herein with respect to any Stock
Options that are "incentive stock options" as defined in Section 422 of the Code
shall be and are intended to be effected in a manner which is consistent with
Section 424(a) of the Code.
(c) At the Effective Time, by virtue of the Merger and without
the need of any further corporate action, Parent shall assume the Company Stock
Plans, with the result that all obligations of the Company under the Company
Stock Plans, including with respect to Stock Options outstanding at the
Effective Time shall be obligations of Parent following the Effective Time.
(d) No later than the Effective Time, Parent shall prepare and
file with the SEC a registration statement on Form S-8 (or another appropriate
form) registering a number of shares of Parent Common Stock equal to the number
of shares subject to the Adjusted Options. Such
<PAGE> 39
35
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for so
long as any Adjusted Options may remain outstanding.
(e) As soon as practicable after the Effective Time, Parent
shall deliver to the holders of Stock Options appropriate notices setting forth
such holders' rights pursuant to the respective Company Stock Plans and the
agreements evidencing the grants of such Stock Options and that such Stock
Options and agreements shall be assumed by Parent and shall continue in effect
on the same terms and conditions (subject to the adjustments required by this
Section 7.04).
(f) A holder of an Adjusted Option may exercise such Adjusted
Options in whole or in part in accordance with its terms by delivering a
properly executed notice of exercise to Parent, together with the consideration
therefor and the Federal withholding tax information, if any, required in
accordance with the related Company Stock Plan.
(g) The Company shall terminate the ESPP by having its Board
of Directors amend the ESPP as necessary to provide that: (i) any shares of
Company Common Stock to be purchased under the ESPP on a new "Exercise Date" (as
such term is defined in the ESPP) set by the Board of Directors, which Exercise
Date shall be on the last trading day immediately prior to consummation of the
Offer, or such earlier time as the Board shall specify, and (ii) immediately
following such purchase of shares of Company Common Stock, the ESPP shall
terminate.
(h) Except as otherwise contemplated by this Section 7.04 and
except to the extent required under the respective terms of the Stock Options,
all restrictions or limitations on transfer and vesting with respect to Stock
Options awarded under the Company Stock Plans or any other plan, program or
arrangement of the Company or any of its subsidiaries, to the extent that such
restrictions or limitations shall not have already lapsed, shall remain in full
force and effect with respect to such options after giving effect to the Merger
and the assumption by Parent as set forth above.
SECTION 7.05. Directors. Promptly upon the acceptance for
payment of, and payment for, Shares by Sub pursuant to the Offer, Sub shall be
entitled to designate such number of directors on the Board of Directors of the
Company as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, a majority of such
<PAGE> 40
36
directors, and the Company shall, at such time, cause Sub's designees to be so
elected by its existing Board of Directors; provided, however, that in the event
that Sub's designees are elected to the Board of Directors of the Company, until
the Effective Time such Board of Directors shall have at least two directors who
are directors of the Company on the date of this Agreement and who are not
officers of the Company or any of its subsidiaries (the "Independent Directors")
and; provided further that, in such event, if the number of Independent
Directors shall be reduced below two for any reason whatsoever, the remaining
Independent Director shall designate a person to fill such vacancy who shall be
deemed to be an Independent Director for purposes of this Agreement or, if no
Independent Directors then remain, the other directors of the Company on the
date hereof shall designate two persons to fill such vacancies who shall not be
officers or affiliates of the Company or any of its subsidiaries, or officers or
affiliates of Parent or any of its subsidiaries, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable law, the Company shall take all action requested by Parent necessary
to effect any such election, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees
to make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Sub's designees). In
connection with the foregoing, the Company will promptly, at the option of
Parent, either increase the size of the Company's Board of Directors and/or
obtain the resignation of such number of its current directors as is necessary
to enable Sub's designees to be elected or appointed to, and to constitute a
majority of the Company's Board of Directors as provided above.
SECTION 7.06. Fees and Expenses. (a) Except as provided below
in this Section 7.06, all fees and expenses incurred in connection with the
Offer, the Merger, this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether or
not the Offer or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent the amount of $50 million (the "Termination Fee") under the
circumstances and at the times set forth as follows:
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37
(i) if the Company terminates this Agreement under Section
9.01(e), the Company shall pay 50% of the Termination Fee
simultaneously with such termination, and 50% of the Termination Fee
upon consummation of the transactions contemplated by the Superior
Proposal giving rise to the Company's right to terminate this Agreement
under Section 9.01(e), or upon the earlier consummation of another
Company Acquisition (as defined in paragraph 7.06(c) below) provided
that such other Company Acquisition is consummated within twelve months
following termination of this Agreement;
(ii) if Parent or Sub terminates this Agreement under Section
9.01(d) and in addition, if within twelve months after such termination
the Company shall enter into an Acquisition Agreement providing for a
Company Acquisition or the Company shall recommend to its stockholders
that they accept a Company Acquisition of the type referred to in
Section 7.06(c)(iii), the Company shall pay (A) 50% of the Termination
Fee simultaneously with the entering into of such Acquisition Agreement
or making of such recommendation and (B) 50% of the Termination Fee
upon consummation of the Company Acquisition which was the subject of
such Acquisition Agreement or recommendation, or upon the consummation,
prior to the expiration of such twelve month period, of any other
Company Acquisition (it being understood that if any Company
Acquisition shall be consummated within such twelve month period and
the Company shall not have paid any amount pursuant to clause (A)
above, that upon consummation of such Company Acquisition the Company
shall pay 100% of the Termination Fee); and
(iii) If, at the time of any termination of this Agreement
pursuant to Section 9.01(b)(i) (as a result of a failure to obtain the
Minimum Condition) or Section 9.01(c), any person shall have publicly
announced a proposal to effect a Company Acquisition and if, within
twelve months after such termination, the Company shall enter into an
Acquisition Agreement providing for a Company Acquisition or the
Company shall recommend to its stockholders that they accept a Company
Acquisition of the type referred to in Section 7.06(c)(iii), the
Company shall pay (A) 50% of the Termination Fee simultaneously with
the entering into of such Acquisition Agreement or making of such
recommendation and (B) 50% of the Termination Fee upon consummation of
the Company Acquisition which was the subject of such Acquisition
Agreement or recommendation, or upon the consummation, prior to the
<PAGE> 42
38
expiration of such twelve month period, of any other Company
Acquisition (it being understood that if any Company Acquisition shall
be consummated within such twelve month period and the Company shall
not have paid any amount pursuant to clause (A) above, that upon
consummation of such Company Acquisition the Company shall pay 100% of
the Termination Fee).
(c) For purposes of this Agreement a "Company Acquisition"
shall mean any of the following transactions (i) a merger, consolidation,
business combination or a recapitalization pursuant to which the stockholders of
the Company immediately preceding such transaction hold less than 60% of the
equity interests in the surviving or resulting entity of such transaction (other
than the transactions contemplated by this Agreement); (ii) a sale by the
Company of assets (excluding the sale of the Company's products in the ordinary
course of business) representing in excess of 40% of the fair market value of
the Company immediately prior to such sale or the issuance by the Company to any
person or group of shares representing in excess of 40% of the then outstanding
shares of capital stock of the Company (other than in connection with an
underwritten public offering); or (iii) the acquisition by any person or group,
by way of a tender offer, exchange offer, or by way of open market purchases of
beneficial ownership of 40% or more of the then outstanding shares of capital
stock of the Company.
SECTION 7.07. Indemnification. (a) From and after the
consummation of the Offer, Parent will, and will cause the Surviving Corporation
to, fulfill and honor in all respects the obligations of the Company pursuant to
(i) each indemnification agreement in effect at such time between the Company
and each person who is or was a director or officer of the Company at or prior
to the Effective Time and (ii) any indemnification provisions under the
Company's Restated Certificate of Incorporation or By-laws as each is in effect
on the date hereof (the persons to be indemnified pursuant to the agreements or
provisions referred to in clauses (i) and (ii) of this Section 7.07(a) shall be
referred to as, collectively, the "Indemnified Parties"). The Certificate of
Incorporation and By-laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability set
forth in the Company's Certificate of Incorporation and By-laws on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of any Indemnified Party.
<PAGE> 43
39
(b) This Section 7.07 shall survive the consummation of the
Merger at the Effective Time, is intended to be for the benefit of, and
enforceable by, the Company, Parent, the Surviving Corporation and each
Indemnified Party and such Indemnified Party's heirs and representatives, and
shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
(c) Notwithstanding anything to the contrary contained in this
Agreement, from and after the date hereof, the Company may enter into
indemnification agreements, or amend existing indemnification agreements, with
current directors and officers of the Company providing for customary provisions
under Delaware law.
SECTION 7.08. Certain Litigation. The Company agrees that it
shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating to
the Offer, the Merger or this Agreement without the prior written consent of
Parent (not to be unreasonably withheld). In addition, subject to Section 6.02
hereof, the Company shall not voluntarily cooperate with any third party that
may hereafter seek to restrain or prohibit or otherwise oppose the Offer or the
Merger and shall cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Offer or the Merger.
SECTION 7.09. Rights Agreement. Except as provided above or as
requested in writing by Parent, the Board of Directors of the Company shall not
(a) amend the Rights Agreement or (b) take any action with respect to, or make
any determination under, the Rights Agreement, including a redemption of the
Rights or any action to facilitate a Takeover Proposal.
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction or waiver prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. If required by applicable
law, the Company Stockholder Approval shall have been obtained.
<PAGE> 44
40
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall
have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
ARTICLE IX
Termination and Amendment
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of the
terms of this Agreement by the stockholders of the Company (provided, however,
that if Shares are purchased pursuant to the Offer, neither Parent nor Sub may
in any event terminate this Agreement):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if Sub shall not have accepted for payment any
Shares pursuant to the Offer prior to December 31, 1997;
provided, however, that the right to terminate this Agreement
pursuant to this Section 9.01(b)(i) shall not be available to
(1) Parent, if Sub shall have breached its obligations under
the second to the last sentence of Section 1.01(a) or (2) any
party whose failure to perform any of its obligations under
this Agreement results in the failure of any such condition or
if the failure of such condition results from facts or
circumstances that constitute a willful breach of
representation or warranty under this Agreement by such party;
or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any
<PAGE> 45
41
other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for,
Shares pursuant to the Offer or the Merger and such order,
decree or ruling or other action shall have become final and
nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant
to the Offer in the event of a breach or failure to perform by the
Company of any representation, warranty, covenant or other agreement
contained in this Agreement which (i) would give rise to the failure of
a condition set forth in paragraph (e) or (f) of Exhibit A and (ii)
cannot be or has not been cured within 30 days after the giving of
written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set
forth in paragraph (d) of Exhibit A to this Agreement;
(e) by the Company in accordance with Section 6.02(b),
provided that it has complied with all provisions thereof, including
the notice provisions therein, and that it complies with applicable
requirements relating to the payment (including the timing of any
payment) of the Termination Fee as provided in Section 7.06 (it being
understood that as provided in Section 6.02(b) the Company shall be
required to terminate this Agreement); or
(f) by the Company in the event of a material breach or
failure to perform in any material respect by Parent or Sub of any
representation, warranty, covenant or other agreement contained in this
Agreement which cannot be or has not been cured within 30 days after
the giving of written notice to Parent and Sub.
SECTION 9.02. Effect of Termination. In the event of a
termination of this Agreement by either the Company or Parent or Sub as provided
in Section 9.01, this Agreement shall forthwith become void and there shall be
no liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.18, Section 5.05, the last sentence of Section 7.02,
Section 7.06, this Section 9.02 and Article X; provided, however, that nothing
herein shall relieve any party for liability for any wilful breach hereof.
<PAGE> 46
42
SECTION 9.03. Amendment. This Agreement may be amended by the
parties hereto, by duly authorized action taken, at any time before or after
obtaining the Company Stockholder Approval, but, after the purchase of Shares
pursuant to the Offer, no amendment shall be made which decreases the Merger
Consideration and, after the Company Stockholder Approval, no amendment shall be
made which by law requires further approval by such stockholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. Following
the election or appointment of Sub's designees pursuant to Section 7.05 and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors then in office shall be required by the Company to (i)
amend or terminate this Agreement by the Company, (ii) exercise or waive any of
the Company's rights or remedies under this Agreement, (iii) extend the time for
performance of Parent and Sub's respective obligations under this Agreement or
(iv) take any action to amend or otherwise modify the Company's Certificate of
Incorporation or By-laws (or similar governing instruments of the Company's
subsidiaries) in violation of Section 7.07 hereof.
SECTION 9.04. Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, subject to
Section 9.03, (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time or, in the case of the Company, shall survive the acceptance
<PAGE> 47
43
for payment of, and payment for, Shares by Sub pursuant to the Offer. This
Section 10.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time, including Section
7.07.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to
Lucent Technologies Inc.
600 Mountain Avenue
Room 3A 530
Murray Hill, NJ 07974
Attention: Pamela F. Craven
Telecopy No.: Separately supplied
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Robert A. Kindler, Esq.
Telecopy No.: Separately supplied
and
(b) if to the Company, to
Octel Communications Corporation
1001 Murphy Ranch Road
Milpitas, CA 95035-7912
Attention: Robert Cohn
Telecopy No.: Separately supplied
<PAGE> 48
44
with a copy to:
Octel Communications Corporation
1001 Murphy Ranch Road
Milpitas, CA 95035-7912
Attention: Derek S. Daley
Telecopy No.: Separately supplied; and
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Larry Sonsini, Esq.
Martin Korman, Esq.
Telecopy No.: Separately supplied
SECTION 10.03. Interpretation. When a reference is made in
this Agreement to an Article or a Section, such reference shall be to an Article
or a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. As used in this Agreement, the
term "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
As used in this Agreement, "material adverse change" or "material adverse
effect" means, when used in connection with the Company or Parent, as the case
may be, any change or effect that is materially adverse to the business,
properties, assets, liabilities, financial condition or results of operations of
such entity and its subsidiaries taken as a whole other than changes or effects
to (i) occurrences relating to the economy in general or such entity's industry
in general and not specifically relating
<PAGE> 49
45
to such entity, (ii) the delay or cancelation of orders for the Company's
products directly attributable to the announcement of this Agreement or (iii) in
the case of the Company, stockholder litigation brought or threatened against
the Company or any member of its Board of Directors in respect of this
Agreement, the Offer or the Merger.
SECTION 10.04. Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries.
This Agreement and the Confidentiality Agreement (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 7.04 and 7.07 hereof, are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware without
regard to any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law
(including Rule 14d-9 promulgated under the Exchange Act), court process or the
rules of the NYSE or the Nasdaq National Market or as contemplated or provided
elsewhere herein, for so long as this Agreement is in effect, neither the
Company nor Parent shall, or shall permit any of its subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence but without relieving any party hereof of any
obligation hereunder, this Agreement
<PAGE> 50
46
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the partes shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in any Delaware state court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any court of the United States located in the
State of Delaware or of any Delaware state court in the event any dispute arises
out of this Agreement or the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than a court of the United
States located in the State of Delaware or a Delaware state court.
SECTION 10.10. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
<PAGE> 51
47
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
LUCENT TECHNOLOGIES INC.,
by /s/ William T. O'Shea
------------------------------------
Name: William T. O'Shea
Title: President, Business
Communications Systems
MEMO ACQUISITION CORP.,
by /s/ William T. O'Shea
------------------------------------
Name: William T. O'Shea
Title: President
OCTEL COMMUNICATIONS CORPORATION,
by /s/ Robert Cohn
------------------------------------
Name: Robert Cohn
Title: Chairman and Chief
Executive Officer
<PAGE> 52
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would constitute
at least a majority of the outstanding Shares (determined on a fully diluted
basis for all outstanding stock options and any other rights to acquire Shares
that are or would be vested prior to December 31, 1997) (the "Minimum
Condition") and (ii) any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall have expired or been terminated.
Furthermore, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and may, in accordance with Section 9.01, terminate this Agreement or amend
the Offer with the consent of the Company, if, upon the scheduled expiration
date of the Offer (as extended, if required, pursuant to the second to the last
sentence of Section 1.01(a)) and before the acceptance of such Shares for
payment or the payment therefor, any of the following conditions exists and is
continuing and does not result principally from the breach by Parent or Sub of
any of their obligations under this Agreement:
(a) there shall be instituted or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition
by Parent or Sub of any Shares under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger, (ii)
seeking to prohibit or materially limit the ownership or operation by
the Company, Parent or any of Parent's subsidiaries of a material
portion of the business or assets of the Company or Parent and its
subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or
assets of the Company or Parent and its subsidiaries, taken as a whole,
in each case as a result of the Offer or the Merger or (iii) seeking to
impose material limitations on the ability of Parent or Sub to acquire
or hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Offer including,
<PAGE> 53
2
without limitation, the right to vote such Shares on all matters
properly presented to the stockholders of the Company or (iv) seeking
to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the
business or operations of the Company;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, by any Governmental Entity or
court, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that would result in any
of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above;
(c) there shall have occurred any material adverse change with
respect to the Company since the date of this Agreement;
(d) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Offer or the Merger or its
adoption of this Agreement, or approved or recommended any Takeover
Proposal;
(e) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
not be true and correct or any such representations and warranties that
are not so qualified shall not be true and correct in any material
respect, in each case at the date of this Agreement and at the
scheduled or extended expiration of the Offer;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under this Agreement, which failure to
perform or comply has not been cured within 30 business days after the
giving of written notice to the Company; or
(g) this Agreement shall have been terminated in accordance
with its terms;
which, in the good faith judgment of Parent or Sub, in its sole discretion, make
it inadvisable to proceed with such acceptance of Shares for payment or the
payment therefor.
<PAGE> 54
3
Notwithstanding anything contained herein, the condition set
forth in clause (e) above shall be deemed not fulfilled only if the respects in
which the representations and warranties made by the Company (without giving
effect to any "materiality" limitations or references to "material adverse
effect" set forth therein) are inaccurate would have a material adverse effect
on the Company; provided, that the foregoing shall not be applicable to the last
sentence of Section 4.09.
The foregoing conditions are for the sole benefit of Parent
and Sub and (except for the Minimum Condition) may, subject to the terms of this
Agreement, be waived by Parent and Sub in whole or in part at any time and from
time to time in their sole discretion. The failure by Parent or Sub 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
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. Terms used but not defined herein
shall have the meanings assigned to such terms in the Agreement to which this
Exhibit A is a part.
