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SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Check the appropriate box:
[x] Preliminary Information Statement [ ] Confidential, for Use of the
Commission Only (as per-
mitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
MICROCOM, INC.
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(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[x] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
COMMON STOCK, $0.01 PAR VALUE
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(2) Aggregate number of securities to which transaction applies:
1,839,036
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
$16.25 (MERGER CONSIDERATION PER SHARE SPECIFIED IN MERGER AGREEMENT)
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(4) Proposed maximum aggregate value of transaction:
$29,884,335
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(5) Total fee paid:
$5,976.87
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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MICROCOM, INC.
500 River Ridge Drive
Norwood, Massachusetts 02062-5028
May 30, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders
of Microcom, Inc. (the "Company") to be held on Friday, June 20, 1997 at 10:00
A.M. (Boston time) at the offices of Choate, Hall & Stewart, 53 State Street,
35th Floor, Exchange Place, Boston, Massachusetts.
At the meeting, you will be asked to vote upon a proposal to approve
and adopt the Agreement and Plan of Merger dated as of April 9, 1997 by and
among Compaq-Boston, Inc. ("Compaq-Boston"), a Massachusetts corporation and
wholly-owned subsidiary of Compaq Computer Corporation, a Delaware corporation
("Compaq"), Compaq, and the Company (the "Merger Agreement"). The Merger
Agreement provides that Compaq-Boston will be merged with and into the Company
(the "Merger"), that the Company, as the surviving corporation, will become a
wholly-owned subsidiary of Compaq, and that each then outstanding share of the
Common Stock of the Company (other than (i) shares held by the Company as
treasury stock, (ii) shares held by Compaq or any subsidiary of Compaq, (iii)
shares as to which appraisal rights have been properly exercised and (iv)
certain shares subject to option agreements) will be converted automatically
into the right to receive $16.25 in cash without interest thereon. The Merger
and certain related matters are described in detail in the enclosed Notice of
Special Meeting and Information Statement.
After careful consideration, the Board of Directors has approved the
Merger Agreement and unanimously recommends that all stockholders vote "FOR"
approval and adoption of the Merger Agreement. The Board believes the Merger is
fair and in the best interests of the Company and its stockholders and the Board
has received the written opinion of Morgan Stanley & Co. Incorporated, as
financial advisors to the Board, to the effect that, as of the date of such
opinion, the Merger is fair, from a financial point of view, to the stockholders
of the Company. Compaq-Boston owns approximately [90+]% of the outstanding
shares of the Common Stock, which were acquired by it in a tender offer for all
outstanding shares of the Common Stock, made at $16.25 per share, which expired
May 13, 1997 (the "Offer"). The affirmative vote of holders of a majority of the
shares of the Common Stock outstanding as of the record date will be necessary
for approval and adoption of the Merger Agreement and the transactions
contemplated thereby. Compaq, Compaq-Boston and the Company have agreed that
Compaq-Boston will vote all shares held by it as of the Record Date in favor of
adoption of the Merger Agreement. ACCORDINGLY, ADOPTION OF THE MERGER AGREEMENT
IS ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER. YOU ARE NOT BEING ASKED
FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND ONE. You may vote your shares of
Common Stock, if you so wish, by attending the Special Meeting in person or
granting a proxy to another person. Each share is entitled to one vote.
Pursuant to Massachusetts law, and as described in greater detail in
the enclosed Notice of the Special Meeting and Information Statement, holders of
Common Stock will be entitled to appraisal rights in connection with the Merger.
A holder of Common Stock who desires to pursue appraisal rights must (i) file a
written objection to the Merger with the Company before the taking of the
stockholders' vote on the Merger Agreement; (ii) refrain from voting in favor of
the Merger; and (iii) make written demand from the Company, as the surviving
corporation, for payment for the stockholder's shares, all in accordance with
the Massachusetts Business Corporation Law. Such appraisal rights are not
conditioned upon voting against the Merger.
Very truly yours,
JAMES M. DOW
Chairman of the Board
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MICROCOM, INC.
500 River Ridge Drive
Norwood, Massachusetts 02062-5028
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on June 20, 1997
A Special Meeting of Stockholders of Microcom, Inc. (the "Company")
will be held at the offices of Choate, Hall & Stewart, 53 State Street, 35th
Floor, Exchange Place, Boston, Massachusetts, on Friday, June 20, 1997 at 10:00
A.M. (Boston time) to consider and act upon the following matters:
1. To consider and vote upon the approval and adoption of an
Agreement and Plan of Merger dated as of April 9, 1997 by and
among Compaq-Boston, Inc. ("Compaq-Boston"), a Massachusetts
corporation and wholly-owned subsidiary of Compaq Computer
Corporation, a Delaware corporation ("Compaq"), Compaq, and
the Company (the "Merger Agreement"). The Merger Agreement
provides that Compaq-Boston will be merged with and into the
Company (the "Merger"), that the Company, as the surviving
corporation, will become a wholly-owned subsidiary of Compaq,
and that each then outstanding share of the Common Stock of
the Company (other than (i) shares held by the Company as
treasury stock, (ii) shares held by Compaq or any subsidiary
of Compaq, (iii) shares as to which appraisal rights have been
properly exercised and (iv) certain shares subject to option
agreements) will be converted automatically into the right to
receive $16.25 in cash without interest thereon.
2. To transact such other business as may properly come before
the meeting or any adjournment or postponement of the meeting.
Only stockholders of record at the close of business on May 30, 1997,
are entitled to notice of and to vote at the meeting. The stock transfer books
of the Company will remain open between such date and the meeting date. All
stockholders are cordially invited to attend the meeting.
If the Merger Agreement is approved by the stockholders of the
Company at the Special Meeting and effected by the Company, any stockholder (i)
who files with the Company before the taking of the vote on the approval of such
action, written objection to the proposed action stating that such stockholder
intends to demand payment for such stockholder's shares if the action is taken
and (ii) whose shares are not voted in favor of such action has or may have the
right to demand in writing from the Company (as the surviving corporation),
within twenty days after the date of mailing to such stockholder of notice in
writing that the corporate action has become effective, payment for such
stockholder's shares and an appraisal of the value thereof. The Company and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 85 to 98, inclusive, of Chapter 156B of the
General Laws of Massachusetts.
By Order of the Board of Directors
WILLIAM C. ROGERS
Clerk
May 30, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE READ THE
ATTACHED INFORMATION STATEMENT CAREFULLY. THE COMPANY IS NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. YOU
WILL RECEIVE INSTRUCTIONS REGARDING THE SURRENDER OF YOUR STOCK CERTIFICATES AND
RECEIPT OF PAYMENT FOR YOUR SHARES AFTER THE MERGER IS EFFECTIVE.
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MICROCOM, INC.
500 River Ridge Drive
Norwood, Massachusetts 02062-5028
INFORMATION STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
To be Held on June 20, 1997
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WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
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This Information Statement is furnished by the Board of Directors
(the "Board") of Microcom, Inc. (the "Company") in connection with a Special
Meeting of Stockholders to be held on June __, 1997 at 10:00 A.M. (Boston time)
and at any adjournment or postponement of that meeting. The purpose of the
Special Meeting is to vote upon the adoption of the Agreement and Plan of Merger
dated as of April 9, 1997 by and among Compaq-Boston, Inc. ("Compaq-Boston"), a
Massachusetts corporation and wholly-owned subsidiary of Compaq Computer
Corporation, a Delaware Corporation ("Compaq"), and the Company (the "Merger
Agreement"). Pursuant to the Merger Agreement, Compaq-Boston will merge (the
"Merger") with and into the Company and the Company, as the surviving
corporation, will become a wholly-owned subsidiary of Compaq. Upon consummation
of the Merger, each then outstanding share of the common stock, $0.01 par value
per share (the "Common Stock"), of the Company (other than (i) shares held by
the Company as treasury stock, (ii) shares held by Compaq or any subsidiary of
Compaq, (iii) shares as to which appraisal rights have been properly exercised
and (iv) certain shares subject to option agreements) will be converted
automatically into the right to receive $16.25 in cash without interest thereon
(the "Merger Consideration").
The Board has fixed May 30, 1997 as the record date (the "Record
Date") for determination of stockholders entitled to vote at the Special
Meeting. At the close of business on May 30, 1997, there were outstanding and
entitled to vote _______________ shares of the Common Stock of the Company. For
purposes of the matter before the Special Meeting, under the Company's By-Laws,
a quorum consists of a majority of all shares of stock then outstanding and
entitled to vote at the meeting. The affirmative vote of holders of a majority
of the shares of the Common Stock outstanding as of the record date will be
necessary for approval and adoption of the Merger Agreement. Each share is
entitled to one vote. Compaq-Boston owns approximately [90+]% of the outstanding
shares of the Common Stock, which were acquired by Compaq-Boston in a tender
offer for all outstanding shares of the Common Stock, made at $16.25 per share,
which expired May 13, 1997 (the "Offer"). Compaq, Compaq-Boston and the Company
have agreed that Compaq-Boston will vote all shares held by it as of the Record
Date in favor of adoption of the Merger Agreement. ACCORDINGLY, ADOPTION OF THE
MERGER AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER. YOU ARE
NOT BEING ASKED FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND ONE. You may vote
your shares of Common Stock, if you so wish, by attending the Special Meeting in
person or by granting a proxy to another person.
All information in this Information Statement relating to the Company
has been supplied by the Company, and all information contained in this
Information Statement relating to Compaq, Compaq-Boston and their subsidiaries
has been supplied by Compaq. The date of mailing of this Information Statement
is expected to be on or about May 30, 1997.
The date of this Information Statement is May 30, 1997.
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TABLE OF CONTENTS
Page
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INTRODUCTION...........................................................
TABLE OF CONTENTS......................................................
AVAILABLE INFORMATION..................................................
SUMMARY................................................................
THE SPECIAL MEETING....................................................
THE MERGER.............................................................
CONFIDENTIALITY AGREEMENT..............................................
REGULATORY FILINGS AND APPROVALS.......................................
ACCOUNTING TREATMENT...................................................
APPRAISAL RIGHTS.......................................................
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS..............................
SELECTED FINANCIAL INFORMATION OF THE COMPANY..........................
SELECTED FINANCIAL INFORMATION OF COMPAQ...............................
MARKET PRICES OF THE COMMON STOCK AND DIVIDEND
POLICY............................................................
SECURITY OWNERSHIP OF THE COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT..................................
INCORPORATION BY REFERENCE.............................................
OTHER MATTERS..........................................................
Annex I - Agreement and Plan of Merger
Annex II - Fairness Opinion of Morgan Stanley & Co., Incorporated
Annex III - Sections 85 Through 98 of the Massachusetts Business Corporation Law
AVAILABLE INFORMATION
The Company and Compaq are subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Copies of such reports, proxy statements, and other information may be inspected
and copied at the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549; and at the public
reference facilities of the Commission's regional offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and Suite 1300, 7 World Trade
Center, New York, New York 10048. Copies of such material may be obtained by
mail, at prescribed rates, from the Public Reference Section of the Commission
at 450 Fifth Street, Washington, DC 20549. Such material relating to the Company
should also be available for inspection at the offices of Nasdaq National Market
operations, 1735 K Street, N.W. Washington, D.C. 20006 and such material
relating to Compaq should also be available at the library of the New York Stock
Exchange. In addition, material filed electronically with the Commission by
either Compaq or the Company is available at the Commission's Web site,
http://www.sec.gov, which contains reports, proxy and information statements and
other information regarding issuers that file electronically with the
Commission.
The Common Stock is currently registered under the Exchange Act.
Following the Merger, the Company will become a wholly-owned subsidiary of
Compaq. Public trading of the Common Stock ceased on May 14, 1997 when the
Common Stock was removed from quotation on The Nasdaq Stock Market. Registration
of the shares of Common Stock under the Exchange Act will be terminated upon
application by the Company to the Commission no later than the time the Merger
is consummated and thereafter the Company will no longer be subject to the
reporting requirements of the Exchange Act.
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SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Information Statement or incorporated
herein by reference. Holders of the Common Stock are urged to review the entire
Information Statement, the Annexes hereto and the other documents incorporated
herein by reference. Capitalized terms used without being defined in this
summary have the meanings given to them elsewhere in this Information Statement.
THE PARTIES
Microcom, Inc., a Massachusetts corporation, is a leading provider of
central site and remote access solutions, offering a broad line of products
utilizing the Company's wide area network (WAN) technology and its network
management and remote access software. Its principal executive offices are
located at 500 River Ridge Drive, Norwood, Massachusetts 02062 and its telephone
number at such offices is (617) 551-1000.
Compaq Computer Corporation, a Delaware corporation, is principally
engaged in designing, developing, manufacturing, and marketing a wide range of
computing products, including desktop computers, portable computers,
workstations, communications products and tower PC servers and peripheral
products that store and manage data in network environments. Compaq markets its
products primarily to business, home, government and education customers. The
principal executive offices of Compaq are located at 20555 SH 249, Houston,
Texas 77070 and its telephone number at such offices is (281) 370-0670.
Compaq-Boston, Inc. is a Massachusetts corporation incorporated on
April 9, 1997 and to date has engaged in no activities other than those incident
to its formation, the execution and delivery of the Merger Agreement and the
commencement and consummation of the Offer. Compaq-Boston is a wholly-owned
subsidiary of Compaq. The principal executive offices of Compaq-Boston are
located at 20555 SH 249, Houston, Texas 77070 and its telephone number at such
offices is (281) 370-0670.
THE TENDER OFFER AND THE MERGER TRANSACTIONS
Pursuant to the Merger Agreement, Compaq-Boston commenced the Offer
on April 16, 1997, in which Compaq-Boston offered to purchase any and all
outstanding shares of Common Stock at $16.25 per share in cash without interest
thereon. ________ shares of Common Stock were validly tendered and not withdrawn
prior to the expiration of the Offer on May 13, 1997. Between May 15-20, 1997,
Compaq-Boston accepted for payment and, therefore, purchased all ________ shares
of Common Stock tendered in response to the Offer. The Merger Agreement further
provides that following the consummation of the Offer, Compaq will cause
Compaq-Boston to merge with and into the Company, with the Company as the
surviving corporation. In the Merger, each remaining share of Common Stock
(other than (i) shares held by the Company as treasury stock, (ii) shares held
by Compaq or any subsidiary of Compaq, (iii) shares as to which appraisal rights
have been properly exercised, and (iv) certain shares subject to option
agreements (collectively, the "Excluded Shares")) will be converted into the
right to receive $16.25 per share in cash without interest thereon (the "Merger
Consideration"). As a result of the Merger, the Company will become a
wholly-owned subsidiary of Compaq. A copy of the Merger Agreement is attached
hereto as Annex I and incorporated by reference into this Information Statement.
Compaq is funding the approximately $290 million required for the transactions
from its general corporate funds. See also "THE MERGER".
EFFECTS OF THE MERGER
Pursuant to the Merger, holders of shares of Common Stock (other than
the Excluded Shares) will be entitled to receive the Merger Consideration for
shares of Common Stock owned by them. After consummation of the Merger, the
Company will become a wholly-owned subsidiary of Compaq and the former holders
of the Shares will no longer possess any interest in the Company. No later than
the consummation of the Merger, the Company will terminate the registration of
the Common Stock under Section 12 of the Exchange Act. See "THE MERGER--Certain
Effects of the Merger".
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THE SPECIAL MEETING
At the Special Meeting, the holders of the Common Stock will be asked
to consider and vote upon the proposal to approve and adopt the Merger
Agreement. The Special Meeting is scheduled to be held at 10:00 A.M., local
time, on June 20, 1997, at the offices of Choate, Hall & Stewart, 53 State
Street, Exchange Place, 35th Floor, Boston, Massachusetts. The Board has fixed
the close of business on May 30, 1997 as the Record Date. Only holders of record
of shares of Common Stock outstanding at the close of business on the Record
Date will be entitled to notice of and to vote at the Special Meeting. See "THE
SPECIAL MEETING".
The Board has approved the Merger Agreement and unanimously
recommends that the holders of the Common Stock vote "FOR" approval and adoption
of the Merger Agreement. "THE MERGER--Recommendation of the Board and Reasons
for the Merger".
REQUIRED VOTE OF STOCKHOLDERS OF THE COMPANY
Pursuant to the Massachusetts Business Corporation Law (the "MBCL")
and the Company's Articles of Organization, as amended, the affirmative vote of
the holders of a majority of Common Stock outstanding as of the Record Date is
required to approve and adopt the Merger Agreement. At the Record Date, there
were _____ shares of the Common Stock outstanding, each of which will be
entitled to one vote on each matter to be acted upon at Special Meeting. As of
the Record Date, Compaq-Boston held shares representing [90+]% of the votes
entitled to be cast by holders of the Common Stock at the Special Meeting.
Compaq, Compaq-Boston and the Company have agreed that Compaq-Boston will vote
its shares of Common Stock in favor of adoption of the Merger Agreement. Because
Compaq-Boston owns approximately [90+]% of the outstanding shares of Common
Stock, the adoption of the Merger Agreement is assured. ACCORDINGLY, ADOPTION OF
THE MERGER AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER. YOU
ARE NOT BEING ASKED FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND ONE.
Stockholders of record may vote their shares, if they so wish, by attending the
Special Meeting or by granting a proxy to another person. As of the Record Date,
the Company's directors and executive officers and their affiliates as a group
held shares representing ____% of the votes entitled to be cast by holders of
the Common Stock at the Special Meeting. See "THE SPECIAL MEETING--Voting
Rights" and "THE MERGER--Interests of Certain Persons in the Merger".
EFFECTIVE TIME
After all the conditions set forth in the Merger Agreement have been
satisfied or waived, the Merger will become effective at such time as the
Articles of Merger required under the MBCL are filed with the Secretary of State
of the Commonwealth of Massachusetts (the "Effective Time"). See "THE
MERGER--The Merger Agreement--The Merger".
EXCHANGE OF SHARES
From and after the Effective Time, each holder of an outstanding
certificate which immediately prior to the Effective Time represented shares of
the Common Stock (other than the Excluded Shares) shall cease to have any rights
as a holder of the Common Stock and such holder's sole right shall be to receive
in exchange for such holder's certificates, upon surrender to the Exchange
Agent, the Merger Consideration. A letter of transmittal for use in surrendering
stock certificates and obtaining payment for surrendered shares will be mailed
to such holders promptly following the Effective Time. CERTIFICATES SHOULD NOT
BE SURRENDERED UNTIL THE LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE OBTAINED AND
THEN SHOULD BE SURRENDERED ONLY IN ACCORDANCE WITH SUCH INSTRUCTIONS.
BACKGROUND OF THE MERGER
The terms of the Merger Agreement resulted from arm's length
negotiations between representatives of Compaq and the Company. See "THE
MERGER--Background".
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RECOMMENDATION OF THE COMPANY'S BOARD AND REASONS FOR THE MERGER
The Board has approved the Merger Agreement and unanimously
recommends that the holders of the Common Stock vote "FOR" approval and adoption
of the Merger Agreement. The recommendation of the Board is based upon its
conclusion that the terms of the Merger Agreement are fair and in the best
interests of the Company and its stockholders. For a discussion of the Board's
reasons for the Merger and the factors considered by the Board in making its
recommendation, see "THE MERGER--Recommendation of the Board and Reasons for the
Merger".
OPINION OF FINANCIAL ADVISOR
In its role as financial advisor to the Company, Morgan Stanley & Co.
Incorporated was asked to render its opinion to the Board as to the fairness to
the Company, from a financial point of view, of the Merger Consideration to be
paid by Compaq-Boston to the holders of the Common Stock. On April 9, 1997,
Morgan Stanley delivered to the Board a written opinion to the effect that, as
of the date thereof, the consideration to be paid by Compaq-Boston to the
holders of the Common Stock pursuant to the Merger Agreement is fair to the
holders of the Common Stock from a financial point of view. A copy of the Morgan
Stanley opinion is attached hereto as Annex II. See also "THE MERGER--Opinion
of Financial Advisor".
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board with respect to the
Merger Agreement, stockholders should be aware that certain members of the Board
and of the Company's management may have certain interests in the Merger that
are in addition to or different from the interests of the stockholders of the
Company generally. Compaq has entered into a written agreement with Lewis A.
Bergins, President and Chief Executive Officer of the Company, pursuant to which
Mr. Bergins will continue to serve as President of the Company after
consummation of the Merger. In addition, the Company understands that Compaq
intends to grant to certain officers and employees of the Company options to
acquire shares of Compaq stock in accordance with Compaq's compensation plans.
See "THE MERGER--Interests of Certain Persons in the Merger."
CONDITIONS TO THE MERGER
The obligations of the Company, Compaq and Compaq-Boston to
consummate the Merger are subject to the satisfaction of certain conditions,
including the following: (i) the adoption by the stockholders of the Company of
the Merger Agreement in accordance with the MBCL and (ii) no provision of any
applicable law or regulation and no judgment, injunction, order or decree shall
prohibit the consummation of the Merger. See "THE MERGER--The Merger
Agreement--Conditions to the Merger".
RIGHTS TO TERMINATE AND AMENDMENTS
The Merger Agreement may be terminated prior to the closing of the
transactions contemplated thereby under certain circumstances. Under certain of
such circumstances, the Company would be required to pay Compaq a termination
fee in varying amounts (depending upon the circumstances) ranging up to
$10,460,000. See "THE MERGER--The Merger Agreement--Termination; Fees and
Expenses; Amendment and Waivers".
ACCOUNTING TREATMENT
It is expected that the Merger will be accounted for as a purchase in
accordance with generally accepted accounting principles. See "THE
MERGER--Accounting Treatment".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The conversion of shares of Common Stock into the right to receive
the Merger Consideration pursuant to the Merger Agreement will be a taxable
transaction for federal income tax purposes and may also be a taxable
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transaction under applicable state and local and other tax laws. See "CERTAIN
FEDERAL INCOME TAX CONSIDERATIONS". EACH HOLDER OF THE COMMON STOCK IS URGED TO
CONSULT A QUALIFIED TAX ADVISOR TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF
THE MERGER TO SUCH HOLDER.
APPRAISAL RIGHTS
Holders of the Common Stock are entitled to appraisal rights under
the MBCL in connection with the Merger. See "THE MERGER--Appraisal Rights".
REGULATORY MATTERS
The Company is not aware of any governmental or regulatory
requirements for consummation of the Merger other than compliance with the
Hart-Scott-Rodino Antitrust Improvements Act ("HSR Act") and applicable state
corporate laws and federal and state securities laws. The waiting period under
the HSR Act expired on May 3, 1997.
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THE SPECIAL MEETING
DATE, TIME AND PLACE; RECORD DATE
The Special Meeting is scheduled to be held at 10:00 A.M. (Boston
time) on June 20, 1997, at the offices of Choate, Hall & Stewart, 53 State
Street, Exchange Place, 35th Floor, Boston, Massachusetts. The Board has fixed
the close of business on May 30, 1997 (the "Record Date") for the determination
of holders of record of the Common Stock entitled to notice of and to vote at
the Special Meeting.
PURPOSE OF THE MEETING
At the Special Meeting, the holders of the Common Stock outstanding
as of the Record Date will be asked to consider and vote upon the proposal to
approve and adopt the Merger Agreement, pursuant to which, among other things,
Compaq-Boston will be merged with and into the Company and each then outstanding
share of the Common Stock (other than (i) shares held by the Company as treasury
stock, (ii) shares held by Compaq or any subsidiary of Compaq, (iii) shares as
to which appraisal rights have been properly exercised and (iv) certain shares
subject to option agreements) will be converted automatically into the right to
receive $16.25 in cash without interest thereon (the "Merger Consideration"). A
copy of the Merger Agreement is attached as Annex I to this Information
Statement and is incorporated herein by reference. The Company's stockholders
also will consider and vote upon such other matters as may properly come before
the Special Meeting.
The Board of Directors has approved the Merger Agreement and
unanimously recommends that all stockholders vote "FOR" approval and adoption of
the Merger Agreement. See "THE MERGER--Recommendation of the Board and Reasons
for the Merger" and "--Interests of Certain Persons in the Merger."
VOTING RIGHTS
Pursuant to the MBCL and the Company's Articles of Organization, as
amended, the affirmative vote of the holders of at least a majority of the
shares of the Common Stock outstanding as of the Record Date is required to
approve and adopt the Merger Agreement. At the Record Date, there were _________
shares of the Common Stock outstanding. Holders of record of the Common Stock
outstanding as of the Record Date are entitled to one vote per share at the
Special Meeting. The presence, either in person or by proxy, of the holders of a
majority of the shares of the Common Stock outstanding as of the Record Date is
necessary to constitute a quorum at the Special Meeting. If a quorum is not
present at the Special Meeting, the holders of Common Stock who are present and
entitled to vote at the Special Meeting may, by majority vote, adjourn the
Special Meeting from time to time without notice or other announcement until a
quorum is present. Because the shares of Common Stock owned by Compaq-Boston
will be represented at the Special Meeting, a quorum will be present, even if no
other shares of Common Stock are represented. Abstentions of shares of Common
Stock that are present at the Special Meeting will have the same effect as votes
against adoption of the Merger Agreement, and broker non-votes will have the
same effect as a vote against adoption of the Merger Agreement. Compaq-Boston
owns approximately [90+]% of the issued and outstanding shares of the Common
Stock, which were acquired by Compaq-Boston in a tender offer for all
outstanding shares of the Common Stock, made at $16.25 per share, which expired
May 13, 1997 (the "Offer"). Compaq, Compaq-Boston and the Company have agreed
that Compaq-Boston will vote all shares held by them as of the Record Date in
favor of adoption of the Merger Agreement. ACCORDINGLY, ADOPTION OF THE MERGER
AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER. YOU ARE NOT
BEING ASKED FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND ONE. You may vote your
shares of Common Stock, if you so wish, by attending the Special Meeting in
person or by granting a proxy to another person.
STOCKHOLDERS' RIGHTS OF APPRAISAL
As more fully described below in "THE MERGER--Appraisal Rights",
holders of shares of Common Stock have the right to demand appraisal of, and
obtain a cash payment for, the "fair value" of their shares (excluding any
element of value arising from the consummation of the Merger Agreement) pursuant
to Sections
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86 to 98, inclusive, of the MBCL. In order to exercise such rights, such holders
of Common Stock must comply with the procedural requirements of Sections 86 to
98, inclusive, of the MBCL. The full text of Sections 86 to 98, inclusive, of
the MBCL is attached to this Information Statement as Annex III and any
stockholder of the Company desiring to exercise rights of appraisal in
connection with the Merger should consult with legal counsel prior to taking any
action to ensure that the stockholder complies with the applicable statutory
provisions. Failure to take any of the steps required under Sections 86 to 98,
inclusive, of the MBCL on a timely basis may result in the loss of appraisal
rights. See "THE MERGER--Appraisal Rights" and Annex III.
In accordance with Massachusetts law, if the Company and any
stockholders who properly perfect their appraisal rights fail to agree on the
value of the share(s) of Common Stock, either any such stockholder or the
Company may file a bill in equity to petition the Superior Court in the county
where the Company has its principal office in the Commonwealth of Massachusetts
to determine the value of the share(s) of Common Stock. The Company has not made
any determination at this time as to whether it would file such a bill in
equity. Therefore, if the Company and any objecting stockholder fail to agree on
the value of the stock, the stockholder may be required to file a bill in equity
in accordance with Sections 86 to 98, inclusive, of the MBCL for the action to
proceed.
INDEPENDENT AUDITORS
Representatives of Arthur Andersen LLP, independent auditors for the
Company, will not be present at the meeting.
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THE MERGER
The following description of certain aspects of the Merger does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Merger Agreement, which is attached to this Information
Statement as Annex I and is incorporated herein by reference.
BACKGROUND OF THE MERGER
In November 1996, representatives of Compaq contacted representatives
of the Company to explore a possible original equipment manufacturer ("OEM")
relationship and several meetings between the companies were held during
December 1996 and January 1997 to pursue that relationship. At a meeting in
Boston, Massachusetts on January 9, 1997, originally scheduled to discuss the
nature and terms of an OEM relationship, Mr. Alan Lutz, Senior Vice President
and General Manager of Compaq's Communication Products Group, first broached the
subject of a possible acquisition of the Company by Compaq with Messrs. Roland
D. Pampel, then President and Chief Executive Office of the Company and Lewis A.
Bergins, then Executive Vice President, International Operations and Modulation
Business of the Company.
Mr. Pampel then reported the substance of that meeting in a telephone
meeting of the Board on January 11, 1997. Included in that meeting, in addition
to the Board and senior Company executives, were representatives of Morgan
Stanley & Co. Incorporated, as financial advisors to the Board ("Morgan
Stanley"), and the Company's outside counsel. At that meeting, Morgan Stanley
was instructed to consult with Compaq's financial advisor, Greenhill & Co., LLC
("Greenhill"), to determine Compaq's timetable for the performance of due
diligence and negotiations. At the regularly scheduled Board meeting held
January 15, 1997, the matter was again discussed and representatives of Morgan
Stanley reported on their conversations with Greenhill to the effect that Compaq
timetable for discussions and negotiations had lengthened although Compaq
continued to express interest in a possible acquisition.
On February 26, 1997, Mr. Bergins next discussed, in a telephone
conversation with Mr. Lutz, the timetable for due diligence and negotiations
with respect to a possible acquisition. The same day, Mr. Bergins reported the
results of his telephone conversation to the Board at its regularly scheduled
February meeting. During the meeting, the Board and Morgan Stanley discussed
issues relating to an acquisition, including timing and negotiation strategies.
On March 4 and 5, 1997, representatives of Compaq, its outside
counsel, its outside auditors and Greenhill met in Boston with representatives
of the Company, the Company's outside counsel and Morgan Stanley to discuss
matters relating to the Company and its business. Mr. Lutz then met with Mr.
Bergins in Boston on March 6, 1997 to discuss a possible transaction structure
and Mr. Bergin's role with the Company following consummation of such a
transaction. The following day, March 7, 1997, Mr. Lutz and representatives of
Greenhill met with the Company's outside counsel and Morgan Stanley to discuss
potential terms under which a transaction could be consummated. Initial
proposals from both sides were considered during this meeting. The Company's
Board, after informal discussion, instructed the Company's senior management and
Morgan Stanley to continue discussions. Messrs. Lutz and Bergins then had a
telephone discussion on Thursday, March 10, 1997, at which certain outstanding
due diligence issues were discussed.
On March 19, 1997, Messrs. Bergins, Pampel and Peter J. Minihane (the
Company's Chief Financial Officer), together with the Company's outside counsel
and several partners from the Company's outside auditors, met in Houston with
representatives of Compaq, including Mr. Lutz and Compaq's general counsel, to
continue discussions. The status of discussions was then reported at the
Company's regularly scheduled meeting of the Board on March 21, 1997, at which
meeting Mr. Bergins was directed to continue to negotiate to see if an
acquisition with appropriate price and other conditions satisfactory to the
Company, could be structured.
Thereafter, on April 7, 1997, negotiations and discussions among
representatives of Compaq and the Company and their respective outside counsel
and financial advisors began with respect to the terms and
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<PAGE> 13
conditions of a merger agreement. Mr. Lutz and Mr. Bergins conferred by
telephone on April 8, 1997, and again on April 9, 1997, to discuss specific
terms, including price.
On April 9, 1997, the Company's Board met to consider a revised draft
of the Merger Agreement (incorporating the revisions set forth above) including
a price of $16.25 per share of Common Stock presented by Mr. Lutz to Mr. Bergins
in a telephone conversation prior to the commencement of the Board meeting. In
considering the Merger Agreement, the Board considered and discussed, among
other things, the following: (i) the Company's business plan for the fiscal year
ended March 31, 1998 and the various factors, including risks attendant to
successful accomplishment of the plan's stated objectives; (ii) the opinion of
Morgan Stanley, described below; (iii) the premium and value accruing to the
stockholders of the Company as a result of the Offer and the Merger; (iv) the
potential effect on other potential bidders of the $10,460,000 fee or $2,000,000
fee (as the case may be) and the reimbursement of up to $2,000,000 in
out-of-pocket expenses that will become payable to Compaq under specified
circumstances (including negotiations to reduce the scope or the circumstances
under which such fees and expenses would become payable); (v) the potential
effect on other potential bidders of limitations on the Company's ability to
solicit or respond to other competing bids, if any (including negotiations to
reduce the scope of such limitations); (vi) the history of the Company's
experience with its major OEM partners over the past nine months including a
discussion by Morgan Stanley of consolidations occurring in the data
communications industry; and (vii) the likelihood that the Offer by Compaq and
Compaq-Boston would be consummated.
By the unanimous vote of all directors, the Board (i) determined that
the Offer and the Merger, taken together, are fair to and in the best interests
of the Company's stockholders, (ii) approved the Merger Agreement and the
transactions contemplated thereby and (iii) resolved to recommend acceptance of
the Offer and approval and adoption of the Merger Agreement and the Merger by
the Company's stockholders. On April 9, 1997, the parties executed and delivered
the Merger Agreement.
On April 16, 1997, Compaq-Boston commenced the Offer, which expired
pursuant to its terms on May 13, 1997. On May 15, 1997, Compaq-Boston accepted
for payment, and, therefore, purchased all of the __________ shares of Common
Stock that were validly tendered and not withdrawn prior to the expiration of
the Offer. The shares of Common Stock so purchased represent approximately
[90+]% of the outstanding shares.
The waiting period under the HSR Act applicable to the Merger expired
on May 3, 1997, thereby satisfying one of the conditions of the Merger
Agreement.
On May __, 1997, Lewis A. Bergins, Donald G. Kennedy, and John C.
Rutherford resigned as directors of the Company and Alan G. Lutz, J. David
Cabello, Edward E. Olkkola, Earl L. Mason and Robert W. Stearns, designees of
Compaq, were elected as directors of the Company. James M. Dow, Michael I.
Schneider and Fred L. Luconi remain directors of the Company.
RECOMMENDATION OF THE BOARD AND REASONS FOR THE MERGER
The Board believes that the terms of the Merger are fair to and in
the best interests of the Company's stockholders. Accordingly, the Board has
approved the Merger Agreement and recommends that the Company's stockholders
vote in favor of the Merger.
In determining to recommend to the Company's stockholders that they
approve the Merger, the Board and the Committee considered a number of factors,
including, without limitation, the following:
(i) the Board's familiarity with and review of the
Company's business, financial condition, results of operations,
assets, liabilities, business strategy and prospects and, in
particular, the Company's business plan for the fiscal year ended
March 31, 1998 and the various factors, including risks, attendant to
successful accomplishment of the plan's stated objectives;
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<PAGE> 14
(ii) the recent consolidations occurring in the Company's
industry, including acquisitions by certain of the Company's OEM
partners;
(iii) the written opinion of Morgan Stanley dated April 9,
1997, that as of such date the Merger Consideration to be received by
the stockholders of the Company pursuant to the Merger Agreement is
fair from a financial point of view to such holders; a copy of such
opinion, setting forth procedures followed, assumptions made, areas
of reliance and other matters considered by Morgan Stanley in
arriving at their opinion, is attached as Annex II to this Statement
and is incorporated herein by reference, and should be read in its
entirety; in considering such opinion, the Board was aware that upon
delivery thereof, Morgan Stanley became entitled to certain fees
described in the following section in connection with its engagement
by the Company and that, in addition, Morgan Stanley expressed no
opinion or recommendation as to whether the stockholders of the
Company should accept the Offer and the Merger;
(iv) the presentations of Morgan Stanley in connection with
such opinion as to various financial and other considerations (as
further described below in "Opinion of Financial Advisor") deemed
relevant to the Board's evaluation of the Offer and the Merger;
(v) the historical and recent market prices of a share of
the Common Stock and the fact that the $16.25 per share Offer price
and Merger Consideration represents, among other things, a premium of
55% over the closing price for a share of the Common Stock on the
Nasdaq National Market on the day before the announcement of the
Offer, a premium of 38% over the closing price for such shares on the
Nasdaq National Market 30 days preceding such announcement, and a
premium of 44% over the 90 day average closing price for such shares;
(vi) the terms and conditions of the Offer and the Merger
Agreement, including the fact that the Offer was not subject to
financing but was subject to minimum tender conditions and that it
contemplates the payment or reimbursement to Compaq, under certain
circumstances and subject to certain limits, of certain fees and
expenses; in analyzing the conditions, the Board considered, among
other things, the risk of the Offer's non-consummation; in assessing
the termination fees, the Board considered the likelihood of any
third party making a proposal for a third party transaction and that
the effect of the termination fee would be to increase by the amount
of such termination fee the costs to a third party of acquiring the
Company;
(vii) the financial ability of Compaq to consummate the
Offer and the Merger;
(viii) the possible impact of the Offer and the Merger and
of alternatives thereto on the Company's business and prospects; and
(ix) the fact that following the consummation of the Offer
and the Merger, the current stockholders of the Company will no
longer be able to participate in any increases or decreases in the
value of the Company's business and profits.
In view of the wide variety of factors considered in connection with
its evaluation of the Offer and the Merger, the Board did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
the individual factors considered in reaching their determinations.
OPINION OF FINANCIAL ADVISOR
The Company retained Morgan Stanley as financial advisor to the Board
in connection with the Merger. Morgan Stanley was selected by the Board to
provide such services based on Morgan Stanley's qualifications, expertise and
reputation, as well as Morgan Stanley's investment banking relationship and
familiarity with the Company.
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<PAGE> 15
Morgan Stanley rendered to the Board its written opinion dated as of
April 9, 1997 (the "Morgan Stanley Opinion") that, as of such date, based upon
and subject to the various considerations set forth in the opinion, the
consideration to be received by the holders of shares of Common Stock pursuant
to the Merger was fair from a financial point of view to the Company.
A copy of the Morgan Stanley Opinion is attached hereto as Annex II
to this Information Statement. Stockholders of the Company are urged to read the
Morgan Stanley Opinion in its entirety for information with respect to the
procedures followed, assumptions made, matters considered and limits of the
review by Morgan Stanley in rendering such opinion. References to the Morgan
Stanley Opinion herein and the summary thereof set forth below are qualified by
references to the full text of the Morgan Stanley Opinion, which is incorporated
by reference. The Morgan Stanley Opinion does not constitute a recommendation to
any of the Company's stockholders as to whether the stockholders of the Company
should approve the Merger.
In arriving at its opinion, Morgan Stanley (a) reviewed certain
publicly available financial statements and other information of the Company and
Compaq; (b) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management of the
Company; (c) analyzed certain financial projections prepared by the management
of the Company; (d) discussed the past and current operations and financial
condition and the prospects of the Company with senior executives of the
Company; (e) reviewed the reported prices and trading activity for the Common
Stock; (f) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other comparable
publicly-traded companies and their securities; (g) reviewed the financial
terms, to the extent publicly available, of certain comparable acquisition
transactions; (h) participated in discussions and negotiations among
representatives of the Company, Compaq and their financial and legal advisors;
(i) reviewed the Merger Agreement and certain related documents; (j)
participated in discussions with certain third parties, including Compaq, who
expressed interest in acquiring the Company or certain assets of the Company,
which led to the proposed Merger; and (k) performed such other analyses and
considered such other factors as it deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon,
without independent verification, the accuracy and completeness of the
information reviewed by it for the purposes of rendering this opinion. With
respect to the financial projections, Morgan Stanley assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of the Company. Morgan Stanley
also relied upon, without independent verification, the assessment by management
of the Company's technologies and products, and the validity of, and risks
associated with, the Company's existing and future products and technologies.
Morgan Stanley did not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor was it furnished with any such appraisals.
The Morgan Stanley Opinion stated that it is necessarily based on economic,
market and other conditions in effect on, and the information made available to
it as of, the date of such opinion.
The following is a brief summary of certain financial analyses
performed by Morgan Stanley in connection with the Morgan Stanley Opinion:
COMPARATIVE STOCK PRICE PERFORMANCE. As part of its analysis, Morgan
Stanley reviewed the recent stock market performance of the Common Stock and
compared such performance to that of certain publicly traded comparable modem
companies such as U.S. Robotics, Global Village Communication, Boca Research and
Zoom Telephonics (the "Modem Comparables"), certain publicly traded comparable
networking companies such as Cisco Systems, 3Com, Bay Networks and Cabletron
Systems (the "Networking Comparables"), and such certain publicly traded
comparable remote access companies such as Ascend Communications, Shiva and Digi
International (the "Remote Access Comparables"). Morgan Stanley observed that
over the period January 1, 1996 to April 14, 1997, the Company underperformed
the Modem Comparables index by 18%, underperformed the Networking Comparables
index by 49%, and underperformed the Remote Access Comparables index by 26%.
PEER GROUP COMPARISON. Morgan Stanley compared certain financial
information of the Company with that of the Modem Comparables, Networking
Comparables, and Remote Access Comparables. Such financial
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<PAGE> 16
information included, among other things, market valuation, market value as a
multiple of historical operating income, market value as a multiple of projected
earnings, and market value as a multiple of projected earnings taken as a
multiple of the projected earnings per share ("EPS") growth rate. In particular,
Morgan Stanley compared the multiples calculated by dividing the implied
acquisition value of the Company by each of the above financial parameters with
those similarly calculated multiples for the various groups of comparables. The
acquisition value multiples implied by the Merger equated to 30.5 times
operating income for the calendar year 1996, 27.4 times research analyst
consensus forecast earnings for the calendar year 1997, and 1.4 times the
projected EPS growth rate; compared to a median of 3.7, 11.6 and 7.7 times
calendar year 1996 operating income, 16.0, 18.2 and 22.9 times calendar year
1997 earnings, and 0.7, 0.6 and 0.2 times the projected EPS growth rates for the
Modem, Networking, and Remote Access Comparables, respectively.
No company utilized as a comparison in the peer group analysis is
identical to the Company. In evaluating the Modem, Networking, and Remote Access
Comparables, Morgan Stanley made judgments and assumptions with regard to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of the
Company, such as the impact of competition on the Company and the industry
generally, industry growth and the absence of any adverse material change in the
financial condition and prospect of the Company or the industry or the financial
market in general.
ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS. Morgan Stanley examined
selected precedent merger and acquisition transactions involving remote access
companies. Such analysis resulted in a median of 3.08 times historical revenues,
17.3 times historical operating income, 13.2 times projected net income, a 2.6%
premium over the stock price one month prior to announcement of the transaction,
and a 11.9% premium over the stock price one day prior to announcement of the
transaction.
No transaction utilized as a comparison in the comparable transaction
analysis is identical to the Merger. In evaluating the precedent transactions,
Morgan Stanley made judgments and assumptions with regard to industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of the Company, such as the
impact of competition on the Company and the industry generally, industry growth
and the absence of any adverse material change in the financial condition and
prospects of the Company or the industry or the financial markets in general.
Mathematical analysis (such as determining the average or median) is not in
itself a meaningful method of using comparable transaction data.
DISCOUNTED EQUITY VALUE. Morgan Stanley performed an analysis of the
present value per share of the Company's future trading prices based on a range
of management based earnings per share estimates increased to reflect the
research analyst consensus growth rate for the Company for calendar years 1998
and 1999, illustrative multiples of earnings per share ranging from 12.0 times
to 16.0 times next calendar year's earnings per share, and illustrative discount
rates ranging from 15.0% to 25.0% based on Morgan Stanley estimates of the
theoretical return required by shareholders to hold shares of the Company. Based
on this analysis, Morgan Stanley estimated a present value of the potential
future trading price per share ranging from approximately $12.00 to $20.00 for
the Common Stock.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, selecting any
portion of Morgan Stanley's analyses, without considering all analyses, would
create an incomplete view of the process underlying the Morgan Stanley Opinion.
In addition, Morgan Stanley may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting for
any particular analysis described above should not be taken to be Morgan
Stanley's view of the actual vale of the Company.
In performing its analyses, Morgan Stanley made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of the Company. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
values, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared
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solely as a part of Morgan Stanley's analysis of the fairness of the
consideration to be received by the holders of the Common Stock pursuant to the
Merger Agreement from a financial point of view and were provided to the Board
in connection with the delivery of the Morgan Stanley Opinion. The analyses do
not purport to be appraisals or to reflect the prices at which the Company might
actually be sold. Because such estimates are inherently subject to uncertainty,
neither the Company nor Morgan Stanley nor any other person assumes
responsibility for their accuracy. In addition, as described above, the Morgan
Stanley Opinion, including Morgan Stanley's presentation to the Board, was one
of many factors taken into consideration by the Board in making its
determination to approve the Merger.
The Company retained Morgan Stanley based upon its experience and
expertise. Morgan Stanley is an internationally recognized investment banking
and advisory firm. Morgan Stanley, as part of its investment banking business,
is regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distribution of listed and unlisted securities, private
placements and valuations for corporate and other purposes. Morgan Stanley and
its affiliates have provided financial advisory and financing services to the
Company and have received customary fees in connection with these services.
The Company has agreed to pay Morgan Stanley a Transaction Fee of
$2.5 million for the rendering of financial advisory services in connection with
the transaction. The Company also has agreed to reimburse Morgan Stanley for its
out-of-pocket expenses and to indemnify Morgan Stanley and its affiliates, their
respective directors, officers, agents and employees and each person, if any,
controlling Morgan Stanley, or any of its affiliates against certain
liabilities, including liabilities under federal securities laws, and expenses
related to Morgan Stanley's engagement.
CERTAIN PROJECTIONS
The Company does not as a matter of course prepare or make public any
forecasts as to future performance or earnings. However, management of the
Company prepared certain projections which were furnished to representatives of
Compaq in February 1997. The projections were not prepared with a view to public
disclosure or compliance with published guidelines of the Commission or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections nor do the projections purport to comply with generally
accepted accounting principles. No independent public accountant has audited,
examined, reviewed or compiled such projections and accordingly, no such firm
has expressed any opinion or other form of assurance thereon or assumes any
responsibility for them. No other independent expert has reviewed these
projections. None of the Company, Compaq, Compaq-Boston or any party to whom any
of these projections were provided assumes any responsibility for the accuracy
of such projections. These projections constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Actual results may differ from management's expectations and beliefs based on a
number of risks and uncertainties, many of which risks and uncertainties have
been described in the Company's filings with the Securities and Exchange
Commission. See "INCORPORATION BY REFERENCE."
These projections are based on a number of estimates and assumptions
that, while considered reasonable by the Company at the time they were made,
were and are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond the
control of the Company, and upon assumptions with respect to future business
decisions that were and are subject to change. The projections were prepared in
the course of discussions concerning the acquisition based on estimates and
assumptions considered reasonable by the Company at that time. Many of the
estimates and assumptions on which the projections are based may not be
consistent with estimates and assumptions which the Company's management would
deem reasonable at the present time. Many of the estimates and assumptions which
the Company believed were reasonable at the time the projections were prepared
would no longer be valid now that the Company is a subsidiary of Compaq. In
addition, the projections included projections for periods for which actual
historical results are now known. Future results may vary from the projections
as a result of a variety of other factors as well, including changes in the
levels of revenue derived from sales of the Company's products, the introduction
of alternate technologies by the Company or its competitors, fluctuations in
operating costs, changes in the
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<PAGE> 18
Company's strategy, the effects of major transactions involving the Company
(such as the Merger) and other industry and general economic factors.
Accordingly, the Company and Compaq believe that the results projected may be
materially different from the results which actually will be realized.
The projections and actual results will vary because events and
circumstances frequently do not occur as expected, and such variations may be
material. The inclusion of the summary projections herein should not be regarded
as a representation by the Company, Compaq or any other person that the
projections will be achieved. Neither the Company nor Compaq intends to update
the summary projections.
The summary projections and assumptions stated below should be
reviewed carefully in conjunction with each other, with the consolidated
financial statements of the Company and the notes thereto incorporated by
reference in this Information Statement. The projections prepared by management
of the Company included the following (in thousands of dollars) for the fiscal
year ending March 31, 1998:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING MARCH 31, 1998
---------------------------------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C>
Revenues....................................... $274,835
Cost of goods sold............................. 171,929
Operating expenses............................. 68,496
Income from operations before income taxes..... 34,410
Net income..................................... 25,807
Net income per share........................... $1.50
</TABLE>
The revenue projections set forth above were based principally on
detailed forecasts for products presented by certain of the Company's major OEM
customers, as well as its own estimates for new OEM customers and for products
sold through distribution. Expense forecasts were based partially on historical
experience as well as estimates based on sales forecasts and attainment of
certain manufacturing efficiencies. The projections were prepared on a
stand-alone basis and do not reflect any effect from the Offer and the Merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the Board's recommendation that the Merger Agreement
be approved, stockholders should be aware that the directors and executive
officers of the Company have certain interests, described below, in connection
with the Merger. The Board has considered such interests in addition to the
other matters described above under "THE MERGER--Recommendation of the Board and
Reasons for the Merger" in recommending the approval of the Merger Agreement.
Compaq has entered into a written agreement dated as of April 9, 1997
with Lewis A. Bergins, President and Chief Executive Officer of the Company (the
"Continuation Agreement"), pursuant to which Mr. Bergins will continue to serve
as President of the Company after consummation of the Merger. The Continuation
Agreement has a one-year term, subject to extension upon the agreement of the
parties. Under the Continuation Agreement, Mr. Bergins will receive: (i) base
salary of approximately $285,000 per annum, subject to annual increases; (ii)
eligibility for a target bonus for 1997 of $215,000, depending upon attainment
of certain agreed-upon performance criteria; and (iii) an option to purchase
25,000 shares of Compaq's common stock. In the event of termination of Mr.
Bergins' employment during the term of the Continuation Agreement other than for
"cause," as defined in the Continuation Agreement, the Continuation Agreement
provides that Mr. Bergins will be entitled to severance compensation from Compaq
of one year's continuance of his annual base salary as in effect at the time of
termination. Upon consummation of the Merger, the Continuation Agreement
supersedes Mr. Bergins' existing compensation and severance arrangements with
the Company.
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Except as otherwise described herein, to the best knowledge of the
Company, as of the date hereof, there are no material contracts, agreements,
arrangements or understandings, or any actual or potential conflicts of interest
between the Company or its affiliates and (i) the Company's executive officers,
directors or affiliates or (ii) Compaq or Compaq-Boston or the executive
officers, directors or affiliates of each of them.
The Company understands that Compaq intends to grant to certain
officers and employees of the Company options to acquire shares of Compaq stock
in accordance with Compaq's compensation plans.
CERTAIN EFFECTS OF THE MERGER
At the Effective Time, all of the properties, rights, privileges,
powers, and franchises of the Company and Compaq-Boston will vest in the Company
as the surviving corporation (the "Surviving Corporation"), and all debts,
liabilities, restrictions, disabilities, and duties of the Company and
Compaq-Boston will become the debts, liabilities, restrictions, disabilities,
and duties of the Surviving Corporation. At the Effective Time, the Articles of
Organization of Compaq-Boston in effect immediately prior to the Effective Time
shall be the Articles of Organization of the Surviving Corporation until amended
in accordance with applicable law. The By-Laws of Compaq-Boston in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation until amended
in accordance with applicable law.
The Common Stock is no longer publicly traded and, as a result of the
Offer and the Merger, Compaq will become the sole stockholder of the Surviving
Corporation. Following the Merger, the current stockholders other than Compaq
and Compaq-Boston will no longer have an opportunity to continue their interests
in the Company as an ongoing corporation and therefore will not share in its
future earnings and potential growth. Trading in the Common Stock ceased on May
14, 1997 when the Common Stock was removed from quotation on the Nasdaq Stock
Market. Registration of the Common Stock under the Exchange Act also will be
terminated, as will the ongoing disclosure requirements thereunder.
At the Effective Time, by virtue of the Merger and without any action
on the part of Compaq, Compaq-Boston, the Company, or the holder of any of the
shares of Common Stock, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than (i) shares held by the
Company as treasury stock, (ii) shares held by Compaq or any subsidiary of
Compaq, (iii) shares as to which appraisal rights have been properly exercised
and (iv) shares of Option Restricted Stock (as hereinafter defined)
(collectively, the "Excluded Shares")), shall by virtue of the Merger and
without any action on the part of the holder thereof be cancelled and
extinguished and be converted into the right to receive an amount equal to the
Merger Consideration. Each share of common stock, par value $0.01 per share, of
Compaq-Boston outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
THE MERGER AGREEMENT
THE MERGER
The Merger Agreement provides that, upon the terms and subject to the
conditions thereof, at the time which the Company and Compaq-Boston file the
articles of merger (the "Articles of Merger") with the Secretary of State of The
Commonwealth of Massachusetts and make all other filings or recordings required
by MBCL in connection with the Merger, Compaq-Boston shall be merged with and
into the Company in accordance with MBCL. The Merger shall become effective at
such time as the Articles of Merger are duly filed with the Secretary of State
of The Commonwealth of Massachusetts (the "Effective Time"). As a result of the
Merger, the separate corporate existence of Compaq-Boston will cease and the
Company will be the surviving corporation (the "Surviving Corporation").
At the Effective Time (i) each share of Common Stock held in the
treasury of the Company or owned by Compaq or any subsidiary thereof (including
Compaq-Boston) shall be canceled, and no payment shall be made with respect
thereto, (ii) each share of common stock of Compaq-Boston then outstanding shall
be
16
<PAGE> 20
converted into and become one share of common stock of the Surviving
Corporation, and (iii) each share of Common Stock outstanding immediately prior
to the Effective Time shall, except as otherwise provided in (i) above and
except shares of Common Stock as to which appraisal rights have been properly
exercised and shares of Option Restricted Stock (as hereinafter defined), be
converted into the right to receive $16.25 per share in cash without interest
thereon.
The Merger Agreement provides that, at the Effective Time, the
Articles of Organization of Compaq-Boston will be the Articles of Organization
of the Surviving Corporation, except that the name of the Surviving Corporation
shall be "Microcom, Inc."
OPTION RESTRICTED STOCK
With respect to any shares of Common Stock acquired upon exercise of
an option granted under any stock option or incentive plan of the Company that
as of the Effective Date is subject to contractual forfeiture or resale
restrictions ("Option Restricted Stock"), such shares shall be canceled
immediately prior to the Effective Time, and Compaq shall grant, as of the
Effective Time, to each former holder of Option Restricted Stock, a number of
shares of Compaq common stock having a market value, based on the most recent
per share closing price of Compaq common stock on the New York Stock Exchange
prior to the Effective Date, equal to the product of (i) the number of shares of
Option Restricted Stock formerly held by such holder multiplied by (ii) $16.25.
Such Compaq common stock shall be subject to the same contractual forfeiture or
resale restrictions as applied to the Restricted Stock immediately prior to the
cancellation thereof.
AGREEMENTS OF COMPAQ, COMPAQ-BOSTON AND THE COMPANY
The Merger Agreement provides that effective upon acceptance of
payment pursuant to the Offer of a number of shares of Common Stock that
satisfies the minimum condition of the Offer, Compaq is entitled to designate
the number of directors, rounded up to the next whole number, on the Company's
Board that equals the product of (i) the total number of directors on the Board
(giving effect to the election of any additional directors pursuant to this
paragraph) multiplied by (ii) the percentage that the number of shares of Common
Stock beneficially owned by Compaq (including shares of Common Stock accepted
for payment) bears to the total number of shares of Common Stock outstanding;
and the Company would take all action necessary to cause Compaq's designees to
be elected or appointed to the Board of Directors, including, without
limitation, increasing the number of directors, and seeking and accepting
resignations of its incumbent directors. The Merger Agreement further provides
that the Company shall use its best efforts to cause at least three members of
the Company's Board as of the date of the Merger Agreement who are not employees
of the Company (the "Continuing Directors") to remain members of the Board until
the Effective Time.
Pursuant to the Merger Agreement, the Company has agreed to use its
best efforts to obtain the necessary approvals by its stockholders of the Merger
Agreement and the transactions contemplated thereby. Compaq has agreed to vote
all shares of Common Stock then beneficially owned by it in favor of adoption of
the Merger Agreement.
The Company has agreed that, prior to the Effective Time, the Company
will not adopt or propose any change in its Articles of Organization or By-Laws;
in addition, the Company has agreed that prior to the Effective Time, the
Company will not, and will not permit any of its subsidiaries (each, a
"Subsidiary") to (a) merge or consolidate with any other Person (as defined in
the Merger Agreement) or (other than purchases of materials or products in the
ordinary course of business) acquire a material amount of assets of any other
person; (b) sell, lease, license or otherwise dispose of any material asset or
property to any Person except (i) pursuant to existing contracts or commitments,
and (ii) in the ordinary course consistent with past practice; (c) settle or
compromise any suit or claim or threatened suit or claim relating to the
transactions contemplated under the Merger Agreement; (d) agree or commit to do
any of the foregoing; or (e) take or agree or commit to take any action that
would make any representation and warranty of the Company under the Merger
Agreement inaccurate in any respect at, or as of any time prior to, the
Effective Time.
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<PAGE> 21
Pursuant to the Merger Agreement, the Company has agreed that from
the date of the Merger Agreement until the termination thereof, the Company and
each Subsidiary and the officers, directors, employees or other agents of the
Company and each Subsidiary will not, directly or indirectly, (i) take any
action to solicit, initiate or encourage any Acquisition Proposal (as
hereinafter defined) or (ii) except as otherwise required by the fiduciary
duties of the Board as advised in writing by counsel, engage in negotiations
with, or disclose any nonpublic information relating to the Company or any
Subsidiary or afford access to the properties, books or records of the Company
or any Subsidiary to, any Person. The Company has agreed to notify promptly
Compaq (and in no event later than 24 hours after receipt of a written
Acquisition Proposal) after (i) receipt of any Acquisition Proposal, (ii) the
Company has actual knowledge that any Person is considering making an
Acquisition Proposal or (iii) the Company has received any request for nonpublic
information relating to the Company or any Subsidiary or for access to the
properties, books or records of the Company or any Subsidiary by any Person that
the Company has actual knowledge is considering making, or has made, an
Acquisition Proposal and to keep Compaq fully informed of the status and details
of any such Acquisition Proposal indication or request. "Acquisition Proposal"
means any offer or proposal for a merger or other business combination involving
the Company or any Subsidiary or the acquisition of any equity interest in, or a
substantial portion of the assets of, the Company or any Subsidiary, other than
the transactions contemplated by the Merger Agreement. The Company has agreed
not to engage in negotiations with, or disclose any nonpublic information to,
any Person unless it receives from such Person an executed confidentiality
agreement with terms no less favorable to the Company than the Confidentiality
Agreement between the Company and Compaq dated April 9, 1997. Pursuant to the
Merger Agreement, the Company has agreed to cease immediately and cause to be
terminated all activities, discussions or negotiations, if any, with any Persons
conducted prior to April 9, 1997 with respect to any Acquisition Proposal.
Compaq and the Company have agreed to appoint personnel from their
respective human relations departments that will meet and coordinate the manner
of transition of the insurance, compensation and other benefit plans of the
Company following the Merger. The parties have agreed that for two years
following the Effective Time, the Company's employees will be provided benefits
that are substantially comparable in the aggregate to those provided by the
Company to its employees as of April 9, 1997, excluding all forms of stock-based
or equity based compensation.
Compaq and Compaq-Boston have agreed that for five years after the
Effective Time, Compaq will cause the Surviving Corporation to indemnify and
hold harmless the present and former officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective Time to the extent
provided under the Company's Articles of Organization and By-Laws in effect on
the date of the Merger Agreement, subject to any limitation imposed from time to
time under applicable law. In addition, Compaq has agreed that for five years
after the Effective Time, Compaq will cause the Surviving Corporation to use its
best efforts to provide officers' and directors' liability insurance in respect
of acts or omissions occurring prior to the Effective Time covering each such
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date of the Merger Agreement.
Notwithstanding the foregoing, Compaq will not be obligated to cause the
Surviving Corporation to pay premiums in excess of 150% of the amount per annum
the Company paid in the twelve months ended December 31, 1996, which amount has
been disclosed to Compaq.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary representations and
warranties of the parties thereto including (a) representations by the Company
as to its corporate existence and power, corporate authorizations, governmental
authorizations, non-contravention, capitalization, subsidiaries, Commission
filings, financial statements, disclosure documents, absence of certain damages,
absence of undisclosed material liabilities, litigation, taxes, employee
matters, compliance with laws, finders' fees, patents and other proprietary
rights, environmental matters, and antitakeover provisions and (b)
representations by Compaq as to its and Compaq-Boston's corporate existence and
power, corporate authorizations, governmental authorizations, non-contravention,
disclosure documents and finders' fees.
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<PAGE> 22
CONDITIONS TO THE MERGER
The obligations of the Company, Compaq and Compaq-Boston to
consummate the Merger are subject to the satisfaction of the following
conditions: (i) the adoption by the stockholders of the Company of the Merger
Agreement in accordance with the MBCL; (ii) any applicable waiting period under
the HSR Act relating to the Merger shall have expired or been terminated; (iii)
no provision of any applicable law or regulation and no judgment, injunction,
order or decree shall prohibit the consummation of the Merger; and (iv)
Compaq-Boston shall have purchased shares of Common Stock pursuant to the Offer.
TERMINATION
The Merger Agreement provides that it may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any approval of the Merger Agreement by the stockholders of the Company, (a) by
mutual written consent of the Company and Compaq; (b) by either the Company or
Compaq, if the Offer has not been consummated by June 4, 1997; (c) by either the
Company or Compaq if there shall be any law or regulation that makes
consummation of the Offer or the Merger illegal or otherwise prohibited or if
any judgment, injunction, order or decree enjoining Compaq or the Company from
consummating the Offer or the Merger is entered and such judgment, injunction,
order or decree shall become final and nonappealable; (d) by either the Company
or Compaq if the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in principle
with respect to any Acquisition Proposal; or (e) by Compaq if any person or
group (as defined in Section 13(d)(3) of the Exchange Act) (other than Compaq,
Compaq-Boston or any affiliate thereof) shall have become the beneficial owner
(as defined in Rule 13d-3 promulgated under the Exchange Act) of at least a
majority of the outstanding shares of Common Stock. If the Merger Agreement is
terminated, the Merger Agreement will become void and of no effect with no
liability on the part of the Company, Compaq or Compaq-Boston other than
obligations of the Company under certain provisions of the Merger Agreement to
pay certain fees to and expenses of Compaq or Compaq-Boston (as described
below).
FEES AND EXPENSES
The Company has agreed that if the Merger Agreement is terminated (i)
in accordance with clause (b) under "Termination" above and (x) the Company
shall have failed to observe or perform in any material respect any of its
obligations under the Merger Agreement or (y) an Acquisition Proposal shall have
been received prior to June 4, 1997 and not publicly rejected by the Company's
Board, or (ii) in accordance with clauses (d) or (e) above, the Company will pay
to Compaq, within two business days following such event, a fee equal to
$10,460,000 in cash.
The Company has agreed to pay Compaq an amount in immediately
available funds equal to the sum of (i) Compaq's out-of-pocket expenses in
connection with the transactions contemplated by the Merger Agreement (but not
in excess of $2 million) and (ii) $2 million, after the termination of the
Merger Agreement pursuant to the provisions described in clause (b) under
"Termination" above, where any of the representations or warranties of the
Company set forth in the Merger Agreement were not true and correct as of the
date of the Merger Agreement.
Except as described in the preceding paragraphs, the Merger Agreement
provides that the Company, Compaq and Compaq-Boston shall each bear all expenses
incurred by it in connection with the Merger Agreement and the transactions
contemplated thereby.
AMENDMENT AND WAIVERS
Any provisions of the Merger Agreement may be amended or waived prior
to the Effective Time if, and only if, such amendment or waiver is in writing
and signed (i) in the case of any amendment, by the Company, Compaq and
Compaq-Boston or (ii) in the case of a waiver, by the party against whom the
waiver is to be effective. A termination or amendment of the Merger Agreement
requires, in the case of the Company, action
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<PAGE> 23
by the Company's Board or the duly authorized designee of the Company's Board.
The Merger Agreement provides that in the event that Compaq's designees are
appointed or elected to the Board of the Company after the consummation of the
Offer and prior to the Effective Time, the affirmative vote of at least a
majority of the Continuing Directors will be required for the Company to agree
to amend, waive compliance with or terminate the Merger Agreement.
CONFIDENTIALITY AGREEMENT
Effective as of April 9, 1997, the Company and Compaq entered into a
letter agreement (the "Confidentiality Agreement"), pursuant to which Compaq
agreed to keep confidential certain business and/or technical information of the
Company furnished to Compaq in connection with the subject matter of the Merger
Agreement.
REGULATORY FILINGS AND APPROVALS
The Company is not aware of any governmental or regulatory
requirements for consummation of the Merger other than compliance with the HSR
Act and applicable state corporate laws and federal, state international
securities laws. The waiting period under the HSR Act expired on May 3, 1997.
ACCOUNTING TREATMENT
It is expected that the Merger will be accounted for as a "purchase"
transaction in accordance with generally accepted accounting principles.
APPRAISAL RIGHTS
If the Merger becomes effective, a holder of the Common Stock who
does not vote in favor of the Merger and who follows the procedures prescribed
under MBCL may require the Company as the surviving corporation to pay the "fair
value", determined as provided under the MBCL, for the shares held by such
stockholder. The following is a summary of certain features of the relevant
sections of the MBCL, the provisions of which are set forth in full in Annex III
hereto, and such summary is subject to and qualified in its entirety by
reference to such law. In order to exercise such statutory appraisal rights,
strict adherence to the statutory provisions is required, and each stockholder
who may desire to exercise such rights should carefully review and adhere to
such provisions.
A holder of the Common Stock who desires to pursue the appraisal
rights available to such stockholder must: (i) file a written objection to the
Merger with the Company pursuant to Section 86 of Chapter 156B of the MBCL
before the taking of the stockholder's vote on the Merger Agreement, stating the
intention of such stockholder to demand payment for shares owned by such
stockholder if the Merger is approved and the Merger is consummated; (ii)
refrain from voting in favor of the Merger; and (iii) make written demand (the
"Demand") to the Company as the surviving corporation for payment for said
stockholder's shares within twenty days of the date of mailing of a notice by
the surviving corporation to objecting stockholders that the Merger has become
effective (which notice will be sent within 10 days of the Effective Date). Such
written objection and written demand should be delivered to Microcom, Inc., 500
River Ridge Road, Norwood, Massachusetts 02062-5028, Attention: Peter J.
Minihane, Executive Vice President, and it is recommended that such objection
and demand be sent by registered or certified mail, return receipt requested.
A stockholder who files the required written objection with the
Company prior to the stockholder vote need not vote against the Merger, but a
vote in favor of the Merger will constitute a waiver of such stockholder's
statutory appraisal rights. A vote against the Merger does not, alone,
constitute a written objection.
The value of the Common Stock will be determined initially by the
Company as the surviving corporation and the dissenting stockholder. If, during
the period of thirty days after the expiration of the period during which the
Demand may be made, the Company and the stockholder fail to agree on the value
of the
20
<PAGE> 24
Common Stock, either of them may file a bill in equity in the Superior Court of
Norfolk County, Massachusetts, asking that the Court determine the value. The
bill in equity must be filed within four months after the date of expiration of
the foregoing thirty-day period. If the bill in equity is timely filed, the
court or an appointed special master will hold a hearing. After the hearing, the
court shall enter a decree determining the fair value of the Common Stock and
shall order the Company to make payment of such value, with interest, from the
date of the vote approving the Merger, if any, to the stockholders entitled to
said payment, upon transfer by them to the Company of the certificates
representing the Common Stock held by said stockholders. The "fair value" of the
Common Stock determined in accordance with the procedures described above could
be more than, the same as or less than the Merger Consideration.
For appraisal proceeding purposes, value is determined as of the day
before the approval of the Merger Agreement by stockholders, excluding any
element of value arising from the expectation or accomplishment of the Merger.
The enforcement by a stockholder of his or her request to receive
payment for shares of the Common Stock as provided under the applicable
statutory provisions shall be an exclusive remedy except that such remedy shall
not exclude the right of a stockholder to bring or maintain an appropriate
proceeding to obtain relief on the ground that said corporate action will be or
is illegal or fraudulent as to said stockholder. In Coggins v. New England
Patriots Football Club, Inc., 397 Mass. 525 (1986), however, the Massachusetts
Supreme Judicial Court held that dissenting stockholders are not limited to the
statutory remedy of judicial appraisal where violations of fiduciary duty exist.
A final judgment by the court or a special master determining the
fair value of the Common Stock would be binding on and enforceable by the
Company stockholders who have perfected their statutory appraisal rights, even
if such fair value were determined to be less than the Merger Consideration. A
stockholder who perfects his rights as a dissenting stockholder will not, after
the Effective Date, be entitled to notices of meetings, to vote, or to receive
dividends.
Each share of the Common Stock held by stockholders who seek to
exercise appraisal rights and, after the Effective Time, fail to perfect or lose
any such right to appraisal, shall be treated as a share that had been converted
as of the Effective Time into the right to receive the Merger Consideration as
provided in the Merger Agreement.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The conversion of shares of Common Stock into the right to receive
the Merger Consideration pursuant to the Merger Agreement will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state and local and other tax laws. In general, a
stockholder will recognize gain or loss equal to the difference between the tax
basis of his or her shares of Common Stock and the amount of cash received in
exchange therefor. Such gain or loss will be capital gain or loss if such shares
are capital assets in the hands of the stockholder and will be long-term capital
gain or loss if the holding period for such shares is more than one year as of
the date of the sale of such shares. Legislation that would reduce the tax rate
on long-term capital gain is now pending before the United States Congress but
its enactment is uncertain. The foregoing discussion may not apply to
stockholders who acquired their shares pursuant to the exercise of stock options
or other compensation arrangements with the Company or who are not citizens or
residents of the United States or who are otherwise subject to special tax
treatment under the Internal Revenue Code of 1986, as amended.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. DUE TO THE INDIVIDUAL NATURE OF
TAX CONSEQUENCES, STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER, INCLUDING THE EFFECTS OF
APPLICABLE STATE, LOCAL OR OTHER TAX LAWS.
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<PAGE> 25
SELECTED FINANCIAL INFORMATION OF COMPAQ
The following selected consolidated financial data relating to Compaq
and its subsidiaries have been taken or derived from the audited financial
statements contained in Compaq's Annual Report on Form 10-K for the year ended
December 31, 1996. More comprehensive financial information is included in such
Annual Report and the other documents filed by Compaq with the Commission, and
the financial data set forth below is qualified in its entirety by reference to
such Annual Report and other documents and all of the financial statements and
notes contained therein. See "INCORPORATION BY REFERENCE."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------
1996 1995 1994
------------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
INCOME STATEMENT DATA
Sales............................................................... $18,109 $14,755 $10,866
Gross margin........................................................ 4,196 3,388 2,727
Income before provision for income taxes............................ 1,876 1,188* 1,172
Net income.......................................................... 1,313 789* 867
Earnings per share.................................................. 4.66 2.87* 3.21
Shares used in computing earnings per common and
common equivalent share.......................................... 281.4 275.0 270.1
BALANCE SHEET DATA
Current assets...................................................... 9,169 6,527 5,158
Total assets........................................................ 10,526 7,818 6,166
Current liabilities................................................. 3,852 2,680 2,013
Long-term debt...................................................... 300 300 300
Stockholders' equity................................................ 6,144 4,614 3,674
</TABLE>
- ------------------
* Includes a $241 million ($.87 per share) non-recurring, non-tax deductible
charge for purchased in-process technology in connection with acquisitions in
1995.
22
<PAGE> 26
SELECTED FINANCIAL INFORMATION OF THE COMPANY
The following selected consolidated financial data relating to the Company
and its subsidiaries have been taken or derived from the audited financial
statements of the Company appearing in its Form 10-K for the fiscal year ended
March 31, 1996 and the unaudited financial statements contained in the Company's
quarterly reports on Form 10-Q for its fiscal quarters ended December 31, 1995
and December 31, 1996. More comprehensive financial information is included in
such Form 10-K and Form 10-Qs and the other documents filed by the Company with
the Commission, and the financial data set forth below is qualified in its
entirety by reference to such reports and other documents and all of the
financial statements and notes contained therein. See "INCORPORATION BY
REFERENCE."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31 (unaudited) FISCAL YEAR ENDED MARCH 31
-------------------------- ---------------------------------------
1996 1995 1996 1995 1994
----- ----- ------ ----- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales.............................. $131,181 $101,341 $146,044 $93,106 $56,464
--------- --------- -------- ------- -------
Gross margin........................... 46,555 43,067 61,010 41,784 27,392
Operating income (loss)................ 4,685 10,354 14,768 7,517 (10,416)
Net income (loss)...................... 2,813 8,662 12,490 5,761 (10,913)
Net income (loss) per share............ 0.17 0.57 0.80 0.49 (1.09)
Weighted average number of
shares outstanding................... 16,818 15,196 15,690 11,805 10,041
BALANCE SHEET DATA
Working capital........................ $81,544 $81,455 $84,329 $17,732 $13,957
Total assets........................... 143,067 118,810 129,199 57,788 38,453
Long-term portion of
capitalized leases................... 3,041 2,526 2,186 122 450
Total stockholders' equity............. 108,559 97,551 103,109 35,282 26,231
</TABLE>
23
<PAGE> 27
MARKET PRICES OF THE COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded in the over-the-counter market and is quoted on
the Nasdaq National Market under the symbol MNPI. The following table sets
forth, for the periods indicated, the high and low sale prices per share of
Common Stock as quoted on the Nasdaq National Market. The Company has never paid
cash dividends on the Common Stock.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR ENDED MARCH 31, 1996
First Quarter........................................... $ 16 7/8 $ 9 5/8
Second Quarter.......................................... 22 1/4 15
Third Quarter........................................... 28 14 5/8
Fourth Quarter.......................................... 34 1/2 18 7/8
FISCAL YEAR ENDED MARCH 31, 1997
First Quarter........................................... $ 31 1/8 $ 10
Second Quarter ......................................... 13 3/4 5 1/2
Third Quarter........................................... 16 7 7/8
Fourth Quarter.......................................... 13 3/4 8 3/4
FISCAL YEAR ENDED MARCH 31, 1998
First Quarter (through April 15, 1997).................. $ 16 1/8 $ 8 1/4
</TABLE>
On April 9, 1997, the last full day of trading before public
announcement of the execution of the Merger Agreement, the reported closing
sales price per share of Common Stock on the Nasdaq National Market was $10 1/2.
On May 14, 1997, the last full day of trading prior to the printing of this
Information Statement, the reported closing sales price per share of Common
Stock on the Nasdaq National Market was $_____.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES
24
<PAGE> 28
SECURITY OWNERSHIP OF THE COMMON STOCK BY
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Shares of Common Stock are the only class of voting securities of the
Company outstanding. Each share of Common Stock is entitled to one vote on each
matter to be considered at meetings of shareholders, including the election of
directors. As of the Record Date, there were __________ shares of Common Stock
outstanding.
The following table sets forth, as of the Record Date, the beneficial
ownership of the Company's common stock: (i) by each shareholder known by the
Company to own beneficially at least 5% of the Shares; (ii) by each director;
(iii) by certain executive officers; and (iv) by all executive officers and
directors as a group. Except as otherwise indicated below, each named beneficial
owner has sole voting and investment power with respect to the Shares listed.
<TABLE>
<CAPTION>
Shares Owned
------------
Beneficial Owner Number Percent
- ---------------- ------ -------
<S> <C> <C>
Compaq Computer Corporation ________ [90+]%
20555 SH 249
Houston, TX 77070
Lewis A. Bergins ________ *
Peter J. Minihane ________ *
Mark Freitas ________ *
Roland D. Pampel ________ *
James M. Dow ________ *
Fred L. Luconi ________ *
John C. Rutherford ________ *
Michael I. Schneider ________ *
Donald G. Kennedy ________ *
Executive officers and directors as a ________ ____
group (9 persons)
</TABLE>
- ------------------
* Less than 1%.
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<PAGE> 29
INCORPORATION BY REFERENCE
The following documents previously filed with the Commission by the
Company and Compaq pursuant to the Exchange Act are incorporated by reference
into this Information Statement: (1) the Annual Report on Form 10-K of Compaq
for the fiscal year ended December 31, 1996; (2) the Current Reports on Form 8-K
filed by Compaq on April 10, 1997 and April 16, 1997; (3) the Tender Offer
Statement on Schedule 14D-1 filed by Compaq on April 16, 1997; (4) the Quarterly
Report on Form 10-Q of Compaq for the quarterly period ended March 31, 1997; (5)
the Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company
dated April 17, 1997; (6) the Annual Report on Form 10-K of the Company for the
fiscal year ended March 31, 1996; and (7) the Quarterly Reports on Form 10-Q of
the Company for the fiscal quarters ended June 30, 1996, September 30, 1996 and
December 31, 1996.
All documents filed by Compaq or the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Information
Statement and prior to the date of the Special Meeting shall be deemed to be
incorporated by reference into this Information Statement and to be a part
hereof from the dates of filing such documents or reports. Any statement
contained herein or in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Information Statement
to the extent that a statement contained herein or in any other subsequently
filed document which is also incorporated or deemed to be incorporated herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Information Statement.
THIS INFORMATION STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
CERTAIN EXHIBITS TO DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A COPY OF THIS
INFORMATION STATEMENT HAS BEEN DELIVERED UPON WRITTEN OR ORAL REQUEST, IN THE
CASE OF COMPANY DOCUMENTS, TO PETER J. MINIHANE, EXECUTIVE VICE PRESIDENT,
MICROCOM, INC. 500 RIVER RIDGE DRIVE, NORWOOD, MASSACHUSETTS 02062, TELEPHONE:
(617) 551-1000, AND IN THE CASE OF COMPAQ DOCUMENTS, TO J. DAVID CABELLO, SENIOR
VICE PRESIDENT, COMPAQ COMPUTER CORPORATION, 20555 S.H. 249, HOUSTON, TEXAS
77070, TELEPHONE 281-370-0670.
OTHER MATTERS
The Board does not know of any other matters which may come before
the Special Meeting. However, if any other matters are properly presented to the
Special Meeting, they will be considered by the stockholders present at the
meeting.
By order of the Board of Directors
WILLIAM C. ROGERS
Clerk
May 30, 1997
26
<PAGE> 30
ANNEX I
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF
APRIL 9, 1997
AMONG
MICROCOM, INC.
COMPAQ COMPUTER CORPORATION
AND
COMPAQ-BOSTON, INC.
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TABLE OF CONTENTS
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ARTICLE 1
THE OFFER
SECTION 1.1. The Offer.......................................................1
SECTION 1.2. Company Action..................................................1
SECTION 1.3. Directors.......................................................2
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger......................................................3
SECTION 2.2. Conversion of Shares............................................4
SECTION 2.3. Surrender and Payment...........................................4
SECTION 2.4. Dissenting Shares...............................................5
SECTION 2.5. Stock Options...................................................6
SECTION 2.6. Employee Stock Purchase Plan....................................6
SECTION 2.7. Option Restricted Stock.........................................7
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1. Articles of Organization........................................7
SECTION 3.2. Bylaws..........................................................7
SECTION 3.3. Directors and Officers..........................................7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1. Corporate Existence and Power...................................8
SECTION 4.2. Corporate Authorization.........................................8
SECTION 4.3. Governmental Authorization......................................8
SECTION 4.4. Non-Contravention...............................................8
SECTION 4.5. Capitalization..................................................9
SECTION 4.6. Subsidiaries....................................................9
SECTION 4.7. SEC Filings....................................................10
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SECTION 4.8. Financial Statements...........................................10
SECTION 4.9. Disclosure Documents...........................................11
SECTION 4.10. Absence of Certain Changes.....................................11
SECTION 4.11. No Undisclosed Material Liabilities............................13
SECTION 4.12. Litigation.....................................................13
SECTION 4.13. Taxes..........................................................13
SECTION 4.14. ERISA..........................................................13
SECTION 4.15. Compliance with Laws...........................................15
SECTION 4.16. Finders' Fees..................................................15
SECTION 4.17. Patents and Other Proprietary Rights...........................15
SECTION 4.18. Environmental Matters..........................................16
SECTION 4.19. Approvals; Antitakeover Provisions.............................17
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 5.1. Corporate Existence and Power..................................17
SECTION 5.2. Corporate Authorization........................................17
SECTION 5.3. Governmental Authorization.....................................17
SECTION 5.4. Non-Contravention..............................................18
SECTION 5.5. Disclosure Documents...........................................18
SECTION 5.6. Finders' Fees..................................................18
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.1. Conduct of the Company.........................................19
SECTION 6.2. Stockholder Meeting; Proxy Material............................19
SECTION 6.3. Access to Information..........................................20
SECTION 6.4. Other Offers...................................................20
ARTICLE 7
COVENANTS OF BUYER
SECTION 7.1. Obligations of Merger Subsidiary...............................21
SECTION 7.2. Voting of Shares...............................................21
SECTION 7.3. Director and Officer Liability.................................21
SECTION 7.4. Tax Certification..............................................21
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ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.1. Best Efforts...................................................21
SECTION 8.2. Certain Filings................................................22
SECTION 8.3. Public Announcements...........................................22
SECTION 8.4. Notices of Certain Events......................................22
SECTION 8.5. Employee Benefits..............................................22
SECTION 8.6. Further Assurances.............................................23
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party....................23
ARTICLE 10
TERMINATION
SECTION 10.1. Termination....................................................23
SECTION 10.2. Effect of Termination..........................................24
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices........................................................24
SECTION 11.2. Survival of Representations and Warranties.....................25
SECTION 11.3. Amendments; No Waivers.........................................25
SECTION 11.4. Fees and Expenses..............................................26
SECTION 11.5. Successors and Assigns.........................................26
SECTION 11.6. Governing Law..................................................27
SECTION 11.7. Counterparts; Effectiveness....................................27
SECTION 11.8. Entire Agreement...............................................27
SECTION 11.9. Definitions....................................................27
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of April 9, 1997 among
Microcom, Inc., a Massachusetts corporation (the "COMPANY"), Compaq Computer
Corporation, a Delaware corporation ("BUYER"), and Compaq-Boston, Inc., a
Massachusetts corporation and a wholly-owned subsidiary of Buyer ("MERGER
SUBSIDIARY").
The parties hereto agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the
date hereof, but in no event later than five business days following the public
announcement of the terms of this Agreement, commence an offer (the "OFFER") to
purchase all of the outstanding shares (the "SHARES") of common stock, $0.01 par
value per share, of the Company (the "COMMON STOCK") at a price of $16.25 per
Share, net to the seller in cash. The Offer shall be subject to the condition
that a number of Shares which, together with the Shares then owned by Buyer,
represents at least a majority of the Shares outstanding on a fully diluted
basis shall be validly tendered in accordance with the terms of the Offer prior
to the expiration date of the Offer and not withdrawn (the "MINIMUM CONDITION")
and to the other conditions set forth in Annex I hereto. Merger Subsidiary
expressly reserves the right to waive the Minimum Condition or any of the other
conditions to the Offer and to make any change in the terms or conditions of the
Offer; provided that no change may be made which changes the form of
consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer or which imposes conditions to the Offer in addition
to those set forth in Annex I or amends the terms and conditions of the Offer in
a manner adverse to the Company.
(b) As soon as practicable on the date of commencement of the Offer,
Merger Subsidiary shall file with the SEC (as defined in Section 4.7) a Tender
Offer Statement on Schedule 14D-1 with respect to the Offer which will contain
the offer to purchase and form of the related letter of transmittal (together
with any supplements or amendments thereto, collectively the "OFFER DOCUMENTS").
Buyer and the Company each agrees promptly to correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect. Merger Subsidiary agrees to
take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given an opportunity to review and comment on the
Schedule 14D-1 prior to its being filed with the SEC.
SECTION 1.2. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (as defined in Section
2.1), are fair to and in the best interest of the Company's stockholders, (ii)
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer
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and the Merger, which approval satisfies in full any applicable requirements of
the Business Corporation Law of the Commonwealth of Massachusetts
("MASSACHUSETTS LAW" OR "MBCL") and any applicable requirements of Chapters
110C, 110D, 110E and 110F of the Massachusetts General Laws, and (iii)
unanimously resolved, except as may be required, in response to an unsolicited
bona fide written Acquisition Proposal (as defined in Section 6.4), in order to
comply with the fiduciary duties of the Board of Directors under applicable
law as advised in writing by Choate, Hall & Stewart ("COMPANY COUNSEL"), to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders. The Company further represents that Morgan
Stanley & Co. Incorporated has delivered to the Company's Board of Directors its
written opinion that the consideration to be paid in the Offer and the Merger is
fair to the holders of Shares from a financial point of view. The Company has
been advised that all of its directors and executive officers intend either to
tender their Shares pursuant to the Offer or to vote in favor of the Merger. The
Company will promptly furnish Buyer with a list of its stockholders, mailing
labels and any available listing or computer file containing the names and
addresses of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case true and correct as of the most
recent practicable date, and will provide to Buyer such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Buyer may
reasonably request in connection with the Offer. Buyer will return such
materials promptly if the Offer is not consummated.
(b) As soon as practicable on the day that the Offer is commenced,
the Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "SCHEDULE 14D-9") which shall reflect the recommendations of
the Company's Board of Directors referred to above. The Company and Buyer each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Buyer and its counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 prior to its being filed with the SEC.
SECTION 1.3. Directors. (a) Effective upon the acceptance for payment
pursuant to the Offer of a number of Shares that satisfies the Minimum
Condition, Buyer shall be entitled to designate the number of directors, rounded
up to the next whole number, on the Company's Board of Directors that equals the
product of (i) the total number of directors on the Company's Board of Directors
(giving effect to the election of any additional directors pursuant to this
Section ) multiplied by (ii) the percentage that the number of Shares
beneficially owned by Buyer (including Shares accepted for payment) bears to the
total number of Shares outstanding; and the Company shall take all action
necessary to cause Buyer's designees to be elected or appointed to the Company's
Board of Directors, including, without limitation, increasing the number of
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directors and seeking and accepting resignations of incumbent directors. At such
times, the Company will use its best efforts to cause individuals designated by
Buyer to constitute the same percentage as such individuals represent on the
Company's Board of Directors of (A) each committee of the Board and (B) each
board of directors (and committee thereof) of each Subsidiary (as defined in
Section 4.6). Notwithstanding the foregoing, the Company shall use its best
efforts to cause at least three members of the Company's Board of Directors as
of the date hereof who are not employees of the Company (the "CONTINUING
DIRECTORS") to remain members of the Board of Directors until the Effective Time
(as defined in Section 2.1(b)), and the Buyer consents thereto.
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (as defined in
Section 4.3) and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to
fulfill its obligations under this Section and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section . Buyer will supply to the Company in writing and
be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. (a) At the Effective Time (as defined
below), Merger Subsidiary shall be merged (the "MERGER") with and into the
Company in accordance with Section 78 of the MBCL, whereupon the separate
existence of Merger Subsidiary shall cease, and the Company shall be the
surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Merger Subsidiary will file articles of merger ("ARTICLES OF MERGER") with the
Secretary of State of the Commonwealth of Massachusetts and make all other
filings or recordings required by Massachusetts Law in connection with the
Merger. The Merger shall become effective at such time as the Articles of Merger
are duly filed with the Secretary of State of the Commonwealth of Massachusetts
(the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Massachusetts Law.
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SECTION 2.2. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned by
Buyer or any subsidiary of Buyer immediately prior to the Effective Time shall
be canceled, and no payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation; and
(c) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 2.2(a) or as provided in Section
2.4 with respect to Shares as to which appraisal rights have been exercised or
as provided in Section 2.7 with respect to Option Restricted Stock, be converted
into the right to receive $16.25 in cash, without interest (the "MERGER
CONSIDERATION").
SECTION 2.3. Surrender and Payment. (a) Prior to the Effective Time,
Buyer shall appoint an agent (the "EXCHANGE AGENT") for the purpose of
exchanging certificates representing Shares for the Merger Consideration. Buyer
will make available to the Exchange Agent, in such amounts as may be needed from
time to time, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Buyer will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such Shares. From and
after the Effective Time, all Shares which have been so converted shall no
longer be outstanding and shall automatically be canceled and retired, and each
such certificate shall, after the Effective Time, represent for all purposes,
only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "PERSON" means an individual, a corporation, a
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limited liability company, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision or any
agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.3(a) that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to Buyer, upon
demand, and any such holder who has not exchanged Shares for the Merger
Consideration in accordance with this Section 2.3 prior to that time shall
thereafter look only to Buyer for payment of the Merger Consideration in respect
of Shares. Notwithstanding the foregoing, Buyer shall not be liable to any
holder of Shares for any amount paid to a public official pursuant to applicable
abandoned property laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of Buyer free and clear of any claims or interest of any Person
previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Buyer, upon demand.
SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.2, Shares
which are held of record by stockholders who shall not have voted such Shares in
favor of the Merger, if applicable, and who shall have properly exercised rights
to demand payment of the fair value of such Shares in accordance with Sections
86 through 98, inclusive, of the MBCL shall not be converted into the right to
receive the Merger Consideration, but the holders thereof instead shall be
entitled to payment of the fair value of such Shares in accordance with the
provisions of Sections 86 to 92, inclusive, of the MBCL, provided, however, that
(i) if such a holder fails to file a notice of election to dissent in accordance
with Section 86 of the MBCL or, after filing such notice of election,
subsequently delivers an effective written withdrawal of such notice or fails to
establish his entitlement to appraisal rights as provided in Sections 87 through
98, inclusive, of the MBCL, or (ii) if such holder shall otherwise lose his
appraisal rights, then in either of such cases such Shares shall be treated as
if they had been converted as of the Effective Time into a right to receive the
Merger Consideration. The Company shall give Buyer prompt notice of any demands
received by the Company for the payment of fair value for Shares, and Buyer
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Buyer, make any payment with respect to, or settle or offer to
settle, any such demands.
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SECTION 2.5. Stock Options. (a) At the Effective Time, each option to
purchase shares of Common Stock outstanding under any employee stock option or
compensation plan or arrangement of the Company (except for the Microcom, Inc.
1987 Employee Stock Purchase Plan (the "COMPANY STOCK PURCHASE PLAN")) that is
vested and exercisable (including any option that becomes vested and exercisable
by its terms as a result of the transactions contemplated hereby) held by (i)
the Chief Executive Officer of the Company, (ii) the Chief Financial Officer of
the Company or (iii) any director or former director of the Company shall be
canceled, and Buyer shall pay each such holder in cash at the Effective Time for
each such option an amount determined by multiplying (A) the excess, if any, of
the Merger Consideration over the applicable exercise price per share of such
option by (B) the number of shares to which such option relates.
(b) Except as otherwise provided in Section 2.5(a) above, at the
Effective Time, each option to purchase shares of Common Stock outstanding under
any employee stock option or compensation plan or arrangement of the Company
(except for the Company Stock Purchase Plan), whether or not vested or
exercisable, shall be canceled, and Buyer shall issue in exchange therefor an
option to purchase shares of common stock of Buyer (a "SUBSTITUTE OPTION"). The
number of shares of Buyer's common stock subject to such Substitute Option and
the exercise price thereunder shall be computed in compliance with the
requirements of Section 424(a) of the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder (the "CODE"). Such
Substitute Option shall vest in accordance with the same schedule and shall have
the same term as the original option in respect of which it is granted, and
shall otherwise be subject to all of the other terms and conditions of options
granted under the employee stock option or compensation plan or arrangement of
Buyer. The Substitute Option will not qualify as an incentive stock option under
Section 422 of the Code. Notwithstanding the foregoing, in the case of any
Substitute Option issued in exchange for an option exercisable for shares of
Common Stock which shares would upon exercise, as of the Effective Time, be
subject to contractual forfeiture or resale restrictions ("FORFEITURE
PROVISIONS"), the Substitute Option shall become exercisable according to a
schedule that mirrors the expiration of such Forfeiture Provisions, but the
shares of Buyer's common stock acquired upon exercise of the Substitute Option
shall not be subject to Forfeiture Provisions.
(c) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the Company's stock option or
compensation plans or arrangements) that are necessary to give effect to the
transactions contemplated by Sections 2.5(a) and 2.5(b).
SECTION 2.6. Employee Stock Purchase Plan. (a) As of the Effective
Time, the Company Stock Purchase Plan shall be terminated. Buyer shall pay each
participant in any current offering under such Plan in cash at or promptly after
the Effective Time, in cancellation of all rights under such Plan, the amount of
such participant's account balance under the Plan.
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(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the Company Stock Purchase
Plan) that are necessary to give effect to the transactions contemplated by
Section 2.6(a).
SECTION 2.7. Option Restricted Stock. The provisions of this Section
2.7 shall apply to each share of Common Stock acquired upon exercise of an
option granted under any stock option or incentive plan of the Company that as
of the Effective Date is subject to Forfeiture Provisions ("OPTION RESTRICTED
STOCK"). Notwithstanding Section 2.2, the Option Restricted Stock shall not be
tendered by any holder thereof into the Offer and shall be canceled immediately
prior to the Effective Time. In consideration of such forbearance and
cancellation, Buyer shall grant, as of the Effective Time, to each former holder
of Option Restricted Stock, a number of shares of Buyer common stock having a
market value, based on the most recent per share closing price of Buyer common
stock on the New York Stock Exchange prior to the Effective Date, equal to the
product of (i) the number of shares of Option Restricted Stock formerly held by
such holder and (ii) the Merger Consideration. Such Buyer common stock shall be
subject to the same Forfeiture Provisions as applied to the Option Restricted
Stock immediately prior to the cancellation thereof. The Company shall use its
best efforts to obtain such consents by the affected holders of Option
Restricted Stock as are necessary to effect the provisions of this Section 2.7.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1. Articles of Organization. (a) The Articles of
Organization of the Surviving Corporation shall be amended pursuant to the
Articles of Merger to read in their entirety as set forth in the Articles of
Organization of Merger Subsidiary, except that the name of the Surviving
Corporation shall be "Microcom, Inc."
(b) The Surviving Corporation shall initially be authorized to issue
up to 100,000 shares of its common stock, par value $.01 per share.
(c) The purposes of the Surviving Corporation shall be as set forth
in the Articles of Organization of Merger Subsidiary as in effect on the date
hereof until such time as such purposes may be amended as provided in the
Articles of Organization of the Surviving Corporation and by applicable law.
SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.3. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (a) the
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directors of Merger Subsidiary at the Effective Time shall be the directors of
the Surviving Corporation and (b) the officers of the Company at the Effective
Time shall be the officers of the Surviving Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that:
SECTION 4.1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the financial condition, business,
assets or results of operations of the Company and the Subsidiaries taken as a
whole (a "MATERIAL ADVERSE EFFECT"). The Company has heretofore delivered to
Buyer true and complete copies of the Company's Articles of Organization and
bylaws as currently in effect.
SECTION 4.2. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except as set forth in the following sentence, have been duly
authorized by all necessary corporate action. The affirmative vote of the
holders of a majority of the Shares approving this Agreement is the only vote of
the holders of the Company's capital stock necessary to approve the transactions
contemplated by this Agreement. This Agreement constitutes a valid and binding
agreement of the Company.
SECTION 4.3. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of
the Articles of Merger in accordance with Massachusetts Law; (b) compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR ACT"); and (c) compliance with any applicable requirements of
the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT").
SECTION 4.4. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions
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contemplated hereby do not and will not (a) contravene or conflict with the
Articles of Organization or bylaws of the Company, (b) assuming compliance with
the matters referred to in Section 4.3, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or any
Subsidiary, (c) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon the Company or any Subsidiary or any license,
franchise, permit or other similar authorization held by the Company or any
Subsidiary, or (d) result in the creation or imposition of any Lien on any asset
of the Company or any Subsidiary except, in the case of clauses (b), (c) and
(d), for such matters as would not, individually or in the aggregate, have a
Material Adverse Effect. For purposes of this Agreement, "LIEN" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
SECTION 4.5. Capitalization. The authorized capital stock of the
Company consists of 30,000,000 shares of Common Stock, $0.01 par value per
share. As of April 9, 1997, there were outstanding 16,288,011 shares of Common
Stock and stock options to purchase an aggregate of 2,102,346 shares of Common
Stock (all of which are currently exercisable) at an average exercise price of
$8.24 per share (of which options to purchase an aggregate of 687,608 shares of
Common Stock were vested). All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. All shares of Common Stock issuable upon exercise of outstanding
stock options have been duly authorized and will have been validly issued and
will be fully paid and nonassessable. Except as set forth in this Section and
except for changes since April 9, 1997 resulting from the exercise of stock
options and purchase rights outstanding on such date, there are outstanding (a)
no shares of capital stock or other voting securities of the Company, (b) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company and (c) no options or other rights to
acquire from the Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses (a), (b)
and (c) being referred to collectively as the "COMPANY SECURITIES"). There are
no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any Company Securities.
SECTION 4.6. Subsidiaries. (a) Each Subsidiary is a corporation duly
incorporated, validly existing and, if applicable, in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, "SUBSIDIARY" means any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
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other persons performing similar functions are directly or indirectly owned by
the Company. All Subsidiaries and their respective jurisdictions of
incorporation are identified in the Company's annual report on Form 10-K for the
fiscal year ended March 31, 1996 (the "COMPANY 10-K").
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each Subsidiary, is owned by the Company,
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such stock or other securities or ownership interests).
There are no outstanding (i) securities of the Company or any Subsidiary
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary and (ii) options or other
rights to acquire from the Company or any Subsidiary, or other obligation of the
Company or any Subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into or exchangeable
for any capital stock, voting securities or ownership interests in, any
Subsidiary (the items in clauses (i) and (ii) being referred to collectively as
the "SUBSIDIARY SECURITIES"). There are no outstanding obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any
outstanding Subsidiary Securities.
SECTION 4.7. SEC Filings. (a) The Company has delivered to Buyer (i)
the Company's annual reports on Form 10-K for its fiscal years ended March 31,
1994, 1995, and 1996, (ii) its quarterly report on Form 10-Q for its fiscal
quarter ended December 31, 1996 (the "COMPANY 10-Q"), (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since March 31, 1996 and (iv)
all of its other reports, statements, schedules and registration statements
filed with the Securities and Exchange Commission (the "SEC") since March 31,
1996.
(b) As of its filing date, each such report or statement filed
pursuant to the Exchange Act did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933 as of the date such
statement or amendment became effective did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
SECTION 4.8. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in its annual reports on Form 10-K referred to in Section 4.7
and the Company 10-Q fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
in the notes thereto), the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements). For purposes of this Agreement, "BALANCE SHEET"
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means the consolidated balance sheet of the Company as of December 31, 1996 set
forth in the Company 10-Q and "BALANCE SHEET DATE" means December 31, 1996.
SECTION 4.9. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "COMPANY PROXY STATEMENT"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy Statement, at the time
of any distribution thereof and at the time of consummation of the Offer, such
Company Disclosure Document will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section 4.9(b)
will not apply to statements or omissions included in the Company Disclosure
Documents based upon information furnished to the Company in writing by Buyer
specifically for use therein.
(c) The information with respect to the Company or any Subsidiary
that the Company furnishes to Buyer in writing specifically for use in the Offer
Documents will not, at the time of the filing thereof, at the time of any
distribution thereof and at the time of the consummation of the Offer, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.10. Absence of Certain Changes. Except as disclosed in
writing to Buyer prior to the date hereof, since the Balance Sheet Date, the
Company and Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development or state of circumstances or
facts which has had or could reasonably be expected to have a Material Adverse
Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company,
or any repurchase, redemption or other acquisition by the Company or any
Subsidiary of any outstanding shares of capital stock or other securities of, or
other ownership interests in, the Company or any Subsidiary;
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(c) any amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices;
(e) any creation or assumption by the Company or any Subsidiary of
any Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices or any amendment of the terms of any
loan to executive officers or directors;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary which, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and the Subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change required by reason of
a concurrent change in generally accepted accounting principles or in Regulation
S-X promulgated under the Exchange Act;
(j) any tax election, other than those consistent with past practice,
not required by law or any settlement or compromise of any tax liability in
either case that is material to the Company and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary, (ii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements, (iii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company or any
Subsidiary or (iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any Subsidiary, other than
any such increases payable to employees other than directors or officers in the
ordinary course of business consistent with past practice; or
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(l) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, which employees were
not subject to a collective bargaining agreement at the Balance Sheet Date, or
any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees.
SECTION 4.11. No Undisclosed Material Liabilities. There are no
material liabilities or obligations of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed or provided for in the
Balance Sheet;
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since the Balance Sheet Date, which in
the aggregate are not material to the Company and the Subsidiaries, taken as a
whole; and
(c) liabilities or obligations under this Agreement.
SECTION 4.12. Litigation. Except as set forth in the Company 10-K,
there is no action, suit, investigation or proceeding pending, or to the
knowledge of the Company threatened, against or affecting the Company or any
Subsidiary or any of their respective properties or any of their respective
officers or directors in their capacity as officers or directors of the Company
(or any basis therefor) before any court or arbitrator or before or by any
governmental body, agency or official (x) as of the date hereof, or (y) which
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
SECTION 4.13. Taxes. The Company has filed all material tax returns,
statements, reports and forms required to be filed with any tax authority when
due and in accordance with all applicable laws, and all taxes shown as due and
payable thereon have been timely paid, or withheld and remitted, to the
appropriate taxing authority. No deficiency in payment of any taxes for any
period has been asserted by any taxing authority which remains unsettled at the
date hereof except for deficiencies which would not have a Material Adverse
Effect. The Company and Subsidiaries do not own any interest in real property in
the State of New York or in any other jurisdiction in which a tax is imposed on
the transfer of a controlling interest in an entity that owns any interest in
real property.
SECTION 4.14. ERISA. (a) The Company has provided Buyer with a list
identifying each "EMPLOYEE BENEFIT PLAN", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), each employment,
severance or similar contract, plan, arrangement or policy and each plan or
arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance coverage
(including any self-
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insured arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits) which is maintained, administered or
contributed to by the Company or any affiliate (as defined below) and covers any
employee or former employee of the Company or any affiliate or under which the
Company or any affiliate has any liability. Copies of such plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished to Buyer together with the three
most recent annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any such plan. Such plans are referred to
collectively herein as the "EMPLOYEE PLANS". For purposes of this Section,
"AFFILIATE" of any Person means any other Person which, together with such
Person, would be treated as a single employer under Section 414 of the Code. At
no time has the Company or any Person who from time to time is or was an
affiliate of the Company ever maintained an employee benefit plan that is
subject to Title IV of ERISA.
(b) Nothing done or omitted to be done and no transaction or holding
of any asset under or in connection with any Employee Plan has or will make the
Company or any Subsidiary, any officer or director of the Company or any
Subsidiary subject to any liability under Title I of ERISA or liable for any tax
pursuant to Section 4975 of the Code that could have a Material Adverse Effect.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. The Company has
furnished to the Buyer copies of the most recent Internal Revenue Service
determination letters with respect to each such Plan. Each Employee Plan has
been maintained in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including but
not limited to ERISA and the Code, which are applicable to such Plan.
(d) Subject to Section 8.5 and except as disclosed in writing to
Buyer prior to the date hereof, no employee of the Company or any Subsidiary
will become entitled to any retirement, severance or similar benefit or enhanced
or accelerated benefit solely as a result of the transactions contemplated
hereby. Without limiting the generality of the foregoing, no amount required to
be paid or payable to or with respect to any employee of the Company or any
Subsidiary in connection with the transactions contemplated hereby (either
solely as a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the meaning
of Section 280G of the Code.
(e) No Employee Plan provides post-retirement health and medical,
life or other insurance benefits for retired employees of the Company and its
affiliates.
(f) Except as disclosed in writing to Buyer prior to the date hereof,
there has been no amendment to, written interpretation or announcement (whether
or not written) by the Company
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or any of its affiliates relating to, or change in employee participation or
coverage under, any Employee Plan which would increase materially the expense of
maintaining such Employee Plan above the level of the expense incurred in
respect thereof for the twelve months ended on the Balance Sheet Date.
(g) Except as disclosed in writing to Buyer prior to the date hereof,
neither the Company nor any Subsidiary is a party to or subject to any union
contract or any employment contract or arrangement with any officer, consultant,
director or employee.
SECTION 4.15. Compliance with Laws. Neither the Company nor any
Subsidiary is in violation of, or has violated, any applicable provisions of any
laws, statutes, ordinances or regulations, except for any such violation that,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.16. Finders' Fees. Except for Morgan Stanley & Co.
Incorporated and Vannevar Management, Inc., copies of whose engagement
agreements have been provided to Buyer, there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf, of the Company or any Subsidiary who might be entitled to any fee or
commission from Buyer or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 4.17. Patents and Other Proprietary Rights. The Company and
Subsidiaries have rights to use, whether through ownership, licensing or
otherwise, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of which
the Company is aware that are necessary for its business as now conducted
(collectively the "INTELLECTUAL PROPERTY RIGHTS"). The Company and Subsidiaries
have not assigned, hypothecated or otherwise encumbered any of the Intellectual
Property Rights and none of the licenses included in the Intellectual Property
Rights purport to grant sole or exclusive licenses to another entity or person,
including, without limitation sole or exclusive licenses limited to specific
fields of use. To the best of the Company's knowledge, the patents owned by the
Company and Subsidiaries are valid and enforceable and any patent issuing from
patent applications of the Company and Subsidiaries will be valid and
enforceable, except as such invalidity or unenforceability would not have a
Material Adverse Effect. Except as disclosed in writing to Buyer prior to the
date hereof: (i) the Company has no knowledge of any infringement by any other
party of any of the Intellectual Property Rights, and (ii) the Company and
Subsidiaries have not entered into any agreement to indemnify any other party
against any charge of infringement of any of its Intellectual Property Rights
except for such matters as would not, individually or in the aggregate, have a
Material Adverse Effect. To the best of the Company's knowledge, the Company and
Subsidiaries have not and do not violate or infringe any intellectual property
right of any other person or entity, and the Company and Subsidiaries have not
received any communication alleging that it violates or infringes the
intellectual property right of any other person or entity, except as disclosed
in writing to Buyer prior to the date hereof and except for any such violations
or infringements as would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and Subsidiaries have not been
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sued for infringing any intellectual property right of another entity or person.
Except as disclosed in writing to Buyer prior to the date hereof, none of the
processes, techniques and formulae, research and development results and other
know-how relating to the business of the Company and Subsidiaries, the value of
which to the Company is contingent upon maintenance of the confidentiality
thereof, has been disclosed by the Company or any affiliate thereof to any
person or entity other than those persons or entities who are bound to hold such
information in confidence pursuant to confidentiality agreements or by operation
of law.
SECTION 4.18. Environmental Matters. (a) Except as set forth in the
Company 10-K:
(i) no notice, notification, demand, request for
information, citation, summons, complaint or order has been received
by, or, to the knowledge of the Company, is pending or threatened by
any Person against, the Company or any Subsidiary nor has any
material penalty been assessed against the Company or any Subsidiary
with respect to any (A) alleged violation of any Environmental Law or
liability thereunder, (B) alleged failure to have any permit,
certificate, license, approval, registration or authorization
required under any Environmental Law, (C) generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance or (D) discharge, emission or release of any Hazardous
Substance; and
(ii) there are no Environmental Liabilities that have had
or could reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in writing to Buyer prior to the date hereof,
there has been no environmental investigation, study, audit, test, review or
other analysis conducted of which the Company has knowledge in relation to the
current or prior business of the Company or any property or facility now or
previously owned or leased by the Company or any Subsidiary which has not been
delivered to Buyer prior to the date hereof.
(c) For purposes of this Section 4.18, the following terms shall have
the meanings set forth below:
"COMPANY" and "SUBSIDIARY" shall include any entity which
is, in whole or in part, a predecessor of the Company or
any Subsidiary;
"ENVIRONMENTAL LAWS" means any federal, state, local or
foreign law, treaty, judicial decision, regulation, rule,
judgment, order, decree, injunction, permit, agreement or
governmental restriction or requirement relating to human
health, the environment or pollutants, contaminants,
chemicals, toxins, hazardous substances or wastes.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities
of or relating to the Company and any Subsidiary, whether
contingent or fixed, actual or potential, known or unknown,
which (i) arise under or relate to matters covered by
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Environmental Laws and (ii) relate to actions occurring or
conditions existing on or prior to the Effective Time; and
"HAZARDOUS SUBSTANCES" means any toxic, radioactive,
corrosive or otherwise hazardous substance, including
petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics,
which in any event is regulated under Environmental Laws.
SECTION 4.19. Approvals; Antitakeover Provisions. The Company has
taken all action necessary to approve the Offer and the Merger such that the
approval is sufficient to render entirely inapplicable to the Offer and Merger
or Buyer or Merger Subsidiary the provisions of Chapter 110C, 110D, 110E and
110F of the Massachusetts General Laws. No other antitakeover or similar statute
or regulation applies or purports to apply to the transactions contemplated by
this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 5.1. Corporate Existence and Power. Each of Buyer and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted. Since
the date of its incorporation, Merger Subsidiary has not engaged in any
activities other than in connection with or as contemplated by this Agreement or
in connection with arranging any financing required to consummate the
transactions contemplated hereby.
SECTION 5.2. Corporate Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Buyer and Merger
Subsidiary.
SECTION 5.3. Governmental Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of
the Articles of Merger in accordance with Massachusetts Law, (b) compliance with
any applicable requirements of the HSR Act; and (c) compliance with any
applicable requirements of the Exchange Act.
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SECTION 5.4. Non-Contravention. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the certificate of
incorporation or bylaws of Buyer or the Articles of Organization or bylaws of
Merger Subsidiary, (b) assuming compliance with the matters referred to in
Section 5.3, contravene or conflict with any provision of law, regulation,
judgment, order or decree binding upon Buyer or Merger Subsidiary, or (c)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Buyer or Merger
Subsidiary or to a loss of any benefit to which Buyer or Merger Subsidiary is
entitled under any agreement, contract or other instrument binding upon Buyer or
Merger Subsidiary, except, in the case of (b) and (c), for such matters as would
not materially adversely effect the ability of Buyer and Merger Subsidiary to
consummate the transactions contemplated by this Agreement.
SECTION 5.5. Disclosure Documents. (a) The information with respect
to Buyer and its subsidiaries that Buyer furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, and (ii) in the case of any
Company Disclosure Document other than the Company Proxy Statement, at the time
of the filing thereof, at the time of any distribution thereof, and at the time
of consummation of the Offer.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty will not
apply to statements or omissions in the Offer Documents based upon information
furnished to Buyer or Merger Subsidiary in writing by the Company specifically
for use therein.
SECTION 5.6. Finders' Fees. Except for Greenhill & Co., LLC, whose
fees will be paid by Buyer, there is no investment banker, broker, finder or
other intermediary who might be entitled to any fee or commission from the
Company or any of its affiliates upon consummation of the transactions
contemplated by this Agreement.
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ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.1. Conduct of the Company. From the date hereof until the
Effective Time, the Company and the Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company will not adopt or propose any change in its Articles
of Organization or bylaws;
(b) the Company will not, and will not permit any Subsidiary to,
merge or consolidate with any other Person or acquire a material amount of
assets of any other Person, other than purchases of materials or products in the
ordinary course of business;
(c) the Company will not, and will not permit any Subsidiary to,
sell, lease, license or otherwise dispose of any material assets or property
except (i) pursuant to existing contracts or commitments and (ii) in the
ordinary course consistent with past practice;
(d) the Company will not, and will not permit any Subsidiary to,
settle or compromise any suit or claims or threatened suit or claim relating to
the transactions contemplated hereby;
(e) the Company will not, and will not permit any Subsidiary to,
agree or commit to do any of the foregoing; and
(f) the Company will not, and will not permit any Subsidiary to, take
or agree or commit to take any action that would make any representation and
warranty of the Company hereunder inaccurate in any respect at, or as of any
time prior to, the Effective Time.
SECTION 6.2. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be
duly called and held as soon as reasonably practicable following the
consummation of the Offer for the purpose of voting on the approval and adoption
of this Agreement, unless a vote shall not be required under Massachusetts Law.
The Directors of the Company shall, except as may be required, in response to an
unsolicited bona fide written Acquisition Proposal (as defined in Section 6.4),
in order to comply with the fiduciary duties of the Board of Directors under
applicable law as advised in writing by Company Counsel, recommend approval and
adoption of this Agreement by the Company's stockholders. In connection with
such meeting, the Company (a) will promptly prepare and file with the SEC, will
use its best efforts to have cleared by the SEC and will thereafter mail to its
stockholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (b) will use its best efforts to obtain
the necessary
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approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (c) will otherwise comply with all legal requirements
applicable to such meeting.
SECTION 6.3. Access to Information. From the date hereof until the
Effective Time, the Company will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of the Company and the Subsidiaries and such
financial and operating data and other information as such Persons may
reasonably request and will instruct the Company's employees, counsel and
financial advisors to cooperate with Buyer in its investigation of the business
of the Company and the Subsidiaries; provided that no investigation pursuant to
this Section 6.3, shall affect any representation or warranty given by the
Company to Buyer hereunder.
SECTION 6.4. Other Offers. From the date hereof until the termination
hereof, the Company and the Subsidiaries and the officers, directors, employees
or other agents of the Company and the Subsidiaries will not, directly or
indirectly, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal or (ii) except as may be required, in response to an
unsolicited bona fide written Acquisition Proposal, in order to comply with the
fiduciary duties of the Board of Directors under applicable law as advised in
writing by Company Counsel, engage in negotiations with, or disclose any
nonpublic information relating to the Company or any Subsidiary or afford access
to the properties, books or records of the Company or any Subsidiary to, any
Person. The Company will promptly (and in no event later than 24 hours after
receipt of the relevant Acquisition Proposal) notify (which notice shall be
provided orally and in writing and shall identify the Person making the relevant
Acquisition Proposal and set forth the material terms thereof) Buyer after (i)
the Company has received any Acquisition Proposal, (ii) the Company has actual
knowledge that any Person is considering making an Acquisition Proposal, or
(iii) the Company has received any request for nonpublic information relating to
the Company or any Subsidiary, or for access to the properties, books or records
of the Company or any Subsidiary, by any Person that the Company has actual
knowledge is considering making, or has made, an Acquisition Proposal. The
Company will keep Buyer fully informed of the status and details of any such
Acquisition Proposal or request. The Company shall not engage in negotiations
with, or disclose any nonpublic information to, any such Person unless it
receives from such Person an executed confidentiality agreement with terms no
less favorable to the Company than the Confidentiality Agreement (as defined in
Section 11.9). The Company shall, and shall cause its Subsidiaries and the
Company's directors, officers, employees, financial advisors and other agents or
representatives to, cease immediately and cause to be terminated all activities,
discussions or negotiations, if any, with any Persons conducted heretofore with
respect to any Acquisition Proposal. For purposes of this Agreement,
"ACQUISITION PROPOSAL" means any offer or proposal for a merger or other
business combination involving the Company or any Subsidiary or the acquisition
of any equity interest in, or a substantial portion of the assets of, the
Company or any Subsidiary, other than the transactions contemplated by this
Agreement.
20
<PAGE> 54
ARTICLE 7
COVENANTS OF BUYER
SECTION 7.1. Obligations of Merger Subsidiary. Buyer will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.2. Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 7.3. Director and Officer Liability. For five years after the
Effective Time, Buyer will cause the Surviving Corporation to indemnify and hold
harmless the present and former officers and directors of the Company in respect
of acts or omissions occurring prior to the Effective Time to the extent
provided under the Company's Articles of Organization and bylaws in effect on
the date hereof; provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law. For five years after
the Effective Time, Buyer will cause the Surviving Corporation to use its best
efforts to provide officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each such
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof, provided that in
satisfying its obligation under this Section , Buyer shall not be obligated to
cause the Surviving Corporation to pay premiums in excess of 150% of the amount
per annum the Company paid in the twelve months ended December 31, 1996, which
amount has been disclosed to Buyer. Buyer, Merger Subsidiary and the Company
acknowledge and agree that any directors and officers, present or former, of the
Company are third party beneficiaries under this Section 7.3 and, as such, shall
be entitled to the benefits of all covenants and obligations of Buyer hereunder.
SECTION 7.4. Tax Certification. At any time during the period
beginning on the date hereof and ending on the Effective Time, the Company shall
provide to Buyer, within two business days of a request by Buyer, a certificate
meeting the requirements of Treas. Reg. Sec. 1.897-2(h) to the effect that the
Company is not, nor has it been within 5 years of the date thereof, a "United
States real property holding corporation" as defined in Section 897 of the Code.
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.1. Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use its best efforts to take, or cause to be
taken, all actions and to do, or cause to
21
<PAGE> 55
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
SECTION 8.2. Certain Filings. The Company and Buyer shall cooperate
with one another (a) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (b) in determining whether any
action by or in respect of, or filing with, any governmental body, agency or
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection therewith
or with the Company Disclosure Documents or the Offer Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
SECTION 8.3. Public Announcements. Buyer and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange or automated quotation system, will not issue any
such press release or make any such public statement prior to such consultation.
SECTION 8.4. Notices of Certain Events. The Company shall promptly
notify Buyer, and Buyer shall promptly notify the Company, of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) with respect only to the Company, any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge
threatened which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.12 or which relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 8.5. Employee Benefits. Buyer and the Company agree to
appoint personnel from their respective human relations departments that will
meet and coordinate the manner of transition of the insurance, compensation and
other benefit plans of the Company following the Merger. The parties agree that
for two years following the Effective Time, the Company's employees will be
provided benefits that are substantially comparable in the aggregate to those
provided by the Company to its employees as of the date hereof, excluding all
forms of stock-based or equity-based compensation.
22
<PAGE> 56
SECTION 8.6. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Buyer and Merger Subsidiary to consummate the Merger
are subject to the satisfaction of the following conditions:
(a) if required by Massachusetts Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or has been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger; and
(d) Buyer shall have purchased Shares pursuant to the Offer.
ARTICLE 10
TERMINATION
SECTION 10.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Offer has not been
consummated by June 4, 1997;
23
<PAGE> 57
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Offer or the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree enjoining
Buyer or the Company from consummating the Offer or the Merger is entered and
such judgment, injunction, order or decree shall become final and nonappealable;
(d) by Buyer, upon the occurrence of any Trigger Event described in
clauses (i) or (ii) of Section 11.4(b); or
(e) by the Company, upon the occurrence of any Trigger Event
described in clause (i)(A) of Section 11.4(b).
The party desiring to terminate this Agreement pursuant to clauses (b), (c) or
(d) shall give written notice of such termination to the other party in
accordance with Section 11.1.
SECTION 10.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that the agreements
contained in Section 11.4 shall survive the termination hereof.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Buyer or Merger
Subsidiary to: Alan G. Lutz
Senior Vice President
Communication Products Group
Compaq Computer Corporation
20555 SH 249
Houston, TX 77070
with copies to: J. David Cabello, Esq.
Senior Vice President
General Counsel and Secretary
Compaq Computer Corporation
20555 SH 249
Houston, TX 77070
24
<PAGE> 58
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attn: Christopher Mayer, Esq.
if to the Company, to: Microcom, Inc.
500 River Ridge Drive
Norwood, MA 02062-5028
Attn: Lewis A. Bergins
President and Chief Executive Officer
with a copy to: Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109
Attn: William C. Rogers, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 11.2. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement except for the agreements
set forth in Section 11.4.
SECTION 11.3. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Buyer and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) A termination of this Agreement pursuant to Section 10.01 or an
amendment of this Agreement in accordance with Section 11.3(a) shall, in order
to be effective, require in the case of the Company action by its Board of
Directors or the duly authorized designee of its Board of Directors. In the
event that Buyer's designees are appointed or elected to the Board of Directors
of the Company as provided in Section 1.3, after the consummation of the Offer
and prior to the Effective Time, the affirmative vote of at least a majority of
the Continuing Directors shall be required for the Company to agree to amend,
waive compliance with or terminate this Agreement.
25
<PAGE> 59
(c) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.4. Fees and Expenses. (a) Except as otherwise provided in
this Section , all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Buyer a fee in immediately available
funds equal to $10,460,000 promptly, but in no event later than two business
days, after the termination of this Agreement as a result of the occurrence of
any of the events set forth below (a "TRIGGER EVENT"):
(i) (A) the Company shall have entered into, or shall
have publicly announced its intention to enter into, an agreement or
an agreement in principle with respect to any Acquisition Proposal,
or (B) the Board of Directors of the Company shall have withdrawn or
materially modified in a manner adverse to Buyer the Board's approval
or recommendation of the Offer or the Merger;
(ii) any person or group (as defined in Section 13(d)(3)
of the Exchange Act) (other than Buyer, the Merger Subsidiary or any
affiliate thereof) shall have become the beneficial owner (as defined
in Rule 13d-3 promulgated under the Exchange Act) of a majority of
the outstanding Shares; or
(iii) this Agreement shall have been terminated in
accordance with Section 10.1(b) and (x) the Company shall have failed
to observe or perform in any material respect any of its obligations
under this Agreement or (y) an Acquisition Proposal is received prior
to June 4, 1997 and not publicly rejected by the Company's Board of
Directors.
(c) The Company agrees to pay Buyer an amount in immediately
available funds equal to the sum of (i) Buyer's out-of-pocket expenses incurred
in connection with this transaction (but not to exceed $2 million) and (ii) $2
million, if this Agreement shall have been terminated in accordance with Section
10.1(b) and any representation or warranty made by the Company in this Agreement
shall not have been true and correct as of the date hereof; provided that in the
event the Company has made a payment to Buyer pursuant to Section 11.4(b) it
shall not be required to make any further payment to Buyer pursuant to this
Section 11.4(c).
SECTION 11.5. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that
26
<PAGE> 60
Buyer may transfer or assign, in whole or from time to time in part, to one or
more of its affiliates, the right to purchase shares pursuant to the Offer, but
any such transfer or assignment will not relieve Buyer of its obligations under
the Offer or prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
SECTION 11.6. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
SECTION 11.7. Counterparts; Effectiveness; Third Party Beneficiaries.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. Except for Section 7.3 hereof, no provision of this Agreement is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
SECTION 11.8. Entire Agreement. This Agreement and the
Confidentiality and Nondisclosure Agreement effective as of April 9, 1997
between Buyer and the Company ("CONFIDENTIALITY AGREEMENT") constitute the
entire agreement among Buyer, Merger Subsidiary and the Company with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among Buyer, Merger Subsidiary and the Company with
respect to the subject matter hereof.
SECTION 11.9. Definitions. Each of the following terms is defined in
the Section set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Acquisition Proposal 6.4
Articles of Merger 2.1
Balance Sheet 4.8
Balance Sheet Date 4.8
Code 2.5
Common Stock 1.1
Company Counsel 1.2
Company Disclosure Documents 4.9
Company Proxy Statement 4.9
Company Securities 4.5
Company Stockholder Meeting 6.2
Company Stock Purchase Plan 2.5
Company 10-K 4.6
Company 10-Q 4.7
Confidentiality Agreement 11.8
</TABLE>
27
<PAGE> 61
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Continuing Directors 1.3
Effective Time 2.1
Employee Plans 4.14
Environmental Laws 4.18
Environmental Liabilities 4.18
ERISA 4.14
Exchange Act 4.3
Exchange Agent 2.3
Hazardous Substances 4.18
HSR Act 4.3
Lien 4.4
Massachusetts Law 1.2
Material Adverse Effect 4.1
MBCL 1.2
Merger 2.1
Merger Consideration 2.2
Minimum Condition 1.1
Offer 1.1
Offer Documents 1.1
Option Restricted Stock 2.7
Person 2.3
Schedule 14D-9 1.2
SEC 4.7
Shares 1.1
Subsidiary 4.6
Subsidiary Securities 4.6
Substitute Option 2.5
Surviving Corporation 2.1
Trigger Event 11.4
</TABLE>
28
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as an instrument under seal by their respective authorized
officers as of the day and year first above written.
MICROCOM, INC.
By: /s/ Lewis A. Bergins
--------------------------
Lewis A. Bergins
President
By: /s/ Peter Minihane
--------------------------
Peter Minihane
Treasurer
COMPAQ COMPUTER CORPORATION
By: /s/ Eckhard Pfieffer
-------------------------
Eckhard Pfeiffer
President and Chief Executive Officer
COMPAQ-BOSTON, INC.
By: /s/ Alan G. Lutz
--------------------------
Alan G. Lutz
President
By: /s/ Earl L. Mason
--------------------------
Earl L. Mason
Treasurer
29
<PAGE> 63
ANNEX I
Notwithstanding any other provision of the Offer, Buyer shall not be
required to accept for payment or pay for any Shares, and may terminate the
Offer, if (i) the Minimum Condition has not been satisfied by June 4, 1997, (ii)
the applicable waiting period under the HSR Act shall not have expired or been
terminated by June 4, 1997, or (iii) at any time on or after April 9, 1997 and
prior to the acceptance for payment of Shares, any of the following conditions
exist:
(a) there shall be threatened, instituted or pending any action,
suit, investigation or proceeding by any government or governmental authority or
agency, domestic or foreign, or by any other person, domestic or foreign, before
any court or governmental authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, to delay materially or otherwise
directly or indirectly to restrain or prohibit the making of the Offer, the
acceptance for payment of or payment for some of or all the Shares pursuant to
the Offer or the consummation of the Merger, seeking to obtain material damages
or otherwise directly or indirectly relating to the transactions contemplated by
the Offer or the Merger, (ii) seeking to restrain or prohibit Buyer's ownership
or operation (or that of its respective subsidiaries or affiliates) of all or
any material portion of the business or assets of the Company and the
Subsidiaries, taken as a whole, or of Buyer and its subsidiaries, taken as a
whole, or to compel Buyer or any of its subsidiaries or affiliates to dispose of
or hold separate all or any material portion of the business or assets of the
Company and the Subsidiaries, taken as a whole, or of Buyer and its
subsidiaries, taken as a whole, (iii) seeking to impose or confirm material
limitations on the ability of Buyer or any of its subsidiaries or affiliates
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by Buyer or
any of its subsidiaries or affiliates on all matters properly presented to the
Company's stockholders, or (iv) seeking to require divestiture by Buyer or any
of its subsidiaries or affiliates of any Shares, or (v) that otherwise is
reasonably likely to have a Material Adverse Effect or materially adversely
affect Buyer and its subsidiaries, taken as a whole; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by any
court, government or governmental authority or agency, domestic or foreign other
than the application of the waiting period provisions of the HSR Act to the
Offer or the Merger that is reasonably likely, directly or indirectly, to result
in any of the consequences referred to in clauses (i) through (v) of paragraph
(a) above; or
(c) (i) there shall be initiated, threatened, instituted or pending
any action, suit, investigation or proceeding by any government or governmental
authority or agency, domestic or foreign, that, in the reasonable judgment of
Buyer, would materially adversely affect the Company and its Subsidiaries, taken
as a whole, or (ii) except as disclosed in writing to Buyer prior to the date
hereof, there has been since the Balance Sheet Date any event, occurrence or
development or state of circumstances or facts which has had or could reasonably
be expected to have a Material Adverse Effect; or
<PAGE> 64
(d) there shall have occurred a decline of at least 20% in either the
Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 Index from
the date of this Agreement through the date of termination or expiration of the
Offer; or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger Agreement,
or any of the representations and warranties of the Company set forth in the
Merger Agreement shall not be true in any material respect when made or at any
time prior to consummation of the Offer as if made at and as of such time
(except as to any representation or warranty which speaks as of a specific date,
which must be untrue as of such date); or
(f) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in principle
with respect to any Acquisition Proposal or the Board of Directors of the
Company shall have withdrawn or materially modified in a manner adverse to Buyer
the Board's approval or recommendation of the Offer or the Merger; or
(g) any person or group (as defined in Section 13(d)(3) of the
Exchange Act) (other than Buyer, the Merger Subsidiary or any affiliate thereof)
shall have become the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of a majority of the outstanding Shares; or
(h) the Merger Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Buyer and Merger
Subsidiary and may, subject to the terms of the Agreement, be waived by Buyer
and Merger Subsidiary in whole or in part at any time and from time to time in
their discretion. The failure by Buyer or Merger Subsidiary 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 prior to the Effective Time.
2
<PAGE> 65
ANNEX II
MORGAN STANLEY CONFORMED COPY
MORGAN STANLEY & CO.
INCORPORATED
555 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 576-2000
April 9, 1997
Board of Directors
Microcom, Inc.
500 River Ridge Drive
Norwood, Massachusetts 02062-5028
Gentlemen:
We understand that Microcom, Inc. ("Microcom" or the "Company"), Compaq Computer
("Buyer") and Buyer Acquisition Corp., a wholly owned subsidiary of Buyer
("Acquisition Sub") have entered into an Agreement and Plan of Merger, dated as
of April 9, 1997 (the "Merger Agreement"), which provides, among other things,
for (i) the commencement by Acquisition Sub of a tender offer (the "Tender
Offer") for all issued and outstanding shares of common stock, par value $0.01
per share (the "Common Stock"), of Target for $16.25 per share net to the seller
in cash, and (ii) the subsequent merger (the "Merger") of Acquisition Sub with
and into the Company. Pursuant to the Merger, the Company will become a wholly
owned subsidiary of Buyer and each issued and outstanding share of Common Stock,
other than shares held in treasury or held by Buyer or any affiliate of Buyer or
as to which dissenters' rights have been perfected, will be converted into the
right to receive $16.25 per share in cash. The terms and conditions of the
Tender Offer and the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Common Stock pursuant to the Merger Agreement is fair
from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other information of the Company and the Buyer;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared
by the management of the Company;
(iii) analyzed certain financial projections prepared by the
management of the Company;
<PAGE> 66
Microcom, Inc.
April 9, 1997
Page 2
(iv) discussed the past and current operations and financial
condition and the prospects of the Company with senior
executives of the Company;
(v) reviewed the reported prices and trading activity for the
Common Stock;
(vi) compared the financial performance of the Company and the
prices and trading activity of the Common Stock with that of
certain other comparable publicly-traded companies and their
securities;
(vii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among
representatives of the Company and, Buyer and their financial
and legal advisors;
(ix) reviewed the Merger Agreement and certain related documents;
(x) participated in discussions with certain third parties,
including Buyer, who expressed interest in acquiring the
Company or certain assets of the Company, which led to the
proposed Merger; and
(xi) performed such other analyses and considered such other
factors as we have deemed appropriate.
We have assumed and relied upon, without independent verification, the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have relied upon, without independent verification, the assessment by the
management of the Company of the Company's technologies and products, and the
validity of, and risks associated with, the Company's existing and future
products and technologies. We have not made any independent valuation or
appraisal of the assets or liabilities of the Company, nor have we been
furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for Buyer and have received fees for
the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent; except that this opinion may be included in any filing
with the Securities and Exchange Commission in connection with the Tender Offer
and the Merger. In addition, Morgan Stanley expresses no opinion or
recommendation as to whether holders of Common Stock should accept the Tender
Offer.
<PAGE> 67
Microcom, Inc.
April 9, 1997
Page 3
Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock pursuant
to the Merger Agreement is fair from a financial point of view to such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Charles R. Cory
----------------------------
Charles R. Cory
Managing Director
<PAGE> 68
ANNEX III
TEXT OF SECTIONS
85 TO 98
OF THE
MASSACHUSETTS
BUSINESS CORPORATION LAW
SECTION 85. DISSENTING STOCKHOLDER; RIGHT TO DEMAND PAYMENT FOR STOCK;
EXCEPTION
A stockholder in any corporation organized under the laws of
Massachusetts which shall have duly voted to consolidate or merge with another
corporation or corporations under the provisions of sections seventy-eight or
seventy-nine who objects to such consolidation or merger may demand payment for
his stock from the resulting or surviving corporation and an appraisal in
accordance with the provisions of sections eighty-six to ninety-eight,
inclusive, and such stockholder and the resulting or surviving corporation shall
have the rights and duties and follow the procedure set forth in those sections.
This section shall not apply to the holders of any shares of stock of a
constituent corporation surviving a merger if, as permitted by subsection (c) of
section seventy-eight, the merger did not require for its approval a vote of the
stockholders of the surviving corporation.
SECTION 86. SECTIONS APPLICABLE TO APPRAISAL; PREREQUISITES
If a corporation proposes to take a corporate action as to
which any section of this chapter provides that a stockholder who objects to
such action shall have the right to demand payment for his shares and an
appraisal thereof, sections eighty-seven to ninety-eight, inclusive, shall apply
except as otherwise specifically provided in any section of this chapter. Except
as provided in sections eighty-two and eighty-three, no stockholder shall have
such right unless (1) he files with the corporation before the taking of the
vote of the shareholders on such corporate action, written objection to the
proposed action stating that he intends to demand payment for his shares if the
action is taken and (2) his shares are not voted in favor of the proposed
action.
SECTION 87. STATEMENT OF RIGHTS OF OBJECTING STOCKHOLDERS IN NOTICE OF
MEETING; FORM
The notice of the meeting of stockholders at which the
approval of such proposed action is to be considered shall contain a statement
of the rights of objecting stockholders. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock, and the directors may authorize the inclusion in any such
notice of a statement of opinion by the management as to the existence or
non-existence of the right of the stockholders to demand payment for their stock
on account of the proposed corporate action. The notice may be in such form as
the directors or officers calling the meeting deem advisable, but the following
form of notice shall be sufficient to comply with this section:
<PAGE> 69
"If the action proposed is approved by the stockholders at the
meeting and effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not voted
in favor of such action has or may have the right to demand in writing from the
corporation (or, in the case of a consolidation or merger, the name of the
resulting or surviving corporation shall be inserted), within twenty days after
the date of mailing to him of notice in writing that the corporate action has
become effective, payment for his shares and an appraisal of the value thereof.
Such corporation and any such stockholder shall in such cases have the rights
and duties and shall follow the procedure set forth in sections 88 to 98,
inclusive, of Chapter 156B of the General Laws of Massachusetts."
SECTION 88. NOTICE OF EFFECTIVENESS OF ACTION OBJECTED TO
The corporation taking such action, or in the case of a merger
or consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified mail,
addressed to the stockholder at his last known address as it appears in the
records of the corporation.
SECTION 89. DEMAND FOR PAYMENT; TIME FOR PAYMENT
If within twenty days after the date of mailing of a notice
under subsection (e) of section eighty-two, subsection (f) of section
eighty-three, or section eighty-eight, any stockholder to whom the corporation
was required to give such notice shall demand in writing from the corporation
taking such action, or in the case of a consolidation or merger from the
resulting or surviving corporation, payment for his stock, the corporation upon
which such demand is made shall pay to him the fair value of his stock within
thirty days after the expiration of the period during which such demand may be
made.
SECTION 90. DEMAND FOR DETERMINATION OF VALUE; BILL IN EQUITY; VENUE
If during the period of thirty days provided for in section
eighty-nine the corporation upon which such demand is made and any such
objecting stockholder fail to agree as to the value of such stock, such
corporation or any such stockholder may within four months after the expiration
of such thirty-day period demand a determination of the value of the stock of
all such objecting stockholders by a bill in equity filed in the superior court
in the county where the corporation in which such objecting stockholder held
stock had or has its principal office in the commonwealth.
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SECTION 91. PARTIES TO SUIT TO DETERMINE VALUE; SERVICE
If the bill is filed by the corporation, it shall name as
parties respondent all stockholders who have demanded payment for their shares
and with whom the corporation has not reached agreement as to the value thereof.
If the bill is filed by a stockholder, he shall bring the bill in his own behalf
and in behalf of all other stockholders who have demanded payment for their
shares and with whom the corporation has not reached agreement as to the value
thereof, and service of the bill shall be made upon the corporation by subpoena
with a copy of the bill annexed. The corporation shall file with its answer a
duly verified list of all such other stockholders, and such stockholders shall
thereupon be deemed to have been added as parties to the bill. The corporation
shall give notice in such form and returnable on such date as the court shall
order to each stockholder party to the bill by registered or certified mail,
addressed to the last known address of such stockholder as shown in the records
of the corporation, and the court may order such additional notice by
publication or otherwise as it deems advisable. Each stockholder who makes
demand as provided in section eighty-nine shall be deemed to have consented to
the provisions of this section relating to notice, and the giving of notice by
the corporation to any such stockholder in compliance with the order of the
court shall be a sufficient service of process on him. Failure to give notice to
any stockholder making demand shall not invalidate the proceedings as to other
stockholders to whom notice was properly given, and the court may at any time
before the entry of a final decree make supplementary orders of notice.
SECTION 92. DECREE DETERMINING VALUE AND ORDERING PAYMENT; VALUATION DATE
After hearing the court shall enter a decree determining the
fair value of the stock of those stockholders who have become entitled to the
valuation of and payment for their shares, and shall order the corporation to
make payment of such value, together with interest, if any, as hereinafter
provided, to the stockholders entitled thereto upon the transfer by them to the
corporation of the certificates representing such stock if certificated or, if
uncertificated, upon receipt of an instruction transferring such stock to the
corporation. For this purpose, the value of the shares shall be determined as of
the day preceding the date of the vote approving the proposed corporate action
and shall be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
SECTION 93. REFERENCE TO SPECIAL MASTER
The court in its discretion may refer the bill or any question
arising thereunder to a special master to hear the parties, make findings and
report the same to the court, all in accordance with the usual practice in suits
in equity in the superior court.
SECTION 94. NOTATION ON STOCK CERTIFICATES OF PENDENCY OF BILL
On motion the court may order stockholder parties to the bill
to submit their certificates of stock to the corporation for the notation
thereon of the pendency of the bill and may order the
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corporation to note such pendency in its records with respect to any
uncertificated shares held by such stockholder parties, and may on motion
dismiss the bill as to any stockholder who fails to comply with such order.
SECTION 95. COSTS, INTEREST
The cost of the bill, including the reasonable compensation
and expenses of any master appointed by the court, but exclusive of fees of
counsel or of experts retained by any party, shall be determined by the court
and taxed upon the parties to the bill, or any of them, in such manner as
appears to be equitable, except that all costs of giving notice to stockholders
as provided in this chapter shall be paid by the corporation. Interest shall be
paid upon any award from the date of the vote approving the proposed corporate
action, and the court may on application of any interested party determine the
amount of interest to be paid in the case of any stockholder.
SECTION 96. DIVIDENDS AND VOTING RIGHTS AFTER DEMAND FOR PAYMENT
Any stockholder who has demanded payment for his stock as
provided in this chapter shall not thereafter be entitled to notice of any
meeting of stockholders or to vote such stock for any purpose and shall not be
entitled to the payment of dividends or other distribution on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the date of the vote approving the proposed corporate action)
unless:
(1) A bill shall not be filed within the time provided in
section ninety;
(2) A bill, if filed, shall be dismissed as to such
stockholder; or
(3) Such stockholder shall with the written approval of
the corporation, or in the case of a consolidation or
merger, the resulting or surviving corporation,
deliver to it a written withdrawal of his objections
to and an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3),
inclusive, said stockholder shall have only the rights of a stockholder who did
not so demand payment for his stock as provided in this chapter.
SECTION 97. STATUS OF SHARES PAID FOR
The shares of the corporation paid for by the corporation
pursuant to the provisions of this chapter shall have the status of treasury
stock, or in the case of a consolidation or merger the shares or the securities
of the resulting or surviving corporation into which the shares of such
objecting stockholder would have been converted had he not objected to such
consolidation or merger shall have the status of treasury stock or securities.
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SECTION 98. EXCLUSIVE REMEDY; EXCEPTION
The enforcement by a stockholder of his right to receive
payment for his shares in the manner provided in this chapter shall be an
exclusive remedy except that this chapter shall not exclude the right of such
stockholder to bring or maintain an appropriate proceeding to obtain relief on
the ground that such corporate action will be or is illegal or fraudulent as to
him.
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