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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
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NORAND CORPORATION
(Name of Subject Company)
NORAND CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
655421 10 5
(CUSIP Number of Class of Securities)
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JAMES I. JOHNSON, ESQ.
GENERAL COUNSEL AND SECRETARY
NORAND CORPORATION
550 SECOND STREET, S.E.
CEDAR RAPIDS, IOWA 52401
(319) 369-3100
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of the person(s) filing statement)
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COPY TO:
JOHN R. SAGAN
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603-3441
(312) 782-0600
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Norand Corporation, a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 550 Second Street, S.E., Cedar Rapids, Iowa 52401. The title
of the class of equity securities to which this statement relates is the common
stock, par value $0.01 per share (the "Common Stock"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by WAI Acquisition Corp., a
Delaware corporation ("Purchaser"), a wholly owned subsidiary of Western Atlas
Inc., a Delaware corporation ("Parent"), disclosed in a Tender Offer Statement
on Schedule 14D-1 (the "Schedule 14D-1"), dated January 24, 1997, to purchase
all outstanding shares of Common Stock at $33.50, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated January 24, 1997 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with the Offer to Purchase and any amendments or
supplements thereto, collectively constitute the "Offer"). According to the
Schedule 14D-1, the address of the principal executive offices of the Purchaser
is 360 North Crescent Drive, Beverly Hills, California 90210.
The Offer is being made by the Purchaser pursuant to an Agreement and Plan
of Merger, dated as of January 21, 1997 (the "Merger Agreement"), among the
Company, Purchaser and Parent. The Merger Agreement is filed as an exhibit to
this statement and is incorporated herein by reference. A copy of the press
release issued by Parent and the Company on January 22, 1997 is filed as an
exhibit to this statement and is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this statement, is set forth above under Item 1.
(b)(1) Certain contracts, agreements, arrangements and understandings
between the Company and its directors and executive officers are described on
pages 2-12 of the Company's Proxy Statement dated December 23, 1996 for its 1997
Annual Meeting of Stockholders (the "Proxy Statement"). Pages 2-12 of the Proxy
Statement are filed as an exhibit to this Statement and are incorporated herein
by reference.
On January 21, 1997, N. Robert Hammer, the Company's Chairman, President and
Chief Executive Officer entered into a Consulting and Separation Agreement with
the Company (the "Separation Agreement"). Pursuant to the Separation Agreement,
Mr. Hammer's employment with the Company will terminate upon the effective time
(the "Effective Time") of the merger of Purchaser with and into the Company (the
"Merger"). The Separation Agreement includes an agreement by Mr. Hammer to
maintain the confidentiality of certain information and an agreement by Mr.
Hammer not to compete with the Company for a period of three years following the
Effective Time. Under the Separation Agreement, at the Effective Time Mr. Hammer
will receive a payment of $1,000,000 and all unvested Company stock options
granted to Mr. Hammer under the Norand Corporation Long Term Incentive Program
and the Norand 1989 Stock Option Plan will become fully vested. The Separation
Agreement also provides for the continuation of medical, life and accidental
death and dismemberment insurance coverage for Mr. Hammer and his dependents for
a period of three years following the Effective Time (which period may be
extended by mutual agreement of the parties). The Separation Agreement also
provides that for a period of one year commencing at the Effective Time, the
Company will retain Mr. Hammer as a consultant for a fee of $800,000 payable at
the Effective Time. The Separation Agreement also provides for payment to Mr.
Hammer of a tax gross-up payment equal to the amount of excise tax that may be
payable by Mr. Hammer under Section 4999 of the Internal Revenue Code of 1986,
as amended (relating to taxes on excess parachute payments) due to payments
under the Separation Agreement and other
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payments and benefits that may be subject to such taxes. The gross-up payment
would also include an amount for interest and penalties relating to payment of
the excise tax and such other payments.
In consideration for his services as Lead Director in connection with the
discussions with Parent and the negotiation and execution of the Merger
Agreement, Charles G. Moore, a director of the Company will receive a payment of
$100,000.
(b)(2)
THE MERGER AGREEMENT. The following summary description of the Merger
Agreement is qualified in its entirety by reference to such agreement, which has
been filed as an exhibit to the Schedule 14D-9.
The Merger Agreement provides that in accordance with the provisions thereof
and the General Corporation Law of the State of Delaware (the "DGCL"), at the
date and time when the Merger shall become effective pursuant to Section 2.02 of
the Merger Agreement (the "Effective Time"), the Purchaser will be merged with
and into the Company, and the Company will be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") and continue its
corporate existence under the laws of the State of Delaware. At the Effective
Time the separate existence of the Purchaser shall cease.
Pursuant to the Merger Agreement, as of the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, each share of
Common Stock issued and outstanding immediately prior to the Effective Time
(other than any shares of Common Stock held by Parent, the Purchaser, any
subsidiary of Parent or the Purchaser or in the treasury of the Company, which
shares, by virtue of the Merger and without any action on the part of the holder
thereof, shall be cancelled and retired and shall cease to exist with no payment
being made with respect thereto, and other than shares, if any, held by
stockholders who perfect their appraisal rights under Delaware law ("Dissenting
Shares")) will be converted into the right to receive $33.50 net to its holder
in cash or any higher price per Share paid in the Offer (the "Merger Price"),
payable to the holder thereof, without interest thereon, upon surrender of the
certificate formerly representing such share.
For a description of certain appraisal rights available to stockholders
under the DGCL in connection with the Merger, see "--Appraisal Rights" below in
this Item 3(b)(2).
As of the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, each share of capital stock of the Purchaser
issued and outstanding immediately prior to the Effective Time will be converted
into and become one fully paid and nonassessable share of Common Stock, par
value $0.01 per share, of the Surviving Corporation.
Under the Merger Agreement, the Company and Parent have agreed to take all
actions necessary to provide that immediately prior to consummation of the Offer
(i) each outstanding option to purchase Shares (the "Options") granted under any
of the Company's 1989 Stock Option Plan, the Company's Long-Term Performance
Program or the Company's 1994 Stock Option Plan for Non-Employee Directors
(collectively, the "Option Plans") will, by virtue of the Merger and without any
further action on the part of the Company or the holder of such Option, be
assumed by Parent in a manner which complies with certain provisions of the
Internal Revenue Code of 1986, as amended (the "Code"). At the Effective Time,
all references in the Option Plans to the Company will be deemed to refer to
Parent, and Parent will issue to each holder of an Option a document evidencing
the assumption of such option by Parent. Each Option assumed by Parent will be
exercisable upon the same terms and conditions including, without limitation,
vesting, as under the applicable Option Plan and the applicable option agreement
issued thereunder, except that (a) each such Option will be exercisable for the
number of shares of Common Stock, par value $1.00 per share, of Parent ("Parent
Common Stock") (rounded to the nearest whole share) obtained by multiplying the
number of shares subject to such Option immediately prior to the Effective Time
by $33.50 and dividing the result by the average of the closing prices for the
Parent Common Stock reported on the New York Stock Exchange Consolidated Tape
for the 10 consecutive trading days immediately prior to the Effective Time; and
(b) the option price per share of Parent Common Stock shall be an amount equal
to
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the aggregate exercise price of such Option prior to adjustment divided by the
number of shares of Parent Common Stock subject to such Option after adjustment
(the option price per share, as so determined, being rounded upward to the
nearest full cent). The date of grant of each Parent Option will be the date on
which the corresponding Option was granted. No payment will be made for
fractional interests.
Except as provided in the Merger Agreement or as otherwise agreed to by the
parties and to the extent permitted by the Option Plans (i) the Option Plans
will terminate as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant by the Company or any
of its subsidiaries of any interest in respect of the capital stock of the
Company or any of its subsidiaries will be deleted as of the Effective Time and
(ii) the Company will use all reasonable efforts to ensure that following the
Effective Time no holder of Options or any participant in any Option Plan or any
other such plans, programs or arrangements shall have any right thereunder to
acquire any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
The Merger Agreement provides that the Certificate of Incorporation and
By-Laws of the Purchaser will be the Certificate of Incorporation and By-Laws of
the Surviving Corporation until thereafter amended as provided by law, except
that the name of the Surviving Corporation will be "Norand Corporation."
Under the Merger Agreement the directors of the Purchaser immediately prior
to the Effective Time will be the initial directors of the Surviving Corporation
and will hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal. The officers of the
Company immediately prior to the Effective Time will be the initial officers of
the Surviving Corporation and will hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
AGREEMENTS OF THE COMPANY, PARENT AND THE PURCHASER. The Merger Agreement
provides that, if required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law, duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as soon as practicable following the
purchase of and payment for shares of Common Stock by the Purchaser pursuant to
the Offer for the purpose of considering and adopting the Merger Agreement and
such other matters as may be necessary to consummate the transactions
contemplated by the Merger Agreement.
Under the Merger Agreement, in the event that Parent, the Purchaser or any
other subsidiary of Parent acquires at least 90% of the outstanding shares of
Common Stock pursuant to the Offer or otherwise, at the request of Parent or the
Purchaser, Parent, the Purchaser and the Company will take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment and purchase of shares of Common
Stock by the Purchaser pursuant to the Offer without a meeting of stockholders
of the Company in accordance with Section 253 of the DGCL.
In the Merger Agreement, the Company has covenanted and agreed that, except
as contemplated by the Merger Agreement or as expressly agreed to in writing by
Parent, during the period from the date of the Merger Agreement to the Control
Date (as defined in "--Directors" below in this Item 3(b)(2)), each of the
Company and its subsidiaries will conduct its operations according to its
ordinary course of business consistent with past practice and will use
commercially reasonable efforts to preserve intact its business organization, to
keep available the services of its key employees and to maintain satisfactory
relationships with material suppliers, distributors, customers and others having
business relationships with it and will take no action not required by law that
would materially adversely affect the ability of the parties to consummate the
transactions contemplated by the Merger Agreement or be inconsistent with such
transactions.
In the Merger Agreement, the Company has covenanted and agreed that prior to
the Effective Time it will keep Parent advised of the status of all discussions
and negotiations concerning possible acquisitions
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and divestitures by it or any of its subsidiaries of any corporations or
businesses, and has further agreed that without the prior written consent of
Parent it will not make, or agree to make, any such acquisition or divestiture.
Under the Merger Agreement, the Company has agreed that prior to the
Effective Time it will not, and will not authorize or permit any of its
subsidiaries or any of its or its subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to solicit, initiate,
facilitate or encourage (including by way of furnishing or disclosing nonpublic
information) any inquiries or the making of any proposal with respect to any
merger, consolidation or other business combination involving the Company or its
subsidiaries or acquisition of all or substantially all of the assets or capital
stock of the Company and its subsidiaries taken as a whole (an "Acquisition
Transaction") or negotiate or explore with any person (other than Parent, the
Purchaser or their respective directors, officers, employees, agents and
representatives) any Acquisition Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by the Merger
Agreement; provided that the Company may in response to an unsolicited written
proposal with respect to an Acquisition Transaction from a third party furnish
information to such third party, and negotiate, explore or otherwise communicate
with such third party, in each case only if the Board of Directors of the
Company determines in good faith by a majority vote, after consultation with its
financial advisors and outside legal counsel, and after the receipt of the
advice of outside legal counsel to the Company that failing to take such actions
would constitute a breach of the fiduciary duty of the Board, that failing to
take such action would constitute a breach of the fiduciary duties of the Board.
The Company has agreed to advise Parent as promptly as practicable in writing of
the receipt of any inquiries or proposals relating to an Acquisition Transaction
and any actions described in this paragraph.
Pursuant to the Merger Agreement, from the date of the Merger Agreement
until the Effective Time, and subject to any limitations imposed by applicable
law or the terms of any of the Company's or its subsidiaries' classified
contracts, the Company has agreed to give Parent and its authorized
representatives (including counsel, environmental and other consultants,
accountants and auditors) access during normal business hours to all facilities,
personnel and operations and to all books and records of the Company and its
subsidiaries, and to permit Parent to make such inspections as it may reasonably
require and to cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and other information with respect
to its business and properties as Parent may from time to time reasonably
request. Pursuant to the Merger Agreement, Parent has agreed that any
information furnished to Parent, its subsidiaries or its authorized
representatives will be subject to the provisions of the Confidentiality
Agreement. See--"Other Agreements" below in this Item 3(b)(2).
The Merger Agreement provides that, subject to the terms and conditions
therein provided and applicable law, each of the Company, Parent and the
Purchaser will use its reasonable best efforts promptly to consummate the
transactions contemplated by the Merger Agreement, including, without limitation
using such reasonable best efforts to (i) obtain all necessary consents,
approvals or waivers under its material contracts and (ii) lift any legal bar to
the Merger; provided, however, that the foregoing will not require Parent, the
Purchaser or any other affiliate of Parent to agree to any action or restriction
which, if imposed by a governmental entity, would constitute a condition
described in paragraph (A) of Section 14 of the Offer to Purchase.
Under the Merger Agreement, before issuing any press release or otherwise
making any public statements with respect to the Merger Agreement, the Offer or
the Merger, Parent, the Purchaser and the Company will consult with each other
as to its form and substance and will not issue any such press release or make
any such public statement prior to such consultation, except in either case as
may be required by law.
Under the Merger Agreement, each of the Company and Parent have agreed to
give prompt notice to the other party of (i) the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence,
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of which would be likely to cause (A) any representation or warranty contained
in the Merger Agreement to be untrue or inaccurate in any material respect at
any time from the date hereof to the acceptance for payment of shares of Common
Stock pursuant to the Offer, (B) any condition set forth in Section 14 of the
Offer to Purchase to be unsatisfied in any material respect at any time from the
date of the Merger Agreement to the date the Purchaser purchases shares of
Common Stock pursuant to the Offer or (C) any conditions set forth in Section 14
of the Offer to Purchase to be unsatisfied in any material respect at any time
from the date of the Merger Agreement to the Effective Time, and (ii) any
material failure of the Company or Parent, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under the Merger
Agreement; provided, however, that the delivery of any notice pursuant to this
paragraph will not limit or otherwise affect the remedies available under the
Merger Agreement to the party receiving such notice.
Under the Merger Agreement, from and after the Effective Time, Parent will
indemnify, defend and hold harmless the present and former officers, directors,
employees and agents of the Company and its subsidiaries against all losses,
claims, damages, expenses or liabilities arising out of or related to actions or
omissions or alleged actions or omissions occurring at or prior to the Effective
Time, including without limitation the transactions contemplated by the Merger
Agreement, to the same extent and on the same terms and conditions (including
with respect to advancement of expenses) provided for in the Company's
Certificate of Incorporation and By-Laws and agreements in effect at the date of
the Merger Agreement (to the extent consistent with applicable law).
Pursuant to the Merger Agreement, for a period of five years after the
Effective Time, Parent has agreed to maintain in effect the current policies of
directors' and officers' liability insurance maintained by the Company (provided
that Parent may substitute therefor policies with reputable and financially
sound carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from
or related to facts or events which occurred at or before the Effective Time;
provided, however, that Parent is not obligated to make annual premium payments
for such insurance to the extent such premiums exceed 150% of the annual
premiums paid as of the date of the Merger Agreement by the Company for such
insurance.
Parent has agreed pursuant to the Merger Agreement that following
consummation of the Offer, it will cause the Company to honor in accordance with
their terms certain existing employment contracts and employee benefits in
effect on the date of the Merger Agreement. In addition, Purchaser has agreed in
the Merger Agreement to provide or cause the Company to provide to individuals
who are employed by the Company or any of its subsidiaries until the first
anniversary of the Effective Time employee benefits that are in the aggregate no
less favorable than those provided to them as of the date of the Merger
Agreement, other than the Company's Employee Stock Purchase Plan. Parent will
make its employee stock purchase plan available to employees of the Company as
promptly as practicable following the Effective Time.
Pursuant to the Merger Agreement, the Company has agreed that prior to the
Effective Time, it will use its reasonable best efforts to cause the Consulting
Agreement between the Company and Donald W. Rowley, dated February 12, 1996, as
amended, and the Consulting Agreement between the Company and Jay Alix dated
January 16, 1996, as amended, to be amended to provide that in lieu of the
warrants to purchase shares of Common Stock granted pursuant to such agreements,
Mr. Rowley and Mr. Alix each be entitled to receive from the Company an
immediate cash payment from the Company equal to the Merger Price multiplied by
the number of shares of Common Stock for which their respective warrants are
exercisable, minus the aggregate exercise price of such warrants.
Under the Merger Agreement, Parent has agreed to use its reasonable best
efforts to assist the Company in obtaining from The Bank of New York Financial
Corporation ("BONYFC") a written commitment to the Company extending through at
least May 31, 1997 to lend up to $75 million to the Company on commercially
reasonable terms that are no less favorable to the Company than the terms of
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the latest written proposal made by BONYFC to the Company as of the date hereof;
provided, however, that such agreement will not obligate Parent to incur any
fees or expenses payable to BONYFC or to guarantee, directly or indirectly, any
obligations or indebtedness of the Company.
If, notwithstanding the foregoing, BONYFC does not extend such written
commitment to the Company on or before March 15, 1997, then, at the Company's
option, Parent will purchase from the Company, and the Company will sell to
Parent, shares of a newly created Series A Convertible Preferred Stock of the
Company ("Series A Convertible Preferred Stock") for an aggregate purchase price
of $25,000,000 payable to the Company by wire transfer in immediately available
funds with the closing of such purchase and sale to take place no later than
March 31, 1997. If this provision becomes effective and the Series A Convertible
Preferred Stock is issued, it will have substantially the following terms. The
Series A Convertible Preferred Stock will have a liquidation preference of
$25,000,000 and will be convertible after the first anniversary of the issue
date, at the option of the holder into Common Stock at the rate of one share of
Common Stock for each $23.00 of liquidation preference, subject to antidilution
provisions substantially identical to those in the Company's Series A and Series
B Warrants. The dividend will be 6 1/2% per annum of the liquidation preference
and will be payable at the option of the Company in shares of Series A
Convertible Preferred Stock or cash. The Company will be required to redeem the
Series A Convertible Preferred Stock at the request of the holder upon the
earlier to occur of (i) consummation of a transaction resulting in a change in
control of the Company and (ii) the tenth anniversary of the date of issuance.
The Company may redeem the Series A Convertible Preferred Stock at the option of
the Company (i) during the first year after the date of issuance at 110% of the
liquidation preference and (ii) after the first year from the date of issuance
at 100% of liquidation preference as long as the Company's common stock has
traded in excess of $25.30 for any 10 consecutive trading days. If the Company
defaults on its mandatory redemption obligation, the dividend rate will increase
by 25 basis points, and will thereafter increase by an additional 25 basis
points for each 91-day period the default continues, up to a maximum dividend
rate of 10 1/2%. During continuance of the default, the holder will be entitled
to appoint one member of the Company's Board of Directors.
DIRECTORS. In the Merger Agreement, the Company has agreed that, subject to
compliance with applicable law, promptly upon the payment by the Purchaser for
shares of Common Stock purchased pursuant to the Offer representing not less
than a majority of the outstanding shares of Common Stock on a fully diluted
basis, and from time to time thereafter, the Company will, upon request of
Parent, promptly take all actions necessary to cause a majority of the directors
of the Company to consist of Parent's designees, including by accepting the
resignations of those incumbent directors designated by the Company or
increasing the size of the Company's Board of Directors and causing Parent's
designees to be elected. The Company's obligations to appoint Parent's designees
to the Board are subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder, if applicable. Following the election or appointment of Parent's
designees as described in this paragraph and prior to the Effective Time, any
amendment or termination of the Merger Agreement by the Company or the Company's
Board of Directors, any extension by the Company or the Company's Board of
Directors, of the time for the performance of any of the obligations or other
acts of Parent or the Purchaser or waiver of any of the Company's rights under
the Merger Agreement or any other action by the Company concerning the Merger
Agreement or any of the transactions contemplated thereby, will require the
concurrence of a majority of the directors of the Company then in office who
were not designated by Parent.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains certain
representations and warranties by the Company, including representations and
warranties concerning: the organization and qualification of the Company and its
subsidiaries; the capitalization of the Company; the authority of the Company
relative to the execution and delivery of, and consummation of the transactions
contemplated by, the Merger Agreement and approval by the Board regarding
certain related matters; the absence of any violations of the corporate
documents and certain instruments of the Company or its subsidiaries or of any
statute, rule, regulation, order or decree, subject to certain exceptions; the
accuracy of reports and
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documents filed by the Company with the Securities and Exchange Commission (the
"Commission") since January 1, 1994 and certain financial statements of the
Company; the absence since November 30, 1996 (except as amended or supplemented
in filings prior to the date of the Merger Agreement with the Commission) to the
date of the Merger Agreement of any event or occurrence (including the
incurrence or existence of any liability) which, individually or in the
aggregate, would have a Company Material Adverse Effect (as defined in the
Merger Agreement); the absence of litigation which could have a Company Material
Adverse Effect; compliance by the Company with applicable laws, regulations, and
similar matters; payment by the Company of taxes; compliance with certain laws
relating to employee benefit plans; the possession of right, title and interest
by the Company and its subsidiaries in certain intellectual property; the
absence of ongoing infringement by the Company of intellectual property rights
belonging to a third-party, indemnification by the Company for any such
infringement or claims or demands against the Company for any such infringement;
the absence of pending or threatened challenges, or grounds for a challenge, to
the rights of the Company to use certain trade secrets or proprietary or
confidential information; the absence of any material defect in the programming
and operation of the Company's software; the absence of material rights of third
parties to use the Company's software; the taking by the Board of all
appropriate and necessary action such that the provisions of Section 203 of the
DGCL will not apply to the transactions contemplated by the Merger Agreement;
and incurrence of broker's and similar fees.
The Merger Agreement also contains certain representations and warranties by
Parent and the Purchaser, including that Parent or the Purchaser has and will
have at the time of acceptance for payment and purchase of Shares under the
Offer and at the Effective Time the funds necessary to consummate the Offer and
the Merger and the transactions contemplated thereby and to pay related fees and
expenses.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the fulfillment of
each of the following conditions: (i) the Purchaser shall have accepted for
payment and paid for shares of Common Stock pursuant to the Offer in accordance
with the terms thereof; (ii) the vote of the stockholders of the Company
necessary to consummate the transactions contemplated by the Merger Agreement
shall have been obtained, if required by applicable law; and (iii) no statute,
rule, regulation, judgment, writ, decree, order or injunction shall have been
promulgated, enacted, entered or enforced, and no other action shall have been
taken, by any domestic, foreign or supranational government or governmental,
administrative or regulatory authority or agency of competent jurisdiction or by
any court or tribunal of competent jurisdiction, domestic, foreign or
supranational, that in any of the foregoing cases has the effect of making
illegal or directly or indirectly restraining, prohibiting or restricting the
consummation of the Merger.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time: (i) by mutual written consent of the Boards of Directors of
Parent and the Company; (ii) by either Parent or the Company if, without any
material breach of the terminating party of its obligations under the Merger
Agreement, the purchase of shares of Common Stock pursuant to the Offer shall
not have occurred on or before September 30, 1997 (which date may be extended by
mutual written consent of the parties to the Merger Agreement); (iii) by Parent
or the Company if the Offer expires or is terminated or withdrawn pursuant to
its terms without any shares of Common Stock being purchased thereunder; or (iv)
by either Parent or the Company if any court of competent jurisdiction in the
United States or other governmental body in the United States shall have issued
an order (other than a temporary restraining order), decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the purchase of
Shares pursuant to the Offer or the Merger, and such order, decree, ruling or
other action shall have become final and nonappealable; provided that the party
seeking to terminate the Merger Agreement shall have used its reasonable best
efforts, subject to certain limitations, to remove or lift such order, decree or
ruling.
The Merger Agreement may be terminated and the Offer and the Merger may be
abandoned by action of the Board of Directors of Parent at any time prior to the
purchase of shares of Common Stock
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pursuant to the Offer if (i) the Board shall withdraw, modify or change its
recommendation or approval in respect of the Merger Agreement or the Offer in a
manner adverse to Parent, (ii) the Board shall have recommended any proposal
other than by Parent or the Purchaser in respect of an Acquisition Transaction,
or (iii) a proposal for an Acquisition Transaction other than by Parent or the
Purchaser shall be publicly disclosed and at the scheduled expiration of the
Offer the condition that a number of shares of Common Stock representing at
least a majority of the number of shares of Common Stock outstanding on a fully
diluted basis be validly tendered and not withdrawn at the expiration of the
Offer shall not have been satisfied.
Upon termination of the Merger Agreement, Parent has agreed to return to the
Company all copies of non-public information supplied to Parent by the Company
in Parent's possession at the time of such termination.
The Merger Agreement may be terminated and the Merger may be abandoned by
action of the Board at any time prior to the Effective Time (i) if there shall
be a material breach of any of Parent's or the Purchaser's representations,
warranties or covenants under the Merger Agreement, which breach shall not be
cured within ten days of notice thereof, or (ii) to allow the Company to enter
into an agreement in respect of an Acquisition Transaction which the Board has
determined is more favorable to the Company and its stockholders than the
transactions contemplated by the Merger Agreement (provided that such
termination shall not be effective unless and until the Company shall have paid
to Parent the fee described in the second paragraph under "--Fees and Expenses"
below).
FEES AND EXPENSES. Except to the extent Parent becomes entitled to an
expense reimbursement fee as described in the following paragraph, Parent and
the Company will bear their respective expenses incurred in connection with the
Merger Agreement, the Offer and the Merger, including, without limitation, the
preparation, execution and performance of the Merger Agreement and the
transactions contemplated thereby, and all fees and expenses of investment
bankers, finders, brokers, agents, representatives, counsel and accountants.
If (i) Parent shall have terminated the Merger Agreement as described in the
second paragraph of "--Termination" above or (ii) the Company shall have
terminated the Merger Agreement as described in clause (ii) of the fourth
paragraph of "--Termination" above, then the Company shall promptly, but in no
event later than two business days after the date of such termination or event,
pay Parent a termination fee of $9,000,000. If Parent shall have terminated this
Agreement pursuant to clause (iii) of the second paragraph of "--Termination"
above and, within one year after such termination, the Company shall have
entered into a definitive agreement providing for an Acquisition Transaction,
the Company shall promptly, but in no event later than two days after the date
of such definitive agreement, pay Parent a termination fee of $9,000,000. Any
termination fee payable as described in this paragraph shall be paid by the
issuance to Parent of shares of a newly issued series of preferred stock of the
Company (the "Series B Convertible Preferred Stock") having substantially the
following terms. The Series B Convertible Preferred Stock will have a
liquidation preference of $9,000,000 and will be convertible after the
expiration of six months from the issue date, at the option of the holder into
Common Stock at the rate of one share of Common Stock for each $23.00 of
liquidation preference, subject to antidilution provisions substantially
identical to those in the Company's Series A and Series B Warrants. The dividend
will be 6% per annum of the liquidation preference and will be payable at the
option of the Company in shares of Series B Convertible Preferred Stock or cash.
The Company will be required to redeem the Series B Convertible Preferred Stock
at the request of the holder upon the earlier to occur of (i) consummation of a
transaction resulting in a change in control of the Company and (ii) the third
anniversary of the date of issuance. The Company may redeem the Series A
Convertible Preferred Stock at the option of the Company (i) during the first
year after the date of issuance at 110% of the liquidation preference and (ii)
after the first year from the date of issuance at 100% of liquidation preference
as long as the Common Stock has traded in excess of $25.30 for any 10
consecutive trading days. If the Company defaults on its mandatory redemption
obligation, the dividend rate will increase by 25 basis points, and will
thereafter increase by an additional 25 basis points for each
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<PAGE>
91-day period the default continues, up to a maximum dividend rate of 10%.
During continuance of the default, the holder will be entitled to appoint one
member of the Board.
AMENDMENT. At any time prior to the Effective Time, subject to applicable
law and the provisions of the Merger Agreement, the Merger Agreement may be
amended, modified or supplemented only by written agreement of Parent, the
Purchaser and the Company with respect to any of the terms contained therein;
provided, however, that after any approval and adoption of the Merger Agreement
by the stockholders of the Company, no such amendment, modification or
supplementation shall be made which reduces the amount of per-share
consideration paid in the Merger or the form of consideration therefor or which
in any way materially adversely affects the rights of such stockholders without
the further approval of such stockholders. Following the election or appointment
of Parent's designees as Directors of the Company as described above and prior
to the Effective Time, any amendment or termination of the Merger Agreement by
the Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Parent or the Purchaser or any other action
by the Company concerning the Merger Agreement or any of the transactions
contemplated thereby, will require the concurrence of a majority of the
directors of the Company then in office who were not designated by Parent.
WAIVERS. At any time prior to the Effective Time, Parent and the Purchaser,
on the one hand, and the Company, on the other hand, may (i) extend the time for
the performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties of the other contained
herein or in any documents delivered pursuant hereto and (iii) waive compliance
by the other with any of the agreements or conditions contained herein which may
legally be waived. Any such extension or waiver shall be valid only if set forth
in an instrument in writing specifically referring to this Agreement and signed
on behalf of such party. Following the election or appointment of Parent's
designees as Directors of the Company as described above and prior to the
Effective Time, any waiver of any of the Company's rights under the Merger
Agreement will require the concurrence of a majority of the directors of the
Company then in office who were not designated by Parent.
OTHER AGREEMENTS. The following summary description of the Original
Equipment Manufacturer Agreement (the "OEM Agreement") is qualified in its
entirety by reference to such agreement, which has been filed as an exhibit to
the Schedule 14D-9. The OEM Agreement gives Parent and its subsidiaries the
non-exclusive right to sell and license pen-based data collection terminals and
computers, charge coupled device products, and radio products of the Company and
the accessories, software and spare parts for such products, for use in
healthcare, manufacturing, warehouse and distribution applications worldwide in
such geographic locations where such products are certified. The OEM Agreement
is in effect as of January 21, 1997 and will expire on January 21, 1999;
provided, however, that the term of the OEM Agreement will automatically be
extended for successive one-year periods ending on the anniversary of January
21, 1999, unless either party has, on or before 60 days prior to the next
scheduled renewal date, given notice to the other of its intention not to renew
the term of the OEM Agreement.
The OEM Agreement provides that the Company will sell the specified products
to Parent at a price based on the volume of purchases by Parent during the
twelve-month period ending on the preceding January 19, such price being no less
favorable than the lowest price then being charged by the Company for sales of
such products to other purchasers with sales volumes similar to Parent's volume
purchases during such twelve-month period. For the period beginning January 21,
1997 and continuing through January 19, 1998, the Company will sell products to
Parent at a price based on the sales forecast covering the twelve-month period
beginning on April 1, 1997, such price being no less favorable than the lowest
price then being charged by the Company for sales of such products to other
purchasers based on sales volumes similar to such forecast.
In February 1996, the Company and Parent (together with Intermec) entered
into the Confidentiality Agreement relating to (1) the mutual exchange of
confidential information concerning the business and affairs of each party and
(2) the agreement of each party to refrain from certain actions affecting
control of
9
<PAGE>
the other party. Pursuant to the Confidentiality Agreement, the Company and
Parent exchanged certain financial, technical, commercial and other information
concerning their respective businesses and affairs and agreed, among other
things, to use the confidential materials solely for the purpose of evaluating a
possible business combination or strategic relationship between the Company and
Parent. The Confidentiality Agreement prohibits disclosure of the following,
without prior written consent of the other party, (a) the contents of the
confidential materials, (b) the existence of the Confidentiality Agreement, and
(c) the existence of and status of negotiations over a possible business
combination or strategic relationship.
Pursuant to the Confidentiality Agreement, the Company and Parent also
agreed, for a period of three years following the date of the Confidentiality
Agreement, not to directly or indirectly, without prior written consent of the
other party, (i) acquire, or offer, propose or agree to acquire, any shares of
the other party's common stock, or securities convertible or exchangeable into,
or the rights to acquire, such stock, (ii) solicit proxies or consents with
respect to such stock, become a participant in any election contest relating to
the election of directors of the other party or initiate, propose or otherwise
solicit holders of such stock with respect to any such proposal, (iii) form,
join or participate in a group within the meaning of Section 13(d)(3) of the
Exchange Act with respect to such stock, (iv) arrange or participate in any
arranging of financing for the purchase of such stock, (v) propose, disclose any
intent to propose or contact any officers, employees, directors, stockholders or
agents of the other party or any other person or entity with respect to any
acquisition, business combination, recapitalization or similar transaction with
respect to the other party or any material amount to its assets, or request any
waiver, amendment or termination of certain provisions of the Confidentiality
Agreement or (vi) attempt in any way to control the other party. The
Confidentiality Agreement also prohibits any direct or indirect solicitation,
negotiation or hiring of employees of one party by the other party for a period
of three years following the date of the Confidentiality Agreement, except
through or in response to general advertisement.
Pursuant to the Merger Agreement, Parent was released from the restrictions
described in the preceding paragraph.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
At a special meeting held on January 21, 1997, the Board of Directors of the
Company (the "Board"), unanimously approved the Merger Agreement and determined
that the Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger are fair to and in the best interests of the holders of
shares of Common Stock and recommends that stockholders accept the Offer and
tender their shares of Common Stock. In making such recommendation and approving
the Merger Agreement and the transactions contemplated thereby, the Board
considered a number of factors, including, but not limited to, the following;
(i) the financial and other terms and conditions of the Merger
Agreement;
(ii) the Company's business, financial condition, results of operations,
assets, liabilities, business strategy and prospects, as well as various
risks and uncertainties associated with those prospects, including the
Company's competitive environment, new product development efforts and the
status of other business initiatives;
(iii) the Company's capital requirements, the terms of the Company's
existing credit facility, which the Board considered to be unfavorable, the
status of the Company's efforts to replace such credit facility and the
terms upon which the Company anticipated that new financing would be
available to it;
(iv) the fact that the $33.50 per share cash price to be received by the
Company's stockholders in both the Offer and the Merger represented a 74%
premium over the last executed trade price of $19.25 per share on January
21, 1997, the last full trading day prior to the announcement of the
execution of the Merger Agreement, and premiums of 87.4% and 97.1% over the
last executed trade
10
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prices of $17.88 per share and $17.00 per share on January 15, 1997 and
December 23, 1996, respectively, the dates seven days and thirty days,
respectively, prior to the announcement of the execution of the Merger
Agreement;
(v) the fact that the Offer and the Merger would not be subject to any
financing condition, that Parent has represented that it has sufficient
financing to provide the funds necessary to consummate the Offer and the
Merger and the transactions contemplated thereby and to pay the related fees
and expenses;
(vi) the written opinion received by the Company from Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJ") on January 21, 1997 to the effect
that as of that date and based upon its review and analysis and subject to
the assumptions, limitations and qualifications set forth therein, the
$33.50 per share cash consideration to be received by the Company's
stockholders in the Offer and the Merger is fair to the stockholders of the
Company from a financial point of view. A copy of the written opinion dated
January 21, 1997 of DLJ, which sets forth the assumptions made, procedures
followed, other matters considered and limits of the review by DLJ is filed
as an exhibit to this Schedule 14D-9 and is also attached hereto as Annex
II. STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY;
(vii) the fact that other potential acquirors had declined invitations by
the Company to explore a business combination with the Company and the
Board's view that there was not likely to be another financially capable
potential acquiror who would be interested in acquiring the Company on more
attractive terms; and
(viii) the fact that, to the extent required by the fiduciary obligations
of the Board under Delaware law, the Company may terminate the Merger
Agreement in order to approve another proposed business combination by a
third party upon the payment of a $9,000,000 termination fee, which
termination fee would not be required to be paid in cash, but rather in the
form of the issuance of shares of a new class of preferred stock of the
Company. See "Item 3. Identity and Background-- Merger
Agreement--Termination."
The Board's approval and recommendation was based on the totality of the
information considered by it. The Board did not assign relative weights to the
factors considered by it or determine that any one factor was of primary
importance.
BACKGROUND OF THE OFFER; CONTACTS WITH PARENT AND PURCHASER
Initial contacts between the Company and Parent concerning a possible
business combination or other strategic relationship began in January 1996. In
February 1996, the Company and Parent entered into a mutual
confidentiality/standstill agreement (the "Confidentiality Agreement") and began
exchanging certain non-public information concerning the Company. This process
continued through May 1996.
In early 1996, the Company, through its representatives and advisors,
approached several other entities regarding a possible acquisition of the
Company by such entities. None of the entities so approached expressed an
interest in acquiring the Company.
In June 1996, the Company and Parent agreed to defer further consideration
of a possible transaction pending the resolution of certain stockholder
litigation against the Company. An agreement providing for the settlement of
such litigation was reached in August 1996 and confirmed by the court in
December 1996.
In the fall of 1996, the Company approached two of the entities which it had
approached in early 1996 to further explore the possibility of an acquisition of
the Company by such entities. The two entities so approached again expressed no
interest in acquiring the Company.
On January 6 and 7, 1997, representatives of the Company and Parent met to
discuss a possible business combination and the Company's financial outlook.
Additional discussions were held by telephone
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over the period between January 8 and January 16. On January 16, 1997, Parent
proposed to the Company, subject to completion of its review and analysis of the
Company and the negotiation of a definitive agreement, to acquire the Company
for $33.75 per share in cash through a tender offer and a merger. On January 19,
1997, the Company's Board of Directors held a special meeting at which the
Company's directors discussed with the Company's legal and financial advisors
the terms of a proposed acquisition of the Company by Parent. Meetings among
representatives of the Company and Parent and their advisors took place on
January 19 through January 21 at which the significant terms of the Merger
Agreement were negotiated. On January 21, 1997, Parent indicated that as a
result of the conclusions reached from its review and analysis of the Company to
date, Parent was unwilling to proceed with an acquisition of the Company at
$33.75 per share and Parent requested a significant reduction in the per share
price. After consultation with certain of its directors and its management and
legal and financial advisors, the Company proposed, subject to the approval of
its Board of Directors, to proceed with a transaction with Parent at a price of
$33.50 per share in cash provided that Parent agree to the Company's remaining
requirements concerning the terms of the definitive transaction agreement.
Parent's representatives accepted these terms subject to the approval of the
Executive Committee of the Board of Directors of Parent. On January 21, 1997,
the Merger Agreement was presented to, and approved by, the Board and the
Executive Committee of the Board of Directors of Parent (acting with the
authority of the full Board of Directors of Parent), and the Merger Agreement
was executed by the parties.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company and DLJ have entered into a letter agreement dated January 7,
1997 (the "Engagement Letter").
Pursuant to the Engagement Letter, DLJ was engaged to act as the exclusive
financial advisor to the Company for a period of 12 months with respect to the
sale, merger, consolidation or any other business combination, in one or a
series of transactions, involving all or a substantial amount of the business,
securities or assets of the Company (each, a "Transaction"). The Engagement
Letter provides that the Company will pay to DLJ for its services (i) a fee of
$600,000 at the time DLJ notifies the Board of Directors of the Company that it
is prepared to deliver its opinion as to the fairness from a financial point of
view of any proposed Transaction with Parent and an additional fee of $100,000
for each update of a prior opinion delivered by DLJ with respect to a
Transaction with Parent and (ii) additional cash compensation in an amount equal
to the sum of (x) $2,250,000 plus (y) five percent (5.0%) of any increase in the
Share Value (as defined below) in excess of $30.00 per share of Common Stock
less (z) any amounts previously paid by the Company; provided, however, that in
no event will the compensation payable pursuant to the Engagement Letter exceed
one percent (1.0%) of the Transaction Value (as defined below). Such additional
compensation is contingent upon and payable in cash promptly upon consummation
of a Transaction. The Company has also agreed to reimburse DLJ for its
out-of-pocket expenses, including the reasonable fees and expenses of its
counsel, but not to exceed $15,000 without the prior approval of the Company,
and to indemnify DLJ and certain related parties against certain liabilities,
including liabilities under the federal securities laws.
As used in the foregoing paragraph, (1) the term "Share Value" means the
price per share received by the Company and/or its stockholders multiplied by
the number of shares of Common Stock outstanding (treating any shares issuable
upon the exercise of options, warrants or other rights of conversion as
outstanding) and (2) the term "Transaction Value" means the aggregate amount of
consideration received by the Company and/or its stockholders (treating any
shares issuable upon the exercise of options, warrants or other rights of
conversion as outstanding.)
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained, or compensated any person to make solicitations
or recommendations to the Company's stockholders with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
The Company, and to the knowledge of the Company, none of its executive
officers, directors, affiliates or subsidiaries has effected any transaction in
the Company's securities in the past 60 days. To the knowledge of the Company,
all of its executive officers, directors, affiliates or subsidiaries who are
also stockholders intend to either tender their Shares in the Offer or vote in
favor of the Merger.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth above, the Company is not engaged in any negotiation
in response to the Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization involving the
Company; (ii) a purchase, sale or transfer of a material amount of assets by the
Company, (iii) a tender offer for or other acquisition of securities by or of
the Company, or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in Item 3 or 4 above, there are no transactions,
Board resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the events referred
to in Item 7(a) above.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached hereto as Annex I is being furnished in
connection with the contemplated designation by Parent, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's stockholders, following the purchase by Purchaser of
the number of Shares pursuant to the Offer necessary to satisfy the Minimum
Condition.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------
<S> <C>
Exhibit 1 Agreement and Plan of Merger dated as of January 21, 1997 among Parent, Purchaser and
the Company.
Exhibit 2 Pages 2-12 of the Proxy Statement.
Exhibit 3 Press Release dated January 22, 1997.
Exhibit 4 Letter to stockholders of the Company dated January 24, 1997.
Exhibit 5 OEM Agreement dated as of January 21, 1997 between Parent and the Company.
</TABLE>
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Norand Corporation
By: /s/ N. ROBERT HAMMER
-----------------------------------------
N. Robert Hammer
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Dated: January 24, 1997
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ANNEX I
NORAND CORPORATION
550 Second Street, S.E.
Cedar Rapids, Iowa 52401
------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
------------------------
This Information Statement, which is being mailed on or about January 24,
1997 to the holders of shares of the common stock, par value $0.01 per share
(the "Common Stock") of Norand Corporation, a Delaware corporation (the
"Company"), is being furnished in connection with the designation by Western
Atlas Inc., a Delaware corporation ("Parent"), of persons (the "Parent
Designees") to the Board of Directors of the Company (the "Board"). Such
designation is to be made pursuant to an Agreement and Plan of Merger dated as
of January 21, 1997 (the "Merger Agreement") among the Company, Parent and WAI
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser").
Pursuant to the Merger Agreement, among other things, the Purchaser
commenced a tender offer on January 24, 1997 to purchase all of the issued and
outstanding shares (the "Shares") of the Common Stock at a price of $33.50 per
Share, net to the seller in cash, as described in the Purchaser's Offer to
Purchase dated January 24, 1997 and the related Letter of Transmittal (which
Offer to Purchase and related Letter of Transmittal together constitute the
"Offer"). The Offer is scheduled to expire at 12:00 midnight, New York City
time, on Friday February 21, 1997, unless extended. The Offer is subject to,
among other things, the condition that a number of Shares representing not less
than a majority of the Company's outstanding Shares on a fully diluted basis
being validly tendered prior to the expiration of the Offer and not withdrawn
(the "Minimum Condition"). The Merger Agreement also provides for the merger
(the "Merger") of Purchaser with and into the Company as soon as practicable
after the consummation of the Offer. Following the consummation of the Merger
(the "Effective Time"), the Company will be the surviving corporation and a
wholly owned subsidiary of Parent. In the Merger, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Parent, Purchaser, in the treasury of the Company or by any subsidiary of
Parent, Purchaser or the Company, all of which will be cancelled, and other than
Shares, if any, held by stockholders who have perfected rights as dissenting
stockholders under Delaware law) will be converted into the right to receive
cash in the amount of $33.50.
Following the election or appointment of the Parent Designees and prior to
the Effective Time, any amendment or termination of this Agreement by the
Company, any extension by the Company of the time for the performance of any of
the obligations or other acts of Parent or the Purchaser, waiver of any of the
Company's rights under the Merger Agreement or any other action by the Company
concerning this Agreement or any of the transactions contemplated by the Merger
Agreement, will require the concurrence of a majority of the directors of the
Company then in office who were not designated by Parent.
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are contained in the Offer to Purchase and in the
Solicitation/Recommendation Statement on Schedule 14D-9
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of the Company (the "Schedule 14D-9") with respect to the Offer, copies of which
are being delivered to stockholders of the Company contemporaneously herewith.
Certain other documents (including the Merger Agreement) were filed with the
Securities and Exchange Commission (the "SEC") as exhibits to the Tender Offer
Statement on Schedule 14D-1 of Purchaser and Parent (the "Schedule 14D-1"). The
exhibits to the Schedule 14D-9 and the Schedule 14D-1 may be examined at, and
copies thereof may be obtained from, the regional offices of and public
reference facilities maintained by the SEC (except that the exhibits thereto
cannot be obtained from the regional offices of the SEC) in the manner set forth
in Sections 8 and 9 of the Offer to Purchase.
No action is required by the stockholders of the Company in connection with
the election or appointment of the Parent Designees to the Board. However,
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the mailing to the Company's stockholders of the information set
forth in this Information Statement prior to a change in a majority of the
Company's directors otherwise than at a meeting of the Company's stockholders.
The information contained in this Information Statement concerning the
Parent, the Purchaser and the Parent Designees has been furnished to the Company
by such persons, and the Company assumes no responsibility for the accuracy or
completeness of such information. The Schedule 14D-1 indicates that the
principal executive offices of the Purchaser and the Parent are located at 360
North Crescent Drive, Beverly Hills, California 90210-9867.
GENERAL
The Shares of Common Stock are the only class of voting securities of the
Company outstanding. Each Share is entitled to one vote. As of January 17, 1997,
there were 7,842,905 Shares outstanding. The Board currently consists of five
(5) members. Each director holds office until his successor is elected and
qualified or until his earlier death, resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; THE PARENT DESIGNEES
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares representing at least a majority of the Shares then actually
outstanding, the Company shall, upon the request of Parent, take all actions
necessary to cause a majority of the directors of the Company to consist of the
Parent Designees, including by accepting the resignations of those incumbent
directors designated by the Company or increasing the size of the Board and
causing the Parent Designees to be elected.
Parent has informed the Company that each of the Parent Designees listed
below has consented to act as a director of the Company.
It is expected that the Parent Designees may assume office at any time
following the purchase by Purchaser of such number of Shares that satisfies the
Minimum Condition, which purchase cannot be earlier than February 21, 1997, and
that, upon assuming office, the Parent Designees will thereafter constitute at
least a majority of the Board.
Biographical information concerning each of the Parent Designees and the
Company's directors and executive officers is presented below.
PARENT DESIGNEES
ALTON J. BRANN. Mr. Brann has been a director, Chairman of the Board and
Chief Executive Officer of Parent since 1994. Mr. Brann was the Chairman of the
Board of Litton Industries, Inc. from 1994 to 1995, the Chief Executive Officer
of Litton from 1992 to 1994, and President of Litton from 1990 to 1994.
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MICHAEL E. KEANE. Mr. Keane has been Senior Vice President and Chief
Financial Officer of Parent since 1996. Prior to assuming his present position,
Mr. Keane served as Vice President and Treasurer from 1994 to 1996, and as
Director of Pensions and Insurance of Litton Industries, Inc. from 1991 to 1994.
NORMAN L. ROBERTS. Mr. Roberts has been Senior Vice President and General
Counsel of Parent since 1994. Prior to assuming his present position, Mr.
Roberts served as Senior Vice President and General Counsel of Litton
Industries, Inc. from 1990 to 1994.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
N. Robert Hammer............................... 54 Mr. Hammer has been Chairman, President and Chief Executive
Officer of the Company since 1988. Mr. Hammer received a
Bachelor of Science degree from Columbia University in
1965, and a Master of Business Administration degree from
Columbia University in 1967.
Keith B. Geeslin............................... 43 Mr. Geeslin has been a director of the Company since 1988.
Mr. Geeslin is a General Partner of the Sprout Group, a
division of DLJ Capital Corporation, where he has been
employed since 1984. In addition, he is a General Partner
of the general partner of a series of investment funds
managed by the Sprout Group. In addition to the Company,
Mr. Geeslin is a director of Actel Corporation, SDL, Inc.,
and several privately-held companies. Mr. Geeslin received
a Bachelor of Science, Electrical Engineering degree from
Stanford University in 1975, a Master of Arts, Philosophy,
Politics and Economics degree from Oxford University in
1977, and a Master of Science, Engineering-Economic Systems
degree from Stanford University in 1978.
</TABLE>
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<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Charles G. Moore III........................... 53 Mr. Moore has been a director of the Company since 1988 and
Senior Director since January 1996. Since March 1994, Mr.
Moore has been president of Little Diamond Island
Enterprises, a venture capital investment firm. Mr. Moore
was Chairman and Chief Executive Officer of Digital
Communications Associates, Inc., a manufacturer of hardware
and software products for the personal computer networking
environment, from November 1993 to March 1994. From January
1982 to June 1993 Mr. Moore was a General Partner of Welsh,
Carson, Anderson & Stowe, a venture capital investment
firm. Mr. Moore serves on the board of directors of one
privately-held company. Mr. Moore received a Bachelor of
Arts, Mathematics degree from Dartmouth College in 1965 and
Master of Science and Ph.D., Computer and Communications
degrees from the University of Michigan in 1967 and 1971,
respectively. From 1972 to 1975, Mr. Moore served on the
faculty of Cornell University in the Department of Computer
Science.
Fred W. Wenninger.............................. 57 Mr. Wenninger has been a director of the Company since
1989. Since August 1995, Mr. Wenninger has served as
President and Chief Executive Officer of Keytronic Corp., a
manufacturer of computer keyboards. From May 1989 to
December 1993, Mr. Wenninger was President and from May
1989 to October 1993 he was also Chief Executive Officer of
Iomega Corporation, a computer disk drive manufacturer. Mr.
Wenninger is also a director of Keytronic Corp. and Hach
Company. Mr. Wenninger received a Bachelor of Science,
Physics degree and Master of Science and Ph.D., Engineering
degrees from Oklahoma State University in 1959, 1962 and
1964, respectively.
</TABLE>
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<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Hatim A. Tyabji................................ 51 Mr. Tyabji has been a director of the Company since March
1995. Mr. Tyabji is Chairman, President and Chief Executive
Officer of VeriFone, Inc., a global provider of transaction
automation solution for the delivery of electronic payment
services; he has been President and CEO since 1986 and
Chairman since 1992. Mr. Tyabji earned a Bachelor of
Science, Electrical Engineering degree from the College of
Engineering in Porrna, India, in 1967, a Master of Science,
Electrical Engineering degree from the State University of
New York at Buffalo in 1969, and a Master of Business
Administration from Syracuse University in 1975. Mr. Tyabji
is also a graduate of the Stanford Executive Program.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The Board of Directors does not have a Nominating
Committee. During the fiscal year ended August 31, 1996, the Board of Directors
met eight times, the Audit Committee met three times, and the Compensation
Committee met four times. During 1996, all directors attended at least 75% of
the meetings of the Board of Directors and the committees thereof on which they
served.
The duties of the Audit Committee are to review the scope of the annual
audit and interim procedures with the independent auditors; consult with the
auditors during any annual audit or interim procedures on any situation that the
auditors deem advisable for resolution prior to the completion of the audit or
procedures; meet with the auditors to appraise the effectiveness of the audit
effort; determine that no restrictions were placed by management on the scope of
the examination or its implementation; inquire into the effectiveness of the
Company's accounting and internal control functions; review with the auditors
and management any registration statement in connection with the public offering
of securities and such other financial reports as the committee or the Board of
Directors deems advisable; report to the Board of Directors on the results of
the committee's activities; and recommend to the Board of Directors any changes
in the appointment of independent auditors that the committee deems to be in the
best interest of the Company and its stockholders. The members of the Audit
Committee are Messrs. Geeslin and Moore.
The duties of the Compensation Committee are to make recommendations to the
Board of Directors concerning the salaries of the Company's officers; to
exercise the authority of the Board of Directors concerning the Company's
benefit plans, including those plans limited in application to the Company's
officers and senior management; to serve as the administration committee of the
Company's compensation plans; and to advise the Board of Directors on other
compensation and benefit matters. The members of the Compensation Committee are
Messrs. Geeslin, Moore, and Tyabji.
OWNERSHIP OF THE CAPITAL STOCK OF THE COMPANY
The following table sets forth information with respect to the number of
shares of Common Stock beneficially owned by (i) each director of the Company,
(ii) the five executive officers of the Company named in the table under
"Compensation of Directors and Executive Officers--Summary Compensation Table,"
(iii) all directors and executive officers of the Company as a group, and (iv)
based on information available to the Company and a review of statements filed
with the Commission pursuant to Section 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each person that owns
beneficially (directly or together with affiliates) more than 5% of the Common
Stock, in each case as
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of November 8, 1996 (unless otherwise noted). The Company believes that each
individual or entity named has sole investment and voting power with respect to
shares of Common Stock indicated as beneficially owned by them, except as
otherwise noted.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY PERCENTAGE
NAME OWNED(1) OWNERSHIP(1)
- ----------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
N. Robert Hammer (2)............................................................... 386,509 4.98%
Keith B. Geeslin (3)............................................................... 9,600 *
Charles G. Moore III (4)........................................................... 20,382 *
Fred W. Wenninger (5).............................................................. 7,665 *
Hatim A. Tyabji (6)................................................................ 1,700 *
Scott D. Mercer (7)................................................................ 5,139 *
Alan G. Bunte (8).................................................................. 25,842 *
John A. Niemzyk (9)................................................................ 8,048 *
Thomas O. Miller (10).............................................................. 36,880 *
All directors and executive officers as a group (11 persons) (11).................. 407,671 6.56%
Kopp Investment Advisors, Inc. (12)................................................ 2,265,014 29.55%
</TABLE>
- ------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants,
rights, or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage owned
by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person listed.
(2) Includes 225,010 shares of Common Stock issuable upon exercise of options,
Also includes 1,566 shares of Common Stock owned by members of Mr. Hammer's
immediate family that may be deemed to be beneficially owned by Mr. Hammer.
(3) Includes 3,800 shares of Common Stock issuable upon exercise of options.
(4) Includes 10,800 shares of Common Stock issuable upon exercise of options.
(5) Includes 6,065 shares of Common Stock issuable upon exercise of options.
Also includes 100 shares of Common Stock held by Mr. Wenninger's wife that
may be deemed to be beneficially owned by Mr. Wenninger.
(6) Includes 1,700 shares of Common Stock issuable upon exercise of options.
(7) Includes 5,139 shares of Common Stock issuable upon exercise of options.
(8) Includes 21,700 shares of Common Stock issuable upon exercise of options.
(9) Includes 7,470 shares of Common Stock issuable upon exercise of options.
(10) Includes 26,748 shares of Common Stock issuable upon exercise of options.
(11) Includes 218,136 shares of Common Stock issuable upon exercise of options.
(12) Kopp Investment Advisor, Inc. ("Kopp") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Common Stock.
According to the Schedule 13G and to information supplied to the Company by
Kopp, (i) Kopp has shared dispositive power with respect to 2,215,014
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shares of Common Stock it beneficially owns and sole dispositive power with
respect to 50,000 shares of Common Stock it beneficially owns and (ii) Kopp
has sole voting power with respect to 181,000 shares of Common Stock
beneficially owned. The number of shares beneficially owned by Kopp is
indicated as of October 24, 1996. The address of Kopp is 6600 France Ave.
S., #672, Edina, MN 55435.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than the percent of a registered
class of the Company's equity securities, to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors, and greater than
ten-percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the Company's 1996 fiscal year all Section 16(a)
filing requirements applicable to its officers, directors, and greater than ten-
percent beneficial owners were complied with except that Mr. John A. Niemzyk and
Mr. Scott D. Mercer each filed one report late.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term, and other
compensation for services rendered to the Company for the fiscal year ended
August 31, 1996, and the prior two fiscal years paid or awarded to those persons
who were, at August 31, 1996: (i) the Company's chief executive officer, and
(ii) the Company's four most highly compensated executive officers other than
the chief executive officer (collectively, including the Company's chief
executive officer, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------- ---------------------------
OTHER ANNUAL RESTRICTED OPTIONS/
NAME AND SALARY BONUS COMPENSATION STOCK AWARDS SARS
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#)
- -------------------------------------- --------- --------- --------- ------------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
N. Robert Hammer 1996 340,000 -- -- 0 35,100
Chief Executive Officer 1995 313,333 -- -- 0 20,000(2)
1994 300,000 143,000 -- 0 12,000
Thomas O. Miller 1996 200,000 -- -- 0 22,975
Senior Vice President 1995 160,113 17,341 -- 0 8,500(4)
1994 141,251 80,000 -- 0 8,800
Scott D. Mercer 1996 152,838 50,760 -- 0 16,760
Vice President, Norand International 1995 93,684 61,260 -- 0 4,700(6)
Corporation 1994 74,448 18,485 -- 0 500
Alan G. Bunte 1996 139,833 -- -- 0 14,285
Vice President, Strategic Planning 1995 129,833 20,000 -- 0 7,000(7)
1994 121,500 41,000 -- 0 --
John A. Niemzyk 1996 133,752 -- -- 0 25,415
Vice President, Operations and 1995 117,153 28,000 -- 0 4,400(9)
Information Technology and Chief 1994 98,208 26,000 -- 0 1,300
Information Officer
<CAPTION>
PAYOUTS
------------- ALL OTHER
NAME AND LTIP PAYOUTS COMPENSATION
PRINCIPAL POSITION ($) ($)
- -------------------------------------- ------------- -------------
<S> <C> <C>
N. Robert Hammer 0 8,269(3)
Chief Executive Officer 0 7,540(3)
0 6,924(3)
Thomas O. Miller 0 5,592(5)
Senior Vice President 0 5,588(5)
0 5,546(5)
Scott D. Mercer 0 0
Vice President, Norand International 0 0
Corporation 0 0
Alan G. Bunte 0 4,635(8)
Vice President, Strategic Planning 0 5,465(8)
0 3,657(8)
John A. Niemzyk 0 5,491(10)
Vice President, Operations and 0 4,883(10)
Information Technology and Chief 0 4,820(10)
Information Officer
</TABLE>
(1) During the fiscal years covered, no Named Executive officer received any
other annual compensation in an aggregate amount exceeding the lesser of
either $50,000 or 10% of his total annual salary and bonus reported in the
preceding two columns.
(2) Represents 20,000 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
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(3) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,750 in 1996, $4,620 in 1995, and
$4,620 in 1994, and represents the value of term life insurance provided in
excess of $50,000 of $3,519 in 1996, $2,920 in 1995, and $2,304 in 1994.
(4) Represents 8,500 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
(5) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,724 in 1996, $5,058 in 1995, and
$5,171 in 1994, and represents the value of term life insurance provided in
excess of $50,000 of $867 in 1996, $530 in 1995, and $375 in 1994.
(6) Represents 700 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25 plus an additional 4,000 options issued on
May 17, 1995, at an exercise price of $33.00.
(7) Represents 7,000 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35,00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
(8) Represents the Company's matching contribution to the Company's 401(k)
deferred compensation plan of $4,219 in 1996, $5,142 in 1995, and $3,453 in
1994, and represents the value of term life insurance provided in excess of
$50,000 of $416 in 1996, $322 in 1995, and $204 in 1994.
(9) Represents 1,400 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25 plus an additional 3,000 options issued on
June 12, 1995, at an exercise price of $36.13.
(10) Represents the Company's matching contribution to the Company's 401(k)
deferred compensation plan of $5,198 in 1996, $4,620 in 1995, and $4,620 in
1994, and represents the value of term life insurance provided in excess of
$50,000 of $293 in 1996, $263 in 1995, and $200 in 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table summarizes the grants of stock options awarded to the
Named Executive Officers during the fiscal year ended August 31, 1996, under the
Company's 1989 Stock Option Plan and the Company's Long-Term Performance
Program.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE
------------------------------------------------------------ APPRECIATION FOR
% OF TOTAL OPTION TERM(2)
OPTIONS/SARS OPTIONS/ SARS EXERCISE PRICE EXPIRATION --------------------
NAME GRANTED(#) GRANTED ($/SH)(1) DATE 5%($) 10%($)
- ---------------------------------- ------------- --------------- --------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
N. Robert Hammer.................. 35,100 6.31% 16.50 03/28/06 364,224 923,016
Thomas O. Miller.................. 7,500 1.35% 18.00 02/05/06 84,901 215,155
Thomas O. Miller.................. 15,475 2.78% 16.50 03/28/06 160,580 406,943
Alan G. Bunte..................... 5,000 0.90% 18.00 02/05/06 56,600 143,437
Alan G. Bunte..................... 9,285 1.67% 16.50 03/28/06 96,348 244,165
Scott D. Mercer................... 10,000 1.80% 18.00 02/05/06 113,201 286,874
Scott D. Mercer................... 6,760 1.22% 16.50 03/28/06 70,147 177,766
John A. Niemzyk................... 20,000 3.60% 13.25 01/24/06 166,657 422,342
John A. Niemzyk................... 5,415 0.97% 16.50 03/28/06 56,190 142,397
</TABLE>
(1) The exercise price equals the last reported sale price of the Common Stock
on the Nasdaq National Market System on the date of grant of the options.
(2) The potential realizable dollar value of a grant is the product of: (a) the
difference between (i) the product of the per share market price at the time
of the grant and the sum of 1 plus the stock appreciation rate compounded
annually over the term of the option (here, 5% and 10%), and (ii) the
per-share exercise price of the option, and (b) the number of securities
underlying the grant at fiscal year-end.
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<PAGE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information concerning options exercised by the
Named Executive Officers during the fiscal year ended August 31, 1996, and the
value at August 31, 1996, of unexercised options.
<TABLE>
<CAPTION>
VALUE ($) OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
AUGUST 31, 1996 AUGUST 31, 1996
---------------- ---------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------- ----------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
N. Robert Hammer................................... 0 0 112,629/69,971 658/12,504
Thomas O. Miller................................... 0 0 23,422/39,153 290/5,513
Alan G. Bunte...................................... 0 0 19,193/20,014 10,033/3,308
Scott D. Mercer.................................... 0 0 3,996/19,484 127/2,408
John A. Niemzyk.................................... 0 0 5,914/27,245 39,595/67,179
</TABLE>
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors, except Mr. Moore, receive an
annual fee of $12,000 (payable $3,000 per quarter) as compensation for their
services as directors, a fee of $1,000 for each board meeting attended in person
and $750 for each committee meeting attended in person. Mr. Moore serves as Lead
Director of the Board of Directors. Mr. Moore receives an annual fee of $24,000
(payable $6,000 per quarter) as compensation for his services as Lead Director,
a fee of $2,000 for each board meeting attended in person and $750 for each
committee meeting attended in person. Directors are also reimbursed for
reasonable costs associated with attendance at board and committee meetings.
Non-employee members of the Board of Directors also participate in the
Company's Stock Option Plan for Non-Employee Directors (the "Plan"), which was
adopted by the Board of Directors effective March 16, 1994 (the "Effective
Date"), and approved by the stockholders as of December 16, 1994. Pursuant to
the Plan, each individual who was a non-employee director as of the Effective
Date (Messrs. Geeslin, Moore, and Wenninger) was granted an option to purchase
6,000 shares of Common Stock as of the Effective Date, and each individual who
became a non-employee director after the Effective Date was granted an option to
purchase 5,000 shares of Common Stock as of the date of his initial appointment
as a non-employee director (in each case, the "Initial Grant"). Each
non-employee director who continues as a director is automatically granted an
option to purchase 2,000 shares of Common Stock on each anniversary of his
Initial Grant. In addition, Mr. Moore is automatically granted an additional
option to purchase 2,000 shares of Common Stock on each anniversary of his
Initial Grant. Options awarded under the Plan become exercisable with respect to
one-twentieth of the total shares as of the last day of each quarter anniversary
of the date of the award, with the exception of the options awarded in the
Initial Grant to non-employee directors who became directors after the Effective
Date, which become exercisable with respect to one-fifth of the shares on the
first anniversary date of the award and thereafter as to one-twentieth of the
total shares as of the last day of each quarter anniversary. Each such option
awarded under the Plan bears an exercise price per share of Common Stock equal
to the greater of par value or the fair market value of Common Stock on the date
the option is granted.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN CONTROL
ARRANGEMENTS
The Company's employment policy provides that upon termination, with certain
exceptions, each of the Company's vice presidents is entitled to severance pay
in the amount of six months pay plus one additional month's pay for each year of
service to the Company, not to exceed a combined total of 18
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months. In the event of a change in control, enhanced severance may be payable
in the event of termination following a change in control on account of certain
events, such as elimination of a position, adverse change in duties or
compensation, or change in job location. The enhanced severance for vice-
presidents is generally equal to two times the employee's annual salary plus
bonus, continuation of employee benefits and outplacement services. The Company
has entered into an employment agreement with each Named Executive Officer. Each
of the agreements contain provisions for payment of a base salary plus bonus, an
automobile allowance and reimbursement of certain expenses relating to
relocating to Cedar Rapids, Iowa. In addition, pursuant to his employment
agreement, Mr. Hammer was granted options for 129,156 shares of Common Stock
vesting over a 55-month period beginning April 18, 1989. Mr. Hammer is also
entitled pursuant to his employment agreement to termination payments of six
months' salary, subject to certain exceptions.
The Company and Mr. Hammer are also parties to a Change in Control Benefit
Agreement pursuant to which Mr. Hammer is entitled to certain benefits in the
event of a change in control. Mr. Hammer may be entitled to accelerate up to
100,000 options upon the occurrence of a change in control, if such acceleration
does not have an adverse effect on the pooling-of-interest method of accounting.
The agreement generally provides that if it is determined that the accelerated
vesting upon a change in control of a stock option awarded to Mr. Hammer on
September 24, 1996 would be subject to the excise tax imposed by section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (relating to excess
parachute payments), Mr. Hammer will be entitled to a tax-gross up payment in an
amount equal to the amount of the excise tax attributable to the accelerated
vesting of the option, taxes incurred by Mr. Hammer on the excise tax and any
interest or penalties incurred by Mr. Hammer with respect to such excise tax.
Pursuant to the Company's Long-Term Performance Program, Mr. Hammer was awarded
100,000 options at an exercise price of $16.00 on September 24, 1996.
On January 21, 1997, the Company and Mr. Hammer entered into a Consulting
and Separation Agreement (the "Separation Agreement"). Pursuant to the
Separation Agreement, Mr. Hammer's employment with the Company will terminate at
the Effective Time. The Separation Agreement includes an agreement by Mr. Hammer
to maintain the confidentiality of certain information and an agreement by Mr.
Hammer not to compete with the Company for a period of three years following the
Effective Time. Under the Separation Agreement, at the Effective Time Mr. Hammer
will receive a payment of $1,000,000 and all unvested Company stock options
granted to Mr. Hammer under the Company's Long-Term Incentive Program and the
Company's 1989 Stock Option Plan will beome fully vested. The Separation
Agreement also provides for the continuation of medical, life and accidental
death and dismemberment insurance coverage for Mr. Hammer and his dependents for
a period of three years following the Effective Time (which period may be
extended by mutual agreement of the parties). The Separation Agreement also
provides that for a period of one year commencing at the Effective Time, the
Company will retain Mr. Hammer as a consultant for a fee of $800,000 payable at
the Effective Time. The Separation Agreement also provides for payment to Mr.
Hammer of a tax gross-up payment equal to the amount of excise tax that may be
payable by Mr. Hammer under Section 4999 of the Code due to payments under the
Separation Agreement and other payments and benefits that may be subject to such
taxes. The gross-up payment would also include an amount for interest and
penalties relating to payment of the excise tax and such other payments.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee approves all of the policies under which
compensation is paid or awarded to the Company's executive officers.
Under the direction of the Compensation Committee, the Company has
implemented compensation practices that seek to enhance the performance of the
Company and increase its value to all stockholders. In order to provide
information on the compensation practices of the Company, the Compensation
Committee has furnished the following report on executive compensation:
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COMPENSATION PHILOSOPHY The Compensation Committee has devoted considerable
attention to developing the Company's compensation philosophy which embodies
four primary objectives:
1. to provide incentives based on value delivered to the Company's
stockholders and customers;
2. to connect individual executive pay action with performance;
3. to maintain a system of rewards that is competitive with industry
standards; and
4. to attract, motivate, and retain executives of the highest quality.
The Company's compensation programs reflect the Compensation Committee's
commitment to the mission, values, and performance of the Company. Continual
review and refinement of the Company's compensation practices in response to the
changing business environment will serve to reinforce this commitment.
The most important performance yardstick in the Company's compensation
program is the Company's ability to deliver value to stockholders through
appreciation in share price. On an ongoing basis, the Compensation Committee
will test and refine the compensation program to ensure a high correlation
between level of compensation and return to stockholders. The Compensation
Committee measures the correlation between executive compensation and return to
stockholders as a function of Company operating income levels, the performance
of operating divisions, and individual performance. Certain goals are set,
reviewed, and approved by the Chairman and CEO, and weighted. Achievement of
goals triggers executive compensation. Goals include Company operating income
threshold levels, sales levels, business and product strategy development, cycle
time, total project cost, development and implementation of global support
strategies, net contributions margin, expense reduction, and days' sales
outstanding objectives. Achieving desirable stockholder returns over a sustained
period of time requires management's attention to a number of financial and
non-financial strategic elements which enables the Company to focus on the
current and long-term requirements of the customer. The Company's compensation
program, therefore, focuses executives on actions that directly impact
stockholder return in the short-term and long-term and serve the needs of the
Company's customers. The impact of executives' actions is measured in terms of
profit growth, earnings per share, asset management, and strategic product
development and positioning.
The Compensation Committee uses multiple sources of information to evaluate
and establish appropriate compensation practices. While using multiple sources,
the Compensation Committee relies on data from benchmark companies within the
computer/peripherals industry to assess the Company's relative performance and
compensation levels. Benchmark companies were selected by matching multiple
criteria including product lines, markets served, revenue size, revenue source,
and comparable operations. Consistent with the Compensation Committee's
objectives, the Compensation Committee will position its executive compensation
targets competitively with the benchmark companies. Annual executive
compensation will be below, at or above the competitive target depending on
individual and Company performance. Company and individual performance is
measured primarily as a function of Company operating income, with thresholds
set at the beginning of each fiscal year by the Board of Directors, through the
planning and budgeting process.
The Company's executive compensation program has three components--base
salary, annual incentives, and long-term incentives. Base salary and annual
incentives are primarily designed to reward current and past performance.
Long-term incentives are primarily designed to provide strong incentives for
long-term future performance.
The Compensation Committee strongly believes that incentive compensation
should only be awarded with commensurate performance. The Compensation Committee
has approved compensation plans which include high minimum levels of performance
to ensure that incentives are paid only when truly earned.
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DESCRIPTION OF COMPENSATION PROGRAMS The following briefly describes the
role of each element of compensation:
BASE SALARY Base salary will be at levels sufficient to attract and retain
qualified executives. To accomplish these goals, the Compensation Committee has
generally targeted base salaries within a competitive range of average base
salaries for similar positions in benchmark companies within the
computer/peripheral industry. Aggregate base salary increases are intended to
parallel increases in the pay levels of the computer/peripheral industry as a
whole. Individual executive salary increases will strongly reflect the
individual's level of performance as measured against the individual and Company
goals discussed above and, to a lesser extent, trends within the industry which
reflect salary and total compensation trends in a growth industry.
ANNUAL INCENTIVE The Company's executive annual incentive plan serves to
recognize and reward executives for taking actions that build the value of the
Company, generate competitive total returns to stockholders, and provide
value-added solutions to the Company's customers. The formula for annual
incentive awards recognizes operational and financial goals of significance to
the Company. Payments are made based on a combination of corporate and
individual performance. Achieving a minimal Company operating income goal is a
pre-condition for the awarding of any incentive awards. Individual annual
incentive awards are conditioned on achieving certain pre-set objectives.
LONG-TERM INCENTIVES The Company's Long-Term Performance Program serves to
reward executive performance in successfully executing the long-term business
strategy and building stockholder value. The program allows for the awarding of
incentive stock options, non-qualified stock options, and performance restricted
stock. During fiscal year 1996, only stock options were granted to the Company's
executive officers. Participation and target awards are determined by the
Compensation Committee by benchmarking the Company's performance against other
companies within the computer/peripheral industry and against companies
providing similar products and services. Awards are based on performance and
individual responsibility. Criteria include: performance expectations versus
results, significant and strategic contributions towards performance of the
Company, and unique core competencies essential to the achievement of the
Company's business mission. Awards may exceed targets if all criteria are met.
COMPENSATION ADMINISTRATION The Compensation Committee follows an annual
cycle to administer each of the three components of executive compensation. The
integrity of the Company's compensation program relies on an annual performance
evaluation process.
DISCUSSION OF CEO COMPENSATION Consistent with the Company's compensation
philosophy, the Compensation Committee managed Mr. Hammer's total compensation
during fiscal year 1996 based on overall performance of the Company and on
relative levels of compensation for CEOs within the benchmark companies in the
computer/peripheral industry. In particular, Mr. Hammer's compensation is based
on achievement of goals relating to earnings per share, profit and revenue
growth, strategic product development and positioning, and asset management.
Mr. Hammer is eligible for an annual incentive award of 50% of his base
salary, provided that the Company achieves certain revenue and operating income
growth thresholds. In fiscal year 1996, Mr. Hammer received no annual incentive
award.
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The Compensation Committee took the following fiscal year 1996 compensation
actions for Mr. Hammer:
1. effective September 1, 1995, the Compensation Committee approved a
base salary of $340,000 per year.
2. granted on May 29, 1996, an incentive stock option to purchase
35,100 shares of Common Stock at $16.50 per share. The option will vest
1/20th each quarter through May 29, 2001.
The primary purpose of this grant was to motivate Mr. Hammer to successfully
execute the Company's long-term business strategy and to build stockholder
value.
COMPENSATION COMMITTEE,
Keith B. Geeslin
Charles G. Moore III
Hatim A. Tyabji
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PERFORMANCE GRAPH
The following line graph compares the Company's cumulative total stockholder
return on its Common Stock since February 2, 1993, the date that the Common
Stock began trading, with the cumulative total return of Standard & Poor's 500
Composite Stock Price Index and the Standard & Poor's Technology Sector Index.
These comparisons assume the investment of $100 on January 31, 1993, in each
index and on February 1, 1993, in the Company's Common Stock and reinvestment of
dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF 43 MONTH
<S> <C> <C> <C>
CUMULATIVE TOTAL RETURN*
AMONG NORAND CORPORATION,
THE S & P 500 INDEX
AND THE S & P TECHNOLOGY
SECTOR INDEX
NORAND CORPORATION S & P 500 S & P TECHNOLOGY SECTOR
02/01/1993 100 100 100
Feb-93 116 101 103
May-93 126 104 108
Aug-93 152 108 109
Nov-93 160 106 114
Feb-94 202 110 126
May-94 237 108 122
Aug-94 215 113 131
Nov-94 216 108 133
Feb-95 253 118 146
May-95 213 130 175
Aug-95 248 138 199
Nov-95 95 149 203
Feb-96 116 159 214
May-96 132 167 232
Aug-96 106 164 222
* $100 INVESTED ON 3/01/96
IN STOCK OR ON
1/01/83 IN INDEX -
INCLUDING INVESTMENT OF
DIVIDEND. FISCAL YEAR
ENDING AUGUST 31.
</TABLE>
AI-14
<PAGE>
ANNEX II
[DLJ LETTERHEAD]
January 21, 1997
Board of Directors
Norand Corporation
550 Second Street, SE
Cedar Rapids, IA 52420-2033
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Norand Corporation (the "Company") of the
consideration to be received by such stockholders pursuant to the terms of the
Agreement and Plan of Merger dated as of January 21, 1997 (the "Agreement"), by
and among the Company, Western Atlas Inc. ("Western"), and WAI Acquisition
Corp., a wholly owned subsidiary of Western ("Purchaser").
Pursuant to the Agreement, Western will commence a tender offer (the "Tender
Offer") for any and all outstanding shares of the Company's common stock, par
value $0.01 per share ("Company Common Stock"), at a price of $33.50 per share
in cash. The tender offer is to be followed by a merger (the "Merger") in which
the shares of Company Common Stock not tendered would be converted, subject to
certain exceptions, into the right to receive $33.50 per share in cash and the
Purchaser would be merged with and into the Company. The Tender Offer, together
with the Merger, are herein referred to as the "Acquisition".
In arriving at our opinion, we have reviewed the Agreement. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company including information provided during discussions
with management. Included in the information provided during discussions were
certain financial projections of the Company for the period beginning September
1, 1996 and ending August 31, 2001 prepared by the management of the Company. In
addition, we have compared certain financial and securities data of the Company
with various other companies whose securities are traded in public markets,
reviewed the historical stock prices and trading volumes of the Company Common
Stock, reviewed prices and premiums paid in certain other business combinations
and conducted such other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion. We were not requested to, nor
did we, solicit the interest of any other party in acquiring the Company.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or its
representatives, or that was otherwise reviewed by us. With respect to the
financial projections supplied to us, we have assumed that they have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of the Company as to the future operating and
financial performance of the Company. We have not assumed any responsibility for
making an independent evaluation of the Company's assets or liabilities or for
making any independent verification of any of the information reviewed by us. We
have relied as to certain legal matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not address the relative
merits of the Acquisition and any other business strategies being considered by
the Company's Board of Directors, nor does it address the Board's decision to
proceed with the Acquisition. Our opinion does not constitute a recommendation
to any holder
<PAGE>
of Company Common Stock as to whether such stockholder should tender its shares
pursuant to the Tender Offer.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. DLJ has performed
investment banking and other services for the Company in the past including an
initial public offering of common stock in 1993 and has been compensated for
such services. In addition, employees and affiliates of DLJ own in the aggregate
less than 4% of Company Common Stock. Furthermore, an employee of a DLJ
affiliate is a member of the Board of Directors of the Company.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the holders of Company
Common Stock pursuant to the Agreement is fair to such stockholders from a
financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ LAWRENCE N. LAVINE
-----------------------------------------
Lawrence N. Lavine
MANAGING DIRECTOR
<PAGE>
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 21, 1997 (the
"Agreement"), by and among NORAND CORPORATION, a Delaware corporation (the
"Company"), WAI ACQUISITION CORP., a Delaware corporation (the "Purchaser"),
and WESTERN ATLAS INC., a Delaware corporation ("Parent"). The Company and
the Purchaser are hereinafter sometimes collectively referred to as the
"Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Parent, the Purchaser and the
Company have each approved the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors
of Parent, the Purchaser and the Company have each approved the merger of the
Purchaser with and into the Company in accordance with the terms of this
Agreement and the General Corporation Law of the State of Delaware (the
"DGCL") and with any other applicable law; and
WHEREAS, the Board of Directors of the Company (the "Board") has, in
light of and subject to the terms and conditions set forth herein, (i)
determined that the consideration to be paid for each Share in the Offer and
the Merger (as hereinafter defined) is fair to the stockholders of the
Company, and the Offer and the Merger are otherwise in the best interests of
the Company and its stockholders, and (ii) resolved to approve and adopt this
Agreement and the transactions contemplated hereby and to recommend
acceptance of the Offer and approval and adoption by the stockholders of the
Company of this Agreement and the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
Section 1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with
<PAGE>
Article IX hereof and none of the events set forth in Annex I hereto shall
have occurred, as promptly as practicable (but in no event later than five
business days from the date hereof) Purchaser shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(including the rules and regulations promulgated thereunder, the "Exchange
Act")) an offer to purchase all outstanding shares of Common Stock, par value
$0.01 per share (the "Shares"), of the Company, at a price of $33.50 per
Share net to the seller in cash (the "Offer") and, subject to the conditions
of the Offer, shall use reasonable best efforts to consummate the Offer. The
obligation of the Purchaser to consummate the Offer and to accept for payment
and to pay for any Shares tendered pursuant thereto shall be subject to only
those conditions set forth in Annex I hereto, including the condition that a
number of Shares representing at least a majority of the number of Shares
outstanding on a fully diluted basis (assuming the exercise of all
outstanding Options and Warrants) be validly tendered and not withdrawn at
the expiration of the Offer (the "Minimum Condition").
(b) Without the prior written consent of the Company, the Purchaser
shall not decrease the price per Share or change the form of consideration
payable in the Offer, decrease the number of Shares sought, impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of Shares. Without the prior written consent of the
Company, the Purchaser will not waive the Minimum Condition if, as a result,
the Purchaser would acquire less than a majority of the Shares actually
outstanding. Upon the terms and subject to the conditions of the Offer, the
Purchaser will accept for payment and purchase, as soon as permitted under
the terms of the Offer, all Shares validly tendered and not withdrawn prior
to the expiration of the Offer.
(c) Each of Parent and the Purchaser, on the one hand, and the
Company, on the other hand, agrees promptly to correct any information
provided by it for use in the documents filed by Parent and the Purchaser
with the Securities and Exchange Commission (the "SEC") in connection with
the Offer (the "Offer Documents") if and to the extent that it shall have
become false or misleading in any material respect, and Parent and the
Purchaser further agree to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
stockholders of the Company, in each case as and to the extent required by
applicable federal securities laws.
(d) Parent and the Purchaser agree that, without the prior written
consent of the Company, the Purchaser shall not
-2-
<PAGE>
terminate or withdraw the Offer or extend the expiration date of the Offer
unless at the expiration date of the Offer the conditions to the Offer
described in Annex I hereto shall not have been satisfied or earlier waived;
provided that, if the number of Shares that have been validly tendered and
not withdrawn prior to the initial expiration date of the Offer represent
less than 90% of the Shares on a fully diluted basis, the Purchaser shall
have the right, in its sole discretion, to extend the Offer for up to a
maximum of 10 additional business days, notwithstanding the prior
satisfaction of such conditions, so long as the Purchaser waives all
conditions to the Offer other than the Minimum Condition and the conditions
set forth in paragraphs (a)(i) or (f) of Annex I hereto. If at the
expiration date of the Offer, the conditions to the Offer described in Annex
I hereto shall not have been satisfied or earlier waived but, in the
reasonable belief of Parent, may be satisfied prior to September 30, 1997,
the Purchaser shall extend the expiration date of the Offer for an additional
period or periods of time until the earlier of (i) the date such conditions
are satisfied or earlier waived and the Purchaser becomes obligated to accept
for payment and pay for Shares tendered pursuant to the Offer or (ii) this
Agreement is terminated in accordance with its terms; provided that this
sentence shall not be applicable in the event the conditions set forth in
paragraph (d)(ii) of Annex I hereto shall not have been satisfied or earlier
waived at the expiration date of the Offer.
Section 1.02. Company Actions. (a) The Company hereby approves of
and consents to the Offer and represents that (i) the Board, by vote of all
directors at a meeting duly called and held, has, in light of and subject to
the terms and conditions set forth herein, unanimously (x) determined that
the consideration to be paid in each of the Offer and the Merger is fair to
the stockholders of the Company and the Offer and the Merger are otherwise in
the best interests of the Company and its stockholders and (y) approved and
adopted this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, and resolved to recommend acceptance of the Offer
and approval and adoption of this Agreement and the Merger and the other
transactions contemplated hereby by the stockholders of the Company and (ii)
Donaldson, Lufkin & Jenrette Securities Corporation, the Company's financial
advisors, have rendered to the Board their opinion that the consideration to
be received by the stockholders of the Company pursuant to the Offer and the
Merger is fair to such stockholders from a financial point of view.
(b) The Company hereby agrees promptly to prepare and, after review
by the Purchaser, to file with the SEC and to
-3-
<PAGE>
mail to its stockholders, a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (together with any amendments or supplements
thereto, the "Schedule 14D-9") containing the recommendation described in
Section 1.02(a) hereof and to disseminate the Schedule 14D-9 as required by
Rule 14d-9 promulgated under the Exchange Act; provided, however, that,
subject to the provisions of Article IX, such recommendation may be
withdrawn, modified or amended only to the extent that the Board deems it
necessary to do so in the exercise of its fiduciary obligations after being
so advised by outside counsel. Each of the Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree promptly to correct any
information provided by either of them for use in the Schedule 14D-9 if and
to the extent that it shall have become false or misleading in any material
respect, and the Company further 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 the stockholders of the Company, in each case as and to the
extent required by applicable federal securities laws.
(c) In connection with the Offer, the Company will furnish the
Purchaser with such information (which subject to applicable law, shall be
held in confidence) and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with the preparation of
the Offer and communicating the Offer to the record and beneficial holders of
the Shares.
Section 1.03. Directors. (a) Subject to compliance with applicable
law, promptly upon the payment by the Purchaser for Shares purchased pursuant
to the Offer representing not less than a majority of the outstanding Shares
on a fully diluted basis, and from time to time thereafter, the Company
shall, upon request of Parent, promptly take all actions necessary to cause a
majority of the directors of the Company to consist of Parent's designees,
including by accepting the resignations of those incumbent directors
designated by the Company or increasing the size of the Board and causing
Parent's designees to be elected.
(b) The Company's obligations to appoint Parent's designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder, if applicable. The Company shall promptly take all actions
required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03 and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors
as is required under such Section and Rule in order to fulfill its
obligations under this Section 1.03. Parent
-4-
<PAGE>
will supply any information with respect to itself and its officers,
directors and affiliates required by such Section and Rule to the Company.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.03 and prior to the Effective Time (as hereinafter
defined), any amendment or termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or the Purchaser, waiver of any of the
Company's rights hereunder or any other action by the Company concerning this
Agreement or any of the transactions contemplated hereby, will require the
concurrence of a majority of the directors of the Company then in office who
were not designated by Parent.
ARTICLE II
THE MERGER
Section 2.01. The Merger. (a) In accordance with the provisions of
this Agreement and the DGCL, at the Effective Time, the Purchaser shall be
merged with and into the Company (the "Merger"), and the Company shall be the
surviving corporation (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of
the State of Delaware. At the Effective Time the separate existence of the
Purchaser shall cease.
(b) The name of the Surviving Corporation shall be "Norand
Corporation."
(c) The Merger shall have the effects on the Company and the
Purchaser as Constituent Corporations of the Merger as provided under the
DGCL.
Section 2.02. Effective Time. The Merger shall become effective at
the time of filing of, or at such later time specified in, a certificate of
merger (the "Certificate of Merger") (or, if applicable, a certificate of
ownership and merger), in the form required by and executed in accordance
with the DGCL, filed with the Secretary of State of the State of Delaware
(the "Delaware Secretary of State") in accordance with the provisions of
Section 251 of the DGCL (or in the event Section 3.04 hereof is applicable,
Section 253 of the DGCL). The date and time when the Merger shall become
effective is herein referred to as the "Effective Time."
-5-
<PAGE>
Section 2.03. Certificate of Incorporation and By-Laws of Surviving
Corporation. The Certificate of Incorporation and By-Laws of the Purchaser
shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation until thereafter amended as provided by law.
Section 2.04. Directors and Officers of Surviving Corporation. (a)
Subject to applicable law, the directors of the Purchaser immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation and shall hold office until their respective successors are duly
elected and qualified, or their earlier death, resignation or removal.
(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall
hold office until their respective successors are duly elected and qualified,
or their earlier death, resignation or removal.
Section 2.05. Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of the Constituent
Corporations acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of each of the Constituent
Corporations or otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE III
CONVERSION OF SHARES
Section 3.01. Effect on Shares and the Purchaser's Capital Stock.
(a) As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof, each Share issued and outstanding
immediately prior to the
-6-
<PAGE>
Effective Time (other than any Shares held by Parent, the Purchaser or any
subsidiary of Parent or the Purchaser, in the treasury of the Company or by
any subsidiary of the Company, which Shares, by virtue of the Merger and
without any action on the part of the holder thereof, shall be cancelled and
retired and shall cease to exist with no payment being made with respect
thereto, and other than any Dissenting Shares (as hereinafter defined)) shall
be converted into the right to receive $33.50 in cash or any higher price per
Share paid in the Offer (the "Merger Price"), payable to the holder thereof,
without interest thereon, as set forth in Section 4.02 hereof.
(b) As of the Effective Time, by virtue of the Merger and without
any action on the part of the holders thereof, each share of capital stock of
the Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and nonassessable share of
Common Stock, par value $0.01 per share, of the Surviving Corporation.
Section 3.02. Company Option Plans. (a) Prior to the consummation
of the Offer, the Company and Parent shall take all actions necessary to
provide that, at the Effective Time, each outstanding option to purchase
Shares (the "Options") granted under any of the Company's 1989 Stock Option
Plan, the Company's Long-Term Performance Program or the Company's 1994 Stock
Option Plan for Non-Employee Directors (collectively, the "Option Plans")
shall, by virtue of the Merger and without any further action on the part of
the Company or the holder of such Option, be assumed by Parent in such manner
that Parent (a) is a corporation (or a parent or a subsidiary corporation of
such corporation) "assuming a stock option in a transaction to which Section
424(a) applied" within the meaning of Section 424 of the Internal Revenue
Code of 1986, as amended (the "Code"); or (b) to the extent that Section 424
of the Code does not apply to any such Options, would be such a corporation
(or a parent or a subsidiary corporation of such corporation) were Section
424 applicable to such Option. At the Effective Time, (i) all references in
the Option Plans to the Company shall be deemed to refer to Parent and (ii)
Parent shall issue to each holder of an Option a document evidencing the
assumption of such option by Parent in accordance herewith. Each Option
assumed by Parent (as assumed, the "Parent Options") shall be exercisable
upon the same terms and conditions including, without limitation, vesting, as
under the applicable Option Plan and the applicable option agreement issued
thereunder, except that (x) each such Option shall be exercisable for the
number of shares of Common Stock, par value $1.00 per share, of Parent
("Parent Common Stock") (rounded to the nearest whole share) obtained by
multiplying the number of Shares
-7-
<PAGE>
subject to such Option immediately prior to the Effective Time by $33.50 and
dividing the result by the average of the closing prices for the Parent
Common Stock reported on the New York Stock Exchange Consolidated Tape for
the 10 consecutive trading days immediately prior to the Effective Time; and
(y) the option price per share of Parent Common Stock shall be an amount
equal to the aggregate exercise price of such Option prior to adjustment
divided by the number of shares of Parent Common Stock subject to such Option
after adjustment (the option price per share, as so determined, being rounded
upward to the nearest full cent). The date of grant of each Parent Option
shall be the date on which the corresponding Option was granted. No payment
shall be made for fractional interests. Parent shall take all corporate
actions necessary to reserve for issuance such number of shares of Parent
Common Stock as will be necessary to satisfy exercises in full of all Options
after the Effective Time.
(b) Except as provided herein or as otherwise agreed to by the
parties and to the extent permitted by the Option Plans, (i) the Option Plans
shall terminate as of the Effective Time and the provisions in any other
plan, program or arrangement, providing for the issuance or grant of any
interest in respect of the capital stock of the Company or any of its
subsidiaries shall be deleted as of the Effective Time and (ii) the Company
shall use all reasonable efforts to ensure that following the Effective Time
no holder of Options or any participant in the Option Plans or any other
plans, programs or arrangements shall have any right thereunder to acquire
any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
Section 3.03. Stockholders' Meeting. (a) If required by applicable
law in order to consummate the Merger, the Company, acting through the Board,
shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Special Meeting") as soon as practicable
following the purchase of and payment for Shares by the Purchaser
pursuant to the Offer for the purpose of considering and adopting this
Agreement and such other matters as may be necessary to consummate the
transactions contemplated herein;
(ii) prepare and file with the SEC a preliminary proxy statement
relating to the matters to be considered at the Special Meeting pursuant
to this Agreement and use its reasonable best efforts (x) to obtain and
furnish the information required to be included by the SEC in the
-8-
<PAGE>
Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect
to the preliminary proxy statement and to cause a definitive proxy
statement (the "Proxy Statement") to be mailed to its stockholders and
(y) to obtain the necessary approvals of the Merger, this Agreement and
such other matters as may be necessary to consummate the transactions
contemplated hereby by its stockholders; and
(iii) subject to the fiduciary obligations of the Board under
applicable law as advised by outside counsel, include in the Proxy
Statement the recommendation of the Board that stockholders of the
Company vote in favor of the approval of the Merger, the adoption of this
Agreement and such other matters as may be necessary to consummate the
transactions contemplated hereby.
(b) Parent agrees that it will vote, or cause to be voted, all of
the Shares then owned by it, the Purchaser or any of its other subsidiaries
in favor of the approval and adoption of this Agreement and such other
matters as may be necessary to consummate the transactions contemplated
hereby.
Section 3.04. Merger Without Meeting of Stockholders.
Notwithstanding Section 3.03 hereof, in the event that Parent, the Purchaser
or any other subsidiary of Parent shall acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto
agree, at the request of Parent or the Purchaser, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer without a meeting of stockholders of the
Company in accordance with Section 253 of the DGCL.
Section 3.05. Consummation of the Merger. As soon as practicable
after the satisfaction or waiver of the conditions set forth in Article VIII
hereof, the Surviving Corporation shall execute in the manner required by the
DGCL and file with the Delaware Secretary of State the Certificate of Merger
(or, in the event Section 3.04 hereof is applicable, the Purchaser shall
execute in the manner required by the DGCL and file with the Delaware
Secretary of State a certificate of ownership and merger), and the parties
shall take such other and further actions as may be required by law to make
the Merger effective as promptly as is practicable.
-9-
<PAGE>
ARTICLE IV
DISSENTING SHARES; PAYMENT FOR SHARES
Section 4.01. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has demanded appraisal for such
Shares in accordance with Section 262 of the DGCL, if such Section 262
provides for appraisal rights for such Shares in the Merger ("Dissenting
Shares"), shall not be converted into the right to receive the Merger Price,
as provided in Section 3.01 hereof, unless and until such holder fails to
perfect or withdraws or otherwise loses his right to appraisal and payment
under the DGCL. If, after the Effective Time, any such holder fails to
perfect or withdraws or loses his right to appraisal, such Dissenting Shares
shall thereupon be treated as if they had been converted as of the Effective
Time into the right to receive the Merger Price to which such holder is
entitled, without interest or dividends thereon. The Company shall give
Parent prompt notice of any demands received by the Company for appraisal of
Shares and Parent 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 Parent, make any payment with respect to, or
settle or offer to settle, any such demands.
Section 4.02. Payment for Shares. (a) From and after the Effective
Time, a bank or trust company to be designated by Parent shall act as paying
agent (the "Paying Agent") in effecting the payment of the Merger Price for
certificates (the "Certificates") formerly representing Shares and entitled
to payment of the Merger Price pursuant to Section 3.01 hereof. At the
Effective Time, Parent or the Purchaser shall pursuant to irrevocable
instructions deposit, or cause to be deposited, in trust with the Paying
Agent the aggregate Merger Price to which holders of Shares shall be entitled
at the Effective Time pursuant to Section 3.01 hereof.
(b) The Merger Price shall be invested by the Paying Agent as
directed by Parent, provided such investments shall be limited to direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for
the payment of principal and interest, commercial paper rated of the highest
quality by Moody's Investors Service, Inc. or Standard & Poor's Corporation
or certificates of deposit issued by a commercial bank having at least
$10,000,000,000 in assets.
-10-
<PAGE>
(c) As soon as practicable after the Effective Time, the Paying
Agent shall mail to each record holder of Certificates that immediately prior
to the Effective Time represented Shares (other than Certificates
representing Shares held by Parent or the Purchaser, any subsidiary of Parent
or the Purchaser, in the treasury of the Company or by any subsidiary of the
Company) a form of letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Paying Agent and
instructions for use in surrendering such Certificates and receiving the
Merger Price therefor. Upon the surrender of each such Certificate, the
Paying Agent shall pay the holder of such Certificate the Merger Price
multiplied by the number of Shares, as appropriate, formerly represented by
such Certificate, in consideration therefor, and such Certificate shall
forthwith be cancelled. Until so surrendered, each such Certificate (other
than Certificates representing Dissenting Shares and Certificates
representing Shares held by Parent or the Purchaser, any subsidiary of Parent
or the Purchaser, in the treasury of the Company or by any subsidiary of the
Company) shall represent solely the right to receive the aggregate Merger
Price relating thereto. No interest shall be paid or accrued on the Merger
Price.
(d) Promptly following the date which is one year after the
Effective Time, the Paying Agent shall deliver to Parent all cash,
Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing a
Share (other than Certificates representing Dissenting Shares and
Certificates representing Shares held by Parent or the Purchaser, any
subsidiary of Parent or the Purchaser, in the treasury of the Company or by
any subsidiary of the Company) may surrender such Certificate to Parent and
(subject to applicable abandoned property, escheat and similar laws) receive
in consideration therefor the aggregate Merger Price relating thereto,
without any interest or dividends thereon.
(e) The Merger Price shall be net to each holder of Certificates in
cash, subject to reduction only for any applicable federal back-up
withholding or stock transfer taxes payable by such holder.
(f) If payment of cash in respect of any Certificate is to be made
to a person other than the person in whose name such Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form
for transfer and that the person requesting such payment shall have paid any
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transfer and other taxes required by reason of such payment in a name other
than that of the registered holder of the Certificate surrendered or shall
have established to the satisfaction of Parent or the Paying Agent that such
tax either has been paid or is not payable.
(g) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of any Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares (other than Certificates
representing Shares held by Parent or the Purchaser, any subsidiary of Parent
or the Purchaser, in the treasury of the Company or by any subsidiary of the
Company) are presented to the Surviving Corporation or the Paying Agent, they
shall be surrendered and cancelled in return for the payment of the aggregate
Merger Price relating thereto, without interest, as provided in this Article
IV, subject to applicable law in the case of Dissenting Shares.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows:
Section 5.01. Organization. The Company and each of its Significant
Subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of their respective
jurisdictions of incorporation and the Company and each of its Significant
Subsidiaries has all requisite corporate power and authority to own, lease
and operate their respective properties and to carry on their respective
businesses as now being conducted. The Company and each of its subsidiaries
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the aggregate,
have a material adverse effect on the business, operations, assets, financial
condition or results of operations of the Company and its subsidiaries taken
as a whole (a "Company Material Adverse Effect"). The Company owns directly
all of the outstanding capital stock of each of its Significant Subsidiaries.
As used in this Agreement a
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"Significant Subsidiary" means a corporation which is a "significant
subsidiary" within the meaning of Rule 1-02(v) of Regulation S-X.
Section 5.02. Capitalization. The authorized capital stock of the
Company consists of 15,000,000 Shares and 15,000,000 shares of preferred
stock, par value $0.01 per share ("Company Preferred Stock"). As of January
17, 1997, there were 7,842,905 Shares and no shares of Company Preferred
Stock issued and outstanding, and there are no Shares or shares of Company
Preferred Stock held in the Company's treasury. As of the date hereof, there
were outstanding options to purchase 1,252,347 Shares under the Option Plans
at a weighted average exercise price of $20.409163. As of the date hereof, a
total of 250,000 Shares are subject to issuance upon exercise of Series A
Warrants at an exercise price of $21.15 per Share and a total of 300,000
Shares are subject to issuance upon exercise of Series B Warrants at an
exercise price of $21.15 per Share and a total of 27,079 Shares are subject
to issuance upon the exercise of warrants granted to two consultants to the
Company at a weighted average exercise price of $17.394006 per Share
(collectively, with the Series A Warrants and Series B Warrants, the
"Warrants"). Except for Options under the Option Plans and Warrants, there
were not as of the date hereof, and at all times thereafter through the
Effective Time there will not be, any existing options, warrants, calls,
subscriptions, or other rights or other agreements or commitments obligating
the Company or any of its subsidiaries to issue, transfer or sell any shares
of capital stock of the Company or any of its subsidiaries or any other
securities convertible into or evidencing the right to subscribe for any such
shares. All issued and outstanding Shares are duly authorized and validly
issued, fully paid, non-assessable and free of preemptive rights with respect
thereto. Schedule 5.02 lists each outstanding Option or Warrant, its
exercise price, expiration date and vesting or exercisability schedule.
Section 5.03. Authority. The Company has full corporate power and
authority to execute and deliver this Agreement and, subject to the approval
of its stockholders, if required, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized
and approved by the Board, and other than the approval by its stockholders,
if required, no other corporate proceedings are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes a legal, valid and binding agreement
of the other parties hereto, it
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constitutes a legal, valid and binding agreement of the Company, enforceable
against it in accordance with its terms.
Section 5.04. No Violations; Consents and Approvals. (a) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by the Company with any of
the provisions hereof will (i) violate any provision of its certificate of
incorporation or by-laws, (ii) except as set forth in Schedule 5.04(a)(ii),
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default, or give rise to any right of
termination, cancellation or acceleration or any right which becomes
effective upon the occurrence of a merger, consolidation or change in control
or ownership, under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture or other instrument of indebtedness for money
borrowed to which the Company or any of its subsidiaries is a party, or by
which the Company or any of its subsidiaries or any of their respective
properties is bound, or (iii) except as set forth in Schedule 5.04(a)(iii),
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default, or give rise to any right of
termination, cancellation or acceleration or any right (including any right
to receive any payment) which becomes effective upon the occurrence of a
merger, consolidation or change in control or ownership, under, any of the
terms, conditions or provisions of any license, franchise, permit or
agreement to which the Company or any of its subsidiaries is a party, or by
which the Company or any of its subsidiaries or any of their respective
properties is bound, or (iv) violate any statute, rule, regulation, order or
decree of any public body or authority by which the Company or any of its
subsidiaries or any of their respective properties is bound, excluding from
the foregoing clauses (iii) and (iv) violations, breaches, defaults or rights
under the laws of any jurisdiction outside the United States or which, either
individually or in the aggregate, would not have a Company Material Adverse
Effect or materially impair the Company's ability to consummate the
transactions contemplated hereby or for which the Company has received or,
prior to the consummation of the Offer, shall have received appropriate
consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required in
connection with the execution and delivery of this Agreement by the Company,
or the consummation by the Company of the transactions contemplated hereby,
except (i) expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) in
connection, or in compliance, with the provisions of
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the Exchange Act, (iii) the filing of the Certificate of Merger with the
Delaware Secretary of State, (iv) such filings and consents as may be
required under any environmental law pertaining to any notification,
disclosure or required approval triggered by the Merger or the transactions
contemplated by this Agreement, (v) filing with, and approval of, the
National Association of Securities Dealers, Inc. and the SEC with respect to
the delisting and deregistration of the Shares, (vi) such consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky
laws of various states, (vii) compliance with any applicable requirements of
any laws or regulations relating to the regulation of monopolies or
competition in Germany and (viii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings not
obtained prior to the consummation of the Offer the failure of which to be
obtained or made would not, individually or in the aggregate, have a Company
Material Adverse Effect, or materially impair the Company's ability to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby.
Section 5.05. SEC Documents; Financial Statements. (a) The Company
has made available to Parent and the Purchaser copies of each registration
statement, report, proxy statement, information statement or schedule filed
with the SEC by the Company since January 1, 1994 (the "SEC Documents"). As
of their respective dates, as amended or supplemented by subsequent SEC
Documents prior to the date hereof, the Company's SEC Documents complied in
all material respects with the applicable requirements of the Securities Act
of 1933, as amended, and the Exchange Act, as the case may be, none of such
SEC Documents, as amended or supplemented by subsequent SEC Documents prior
to the date hereof, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) Neither the Company nor any of its subsidiaries, nor any of
their respective assets, businesses, or operations, is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits under
any contract or agreement or amendment thereto, that in each case would be
required to be filed as an exhibit to a Form 10-K as of the date of this
Agreement that has not been filed as an exhibit to an SEC Document filed
prior to the date of this Agreement.
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(c) As of their respective dates, the consolidated financial
statements included in the Company's SEC Documents, as amended or
supplemented by subsequent SEC Documents prior to the date hereof, complied
as to form in all material respects with then applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly presented the
Company's consolidated financial position and that of its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and statements of cash flows for the periods then ended (subject,
in the case of unaudited statements, to the lack of footnotes thereto, to
normal year-end audit adjustments and to any other adjustments described
therein).
Section 5.06. Absence of Certain Changes; No Undisclosed
Liabilities. (a) Since November 30, 1996, except as disclosed in the SEC
Documents prior to the date hereof, the Company has not (i) incurred any
liability, whether or not accrued, contingent or otherwise, or suffered any
event or occurrence which, individually or in the aggregate, could reasonably
be expected to have a Company Material Adverse Effect, (ii) made any changes
in accounting methods, principles or practices, (iii) declared, set aside or
paid any dividend or other distribution with respect to its capital stock,
(iv) issued, or agreed to issue, any capital stock except pursuant to
outstanding Options or Warrants or (v) materially revalued any of its assets,
including but not limited to materially writing down its inventory or
accounts receivable. Since November 30, 1996 to the date of this Agreement,
each of the Company and its subsidiaries has conducted its operations
according to its ordinary course of business consistent with past practice,
subject to the transactions contemplated by this Agreement.
(b) Except as and to the extent disclosed by the Company in the SEC
Documents, as of November 30, 1996, neither the Company nor any of its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance
sheet of the Company and its subsidiaries (including the notes thereto) or
which could reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(c) Since August 31, 1996, except as disclosed on Schedule 5.06(c),
the Company has not made any changes to any
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employee benefit plan or program or any agreement or arrangement providing
compensation or benefits to any of its officers or directors.
Section 5.07. Litigation. Except as disclosed by the Company in the
SEC documents, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company
or any of its subsidiaries or any of their respective properties or assets
before any court or governmental entity which, individually or in the
aggregate, could reasonably be expected to have a Company Material Adverse
Effect or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated by this Agreement. Except as disclosed by
the Company in the SEC Documents, neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which, insofar as can be reasonably foreseen, individually or in the
aggregate, in the future could reasonably be expected to have a Company
Material Adverse Effect or could reasonably be expected to prevent or delay
the consummation of the transactions contemplated hereby.
Section 5.08. Compliance with Applicable Law. (a) Except as
disclosed by the Company in the SEC Documents, the Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental entities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except for failures to
hold such permits, licenses, variances, exemptions, orders and approvals
which could not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. Except as disclosed by the Company
in the SEC Documents, the Company and its subsidiaries are in compliance with
the terms of the Company Permits, except where the failure so to comply would
not have a Company Material Adverse Effect. Except as disclosed by the
Company in the SEC Documents, the businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity except for violations or possible
violations which individually or in the aggregate do not, and, insofar as
reasonably can be foreseen, in the future could not, have a Company Material
Adverse Effect. Except as disclosed by the Company in the SEC Documents, no
investigation or review by any governmental entity with respect to the
Company or any of its subsidiaries is pending or, to the best knowledge of
the Company, threatened nor, to the best knowledge of the Company, has any
governmental entity indicated an intention to conduct the same, other than,
in each case, those which the Company reasonably believes could not have a
Company Material Adverse Effect.
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(b) To the best knowledge of the Company, except as set forth on
Schedule 5.08(b), all proceedings or investigations concerning the practices
of the Company's Italian subsidiary have been concluded, and all penalties,
fines or other payments required to be made by the Company or any of its
subsidiaries in connection therewith have been reflected in the Company's
financial statements included in the SEC Documents or otherwise disclosed in
the SEC Documents. To the Company's knowledge, no employee of the Company or
any of its subsidiaries is the subject of any continuing proceeding or
investigation by any domestic or foreign governmental entity relating to
these matters.
Section 5.09. Taxes. Each of the Company and its subsidiaries has
filed, or caused to be filed, all federal, state, local and foreign income
and other material tax returns required to be filed by it, has paid or
withheld, or caused to be paid or withheld, all taxes of any nature
whatsoever, with any related penalties, interest and liabilities (any of the
foregoing being referred to herein as a "Tax"), that are shown on such tax
returns as due and payable, or otherwise required to be paid, other than such
Taxes as are being contested in good faith and for which adequate reserves
have been established and other than such Taxes for which adequate reserves
have been established and reflected in the November 30, 1996 financial
statements and in the books and records of the Company, and other than where
the failure to so file, pay or withhold would not have a Company Material
Adverse Effect. Adequate reserves have been established in the November 30,
1996 financial statements and in the books and records of the Company for
deferred Taxes applicable to all differences between book and taxable income.
There are no material claims or assessments pending against the Company or
its subsidiaries for any alleged deficiency in any Tax, and the Company does
not know of any threatened Tax claims or assessments against the Company or
any of its subsidiaries which if upheld could have a Company Material Adverse
Effect. Neither the Company nor any of its subsidiaries has made an election
to be treated as a "consenting corporation" under Section 341(f) of the Code.
There is no material deferred inter-company gain within the meaning of the
Treasury Regulations promulgated under Section 1502 of the Code. Except as
set forth on Schedule 5.09, there are no waivers or extensions of any
applicable statutes of limitations to assess any United States federal state
or local Taxes. All returns filed with respect to Taxes are true and correct
in all material respects. Except as set forth on Schedule 5.09, there are no
outstanding requests for any extension of time within which to file any
return or within which to pay any United States federal, state or local Taxes
shown to be due on any return. To the best knowledge of the Company's
Director
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of Corporate Taxes, there are no (i) outstanding requests for any extension
of time within which to file any return or within which to pay any foreign
Taxes shown to be due on any return or (ii) waivers or extensions of any
applicable statutes of limitations to assess any foreign Taxes.
Section 5.10. Certain Employee Plans. Each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), maintained by the Company or any of its
subsidiaries or under which they have any liability, contingent or otherwise
(the "Plans"), complies in all material respects with all applicable
requirements of ERISA (to the extent required to so comply) and the Code and
other applicable laws, and no "reportable event" (as such term is defined in
ERISA) or termination has occurred with respect to any Plan under
circumstances which present a risk of liability to any governmental entity or
other person which could reasonably be expected to have a Company Material
Adverse Effect. None of the Plans is a multiemployer plan, as such term is
defined in ERISA, and none of the Plans is subject to Title IV of ERISA.
Neither the Company and its subsidiaries, nor any of their respective
directors, officers, employees or agents has, with respect to any Plan,
engaged in any "prohibited transaction", as such term is defined in Section
4975 of the Code or Section 406 of ERISA, nor has any Plan engaged in any
such prohibited transaction which could result in any taxes or penalties or
prohibited transactions under Section 4975 of the Code or under Section
502(i) of ERISA, which in the aggregate could have a Company Material Adverse
Effect. Except as set forth on Schedule 5.10, no Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of the Company or its
subsidiaries or any Company ERISA Affiliate beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law,
(B) death benefits or retirement benefits under any "employee pension plan"
(as such term is defined in Section 3(2) of ERISA), (C) deferred compensation
benefits accrued as liabilities on the books of the Company, its subsidiaries
or the Company ERISA Affiliates or (D) benefits the full cost of which is
borne by the current or former employee (or his beneficiary). Copies of all
of the Company's Plans covering United States employees of the Company and
any related trusts and summary plan descriptions have been made available to
the Purchaser. Except as specifically contemplated by this Agreement or as
set forth on Schedule 5.10, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in, cause the accelerated vesting or delivery of, or increase the
amount or
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value of, any payment or benefit to any employee or former employee of the
Company or any of its subsidiaries. "Company ERISA Affiliate" means any trade
or business which would together with the Company be deemed a "single
employer" within the meaning of Section 4001 of ERISA.
Section 5.11. Patents, Trade Names, Trademarks, Service Marks,
Copyrights and Chip Registrations. (a) Set forth on Schedule 5.11(a) is a
list and description of all material patents, patent applications, trade
names, trademark registrations and trademark applications, service mark
registrations and service mark applications, copyright registrations and
copyright registration applications, both domestic and foreign, which are
owned by the Company or any of its subsidiaries. The assets described on
Schedule 5.11(a), all patent disclosures, common law trademarks and service
marks, certification marks and their registrations and applications, chip
registrations and their applications, and all "Software" (as defined in
Section 5.14(a)), trade secrets, know-how, industrial property, technology or
other proprietary rights which are owned or used by the Company or any of its
subsidiaries are referred to as the "Intellectual Property." Except as
otherwise indicated on Schedule 5.11(a), the Company and its subsidiaries own
all right, title and interest in and to the Intellectual Property validly and
beneficially, free and clear of all material liens or encumbrances of title,
with the sole and exclusive right to use the same, subject to those licenses
listed on Schedule 5.11(b). None of the Intellectual Property is the subject
of any material claim or challenge asserted by any third party, except as
specifically identified on Schedule 5.11(a).
(b) Set forth on Schedule 5.11(b) is a list and description of (i)
all material licenses, assignments and other transfers of Intellectual
Property granted to others by the Company or any of its subsidiaries, and
(ii) all material licenses, assignments and other transfers of material
patents, trade names, trademarks, service marks, copyrights, chip
registrations, Software, trade secrets, know-how, technology or other
proprietary rights granted to the Company or any of its subsidiaries by
others. Except as set forth in Schedule 5.04(a)(iii), none of the licenses
described above is subject to termination or cancellation or material change
in its terms or provisions as a result of this Agreement or the transactions
provided for in this Agreement.
(c) To the knowledge of Company without making inquiry of any third
party, no person or entity is infringing, or has misappropriated, in any
material respect, any Intellectual Property.
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(d) The Company has paid all material maintenance, renewal or
similar fees required by the applicable governmental agencies to maintain the
Intellectual Property.
Section 5.12. Patent, Trade Name, Trademark, Service Mark,
Copyright or Chip Registration Indemnification and Infringement. Except as
set forth on Schedule 5.12, neither the Company nor any of its subsidiaries
has given or granted any significant indemnification for, and there are no
pending written or, to the best knowledge of the Company, oral claims or
demands against the Company for, patent, trade name, trademark, service mark,
copyright, chip registration or Software infringement. To the knowledge of
the Company, the present conduct of the business of the Company and its
subsidiaries does not infringe in any material respect, any material patents,
trade names, trademarks, service marks, copyrights, chip registrations or
other proprietary rights of others.
Section 5.13. Confidential Information or Trade Secrets. Except as
set forth on Schedule 5.13, there are no material claims or demands of any
person pertaining to, or any material proceedings which are pending or, to
the Company's knowledge, threatened, which challenge the rights of the
Company or any of its subsidiaries in respect of any material proprietary or
confidential information or trade secrets used in the conduct of its
business, and, to the Company's knowledge without making inquiry of any third
party, no methods, processes, procedures, apparatus or equipment used by the
Company or any of its subsidiaries use or include any material proprietary or
confidential information or trade secrets misappropriated from any person or
entity. To the Company's knowledge without making inquiry of any third
party, neither the Company nor any of its subsidiaries has any material
proprietary or confidential information or trade secrets owned or claimed by
third parties not rightfully in its possession, and the Company and its
subsidiaries have complied in all material respects with all material
agreements, understandings and licenses governing the use of such proprietary
or confidential information or trade secrets.
Section 5.14. Software. (a) For purposes of this Agreement,
"Software" shall mean any material computer program or any part of such
computer program, whether in source code, object code or in any other form,
whether recorded on tape or on any other media, and all material
modifications, enhancements or corrections made to such program, and all
material documentation relating to such program, including any flow charts,
designs, instructions, job control procedures and manuals relating to such
program in printed or machine readable
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form. All Software that is included in the Intellectual Property or under
development for use by the Company and its subsidiaries is referred to as the
"Company Software". To the knowledge of the Company, the Company Software is
not subject to any material defect in programming and operation.
(b) The Company is not aware of any material breach by any third
parties of any material confidentiality agreement in favor of the Company or
any of its subsidiaries relating to such Software. Except as disclosed in
the licenses listed on Schedule 5.11(b) or as otherwise disclosed on Schedule
5.11(a), neither the Company nor any of its subsidiaries has conveyed or
granted to any third parties any other material rights to Company Software,
nor is it obligated to grant or convey any material rights to license,
market, incorporate in other Software, sell or otherwise use any such
Software, and to the knowledge of the Company without making inquiry of any
third party, no third party has unauthorized access to the documentation,
source code or similar material for such Software.
Section 5.15. Information. None of the Schedule 14D-9, the Proxy
Statement, if any, or any other document filed or to be filed by or on behalf
of the Company with the SEC or any other governmental entity in connection
with the transactions contemplated by this Agreement contained when filed or
will, at the respective times filed with the SEC or other governmental entity
and, in addition, in the case of the Proxy Statement, if any, at the date it
or any amendment or supplement is mailed to stockholders and at the time of
any Special Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances
under which they were made, not misleading; provided that the foregoing shall
not apply to information supplied by Parent or the Purchaser specifically for
inclusion or incorporation by reference in any such document. The Schedule
14D-9 and the Proxy Statement, if any, will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and
regulations thereunder. None of the information supplied by the Company
specifically for inclusion or incorporation by reference in the Offer
Documents or in any other document filed or to be filed by or on behalf of
Parent or the Purchaser with the SEC or any other governmental entity in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
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Section 5.16. Delaware Section 203. The Board has taken all
appropriate and necessary action such that the provisions of Section 203 of
the DGCL will not apply to any of the transactions contemplated by this
Agreement.
Section 5.17. Broker's Fees; Transaction Expenses. (a) Except for
Donaldson, Lufkin & Jenrette Securities Corporation, neither the Company nor
any of its subsidiaries or any of its directors or officers has incurred any
liability for any broker's fees, commissions, or financial advisory or
finder's fees in connection with any of the transactions contemplated by this
Agreement, and neither the Company nor any of its subsidiaries or any of its
directors or officers has employed any other broker, finder or financial
advisor in connection with any of the transactions contemplated by this
Agreement.
(b) Schedule 5.17(b) lists all financial advisory, legal,
accounting, consulting and similar fees for services that will be payable by
the Company in connection with the negotiation and execution of this
Agreement and the consummation of the Offer and the Merger.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND
THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
Section 6.01. Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and each of Parent and the Purchaser has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Purchaser is an indirect
wholly owned subsidiary of Parent.
Section 6.02. Authority. Each of Parent and the Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized and approved by the Board of
Directors of each of Parent and the Purchaser and by Parent (or another
wholly owned subsidiary of Parent) as the sole stockholder of the Purchaser
and no other corporate proceedings are necessary to authorize this Agreement
or the consummation of the transactions contemplated hereby. This Agreement
has
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been duly and validly executed and delivered by each of Parent and the
Purchaser and, assuming this Agreement constitutes a legal, valid and binding
agreement of the Company, it constitutes a legal, valid and binding agreement
of each of Parent and the Purchaser, enforceable against them in accordance
with its terms.
Section 6.03. No Violations; Consents and Approvals. (a) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by Parent or the Purchaser
with any of the provisions hereof will (i) violate any provision of their
respective certificates of incorporation or by-laws, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective upon the
occurrence of a merger, under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture or other instrument of indebtedness for
money borrowed to which Parent or the Purchaser is a party, or by which
Parent or the Purchaser or any of their respective properties is bound, (iii)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default, or give rise to any right of
termination, cancellation or acceleration or any right which becomes
effective upon the occurrence of a merger, under, any of the terms,
conditions or provisions of any license, franchise, permit or agreement to
which Parent or the Purchaser is a party, or by which Parent or the Purchaser
or any of their respective properties is bound, or (iv) violate any statute,
rule, regulation, order or decree of any public body or authority by which
Parent or the Purchaser or any of its respective properties is bound,
excluding from the foregoing clauses (ii), (iii) and (iv) violations,
breaches, defaults or rights which, either individually or in the aggregate,
would not have a material adverse effect on Parent's or the Purchaser's
ability to perform their respective obligations pursuant to this Agreement or
consummate the Offer and the Merger (a "Parent Material Adverse Effect") or
for which Parent or the Purchaser has received appropriate consents or
waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
Parent or the Purchaser in connection with the execution and delivery of this
Agreement, or the consummation by Parent or the Purchaser of the transactions
contemplated hereby, except (i) expiration of the waiting period under the
HSR Act, (ii) in connection, or in compliance, with the provisions of the
Exchange Act, (iii) the filing of the Certificate of Merger with the Delaware
Secretary of State, (iv)
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such filings and consents as may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered by
the Merger or the transactions contemplated by this Agreement, (v) such
consents, approvals, orders, authorizations, notifications, approvals,
registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states
[or non-U.S. change-in-control laws or regulations] and (vi) such other
consents, orders, authorizations, registrations, declarations and filings not
obtained prior to the Effective Time the failure of which to be obtained or
made would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
Section 6.04. Information. Neither the Offer Documents nor any
other document filed or to be filed by or on behalf of Parent or the
Purchaser with the SEC or any other governmental entity in connection with
the transactions contemplated by this Agreement contained when filed or will,
at the respective times filed with the SEC or other governmental entity,
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 light of the circumstances under which they were
made, not misleading; provided that the foregoing shall not apply to
information supplied by the Company specifically for inclusion or
incorporation by reference in any such document. None of the information
supplied by Parent or the Purchaser specifically for inclusion or
incorporation by reference in the Schedule 14D-9, the Proxy Statement, if
any, or any other document filed or to be filed by or on behalf of the
Company with the SEC or any other governmental entity in connection with the
transactions contemplated by this Agreement contains any untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
Section 6.05. Financing. Parent currently has in effect and will
have at the time of acceptance for payment and purchase of Shares under the
Offer and at the Effective Time, lines of credit and sufficient unused
borrowing capacity thereunder to provide the funds necessary to consummate
the Offer and the Merger and the transactions contemplated thereby and to pay
related fees and expenses.
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ARTICLE VII
COVENANTS
Section 7.01. Conduct of Business of the Company. Except as
contemplated by this Agreement or as expressly agreed to in writing by
Parent, during the period from the date of this Agreement to the Effective
Time, each of the Company and its subsidiaries will conduct its operations
according to its ordinary course of business consistent with past practice,
and will use all commercially reasonable efforts to preserve intact its
business organization, to keep available the services of its employees and to
maintain satisfactory relationships with suppliers, distributors, customers
and others having business relationships with it and will take no action
which would materially adversely affect the ability of the parties to
consummate the transactions contemplated by this Agreement or be inconsistent
with such transactions. Without limiting the generality of the foregoing
restriction, neither the Company nor any of its subsidiaries shall, without
the written consent of Parent (which consent will not be unreasonably
withheld) (i) amend any employee benefit plans or change the compensation or
benefits due to any employee (other than normal merit increases in accordance
with past practice), (ii) hire any officer at the vice president level or
higher, (iii) enter into any license of intellectual property, whether as
licensee or licensor, (iv) incur indebtedness for borrowed money in any
amount over $1,000,000, (v) enter into any lease having a term in excess of
one year, (vi) incur any capital expenditure in excess of $100,000, (vii)
sell or otherwise dispose of any capital assets for consideration in excess
of $100,000 or any real property, (viii) permit the creation of any lien on
any of its, except in the ordinary course of business or in connection with
its contemplated refinancing or (ix) enter into any sales contract or
purchase order or related group of contracts or orders calling for aggregate
payments in excess of $500,000 or having a term in excess of one year.
Section 7.02. Acquisitions and Divestitures. Prior to the Effective
Time, the Company shall keep Parent advised of the status of all discussions
and negotiations concerning possible acquisitions and divestitures of any
corporations or businesses, and the Company agrees that without the prior
written consent of Parent it shall not make, or agree to make, any such
acquisition or divestiture.
Section 7.03. No Solicitation. (a) The Company agrees that, prior
to the Effective Time, it shall not, and shall not authorize or permit any of
its subsidiaries or any of its or its subsidiaries' directors, officers,
employees, agents
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or representatives (including financial advisors), directly or indirectly, to
solicit, initiate, facilitate or encourage (including by way of furnishing or
disclosing non-public information) any inquiries or the making of any
proposal with respect to any merger, consolidation or other business
combination involving the Company or its subsidiaries or acquisition of any
kind of all or substantially all of the assets or capital stock of the
Company and its subsidiaries taken as a whole (an "Acquisition Transaction")
or negotiate or explore with any person (other than Parent or the Purchaser)
any Acquisition Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; provided
that the Company may, in response to an unsolicited written proposal with
respect to an Acquisition Transaction from a third party that the Board
believes to be capable of obtaining financing for such proposal, (i) furnish
or disclose non-public information to such third party and (ii) negotiate,
explore or otherwise communicate with such third party, in each case only if
the Board determines in good faith by a majority vote, after consultation
with its legal and financial advisors, and after receipt of the advice of
outside legal counsel of the Company that failing to take such action would
constitute a breach of the fiduciary duties of the Board, that failing to
take such action would constitute a breach of the Board's fiduciary duties.
(b) The Company shall as promptly as practicable advise Parent in
writing of the receipt of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 7.03(a).
Section 7.04. Access to Information. From the date of this
Agreement until the Effective Time, the Company will give Parent and its
authorized representatives (including counsel, environmental and other
consultants, accountants and auditors) full access during normal business
hours, subject to applicable law, to all facilities, personnel and operations
and to all books and records of the Company and its subsidiaries, will permit
Parent to make such inspections as it may reasonably require and will cause
its employees and those of its subsidiaries to furnish Parent with such
financial and operating data and other information with respect to its
business and properties as Parent may from time to time reasonably request.
The Company shall use its best efforts to make available to Parent and its
authorized representatives the Company's accountants to facilitate Parent's
investigation. Other than as required by applicable law, Parent agrees that
any information
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furnished to it, its subsidiaries or its authorized representatives pursuant
to this Section 7.04 will be subject to the confidentiality provisions of the
letter agreement dated February 16, 1996 between Parent and the Company.
Section 7.05. Best Efforts; Other Actions. Subject to the terms and
conditions herein provided and applicable law, each of the Company, Parent
and the Purchaser shall use its reasonable best efforts promptly to take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or appropriate under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, (i) the obtaining of all necessary
consents, approvals or waivers under its material contracts and (ii) the
lifting of any legal bar to the Merger; provided, however, that the foregoing
shall not require Parent, the Purchaser or any other affiliate of Parent to
agree to any action or restriction which, if imposed by a governmental
entity, would constitute a condition described in paragraph (a) of Annex I to
this Agreement.
Section 7.06. Public Announcements. Before issuing any press
release or otherwise making any public statements with respect to this
Agreement, the Offer or the Merger, Parent, the Purchaser and the Company
will consult with each other as to its form and substance and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law; provided, however, that
neither Parent nor the Company shall be required to consult with the other
concerning any portion of such a press release or public statement that
relates to matters other than the transactions contemplated by this Agreement.
Section 7.07. Notification of Certain Matters. Each of the Company
and Parent shall give prompt notice to the other party of (i) the occurrence,
or non-occurrence, of any event the occurrence, or non-occurrence, of which
would be likely to cause either (A) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at any
time from the date hereof to the acceptance for payment of Shares pursuant to
the Offer, (B) any condition set forth in Annex I to be unsatisfied in any
material respect at any time from the date hereof to the date the Purchaser
purchases Shares pursuant to the Offer or (C) any condition set forth in
Article VIII hereof to be unsatisfied in any material respect at any time
from the date hereof to the Effective Time, and (ii) any material failure of
the Company or Parent, as the
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case may be, or any officer, director, employee or agent thereof, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.07 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 7.08. Indemnification. (a) From and after the Effective
Time, Parent shall indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company and its subsidiaries
against all losses, claims, damages, expenses or liabilities arising out of
actions or omissions or alleged actions or omissions occurring at or prior to
the Effective Time, including without limitation the transactions
contemplated by this Agreement, to the same extent and on the same terms and
conditions (including with respect to advancement of expenses) provided for
in the Company's Certificate of Incorporation and By-Laws and agreements in
effect at the date hereof (to the extent consistent with applicable law).
(b) For a period of five years after the Effective Time, Parent
shall cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Parent
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect
to claims arising from facts or events which occurred before the Effective
Time; provided, however, that Parent shall not be obligated to make annual
premium payments for such insurance to the extent such premiums exceed 150%
of the premiums paid as of the date hereof by the Company for such insurance
(the "Maximum Premium"). If the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Premium.
(c) The provisions of this Section 7.08 are intended to be for the
benefit of, and shall be enforceable by each indemnified party hereunder, his
or her heirs and his or her representatives.
Section 7.09. Expenses. Except as set forth in Section 9.05(b)
hereof, Parent and the Company shall bear their respective expenses incurred
in connection with this Agreement, the Offer and the Merger, including,
without limitation, the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, and all fees and expenses
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of investment bankers, finders, brokers, agents, representatives, counsel and
accountants.
Section 7.10. State Takeover Laws. The Company shall, upon the
request of Parent or the Purchaser, take all reasonable steps to assist in
any challenge by Parent or the Purchaser to the validity or applicability to
the transactions contemplated by this Agreement, including the Offer and the
Merger, of any state takeover law.
Section 7.11. Employee Benefits. Following the Effective Time,
Purchaser shall cause the Company to honor in accordance with their terms the
employment contracts set forth on Schedule 7.11, as in effect on the date
hereof. Until the first anniversary of the Effective Time, Parent shall
provide or cause the Company to provide to individuals who are employed by
the Company or any of its subsidiaries as of the Effective Time employee
benefits that are in the aggregate no less favorable than those generally
provided to employees of the Company on the date hereof, other than the
Company's Employee Stock Purchase Plan. Parent will make its employee stock
purchase plan available to employees of the Company as promptly as
practicable following the Effective Time.
Section 7.12. Warrants. Prior to the Effective Time, the Company
shall use its reasonable best efforts to cause the Consulting Agreement
between the Company and Donald W. Rowley ("Rowley") dated February 12, 1996,
as amended (the "Rowley Agreement"), and the Consulting Agreement between the
Company and Jay Alix ("Alix") dated January 16, 1996, as amended (the "Alix
Agreement"), to be amended to provide that each of the Warrants to purchase
Shares granted to Rowley pursuant to the Rowley Agreement and each of the
Warrants to purchase Shares granted to Alix pursuant to the Alix Agreement
shall, at the Effective Time, be cancelled and each of Rowley and Alix,
respectively, shall be entitled to receive from the Company in lieu thereof
an immediate cash payment from the Company equal to the Merger Price
multiplied by the number of Shares for which their respective Warrants are
exercisable, minus the aggregate exercise price of such Warrants.
Section 7.13. Credit Commitment. Parent shall use its reasonable
best efforts to assist the Company in obtaining from The Bank of New York
Financial Corporation ("BONYFC") a written commitment to the Company
extending through at least May 31, 1997 to lend up to $75 million to the
Company on commercially reasonable terms that are no less favorable to the
Company than the terms of the latest written proposal made by BONYFC to the
Company as of the date hereof; provided, however, that the foregoing shall
not obligate Parent to incur any fees
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or expenses payable to BONYFC or to guarantee, directly or indirectly, any
obligations or indebtedness of the Company. If, notwithstanding the
foregoing, BONYFC does not extend such written commitment to the Company on
or before March 15, 1997, then, at the Company's option, Parent shall
purchase from the Company, and the Company shall sell to Parent, shares of a
newly created series of preferred stock of the Company having the terms set
forth in Annex II hereto for an aggregate purchase price of $25,000,000
payable to the Company by wire transfer in immediately available funds with
the closing of such purchase and sale to take place no later than March 31,
1997.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF PARENT,
THE PURCHASER AND THE COMPANY
The respective obligations of each party to effect the Merger shall
be subject to the satisfaction or, if permissible, waiver at or prior to the
Effective Time of each of the following conditions:
Section 8.01. Purchase of Shares. The Purchaser shall have accepted
for payment and paid for Shares pursuant to the Offer in accordance with the
terms thereof.
Section 8.02. Stockholder Approval. The vote of the stockholders of
the Company necessary to consummate the transactions contemplated by this
Agreement shall have been obtained, if required by applicable law.
Section 8.03. No Legal Impediments. No statute, rule, regulation,
judgment, writ, decree, order or injunction shall have been promulgated,
enacted, entered, enforced or deemed applicable to this Agreement or the
Merger, and no other action shall have been taken, by any domestic, foreign
or supranational government or governmental, administrative or regulatory
authority or agency or by any court or tribunal, domestic, foreign or
supranational, that has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger.
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ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent of the Boards of Directors of Parent and the
Company;
(b) by either Parent or the Company if, without fault of such
terminating party, the purchase of Shares pursuant to the Offer shall not
have occurred on or before September 30, 1997, which date may be extended
by mutual written consent of the parties hereto;
(c) by Parent or the Company if the Offer expires or is terminated
or withdrawn pursuant to its terms without any Shares being purchased
thereunder; or
(d) by either Parent or the Company if any court of competent
jurisdiction in the United States or other governmental body in the
United States shall have issued an order (other than a temporary
restraining order), decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the purchase of Shares
pursuant to the Offer or the Merger, and such order, decree, ruling or
other action shall have become final and nonappealable; provided that the
party seeking to terminate this Agreement shall have used its reasonable
best efforts, subject to Section 7.05, to remove or lift such order,
decree or ruling.
Section 9.02. Termination by Parent. This Agreement may be
terminated and the Offer and the Merger may be abandoned by action of the
Board of Directors of Parent, at any time prior to the purchase of Shares
pursuant to the Offer, if (a) the Board shall withdraw, modify or change its
recommendation or approval in respect of this Agreement or the Offer in a
manner adverse to Parent, (b) the Board shall have recommended any proposal
other than by Parent or the Purchaser in respect of an Acquisition
Transaction, or (c) a proposal for an Acquisition Transaction other than by
Parent or the Purchaser shall be publicly disclosed and at the scheduled
expiration of the Offer the Minimum Condition shall not have been satisfied.
Section 9.03. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned by action of the Board, at any
time prior to the Effective Time, (a) if there shall be a material breach of
any of Parent's or
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the Purchaser's representations, warranties or covenants hereunder, which
breach shall not be cured within ten days of notice thereof, or (b) provided
the Company is not in breach of any obligation under this Agreement, to allow
the Company to enter into an agreement in respect of an Acquisition
Transaction which the Board determines is more favorable to the Company's
stockholders from a financial point of view than the transactions
contemplated hereby (provided that such termination shall not be effective
unless and until the Company shall have paid to Parent the fee described in
Section 9.05(b) hereof).
Section 9.04. Procedure for Termination. In the event of
termination and abandonment of the Merger and the Offer by Parent or the
Merger by the Company pursuant to this Article IX, written notice thereof
shall forthwith be given to the other.
Section 9.05. Effect of Termination and Abandonment. (a) In the
event of termination of this Agreement and abandonment of the Merger pursuant
to this Article IX, no party hereto (or any of its directors or officers)
shall have any liability or further obligation to any other party to this
Agreement, except as provided in this Section 9.05 and except that nothing
herein shall relieve any party from liability for any breach of this
Agreement.
(b) If (i) Parent shall have terminated this Agreement pursuant to
clause (a) or (b) of Section 9.02 hereof or (ii) the Company shall have
terminated this Agreement pursuant to Section 9.03(b) hereof, then in any
such case the Company shall promptly, but in no event later than two days
after the date of such termination or event, pay Parent in the manner set
forth in the last sentence of this paragraph a termination fee of $9,000,000.
If Parent shall have terminated this Agreement pursuant to clause (c) of
Section 9.02 hereof and, within one year after such termination, the Company
shall have entered into a definitive agreement providing for an Acquisition
Transaction, the Company shall promptly, but in no event later than two days
after the date of such definitive agreement, pay Parent in the manner set
forth in the last sentence of this paragraph a termination fee of $9,000,000.
Any termination fee payable under this paragraph shall be paid by the
issuance to Parent of shares of preferred stock of the Company having the
terms set forth in Annex III.
(c) Upon termination of this Agreement, Parent will return to the
Company all copies in Parent's possession of all non-public information
supplied to Parent by the Company.
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ARTICLE X
DEFINITIONS
Section 10.01. Terms Defined in the Agreement. The following terms
used herein shall have the meanings ascribed in the indicated sections.
Acquisition Transaction ......................................... 7.03(a)
Agreement........................................................ Preamble
Alix............................................................. 7.12
Alix Agreement .................................................. 7.12
Board ........................................................... Recitals
BONYFC........................................................... 7.13
Certificate of Merger ........................................... 2.02
Certificates .................................................... 4.02(a)
Code............................................................. 3.02(a)
Company ......................................................... Preamble
Company ERISA Affiliate.......................................... 5.10
Company Material Adverse Effect ................................. 5.01
Company Permits ................................................. 5.08
Company Preferred Stock.......................................... 5.02
Company Software................................................. 5.14(a)
Constituent Corporations......................................... Preamble
Delaware Secretary of State ..................................... 2.02
DGCL ............................................................ Recitals
Dissenting Shares ............................................... 4.01
Effective Time .................................................. 2.02
ERISA ........................................................... 5.10
Exchange Act..................................................... 1.01(a)
Intellectual Property ........................................... 5.11(a)
Maximum Premium ................................................. 7.08(b)
HSR Act ......................................................... 5.04(b)
Merger .......................................................... 2.01(a)
Merger Price .................................................... 3.01
Minimum Condition ............................................... 1.01(a)
Offer ........................................................... 1.01(a)
Offer Documents ................................................. 1.01(c)
Option Plans .................................................... 3.02(a)
Options ......................................................... 3.02(a)
Parent .......................................................... Preamble
Parent Common Stock ............................................. 3.02(a)
Parent Material Adverse Effect .................................. 6.03(a)
Parent Options .................................................. 3.02(a)
Paying Agent .................................................... 4.02(a)
Person .......................................................... 11.09
Plans ........................................................... 5.10
Proxy Statement ................................................. 3.03(a)(ii)
Purchaser ....................................................... Preamble
Rowley .......................................................... 7.12
Rowley Agreement ................................................ 7.12
Schedule 14D-9 .................................................. 1.02(b)
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SEC ............................................................. 1.01(c)
SEC Documents ................................................... 5.05(a)
Shares .......................................................... 1.01(a)
Significant Subsidiary .......................................... 5.01
Software ........................................................ 5.14(a)
Special Meeting ................................................. 3.03(a)(i)
Subsidiary ...................................................... 11.09
Surviving Corporation ........................................... 2.01(a)
Tax ............................................................. 5.09
Warrants ........................................................ 5.02
ARTICLE XI
MISCELLANEOUS
Section 11.01. Amendment and Modification. At any time prior to the
Effective Time, subject to applicable law and the provisions of Section
1.03(c) hereof, this Agreement may be amended, modified or supplemented only
by written agreement (referring specifically to this Agreement) of Parent,
the Purchaser and the Company with respect to any of the terms contained
herein; provided, however, that after any approval and adoption of this
Agreement by the stockholders of the Company, no such amendment, modification
or supplementation shall be made which reduces the Merger Price or the form
of consideration therefor or which in any way materially adversely affects
the rights of such stockholders, without the further approval of such
stockholders.
Section 11.02. Waiver. At any time prior to the Effective Time,
Parent and the Purchaser, on the one hand, and the Company, on the other
hand, may (i) extend the time for the performance of any of the obligations
or other acts of the other, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any
documents delivered pursuant hereto and (iii) waive compliance by the other
with any of the agreements or conditions contained herein which may legally
be waived. Any such extension or waiver shall be valid only if set forth in
an instrument in writing specifically referring to this Agreement and signed
on behalf of such party.
Section 11.03. Survivability; Investigations. The respective
representations and warranties of Parent, the Purchaser and the Company
contained herein or in any certificates or other documents delivered prior to
or as of the Effective Time shall not be deemed waived or otherwise affected
by any investigation made by any party hereto and shall not survive the
Merger. The covenants and agreements of the Surviving Corporation and Parent
and the Purchaser, including those contained in Section 7.08 hereof, shall
survive the Effective Time without limitation.
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Section 11.04. Notices. All notices and other communications
hereunder shall be in writing and shall be delivered personally or by
next-day courier or telecopied with confirmation of receipt, to the parties
at the addresses specified below (or at such other address for a party as
shall be specified by like notice; provided that notices of a change of
address shall be effective only upon receipt thereof). Any such notice shall
be effective upon receipt, if personally delivered or telecopied, or one day
after delivery to a courier for next-day delivery.
(a) if to the Company, to
Norand Corporation
550 Second Street S.E.
Cedar Rapids, Iowa 52401
Telecopy: (319) 369-3630
Attention: James I. Johnson
with a copy to:
Mayer Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Telecopy: (312) 701-7711
Attention: John R. Sagan
(b) if to Parent or the Purchaser, to
Western Atlas Inc.
360 North Crescent Drive
Beverly Hills, California 90210
Telecopy: (310) 888-2913
Attention: General Counsel
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2000
Attention: Elliott V. Stein, Esq.
Section 11.05. Assignment; Third-Party Beneficiaries. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations
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hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties. This Agreement is not intended to
confer any rights or remedies hereunder upon any other person except the
parties hereto and, with respect to Section 7.08, the present and former
officers, directors, employees and agents of the Company.
Section 11.06. Governing Law. This Agreement shall be governed by
the laws of the State of Delaware (regardless of the laws that might
otherwise govern under applicable Delaware principles of conflicts of law) as
to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
Section 11.07. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 11.08. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect against a party hereto, the validity, legality
and enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby and such invalidity, illegality or
unenforceability shall only apply as to such party in the specific
jurisdiction where such judgment shall be made.
Section 11.09. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement. As used in this Agreement, (i)
the term "person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof; and (ii) the term
"subsidiary" of any specified corporation shall mean any corporation of which
a majority of the outstanding securities having ordinary voting power to
elect a majority of the board of directors are directly or indirectly owned
by such specified corporation or any other person of which a majority of the
equity interests therein are, directly or indirectly, owned by such specified
corporation.
Section 11.10. Guarantee. Parent hereby guarantees the due
performance by the Purchaser of all of the Purchaser's obligations incurred
in connection with the Offer and the Merger.
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Section 11.11. Confidentiality Agreement. The letter agreement
dated February 16, 1996 between Parent and the Company is hereby amended by
deleting the eighth paragraph thereof.
Section 11.12. Entire Agreement. This Agreement, including the
schedules, annexes and exhibits hereto and the documents and instruments
referred to herein and therein, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein and supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
There are no representations, promises, warranties, covenants, or
undertakings in respect of such subject matter, other than those expressly
set forth or referred to herein and therein.
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective duly authorized
officers as of the date first above written.
WESTERN ATLAS INC.
By: /s/ Michael E. Keane
---------------------
Name: Michael E. Keane
Title: Senior Vice President
and Chief Financial
Officer
WAI ACQUISITION CORP.
By: /s/ Michael E. Keane
---------------------
Name: Michael E. Keane
Title: President
NORAND CORPORATION
By: /s/ N. Robert Hammer
---------------------
Name: N. Robert Hammer
Title: Chairman, President and
Chief Executive Officer
-38-
<PAGE>
ANNEX I
Conditions to the Offer. Notwithstanding any other provision of the
Offer, the Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for, and may delay the acceptance for payment of any tendered
Shares and amend or terminate the Offer as to any Shares not then paid for if
(i) there shall not be validly tendered and not withdrawn prior to the
expiration of the Offer a number of Shares which represents at least a
majority of the number of Shares outstanding on a fully diluted basis
(assuming the exercise of all outstanding Options and Warrants) or (ii) any
applicable waiting period under the HSR Act or other applicable laws or
regulations shall not have expired or been terminated prior to the expiration
of the Offer or (iii) at any time after the date of this Merger Agreement and
before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the
Offer), any of the following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission or a statute, rule,
regulation, executive order or other action shall have been promulgated,
enacted, taken or threatened by a governmental authority or a governmental,
regulatory or administrative agency or commission which in any such case (i)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, (ii) prohibits or restricts the ownership or
operation by Parent or the Purchaser (or any of their respective affiliates
or subsidiaries) of any portion of its or the Company's business or assets
which is material to the business of all such entities taken as a whole, or
compels Parent or the Purchaser (or any of their respective affiliates or
subsidiaries) to dispose of or hold separate any portion of its or the
Company's business or assets which is material to the business of all such
entities taken as a whole, (iii) imposes material limitations on the ability
of the Purchaser effectively to acquire or to hold or to exercise full rights
of ownership of the Shares, including, without limitation, the right to vote
the Shares purchased by the Purchaser on all matters properly presented to
the stockholders of the Company, (iv) imposes any material limitations on the
ability of Parent or the Purchaser or any of their respective affiliates or
subsidiaries effectively to control in any material respect the business and
operations of the Company
<PAGE>
and its subsidiaries, or (v) which otherwise would materially adversely
affect the Company and its subsidiaries taken as a whole; or
(b) there shall be pending any litigation or other proceeding
brought by any governmental entity or agency that seeks to impose any of the
effects referred to in paragraph (a) above or seeks material damages from the
Company or Parent in connection with the Offer or the Merger; or
(c) this Agreement shall have been terminated by the Company, Parent
or the Purchaser in accordance with its terms; or
(d)(i) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct, or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, when made,
or as of the Expiration Date (as defined in the Offer Documents) as if made
as of such date, or (ii) as of the Expiration Date the Company shall not in
all material respects have performed its obligations and agreements and
complied with its covenants to be performed and complied with by it under
this Agreement; or
(e) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or the over-the-counter market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) the commencement of a war, armed
hostilities or other international or national calamity directly involving
the United States, (iv) from the date of this Merger Agreement through the
date of termination or expiration of the Offer, a decline of at least 25% in
the Standard & Poor's 500 Index, or (v) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(f) Parent, the Purchaser and the Company shall have agreed that the
Purchaser shall amend the Offer to terminate the Offer or postpone the
payment for Shares pursuant thereto.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances (including any action or inaction by Parent or the Purchaser)
giving rise to any such conditions and may be waived by Parent or the
Purchaser in whole or in part at any time and from time to time, in each
-2-
<PAGE>
case, in the good faith judgment of Parent and the Purchaser and subject to
the terms of this Agreement. The failure by Parent or the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
-3-
<PAGE>
ANNEX II
Term Sheet for Series A
Convertible Preferred Stock
Issuer: Norand Corporation (the "Company")
Liquidation
Preference: $25,000,000
Conversion: After the first anniversary of issue date, convertible
at the option of holder into common stock of the
Company at the rate of 1 share of common stock for each
$23.00 of liquidation preference, subject to
antidilution provisions substantially identical to
those in the Company's Series A and Series B Warrants.
Dividend: 6-1/2% per annum of liquidation preference amount
payable at the option of the Company in shares of
Series A Convertible Preferred Stock or cash.
Mandatory Redemption: Upon request of holder on earlier to occur of (i)
consummation of a transaction resulting in a change in
control of the Company and (ii) tenth anniversary of
date of issue.
Optional Redemption: At the option of the Company (i) during first year of
issuance at 110% of liquidation preference and (ii)
after first year from issuance at 100% of liquidation
preference as long as the Company's common stock has
traded in excess of $25.30 for any 10 consecutive
trading days.
Default: If the Company defaults on its mandatory redemption
obligation, the dividend rate will increase by 25 basis
points, and will thereafter increase by an additional
25 basis points for each 91-day period the default
continues, up to a maximum dividend rate of
<PAGE>
10-1/2%. During continuance of the default, the
holder will be entitled to appoint one member of the
Company's board of directors.
-2-
<PAGE>
ANNEX III
Term Sheet for Series B
Convertible Preferred Stock
Issuer: Norand Corporation (the "Company")
Liquidation
Preference: $9,000,000
Conversion: After the expiration of six months from issue date,
convertible at the option of holder into common stock
of the Company at the rate of 1 share of common stock
for each $23.00 of liquidation preference, subject to
antidilution provisions substantially identical to
those in the Company's Series A and Series B Warrants.
Dividend: 6% per annum of liquidation preference amount payable
semi-annually and at the option of the Company in
shares of Series B Convertible Preferred Stock or cash.
Mandatory Redemption: Upon request of holder on earlier to occur of (i)
consummation of a transaction resulting in a change in
control of the Company and (ii) third anniversary of
date of issue.
Optional Redemption: At the option of the Company (i) during first year of
issuance at 110% of liquidation preference and (ii)
after first year from issuance at 100% of liquidation
preference so long as Target's common stock has traded
in excess of $25.30 for any 10 consecutive trading
days.
Default: If the Company defaults on its mandatory redemption
obligation, the dividend rate will increase by 25 basis
points, and will thereafter increase by an additional
25 basis points for each 91-day period the default
contin-
<PAGE>
ues, up to a maximum dividend rate of 10%. During
continuance of the default, the holder will be
entitled to appoint one member of the Company's board
of directors.
-2-
<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
N. Robert Hammer............................... 54 Mr. Hammer has been Chairman, President and Chief Executive
Officer of the Company since 1988. Mr. Hammer received a
Bachelor of Science degree from Columbia University in
1965, and a Master of Business Administration degree from
Columbia University in 1967.
Keith B. Geeslin............................... 43 Mr. Geeslin has been a director of the Company since 1988.
Mr. Geeslin is a General Partner of the Sprout Group, a
division of DLJ Capital Corporation, where he has been
employed since 1984. In addition, he is a General Partner
of the general partner of a series of investment funds
managed by the Sprout Group. In addition to the Company,
Mr. Geeslin is a director of Actel Corporation, SDL, Inc.,
and several privately-held companies. Mr. Geeslin received
a Bachelor of Science, Electrical Engineering degree from
Stanford University in 1975, a Master of Arts, Philosophy,
Politics and Economics degree from Oxford University in
1977, and a Master of Science, Engineering-Economic Systems
degree from Stanford University in 1978.
Charles G. Moore III........................... 53 Mr. Moore has been a director of the Company since 1988 and
Senior Director since January 1996. Since March 1994, Mr.
Moore has been president of Little Diamond Island
Enterprises, a venture capital investment firm. Mr. Moore
was Chairman and Chief Executive Officer of Digital
Communications Associates, Inc., a manufacturer of hardware
and software products for the personal computer networking
environment, from November 1993 to March 1994. From January
1982 to June 1993 Mr. Moore was a General Partner of Welsh,
Carson, Anderson & Stowe, a venture capital investment
firm. Mr. Moore serves on the board of directors of one
privately-held company. Mr. Moore received a Bachelor of
Arts, Mathematics degree from Dartmouth College in 1965 and
Master of Science and Ph.D., Computer and Communications
degrees from the University of Michigan in 1967 and 1971,
respectively. From 1972 to 1975, Mr. Moore served on the
faculty of Cornell University in the Department of Computer
Science.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Fred W. Wenninger.............................. 57 Mr. Wenninger has been a director of the Company since
1989. Since August 1995, Mr. Wenninger has served as
President and Chief Executive Officer of Keytronic Corp., a
manufacturer of computer keyboards. From May 1989 to
December 1993, Mr. Wenninger was President and from May
1989 to October 1993 he was also Chief Executive Officer of
Iomega Corporation, a computer disk drive manufacturer. Mr.
Wenninger is also a director of Keytronic Corp. and Hach
Company. Mr. Wenninger received a Bachelor of Science,
Physics degree and Master of Science and Ph.D., Engineering
degrees from Oklahoma State University in 1959, 1962 and
1964, respectively.
Hatim A. Tyabji................................ 51 Mr. Tyabji has been a director of the Company since March
1995. Mr. Tyabji is Chairman, President and Chief Executive
Officer of VeriFone, Inc., a global provider of transaction
automation solution for the delivery of electronic payment
services; he has been President and CEO since 1986 and
Chairman since 1992. Mr. Tyabji earned a Bachelor of
Science, Electrical Engineering degree from the College of
Engineering in Porrna, India, in 1967, a Master of Science,
Electrical Engineering degree from the State University of
New York at Buffalo in 1969, and a Master of Business
Administration from Syracuse University in 1975. Mr. Tyabji
is also a graduate of the Stanford Executive Program.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The Board of Directors does not have a Nominating
Committee. During the fiscal year ended August 31, 1996, the Board of Directors
met eight times, the Audit Committee met three times, and the Compensation
Committee met four times. During 1996, all directors attended at least 75% of
the meetings of the Board of Directors and the committees thereof on which they
served.
The duties of the Audit Committee are to review the scope of the annual
audit and interim procedures with the independent auditors; consult with the
auditors during any annual audit or interim procedures on any situation that the
auditors deem advisable for resolution prior to the completion of the audit or
procedures; meet with the auditors to appraise the effectiveness of the audit
effort; determine that no restrictions were placed by management on the scope of
the examination or its implementation; inquire into the effectiveness of the
Company's accounting and internal control functions; review with the auditors
and management any registration statement in connection with the public offering
of securities and such other financial reports as the committee or the Board of
Directors deems advisable; report to the Board of Directors on the results of
the committee's activities; and recommend to the Board of Directors any changes
in the appointment of independent auditors that the committee deems to be in the
best interest of the Company and its stockholders. The members of the Audit
Committee are Messrs. Geeslin and Moore.
The duties of the Compensation Committee are to make recommendations to the
Board of Directors concerning the salaries of the Company's officers; to
exercise the authority of the Board of Directors concerning the Company's
benefit plans, including those plans limited in application to the Company's
officers and senior management; to serve as the administration committee of the
Company's compensation
<PAGE>
plans; and to advise the Board of Directors on other compensation and benefit
matters. The members of the Compensation Committee are Messrs. Geeslin, Moore,
and Tyabji.
OWNERSHIP OF THE CAPITAL STOCK OF THE COMPANY
The following table sets forth information with respect to the number of
shares of Common Stock beneficially owned by (i) each director of the Company,
(ii) the five executive officers of the Company named in the table under
"Compensation of Directors and Executive Officers--Summary Compensation Table,"
(iii) all directors and executive officers of the Company as a group, and (iv)
based on information available to the Company and a review of statements filed
with the Commission pursuant to Section 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each person that owns
beneficially (directly or together with affiliates) more than 5% of the Common
Stock, in each case as of November 8, 1996 (unless otherwise noted). The Company
believes that each individual or entity named has sole investment and voting
power with respect to shares of Common Stock indicated as beneficially owned by
them, except as otherwise noted.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY PERCENTAGE
NAME OWNED(1) OWNERSHIP(1)
- ----------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
N. Robert Hammer (2)............................................................... 386,509 4.98%
Keith B. Geeslin (3)............................................................... 9,600 *
Charles G. Moore III (4)........................................................... 20,382 *
Fred W. Wenninger (5).............................................................. 7,665 *
Hatim A. Tyabji (6)................................................................ 1,700 *
Scott D. Mercer (7)................................................................ 5,139 *
Alan G. Bunte (8).................................................................. 25,842 *
John A. Niemzyk (9)................................................................ 8,048 *
Thomas O. Miller (10).............................................................. 36,880 *
All directors and executive officers as a group (11 persons) (11).................. 407,671 6.56%
Kopp Investment Advisors, Inc. (12)................................................ 2,265,014 29.55%
</TABLE>
- ------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants,
rights, or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage owned
by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person listed.
(2) Includes 225,010 shares of Common Stock issuable upon exercise of options,
Also includes 1,566 shares of Common Stock owned by members of Mr. Hammer's
immediate family that may be deemed to be beneficially owned by Mr. Hammer.
(3) Includes 3,800 shares of Common Stock issuable upon exercise of options.
(4) Includes 10,800 shares of Common Stock issuable upon exercise of options.
(5) Includes 6,065 shares of Common Stock issuable upon exercise of options.
Also includes 100 shares of Common Stock held by Mr. Wenninger's wife that
may be deemed to be beneficially owned by Mr. Wenninger.
(6) Includes 1,700 shares of Common Stock issuable upon exercise of options.
(7) Includes 5,139 shares of Common Stock issuable upon exercise of options.
(8) Includes 21,700 shares of Common Stock issuable upon exercise of options.
<PAGE>
(9) Includes 7,470 shares of Common Stock issuable upon exercise of options.
(10) Includes 26,748 shares of Common Stock issuable upon exercise of options.
(11) Includes 218,136 shares of Common Stock issuable upon exercise of options.
(12) Kopp Investment Advisor, Inc. ("Kopp") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Common Stock.
According to the Schedule 13G and to information supplied to the Company by
Kopp, (i) Kopp has shared dispositive power with respect to 2,215,014 shares
of Common Stock it beneficially owns and sole dispositive power with respect
to 50,000 shares of Common Stock it beneficially owns and (ii) Kopp has sole
voting power with respect to 181,000 shares of Common Stock beneficially
owned. The number of shares beneficially owned by Kopp is indicated as of
October 24, 1996. The address of Kopp is 6600 France Ave. S., #672, Edina,
MN 55435.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than the percent of a registered
class of the Company's equity securities, to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors, and greater than
ten-percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the Company's 1996 fiscal year all Section 16(a)
filing requirements applicable to its officers, directors, and greater than ten-
percent beneficial owners were complied with except that Mr. John A. Niemzyk and
Mr. Scott D. Mercer each filed one report late.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term, and other
compensation for services rendered to the Company for the fiscal year ended
August 31, 1996, and the prior two fiscal years paid or awarded to those persons
who were, at August 31, 1996: (i) the Company's chief executive officer, and
(ii) the Company's four most highly compensated executive officers other than
the chief executive officer (collectively, including the Company's chief
executive officer, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------- ---------------------------
OTHER ANNUAL RESTRICTED OPTIONS/
NAME AND SALARY BONUS COMPENSATION STOCK AWARDS SARS
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#)
- -------------------------------------- --------- --------- --------- ------------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
N. Robert Hammer 1996 340,000 -- -- 0 35,100
Chief Executive Officer 1995 313,333 -- -- 0 20,000(2)
1994 300,000 143,000 -- 0 12,000
Thomas O. Miller 1996 200,000 -- -- 0 22,975
Senior Vice President 1995 160,113 17,341 -- 0 8,500(4)
1994 141,251 80,000 -- 0 8,800
Scott D. Mercer 1996 152,838 50,760 -- 0 16,760
Vice President, Norand International 1995 93,684 61,260 -- 0 4,700(6)
Corporation 1994 74,448 18,485 -- 0 500
Alan G. Bunte 1996 139,833 -- -- 0 14,285
Vice President, Strategic Planning 1995 129,833 20,000 -- 0 7,000(7)
1994 121,500 41,000 -- 0 --
John A. Niemzyk 1996 133,752 -- -- 0 25,415
Vice President, Operations and 1995 117,153 28,000 -- 0 4,400(9)
Information Technology and Chief 1994 98,208 26,000 -- 0 1,300
Information Officer
<CAPTION>
PAYOUTS
------------- ALL OTHER
NAME AND LTIP PAYOUTS COMPENSATION
PRINCIPAL POSITION ($) ($)
- -------------------------------------- ------------- -------------
<S> <C> <C>
N. Robert Hammer 0 8,269(3)
Chief Executive Officer 0 7,540(3)
0 6,924(3)
Thomas O. Miller 0 5,592(5)
Senior Vice President 0 5,588(5)
0 5,546(5)
Scott D. Mercer 0 0
Vice President, Norand International 0 0
Corporation 0 0
Alan G. Bunte 0 4,635(8)
Vice President, Strategic Planning 0 5,465(8)
0 3,657(8)
John A. Niemzyk 0 5,491(10)
Vice President, Operations and 0 4,883(10)
Information Technology and Chief 0 4,820(10)
Information Officer
</TABLE>
<PAGE>
(1) During the fiscal years covered, no Named Executive officer received any
other annual compensation in an aggregate amount exceeding the lesser of
either $50,000 or 10% of his total annual salary and bonus reported in the
preceding two columns.
(2) Represents 20,000 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
(3) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,750 in 1996, $4,620 in 1995, and
$4,620 in 1994, and represents the value of term life insurance provided in
excess of $50,000 of $3,519 in 1996, $2,920 in 1995, and $2,304 in 1994.
(4) Represents 8,500 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
(5) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,724 in 1996, $5,058 in 1995, and
$5,171 in 1994, and represents the value of term life insurance provided in
excess of $50,000 of $867 in 1996, $530 in 1995, and $375 in 1994.
(6) Represents 700 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25 plus an additional 4,000 options issued on
May 17, 1995, at an exercise price of $33.00.
(7) Represents 7,000 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35,00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
(8) Represents the Company's matching contribution to the Company's 401(k)
deferred compensation plan of $4,219 in 1996, $5,142 in 1995, and $3,453 in
1994, and represents the value of term life insurance provided in excess of
$50,000 of $416 in 1996, $322 in 1995, and $204 in 1994.
(9) Represents 1,400 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25 plus an additional 3,000 options issued on
June 12, 1995, at an exercise price of $36.13.
(10) Represents the Company's matching contribution to the Company's 401(k)
deferred compensation plan of $5,198 in 1996, $4,620 in 1995, and $4,620 in
1994, and represents the value of term life insurance provided in excess of
$50,000 of $293 in 1996, $263 in 1995, and $200 in 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table summarizes the grants of stock options awarded to the
Named Executive Officers during the fiscal year ended August 31, 1996, under the
Company's 1989 Stock Option Plan and the Company's Long-Term Performance
Program.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE
------------------------------------------------------------ APPRECIATION FOR
% OF TOTAL OPTION TERM(2)
OPTIONS/SARS OPTIONS/ SARS EXERCISE PRICE EXPIRATION --------------------
NAME GRANTED(#) GRANTED ($/SH)(1) DATE 5%($) 10%($)
- ---------------------------------- ------------- --------------- --------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
N. Robert Hammer.................. 35,100 6.31% 16.50 03/28/06 364,224 923,016
Thomas O. Miller.................. 7,500 1.35% 18.00 02/05/06 84,901 215,155
Thomas O. Miller.................. 15,475 2.78% 16.50 03/28/06 160,580 406,943
Alan G. Bunte..................... 5,000 0.90% 18.00 02/05/06 56,600 143,437
Alan G. Bunte..................... 9,285 1.67% 16.50 03/28/06 96,348 244,165
Scott D. Mercer................... 10,000 1.80% 18.00 02/05/06 113,201 286,874
Scott D. Mercer................... 6,760 1.22% 16.50 03/28/06 70,147 177,766
John A. Niemzyk................... 20,000 3.60% 13.25 01/24/06 166,657 422,342
John A. Niemzyk................... 5,415 0.97% 16.50 03/28/06 56,190 142,397
</TABLE>
(1) The exercise price equals the last reported sale price of the Common Stock
on the Nasdaq National Market System on the date of grant of the options.
(2) The potential realizable dollar value of a grant is the product of: (a) the
difference between (i) the product of the per share market price at the time
of the grant and the sum of 1 plus the stock appreciation rate compounded
annually over the term of the option (here, 5% and 10%), and (ii) the
<PAGE>
per-share exercise price of the option, and (b) the number of securities
underlying the grant at fiscal year-end.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information concerning options exercised by the
Named Executive Officers during the fiscal year ended August 31, 1996, and the
value at August 31, 1996, of unexercised options.
<TABLE>
<CAPTION>
VALUE ($) OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
AUGUST 31, 1996 AUGUST 31, 1996
---------------- ---------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------- ----------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
N. Robert Hammer................................... 0 0 112,629/69,971 658/12,504
Thomas O. Miller................................... 0 0 23,422/39,153 290/5,513
Alan G. Bunte...................................... 0 0 19,193/20,014 10,033/3,308
Scott D. Mercer.................................... 0 0 3,996/19,484 127/2,408
John A. Niemzyk.................................... 0 0 5,914/27,245 39,595/67,179
</TABLE>
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors, except Mr. Moore, receive an
annual fee of $12,000 (payable $3,000 per quarter) as compensation for their
services as directors, a fee of $1,000 for each board meeting attended in person
and $750 for each committee meeting attended in person. Mr. Moore serves as Lead
Director of the Board of Directors. Mr. Moore receives an annual fee of $24,000
(payable $6,000 per quarter) as compensation for his services as Lead Director,
a fee of $2,000 for each board meeting attended in person and $750 for each
committee meeting attended in person. Directors are also reimbursed for
reasonable costs associated with attendance at board and committee meetings.
Non-employee members of the Board of Directors also participate in the
Company's Stock Option Plan for Non-Employee Directors (the "Plan"), which was
adopted by the Board of Directors effective March 16, 1994 (the "Effective
Date"), and approved by the stockholders as of December 16, 1994. Pursuant to
the Plan, each individual who was a non-employee director as of the Effective
Date (Messrs. Geeslin, Moore, and Wenninger) was granted an option to purchase
6,000 shares of Common Stock as of the Effective Date, and each individual who
became a non-employee director after the Effective Date was granted an option to
purchase 5,000 shares of Common Stock as of the date of his initial appointment
as a non-employee director (in each case, the "Initial Grant"). Each
non-employee director who continues as a director is automatically granted an
option to purchase 2,000 shares of Common Stock on each anniversary of his
Initial Grant. In addition, Mr. Moore is automatically granted an additional
option to purchase 2,000 shares of Common Stock on each anniversary of his
Initial Grant. Options awarded under the Plan become exercisable with respect to
one-twentieth of the total shares as of the last day of each quarter anniversary
of the date of the award, with the exception of the options awarded in the
Initial Grant to non-employee directors who became directors after the Effective
Date, which become exercisable with respect to one-fifth of the shares on the
first anniversary date of the award and thereafter as to one-twentieth of the
total shares as of the last day of each quarter anniversary. Each such option
awarded under the Plan bears an exercise price per share of Common Stock equal
to the greater of par value or the fair market value of Common Stock on the date
the option is granted.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN CONTROL
ARRANGEMENTS
The Company's employment policy provides that upon termination, with certain
exceptions, each of the Company's vice presidents is entitled to severance pay
in the amount of six months pay plus one additional month's pay for each year of
service to the Company, not to exceed a combined total of 18
<PAGE>
months. In the event of a change in control, enhanced severance may be payable
in the event of termination following a change in control on account of certain
events, such as elimination of a position, adverse change in duties or
compensation, or change in job location. The enhanced severance for vice-
presidents is generally equal to two times the employee's annual salary plus
bonus, continuation of employee benefits and outplacement services. The Company
has entered into an employment agreement with each Named Executive Officer. Each
of the agreements contain provisions for payment of a base salary plus bonus, an
automobile allowance and reimbursement of certain expenses relating to
relocating to Cedar Rapids, Iowa. In addition, pursuant to his employment
agreement, Mr. Hammer was granted options for 129,156 shares of Common Stock
vesting over a 55-month period beginning April 18, 1989. Mr. Hammer is also
entitled pursuant to his employment agreement to termination payments of six
months' salary, subject to certain exceptions.
The Company and Mr. Hammer are also parties to a Change in Control Benefit
Agreement pursuant to which Mr. Hammer is entitled to certain benefits in the
event of a change in control. Mr. Hammer may be entitled to accelerate up to
100,000 options upon the occurrence of a change in control, if such acceleration
does not have an adverse effect on the pooling-of-interest method of accounting.
The agreement generally provides that if it is determined that the accelerated
vesting upon a change in control of a stock option awarded to Mr. Hammer on
September 24, 1996 would be subject to the excise tax imposed by section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (relating to excess
parachute payments), Mr. Hammer will be entitled to a tax-gross up payment in an
amount equal to the amount of the excise tax attributable to the accelerated
vesting of the option, taxes incurred by Mr. Hammer on the excise tax and any
interest or penalties incurred by Mr. Hammer with respect to such excise tax.
Pursuant to the Company's Long-Term Performance Program, Mr. Hammer was awarded
100,000 options at an exercise price of $16.00 on September 24, 1996.
On January 21, 1997, the Company and Mr. Hammer entered into a Consulting
and Separation Agreement (the "Separation Agreement"). Pursuant to the
Separation Agreement, Mr. Hammer's employment with the Company will terminate at
the Effective Time. The Separation Agreement includes an agreement by Mr. Hammer
to maintain the confidentiality of certain information and an agreement by Mr.
Hammer not to compete with the Company for a period of three years following the
Effective Time. Under the Separation Agreement, at the Effective Time Mr. Hammer
will receive a payment of $1,000,000 and all unvested Company stock options
granted to Mr. Hammer under the Company's Long-Term Incentive Program and the
Company's 1989 Stock Option Plan will beome fully vested. The Separation
Agreement also provides for the continuation of medical, life and accidental
death and dismemberment insurance coverage for Mr. Hammer and his dependents for
a period of three years following the Effective Time (which period may be
extended by mutual agreement of the parties). The Separation Agreement also
provides that for a period of one year commencing at the Effective Time, the
Company will retain Mr. Hammer as a consultant for a fee of $800,000 payable at
the Effective Time. The Separation Agreement also provides for payment to Mr.
Hammer of a tax gross-up payment equal to the amount of excise tax that may be
payable by Mr. Hammer under Section 4999 of the Code due to payments under the
Separation Agreement and other payments and benefits that may be subject to such
taxes. The gross-up payment would also include an amount for interest and
penalties relating to payment of the excise tax and such other payments.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee approves all of the policies under which
compensation is paid or awarded to the Company's executive officers.
Under the direction of the Compensation Committee, the Company has
implemented compensation practices that seek to enhance the performance of the
Company and increase its value to all stockholders. In order to provide
information on the compensation practices of the Company, the Compensation
Committee has furnished the following report on executive compensation:
COMPENSATION PHILOSOPHY The Compensation Committee has devoted considerable
attention to developing the Company's compensation philosophy which embodies
four primary objectives:
<PAGE>
1. to provide incentives based on value delivered to the Company's
stockholders and customers;
2. to connect individual executive pay action with performance;
3. to maintain a system of rewards that is competitive with industry
standards; and
4. to attract, motivate, and retain executives of the highest quality.
The Company's compensation programs reflect the Compensation Committee's
commitment to the mission, values, and performance of the Company. Continual
review and refinement of the Company's compensation practices in response to the
changing business environment will serve to reinforce this commitment.
The most important performance yardstick in the Company's compensation
program is the Company's ability to deliver value to stockholders through
appreciation in share price. On an ongoing basis, the Compensation Committee
will test and refine the compensation program to ensure a high correlation
between level of compensation and return to stockholders. The Compensation
Committee measures the correlation between executive compensation and return to
stockholders as a function of Company operating income levels, the performance
of operating divisions, and individual performance. Certain goals are set,
reviewed, and approved by the Chairman and CEO, and weighted. Achievement of
goals triggers executive compensation. Goals include Company operating income
threshold levels, sales levels, business and product strategy development, cycle
time, total project cost, development and implementation of global support
strategies, net contributions margin, expense reduction, and days' sales
outstanding objectives. Achieving desirable stockholder returns over a sustained
period of time requires management's attention to a number of financial and
non-financial strategic elements which enables the Company to focus on the
current and long-term requirements of the customer. The Company's compensation
program, therefore, focuses executives on actions that directly impact
stockholder return in the short-term and long-term and serve the needs of the
Company's customers. The impact of executives' actions is measured in terms of
profit growth, earnings per share, asset management, and strategic product
development and positioning.
The Compensation Committee uses multiple sources of information to evaluate
and establish appropriate compensation practices. While using multiple sources,
the Compensation Committee relies on data from benchmark companies within the
computer/peripherals industry to assess the Company's relative performance and
compensation levels. Benchmark companies were selected by matching multiple
criteria including product lines, markets served, revenue size, revenue source,
and comparable operations. Consistent with the Compensation Committee's
objectives, the Compensation Committee will position its executive compensation
targets competitively with the benchmark companies. Annual executive
compensation will be below, at or above the competitive target depending on
individual and Company performance. Company and individual performance is
measured primarily as a function of Company operating income, with thresholds
set at the beginning of each fiscal year by the Board of Directors, through the
planning and budgeting process.
The Company's executive compensation program has three components--base
salary, annual incentives, and long-term incentives. Base salary and annual
incentives are primarily designed to reward current and past performance.
Long-term incentives are primarily designed to provide strong incentives for
long-term future performance.
The Compensation Committee strongly believes that incentive compensation
should only be awarded with commensurate performance. The Compensation Committee
has approved compensation plans which include high minimum levels of performance
to ensure that incentives are paid only when truly earned.
DESCRIPTION OF COMPENSATION PROGRAMS The following briefly describes the
role of each element of compensation:
BASE SALARY Base salary will be at levels sufficient to attract and retain
qualified executives. To accomplish these goals, the Compensation Committee has
generally targeted base salaries within a competitive range of average base
salaries for similar positions in benchmark companies within the
computer/peripheral industry. Aggregate base salary increases are intended to
parallel increases in the pay
<PAGE>
levels of the computer/peripheral industry as a whole. Individual executive
salary increases will strongly reflect the individual's level of performance as
measured against the individual and Company goals discussed above and, to a
lesser extent, trends within the industry which reflect salary and total
compensation trends in a growth industry.
ANNUAL INCENTIVE The Company's executive annual incentive plan serves to
recognize and reward executives for taking actions that build the value of the
Company, generate competitive total returns to stockholders, and provide
value-added solutions to the Company's customers. The formula for annual
incentive awards recognizes operational and financial goals of significance to
the Company. Payments are made based on a combination of corporate and
individual performance. Achieving a minimal Company operating income goal is a
pre-condition for the awarding of any incentive awards. Individual annual
incentive awards are conditioned on achieving certain pre-set objectives.
LONG-TERM INCENTIVES The Company's Long-Term Performance Program serves to
reward executive performance in successfully executing the long-term business
strategy and building stockholder value. The program allows for the awarding of
incentive stock options, non-qualified stock options, and performance restricted
stock. During fiscal year 1996, only stock options were granted to the Company's
executive officers. Participation and target awards are determined by the
Compensation Committee by benchmarking the Company's performance against other
companies within the computer/peripheral industry and against companies
providing similar products and services. Awards are based on performance and
individual responsibility. Criteria include: performance expectations versus
results, significant and strategic contributions towards performance of the
Company, and unique core competencies essential to the achievement of the
Company's business mission. Awards may exceed targets if all criteria are met.
COMPENSATION ADMINISTRATION The Compensation Committee follows an annual
cycle to administer each of the three components of executive compensation. The
integrity of the Company's compensation program relies on an annual performance
evaluation process.
DISCUSSION OF CEO COMPENSATION Consistent with the Company's compensation
philosophy, the Compensation Committee managed Mr. Hammer's total compensation
during fiscal year 1996 based on overall performance of the Company and on
relative levels of compensation for CEOs within the benchmark companies in the
computer/peripheral industry. In particular, Mr. Hammer's compensation is based
on achievement of goals relating to earnings per share, profit and revenue
growth, strategic product development and positioning, and asset management.
Mr. Hammer is eligible for an annual incentive award of 50% of his base
salary, provided that the Company achieves certain revenue and operating income
growth thresholds. In fiscal year 1996, Mr. Hammer received no annual incentive
award.
<PAGE>
The Compensation Committee took the following fiscal year 1996 compensation
actions for Mr. Hammer:
1. effective September 1, 1995, the Compensation Committee approved a
base salary of $340,000 per year.
2. granted on May 29, 1996, an incentive stock option to purchase
35,100 shares of Common Stock at $16.50 per share. The option will vest
1/20th each quarter through May 29, 2001.
The primary purpose of this grant was to motivate Mr. Hammer to successfully
execute the Company's long-term business strategy and to build stockholder
value.
COMPENSATION COMMITTEE,
Keith B. Geeslin
Charles G. Moore III
Hatim A. Tyabji
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the Company's cumulative total stockholder
return on its Common Stock since February 2, 1993, the date that the Common
Stock began trading, with the cumulative total return of Standard & Poor's 500
Composite Stock Price Index and the Standard & Poor's Technology Sector Index.
These comparisons assume the investment of $100 on January 31, 1993, in each
index and on February 1, 1993, in the Company's Common Stock and reinvestment of
dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF 43 MONTH
CUMULATIVE TOTAL RETURN*
AMONG NORAND CORPORATION,
THE S & P 500 INDEX
AND THE S & P TECHNOLOGY
SECTOR INDEX
NORAND CORPORATION S & P 500 S & P TECHNOLOGY SECTOR
<S> <C> <C> <C>
02/01/1993 100 100 100
Feb-93 116 101 103
May-93 126 104 108
Aug-93 152 108 109
Nov-93 160 106 114
Feb-94 202 110 126
May-94 237 108 122
Aug-94 215 113 131
Nov-94 216 108 133
Feb-95 253 118 146
May-95 213 130 175
Aug-95 248 138 199
Nov-95 95 149 203
Feb-96 116 159 214
May-96 132 167 232
Aug-96 106 164 222
* $100 INVESTED ON 3/01/96
IN STOCK OR ON
1/01/83 IN INDEX -
INCLUDING INVESTMENT OF
DIVIDEND. FISCAL YEAR
ENDING AUGUST 31.
</TABLE>
<PAGE>
Exhibit (a)(7)
For Immediate Release
Contacts: Dirk Koerber (310) 888-2575 (Western Atlas)
Donald Rowley (319) 369-3250 (Norand)
Keith Everett (206) 348-2686 (Intermec)
Western Atlas Acquisition of Norand
Creates A Leader in
High-Growth Data Collection
and Mobile Computing Industries
BEVERLY HILLS, Calif./CEDAR RAPIDS, Iowa - January 22, 1997 - Western Atlas
Inc. (NYSE: WAI) and Norand Corporation (NASDAQ: NRND) announced today that the
companies have entered into a definitive agreement under which Western Atlas
will acquire Norand Corporation, a designer and developer of mobile computing
systems and wireless data communications networks. The acquisition has been
unanimously approved by the Boards of Directors of both companies.
When completed, this acquisition will further strengthen the position of
Western Atlas' Seattle-based Intermec division in the automated data collection
(ADC) and mobile computing solutions industry.
Under the agreement, Western Atlas will offer $33.50 per share for all 7.8
million shares of Norand common stock outstanding through a cash tender offer.
The offer will be subject to receipt of a majority of the common stock of Norand
and satisfaction of Hart-Scott-Rodino and other customary approvals and
requirements.
"This acquisition will establish Western Atlas--through its Intermec
division -- as the company with the broadest technology range and most extensive
distribution network in the industrial automated data collection and mobile
computing solutions industry. The combined company will offer superior value
and solutions to its customers," said Alton J. Brann, Chairman and CEO of
Western Atlas. "The overall ADC industry has shown consistent annual growth
rates of 12 to 17 percent."
<PAGE>
Norand's strong positions in wireless technology, pen-based systems, and in
inventory tracking, route accounting and mobile computing solutions for the
transportation, car rental, automotive and food/beverage industries, directly
complement Intermec's expertise in rugged ADC systems for the industrial,
government and distribution industries. Customers for all these applications
increasingly are requiring the integration of products and services that the
two organizations provide.
"This is a combination of two companies with complementary technologies,
distribution channels and application know-how," Brann continued. "Both sales
organizations will benefit from a broader range of products and services, while
the resulting larger production runs should generate economies of scale and
major cost advantages. The acquisition is expected to be nondilutive to
earnings in 1997 and additive to cash flow. These positive impacts will
accelerate as we go forward."
Norand's Chairman and CEO, N. Robert Hammer, said, "The merger of our
company with Intermec combines two leaders in the global ADC industry that have
complementary product and service lines, and this provides the base for
excellent long-term growth. We fully support this transaction with Western
Atlas.
Brann added, "The acquisition represents an outstanding opportunity and it
is adding to our growing information technology activities in the energy and
industrial fields. Western Atlas is well on its way toward creating the
prototype for a fast-growing global 'solutions' company whose success is based
on information and systems integration technology."
Norand's mobile computing systems and wireless data networks use radio
frequency (RF) technology to automate the collection, processing and
communication of information. Major products used in the systems solutions are
hand-held computers, including pen-based units, radio-frequency terminals and
communication networks. Over the past few years, Norand has invested heavily to
move from a product orientation to an integrated systems solution provider in
mobile data collection, and has established one of the premier application
engineering capabilities in the industry.
"The timing of this acquisition is excellent," said Michael Ohanian, a
Western Atlas Vice President and President of Intermec. "Intermec already is an
important supplier of automated data collection systems for industrial
applications. Together with Norand, we will have the product offering,
market-specific applications experience, and sales and service capability to
become the
<PAGE>
leader in ADC for the emerging global logistics automation marketplace. We
expect to build significantly on this foundation."
Western Atlas, headquartered in Beverly Hills, California, is a global
supplier of oilfield information services and industrial automation systems with
annual revenues of more that $2.5 billion.
Norand designs, manufactures and markets mobile computing systems and
wireless data communications networks using radio frequency technology.
NORAND-Registered Trademark- systems allow businesses worldwide to apply
information technology to industrial and field automation settings. Typical
applications include route accounting, field-sales automation, and inventory
database management in manufacturing, warehouse and retail settings. Norand and
its partners provide hardware, application software, systems integration and
support to thousands of customers in dozens of industries to improve
accountability, productivity and management control. Corporate offices are at
550 Second Street Southeast in Cedar Rapids, Iowa. Norand's World Wide Web home
page is located at http://www.norand.com.
# # #
WAI083
------
------
<PAGE>
[NORAND CORPORATION LETTERHEAD]
January 24, 1997
Dear Stockholder,
I am pleased to report that, on January 21, 1997, Norand Corporation entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Western Atlas
Inc. that provides for the acquisition of Norand by Western Atlas at a price of
$33.50 per share in cash. Under the terms of the proposed transaction, a Western
Atlas subsidiary is today commencing a cash tender offer (the "Offer") for all
outstanding shares of Norand common stock at $33.50 per share. Following the
successful completion of the Offer, the Western Atlas subsidiary will be merged
into Norand (the "Merger") and all Norand shares not purchased in the Offer will
be converted into the right to receive $33.50 per share in cash in the Merger.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE
HOLDERS OF SHARES OF NORAND COMMON STOCK AND RECOMMENDS THAT NORAND STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion of
Donaldson, Lufkin & Jenrette Securities Corporation, financial advisors to
Norand, that the consideration to be received by Norand's stockholders pursuant
to the Merger Agreement is fair to such stockholders from a financial point of
view.
Accompanying this letter is a copy of Norand's Solicitation/Recommendation
Statement on Schedule 14D-9 including Norand's Rule 14f-1 Information Statement.
Also enclosed is Western Atlas' Offer to Purchase and related materials,
including a Letter of Transmittal for use in tendering shares. I urge you to
carefully read the enclosed materials, including Donaldson, Lufkin & Jenrette's
fairness opinion which is attached to the Schedule 14D-9.
The management and directors of Norand thank you for the support you have
given the company.
Sincerely,
N. Robert Hammer
Chairman, President and Chief
Executive Officer
<PAGE>
Exhibit (c)(2)
Contract Expiration Date: January 21, 1999
ORIGINAL EQUIPMENT MANUFACTURER AGREEMENT
This Agreement is between Norand Corporation ("NORAND"), 550 Second Street S.E.,
Cedar Rapids, IA 52401, and Western Atlas, Inc., including its subsidiaries
("WESTERN ATLAS"), located at 360 North Crescent Drive, Beverly Hills,
California 90210.
BACKGROUND
A. Norand is in the business of selling computer hardware and associated hand
held terminal equipment, software and services for use with such computer
hardware.
B. Western Atlas is in the business of selling integrated manufacturing
systems, automated data collection systems and material management systems.
C. Western Atlas wishes to purchase computer hardware and systems software from
Norand for resale in the Territory (defined in Section 1.1 below).
AGREEMENT
1. APPOINTMENT OF WESTERN ATLAS
1.1 TERRITORY
On a non-exclusive basis, Western Atlas may sell and license Products (as
defined in Section 2) for use in healthcare, manufacturing, warehouse and
distribution applications worldwide in such geographic locations where the
Products are certified (the "TERRITORY"). Norand reserves the right to
appoint other original equipment manufacturers, distributors and resellers
in the Territory to sell Products and support customers using Products if
Norand determines that is advisable. In addition, Norand reserves the
right to make sales and provide service directly through its own employees,
sales representatives and other original equipment manufacturers,
distributors and resellers.
1.2 NOT AN AGENT
Western Atlas is not Norand's agent for any purpose. This Agreement is not
to be construed as a joint venture, partnership, agency, employer/employee
relationship or any other form of business obligation between Norand and
West-
<PAGE>
ern Atlas to share profits or bear any losses of the other. Western Atlas
is acting solely as an independent contractor.
2. PRODUCTS
The products which may be purchased pursuant to this Agreement ("PRODUCTS")
are those listed on Schedule A, as may be amended from time to time by the
parties hereto. Any Products sold to Western Atlas pursuant to this
Agreement shall bear the "Intermec" name and/or logo as specified from time
to time by Western Atlas. Norand reserves the right, without incurring any
liability, to change prices, change the design or to discontinue the
manufacture or sale of any Products. Norand will give Western Atlas thirty
(30) days notice of any price changes or design changes to be made that
change form, fit or function of such products and ninety (90) days notice
of discontinuance of any Products. Norand will notify Western Atlas when
any product listed on Schedule A, but not yet released for sale, is so
released.
3. WESTERN ATLAS RESPONSIBILITIES
3.1 REASONABLE EFFORTS
Western Atlas agrees to use reasonable efforts to service customers in the
Territory.
3.2 VALUE ADDED
Western Atlas represents that it is a reseller of computer systems and
products and that it will purchase Products under this Agreement which it
will then remarket to third-party end-users in the regular course of its
business. The systems that Western Atlas sells will include additions or
integration of other equipment or software which Western Atlas
manufactures, acquires or develops.
3.3 SALES PROMOTION
Western Atlas will maintain a sales organization knowledgeable in the
Products. All Western Atlas sales personnel shall be certified by Norand
in accordance with Section 3.4.
-2-
<PAGE>
3.4 CUSTOMER SUPPORT
Western Atlas will provide the appropriate personnel, facilities and
equipment necessary to provide support in the use and sale of Products to
customers in the Territory. Western Atlas will have its personnel attend
product, sales and service training courses as may be offered by Norand
from time to time or as required by Norand of its sales employees,
including but not limited to, the requirements set forth in Schedule B
hereto. Western Atlas will make available adequate and competent technical
resources to promptly answer technical start-up questions, to counsel
end-users regarding the selection, integration and use of Products and
available software programs; to assist end-users with obtaining appropriate
FCC licenses; to survey the customer's facilities to determine the
appropriate quantity and configuration of Products for that facility;
install Products at the customer's facilities and act as the primary
resource for end-user's support requirements.
3.5 MAINTENANCE
Western Atlas shall have the right to sell its maintenance services to
purchasers of Products. Norand will also make available to Western Atlas
for sale to its customers that purchase Products Norand's maintenance
services in the Territory in accordance with Norand's then current Value
Added Reseller Maintenance Incentive Program.
3.6 SALES FORECAST
Western Atlas will participate and cooperate with Norand fully in a monthly
forecast system to provide good faith qualitative and quantitative details
by month of projected sales and purchases of Products for the following
twelve calendar months. The forecast will include such information and be
in such form as Norand will from time to time require, including but not
limited to, the quantity and type of Products to be sold, projected
delivery dates and an assessment of the likelihood that the transaction
will be completed. The first such forecast to be provided by Western Atlas
pursuant to this Section shall be provided to Norand on or before April 1,
1997.
3.7 MONTHLY SALES AND SHIPMENT STATEMENT
Western Atlas will provide Norand with written reports each
-3-
<PAGE>
month detailing sales by location and monthly shipment information,
including the serial numbers of the Products sold. This report will be
used to initiate the warranty period hereunder, and, while delay in such
report will not serve to lengthen the warranty period, failure or delay in
making such report may diminish the warranty coverage. The report will
include such information and be in such form as Norand will from time to
time require. All such records will be maintained by Western Atlas for a
period of three years from the date of termination of this Agreement.
3.8 FUNCTIONAL REQUIREMENTS
Western Atlas agrees that it is responsible for the selection of the
Products and the determination of the suitability of the Products for the
purpose for which Western Atlas intends to use them.
3.9 INSPECTION
Western Atlas agrees to inspect the Products upon receipt to ascertain that
they are operable and function properly prior to resale.
3.10 INDEMNITY
Western Atlas agrees to defend and hold Norand, its employees, agents,
successors and assigns harmless from any liability, loss, damage, claims
and expense whatsoever, including but not limited to judgments and
attorneys fees, caused or alleged to be caused directly or indirectly by
the products or services, or both, sold by Western Atlas or by the
negligent, grossly negligent or willful acts of any agent, employee or
subcontractor of Western Atlas; provided, however, that Western Atlas'
obligations hereunder shall not arise to the extent that the claim or
damage is caused solely by: (a) the Products; or (b) the negligent,
grossly negligent or willful acts of Norand or its agents or employees.
4. NORAND RESPONSIBILITIES
4.1 SALES ASSISTANCE
Norand may provide sales assistance in the Territory (as mutually agreed
upon) and will provide brochures and materials at Norand's standard prices
for such items then in
-4-
<PAGE>
effect.
4.2 NORAND TRAINING, SUPPORT AND INTEGRATION
Norand shall make available to Western Atlas training programs, support
services and programs and system integration consulting at Norand's
standard prices for such services then in effect.
5. ORDERS AND RETURNS
5.1 AUTHORIZED ORDER FORM
The terms and conditions of this Agreement will be the only terms and
conditions which apply to all orders Western Atlas makes for Products,
unless Norand specifically agrees otherwise in writing. Any additional or
conflicting terms Western Atlas may propose with its orders will not apply.
All orders are subject to written acceptance by Norand.
5.2 ORDER INFORMATION
Western Atlas' orders must be in writing and identify the product or
service ordered, the shipping instructions, the requested delivery dates,
and the system number if applicable. Requested delivery dates must be
within one hundred and eighty (180) days of the date of order.
5.3 RESCHEDULING SHIPMENT
Western Atlas may reschedule shipment of an accepted order one time if
Western Atlas gives Norand written notice at least thirty (30) days before
the scheduled ship date; provided that, the requested rescheduling date is
within ninety (90) days of the original order date and Norand accepts the
new ship date requested. Such acceptance will not be unreasonably
withheld.
Western Atlas may cancel shipment of an accepted order if it gives Norand
written notice at least fifteen (15) business days before the scheduled
shipment date.
Cancellations, rescheduling and reconfigurations are subject to the
following charges:
Cancellation/Reconfiguration/
-----------------------------
If Notice is Received Rescheduling Charges
--------------------- --------------------
-5-
<PAGE>
More than 60 days 0%
31 to 60 days 5%
16 to 30 days 10%
15 days 15%
Prior to Date of
Scheduled Shipment
An accepted order may be rescheduled or reconfigured no more than once.
Except as permitted by Norand in its sole and absolute discretion,
cancellation, reconfiguration or rescheduling is not permitted less than
fifteen (15) business days before the scheduled shipment date.
6. PRICES
6.1 PRICES
For the period beginning on the date hereof and continuing through January
19, 1998, Norand will sell Products to Western Atlas at a price based on
the sales forecast provided pursuant to Section 3.6 covering the
twelve-month period beginning on April 1, 1997, such price being no less
favorable than the lowest price then being charged by Norand for such
Products for sales to other purchasers based on sales volumes similar to
such forecast. For each period beginning on January 20 and ending on the
following January 19, commencing January 20, 1998, Norand will sell
Products to Western Atlas at a price based on the volume of purchases by
Western Atlas during the twelve-month period ending on the preceding
January 19, such price being no less favorable than the lowest price then
being charged by Norand for such Products for sales to other purchasers
with sales volumes similar to Western Atlas' volume purchases during such
twelve-month period. Prices are F.O.B. point of shipment and exclude all
transportation charges, duties and taxes. Western Atlas is responsible to
reimburse Norand for all duties and taxes (other than taxes on Norand's
income) which arise from the purchase and sale of Products, unless Western
Atlas provides Norand with written evidence that is satisfactory to Norand
of an exemption from such duties and taxes. Western Atlas is also
responsible for all transportation charges. Risk of loss shall pass to
Western Atlas F.O.B. point of shipment.
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6.2 PRICE CHANGES
Norand will use reasonable efforts to provide Western Atlas written notice
of any price changes ninety (90) days before the new prices become
effective. If the change is an increase, orders placed within ninety (90)
days of the written notice will be at the old price; provided Western Atlas
accepts shipment within sixty (60) days from date of order. Orders for
shipment more than sixty (60) days after the date of order will be at the
new prices. In addition, the old price will apply to shipments made under
an order accepted before the notice of the price increase is given;
provided that, the agreed upon scheduled ship dates are within one hundred
and eighty (180) days of the order date and Western Atlas does not
reschedule shipment. If a shipment under such an order is rescheduled, the
new prices will apply to all subsequent shipments under that order.
If the change is a price decrease, Norand will apply the new lower price to
all shipments made under orders accepted, but not shipped, before the date
of notice of the price change.
7. INVOICING AND PAYMENT
Prices and other charges will be invoiced on shipment. Subject to prior
credit approval by Norand, payment will be due within thirty (30) days from
the date of invoice. If deliveries are made in installments, each shipment
will be paid for when due without regard to the other scheduled deliveries.
Failure to make payment when due may result in delay of scheduled
shipments. All amounts not paid when due will be subject to the lesser of:
(a) a 1-1/2% per month delinquency charge and (b) the highest interest rate
permitted under applicable law. Norand reserves the right to withhold
shipment and to require prepayment or other payment arrangements on all
future shipments if Western Atlas does not pay any invoice when due. To
assist Norand in establishing and updating credit limits and payment terms,
Western Atlas agrees to provide Norand with financial information relating
to Western Atlas' business, including audited financial statements and
other credit related information as Norand may reasonably request. Western
Atlas also agrees to provide updated financial information prior to renewal
of this Agreement for any additional term. To secure any indebtedness now
or hereafter owed by Western Atlas to Norand, Western Atlas hereby grants
to Norand a continuing security interest in
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the Products whether now existing or hereafter acquired by Western Atlas
and all additions to, improvements on and substitutions for the Products
and all proceeds of the foregoing to secure any and all amounts owed Norand
by Western Atlas. Western Atlas authorizes Norand to file this Agreement
as a nonuniform financing statement and also agrees, upon request from
Norand, to sign and file appropriate documentation to perfect this security
interest.
8. ADVERTISING
Western Atlas agrees not to advertise Products in a false, misleading or
derogatory fashion and agrees to indemnify, defend and hold Norand harmless
for any claim, cause of action, suit, loss or liability (including court
costs and attorneys fees) based upon Western Atlas' advertisements.
Western Atlas will provide Norand with a copy of any advertisement upon
request and will cease and desist using any advertisement or forth of
advertisement which is not consistent with the requirements of this
Section.
9. LIMITED WARRANTIES AND REMEDIES
9.1 WARRANTY FOR NORAND EQUIPMENT
Norand warrants that Hardware will be free from defects in manufacturing
materials and workmanship for the warranty period applicable to the
Hardware as set forth in the Price Guide in effect when Western Atlas
places its order for such Hardware. The warranty period begins to run on
the date Norand ships the Hardware to Western Atlas. If an item of
Hardware has such a defect, Norand will repair it without charge or, if
Norand is not able to repair it, Western Atlas may return it to Norand and
Norand will credit the purchase price to Western Atlas' account for the
original price paid. Warranty repairs will be completed within 10 working
days and then returned to Western Atlas by prepaid surface freight carrier.
As used herein, the term "HARDWARE" means the Products excluding the
Software.
For this warranty to apply:
a. Western Atlas must obtain a Repair Return Authorization from the
Norand Service Center within the warranty period;
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<PAGE>
b. Norand must be given a written, detailed description of the
defect;
c. The item of Hardware must be promptly returned to the designated
Norand service center, freight prepaid by Western Atlas; and
d Upon examination of the item, Norand must agree that the defect
exists and is covered by this warranty.
9.2 WARRANTY FOR NORAND SOFTWARE
Norand warrants that Software will function in accordance with the user
manual provided with the Norand Software Products for one hundred eighty
(180) days from the date Norand ships to Western Atlas. If an item of
Software does not function as warranted, Norand will, without charge,
attempt to provide information to correct the program or the user manual.
If Norand is not able to provide this information, Western Atlas may return
the item of Software to Norand and Norand will credit the purchase price to
Western Atlas' account.
For this warranty to apply:
a. Norand must be given a written, detailed description of the
problem, within the warranty period; and
b. Norand must be able to reproduce the reported problem.
9.3LIMITATION OF WARRANTIES AND REMEDIES
The warranties set forth in Sections 9.1 and 9.2 do not apply to:
a. expendable items such as customer replaceable batteries and the
like, nor
b. defects or problems caused by causes outside of Norand's control;
such as, but not limited to, accident, misuse, neglect,
alteration, adjustments or repairs made by persons other than
authorized Norand personnel, unauthorized testing, use not within
specifications, or a product for which Norand is not responsible.
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The remedies set forth in Section 9.1 and 9.2 are the only remedies that
apply. THE WARRANTIES IN THIS SECTION REPLACE AND ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OTHER
WARRANTIES ARE DISCLAIMED.
Norand does not warrant uninterrupted or error-free operation of products
provided under this Agreement.
Non-Norand hardware and software is provided by Norand without warranty on
an "AS IS, WITH ALL FAULTS" basis. However, the manufacturers, suppliers
or publishers of the non-Norand hardware or Software may provide their own
warranties.
9.4 LIMITATION ON PATENT INFRINGEMENT SUITS
Western Atlas agrees not to assert any claims during the term of this
Agreement against Norand alleging that any of the Products infringe any
patent owned or controlled by Western Atlas or any of its subsidiaries.
10. LIMITATIONS OF LIABILITY
Norand does not guarantee delivery of Products by any particular date. If
Norand accepts Western Atlas' order and fails to deliver ordered Products,
Western Atlas' sole remedy will be limited to refund of money paid to
Norand for the undelivered products.
NEITHER NORAND NOR WESTERN ATLAS WILL HAVE ANY LIABILITY OR RESPONSIBILITY
TO WESTERN ATLAS OR NORAND, AS THE CASE MAY BE, OR ANY OTHER PERSON OR
ENTITY FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE OR INCIDENTAL
DAMAGES OR LOST PROFITS, WHETHER FORESEEABLE OR UNFORESEEABLE, BASED ON
CLAIMS OF NORAND, WESTERN ATLAS OR WESTERN ATLAS' CUSTOMERS, AS THE CASE
MAY BE, (INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR LOSS OF DATA, GOODWILL,
PROFITS, USE OF MONEY OR USE OF PRODUCT, INTERRUPTION IN USE OR
AVAILABILITY OF DATA, STOPPAGE OF OTHER WORK OR IMPAIRMENT OF OTHER
ASSETS), ARISING OUT OF BREACH OR FAILURE OF EXPRESS OR IMPLIED WARRANTY,
BREACH OF CONTRACT, MISREPRESENTATION, NEGLIGENCE, STRICT LIABILITY IN TORT
OR OTHERWISE, EXCEPT
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ONLY IN THE CASE OF DEATH OR PERSONAL INJURY WHERE AND TO THE EXTENT THAT
APPLICABLE LAW REQUIRES SUCH LIABILITY. IN NO EVENT WILL THE AGGREGATE
LIABILITY INCURRED BY NORAND OR WESTERN ATLAS, AS THE CASE MAY BE, IN ANY
ACTION OR PROCEEDING EXCEED THE TOTAL AMOUNT ACTUALLY PAID TO NORAND BY
WESTERN ATLAS OR BY WESTERN ATLAS TO NORAND, AS THE CASE MAY BE, FOR THE
PURCHASE OF THE PRODUCT(S) THAT ACTUALLY CAUSED THE DAMAGE OR LOSS.
11. INTERNATIONAL SALES
Western Atlas represents and warrants that the Products and all other
software and technical data which Western Atlas receives under this
Agreement is for resale within the Territory, subject, where applicable, to
the consent of the United States government.
12. TERM
12.1 INITIAL TERM
The initial term of this Agreement will commence upon the Effective Date
hereof, and, subject to Section 12.2, will expire on the date set forth on
the face page of this Agreement, unless sooner terminated or extended as
provided herein. The expiration or earlier termination of this Agreement
will not relieve either party of obligations incurred prior thereto.
12.2 EXTENSION OF TERM
The term of this Agreement shall automatically be extended for successive
one-year periods ending on the anniversary of the date set forth on the
cover page of this Agreement, provided that neither party has, on or before
60 days prior to the next scheduled renewal date, given notice to the other
of its intention not to renew the term of this Agreement.
12.3 TERMINATION
This Agreement may be terminated:
A. Immediately, if Western Atlas assigns this Agreement or any of
its rights hereunder; the
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term "assign" to include, without limiting the generality
thereof, a transfer of a majority interest in Western Atlas'
business, or a sale of substantially all of Western Atlas'
assets.
B. By either party upon one (1) day's written notice in the event
the other party ceases to function as a going concern or to
conduct its operations in the normal course of business, or a
receiver for it is appointed or applied for, or a Petition under
the Federal Bankruptcy Act is filed by or against it, or it makes
an assignment for the benefit of creditors.
C. By written notice from Norand to Western Atlas effective
immediately if Western Atlas violates Section 1.1, Section 13,
or Section 17.2 of this Agreement.
D. By written notice from Western Atlas to Norand effective
immediately if Norand violates Section 17.2.
E. By either party, upon thirty (30) days written notice if the
other party fails in any material respect to perform or observe
any of its obligations (except those obligations otherwise
specifically addressed in this Section 12.3) under this
Agreement and such party has failed to cure such default within
thirty (30) days after the date of such notice of default.
Orders which are accepted but not shipped on the date of such
notice shall be deemed canceled as of the date of such notice.
13. SOFTWARE PRODUCT LICENSING
Products consisting of software programs ("SOFTWARE") are licensed, not
sold. Norand authorizes Western Atlas to offer end-users, in conjunction
with Western Atlas' resale of other Products, a limited license for the use
of Software with the Products sold by Western Atlas to the end-user.
Western Atlas agrees to distribute such Software only in conjunction with
the sale of Western Atlas' proprietary products, upon a signed, written
license agreement containing provisions substantially in the form of
Schedule C of this Agreement and payment in accordance with this Agreement.
Software will be distributed in object code only. Western Atlas may not
otherwise distribute the Software. Norand shall have the right during
normal
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business hours and upon reasonable notice to audit Western Atlas' relevant
books and records for the sole purpose of verifying performance of Western
Atlas' obligations under this Agreement. Norand reserves the right to
change the terms and conditions of Schedule C from time to time upon giving
Western Atlas notice of such changes.
14. PATENT AND COPYRIGHT INDEMNIFICATION
If an action is brought against Western Atlas claiming that a Product
infringes a patent or copyright within the Territory, Norand will defend
Western Atlas at Norand's expense and, subject to this Section and Section
10, above, will pay the damages and costs finally awarded against Western
Atlas in the infringement action, but only if (a) Western Atlas notifies
Norand promptly upon learning that the claim might be asserted, (b) Norand
has sole control over the defense of the claim and any negotiation for its
settlement or compromise; and (c) Western Atlas takes no action, that in
Norand's judgment, is contrary to Norand's interest.
If a claim described in this Section 14 may be or has been asserted,
Western Atlas will permit Norand, at Norand's option and expense, to (a)
procure the right to continue using the Product, (b) replace or modify the
Product to eliminate the infringement while providing functionally
equivalent performance, or (c) accept the return of the Product in exchange
for a refund of the price that Western Atlas actually paid to Norand for
such Product, less depreciation based on a 3-year straight-line
depreciation schedule, and a pro rata share of any maintenance fees that
Western Atlas actually paid to Norand for the then-current maintenance
period of the product.
Notwithstanding the above, Norand will have no duty to indemnify Western
Atlas if the patent or copyright infringement claim contemplated in this
Section 14 results from (a) a correction or modification of the Product not
provided by Norand, (b) the failure to promptly install any update which
Norand may have provided to Western Atlas, or (c) the combination of the
Product with other software or hardware not provided by Norand.
15. INTEGRATED LASER SCANNING TERMINALS
Norand is authorized by license to sell the integrated laser scanning
terminals Norand offers for use as a one-
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piece unit to read bar codes and process data. Western Atlas agrees not to
make any changes to these terminals and to use them for only these
purposes. The licensor under Norand's license has the sole right to
enforce these provisions. If Western Atlas makes an authorized transfer of
these terminals to another party, that party must agree to these conditions
in writing.
16. PUBLIC ANNOUNCEMENTS
Neither party to this Agreement may make any public announcements with
respect hereto without the approval of such announcement by the other party
hereto, which consent shall not be unreasonably withheld.
17. GENERAL
17.1 GOVERNING LAW
This Agreement and performance hereunder will be governed by and construed
in accordance with the laws of the State of Iowa, U.S.A.
17.2 CONFIDENTIALITY
Western Atlas and its employees and Norand and its employees each agree to
not directly or indirectly, use, divulge or reveal to any person any
Confidential Information without the prior written consent of Norand or
Western Atlas, as the case may be. For purposes of this Agreement, the
term "CONFIDENTIAL INFORMATION" shall mean information which is not known
outside of Norand's business or Western Atlas' business, as the case may
be, and from which Norand or Western Atlas, as the case may be, obtains an
economic benefit because it is not known outside of Norand's business or
Western Atlas' business, as the case may be, and which is disclosed by
Norand to Western Atlas or Western Atlas to Norand, as the case may be, or
becomes known to Western Atlas or Norand, as the case may be, as a
consequence of this Agreement or any actions taken under this Agreement,
including but not limited to all drawings, specifications, parts lists,
lists of other resellers of Products, the Price Guide and other price
lists, channel marketing programs and other types of information or data
relating to Norand's business or Western Atlas' business, as the case may
be.
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<PAGE>
Western Atlas also agrees not to reverse engineer, disassemble or decompile
any of the Products. Western Atlas and Norand also each agree to comply
with all reasonable regulations which Norand may ask Western Atlas to
follow or Western Atlas may ask Norand to follow, as the case may be, to
preserve the confidential nature of such Confidential Information and to
enforce such regulations against their respective officers, employees and
agents and otherwise assure that the Confidential Information is protected.
In the event of a breach or a threatened breach by Western Atlas or Norand
of any provision of this Section, Norand or Western Atlas, as the case may
be, will be entitled to an injunction restraining Western Atlas or Norand,
as the case may be, from any use or disclosure, or threatened use or
disclosure, in whole or in part, of the other's Confidential Information.
Nothing herein will be construed as prohibiting Norand or Western Atlas
from pursuing any other remedies for such breach or threatened breach,
including the recovery of damages.
In addition, Western Atlas and Norand each agree not to disclose the
financial terms of this Agreement, including discounts, without the prior
written consent of the other, except as required by law.
Upon termination of this Agreement, Western Atlas and Norand each agree to
promptly return all Confidential Information belonging to the other or to
certify to the other that such information has been destroyed.
17.3 NOTICES
Notices required or allowed to be given hereunder will be deemed given on
the date deposited, postage prepaid, for delivery by the U.S. Postal
Service, to the parties at the following respective addresses:
IF TO NORAND: IF TO WESTERN ATLAS:
Norand Corporation Western Atlas, Inc.
550 Second Street S.E. 360 North Crescent Drive
Cedar Rapids, IA 52403 Beverly Hills, CA 90210
Attention: Legal Services Attn: General Counsel
with copy to:
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Intermec Corporation
6001 36th Avenue West
Everett, Washington 98203
Attn: Michael Ohanian
Addresses may be from time to time modified by like notice. Routine
periodic notices (such as price and product changes and the like) may be
given by first class mail, all other notices must be given by certified
mail, return receipt requested.
17.4 ENTIRE AGREEMENT
Each party acknowledges that it has read this Agreement, fully understands
it, and agrees to be bound by its terms and further agrees that it,
including the Schedules, Price Guide and any addenda hereto, is the
complete and exclusive statement of the agreement between the parties,
which supersedes and merges all prior proposals, understandings and all
other agreements, oral and written, between the parties, relating to the
subject matter of this Agreement. This Agreement cannot be modified or
altered except by a written instrument duly executed by both parties. In
the event of any conflict between the provisions of this Agreement, the
Schedules, the Price Guide and any addenda hereto, the following order or
precedence will apply: Addenda, if any, the Agreement, Schedules, and then
the Price Guide.
17.5 ENFORCEABILITY
If any provision of this Agreement will be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions will in no way be affected or impaired thereby.
17.6 NO WAIVER
The failure of either party to exercise in any respect any right provided
for herein will not be deemed a waiver of any right hereunder.
17.7 SURVIVAL
The provisions of Sections 7, 8, 10, 14 and 15 of this Agreement will
survive termination hereof.
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17.8 EFFECTIVE DATE
This Agreement will be effective on the date when it is accepted by Norand
and signed by Norand's authorized representative (the "EFFECTIVE DATE").
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed below by
their authorized representatives.
Accepted By:
NORAND CORPORATION WESTERN ATLAS INC.
BY: BY:
------------------------------- -------------------------------
Signature Signature
Name: N. Robert Hammer Name: Michael E. Keane
--------------------------------- -------------------------
Title: Chairman, President and Title: Senior Vice President and
Chief Executive Officer Chief Financial Officer
Date: Date:
--------------------------------- ----------------------------
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__________________________________SCHEDULE "A"
PRODUCTS 1.
PEN*KEY 6100
PEN*KEY 6600
OWL Radio Network, including
- 6700 Access Point
- Radio Network Software
- Gateway hardware and software
- Emulation software, if required
- 900 radio cards
- Norand 2.4 radio cards, when available
- Norand Synthetic UHF radio cards, when available
Any charge coupled device product modular engines
Accessories, software and spare parts
____________________
1 Including improvements, upgrades, replacements and enhancements of any
Product.
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SCHEDULE "B"
TRAINING PROGRAM REQUIREMENTS 2.
I. LEVEL ONE CERTIFICATION -- CERTIFIED WIRELESS SPECIALIST
I.A. Western Atlas must complete the following courses:
1. Introduction to Products (RF101)
2. UHF Systems
3. SST Systems
4. Hands-on Configuration
5. Troubleshooting RF Systems
6. TCP/IP or 3270/5250
7. PEN*KEY-TM-
II. LEVEL TWO CERTIFICATION -- CERTIFIED WIRELESS ENGINEER
II.A. Western Atlas must complete the following courses in addition to
completion of the courses set forth in Paragraph A above:
1. UHF Site Survey
2. SST Site Survey
3. Local Area Networking
4. Ethernet From A to Z
5. Taken Ring
6. TCP/IP and 3270/5250
____________________
2. Courses and course content are subject to change at the sole
discretion of Norand.
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SCHEDULE "C"
Western Atlas agrees that it will obtain written agreements containing
substantially the following provisions before delivering any Norand Software to
another person.
1. Certain software programs provided under this Agreement are provided under
license from Norand Corporation ("Norand Corporation"). Norand Software is
licensed, not sold. Western Atlas, Inc. ("Western Atlas") hereby grants
________________________ (Buyer) a non-exclusive right and license to use
Norand Software on the Products covered by this Agreement. No other right
or license is granted nor implied.
________________________ (Buyer) agrees to not modify, copy, distribute or
otherwise disclose Norand Software without the prior written consent of
Norand. Buyer further agrees not to reverse engineer, disassemble, or
decompile the Products, including but not limited to the Norand Software.
This license shall expire when ________________________ (Buyer) no longer
owns or ceases to use the Products with which ________________________
(Buyer) is licensed to use.
2. Western Atlas warrants that Norand Software will function in accordance
with the user manual provided with the Norand Software for ninety (90) days
from date of shipment. If an item of Norand Software does not function as
warranted, Western Atlas will, without charge, attempt to provide
information to correct the program or the user manual. If Western Atlas is
not able to provide this information, ________________________ (Buyer) may
return the item of Norand Software to Western Atlas and Western Atlas will
refund ________________________ (Buyer's) money.
THE WARRANTIES IN THIS SECTION REPLACE ALL OTHER WARRANTIES OF NORAND
SOFTWARE, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
3. IN NO EVENT WILL WESTERN ATLAS NOR NORAND BE LIABLE FOR ANY SPECIAL,
INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE, INCLUDING WITHOUT LIMITATION,
ANY LOST PROFITS OR SAVINGS, AND ANY LOSS OR DAMAGE CAUSED BY THE LOSS OF
USE OF ANY DATA OR INFORMATION OR ANY INACCURATE DATA OR INFORMATION.
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