<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
PURSUANT TO SECTION 13(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
MICOM COMMUNICATIONS CORP.
(NAME OF SUBJECT COMPANY)
------------------------
NORTHERN TELECOM LIMITED
NORTHERN TELECOM INC.
ELDER CORPORATION
(BIDDERS)
------------------------
COMMON STOCK, PAR VALUE $.0000001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
59478P 10 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
PETER J. CHILIBECK
CORPORATE SECRETARY AND ASSISTANT GENERAL COUNSEL
NORTHERN TELECOM LIMITED
2920 MATHESON BOULEVARD EAST
MISSISSAUGA, ONTARIO
CANADA L4W 4M7
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
WITH A COPY TO:
VICTOR I. LEWKOW, ESQ.
CLEARY, GOTTLIEB, STEEN & HAMILTON
ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10006
(212) 225-2000
------------------------
CALCULATION OF FILING FEE
<TABLE>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$137,439,036.00 $27,487.81
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</TABLE>
* Transaction valuation assumes the purchase of 11,453,253 shares of common
stock at $12.00 in cash per share.
** The amount of the filing fee, calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, equals 1/50 of one percent
of the value of the shares to be purchased.
/ /Check Box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
<TABLE>
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Amount Previously Paid: Not applicable. Filing Party:
Form or Registration No.: Date Filed
</TABLE>
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<PAGE> 2
SCHEDULE 14D-1
<TABLE>
<S> <C> <C>
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CUSIP No. 59478P 10 3 Page 2 of 8 Pages
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NAME OF REPORTING PERSONS:
1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Elder Corporation
62-1640287
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
2 (See Instructions) (b) /
/
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SEC USE ONLY
3
- ------------------------------------------------------------------------------------------------
SOURCES OF FUNDS (See Instructions)
4
AF
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(e) or 2(f) /
/
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
7 PERSON
5,151,145
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
8 CERTAIN SHARES (See Instructions) /
/
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9
45.0%
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TYPE OF REPORTING PERSON (See Instructions)
10
CO
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</TABLE>
<PAGE> 3
SCHEDULE 14D-1
<TABLE>
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CUSIP No. 59478P 10 3 Page 3 of 8 Pages
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NAME OF REPORTING PERSONS:
1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Northern Telecom Inc.
04-2486332
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
2 (See Instructions) (b) /
/
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SEC USE ONLY
3
- ------------------------------------------------------------------------------------------------
SOURCES OF FUNDS (See Instructions)
4
WC
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(e) or 2(f) /
/
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
7 PERSON
5,151,145
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
8 CERTAIN SHARES (See Instructions) /
/
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9
45.0%
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TYPE OF REPORTING PERSON (See Instructions)
10
HC, CO
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</TABLE>
<PAGE> 4
SCHEDULE 14D-1
<TABLE>
<S> <C> <C>
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CUSIP No. 59478P 10 3 Page 4 of 8 Pages
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NAME OF REPORTING PERSONS:
1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Northern Telecom Limited
62-1262580
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
2 (See Instructions) (b) /
/
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SEC USE ONLY
3
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SOURCES OF FUNDS (See Instructions)
4
Not Applicable
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(e) or 2(f) /
/
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Canada
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
7 PERSON
5,151,145
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
8 CERTAIN SHARES (See Instructions) /
/
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9
45.0%
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TYPE OF REPORTING PERSON (See Instructions)
10
HC, CO
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</TABLE>
<PAGE> 5
INTRODUCTION
This Tender Offer Statement on Schedule 14D-1 relates to a tender offer by
Elder Corporation, a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of Northern Telecom Inc., a Delaware corporation ("Parent"), which
is, in turn, a wholly owned subsidiary of Northern Telecom Limited, a
corporation organized under the laws of Canada ("Nortel"), to purchase all
outstanding shares of Common Stock, par value $.0000001 per share (the
"Shares"), of MICOM Communications Corp., a Delaware corporation, at $12.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated May 17, 1996 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), copies of which are
filed as Exhibits (a)(1) and (a)(2) hereto, respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The subject company is MICOM Communications Corp., a Delaware
corporation (the "Company"), and the principal executive offices of the Company
are located at 4100 Los Angeles Avenue, Simi Valley, California 93063.
(b) The class of equity securities sought is the Company's common stock,
par value $.0000001 per share. The information set forth in "Introduction" of
the Offer to Purchase is incorporated herein by reference.
(c) The information regarding the principal market for, and the high and
low sales prices for, the Shares set forth in "Section 6. Price Range of the
Shares; Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) The persons filing this statement are Purchaser, Parent and
Nortel. BCE Inc. ("BCE") is the owner of approximately 51.4% of the outstanding
common stock of Nortel and may be deemed to control Nortel. The information set
forth in "Section 9. Certain Information Concerning Purchaser, Parent, Nortel
and BCE" of the Offer to Purchase is incorporated herein by reference. The
names, business addresses, present principal occupations or employment, material
occupations, positions, offices or employments during the last five years and
citizenship of the directors and executive officers of Purchaser, Parent, Nortel
and BCE are set forth in Annex I of the Offer to Purchase, which Annex is
incorporated herein by reference.
(e)-(f) During the last five years, none of Purchaser, Parent or Nortel
nor, to the best knowledge of Purchaser, Parent and Nortel, neither BCE nor any
of the persons listed in Annex I of the Offer to Purchase, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, Federal or State securities
laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Introduction", "Section 10. Source
and Amount of Funds", "Section 11. Background of the Transaction" and "Section
12. Purpose of the Offer; The Merger Agreement; The Stock Option Agreements" of
the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in "Introduction", "Section 10. Source
and Amount of Funds" and "Section 14. Certain Conditions of the Offer" of the
Offer to Purchase is incorporated herein by reference.
Page 5 of 8 pages
<PAGE> 6
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(e) The information set forth in "Introduction", "Section 10. Source
and Amount of Funds", "Section 11. Background of the Transaction" and "Section
12. Purpose of the Offer; The Merger Agreement; The Stock Option Agreements" of
the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in "Section 7. Certain Effects of the
Transaction" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Introduction", "Section 9. Certain
Information Concerning Purchaser, Parent, Nortel and BCE", "Section 11.
Background of the Transaction" and "Section 12. Purpose of the Offer; The Merger
Agreement; The Stock Option Agreements" of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction", "Section 9. Certain
Information Concerning Purchaser, Parent, Nortel and BCE", "Section 11.
Background of the Transaction" and "Section 12. Purpose of the Offer; The Merger
Agreement; The Stock Option Agreements" of the Offer to Purchase is incorporated
herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction", "Section 11. Background of the
Transaction", "Section 12. Purpose of the Offer; The Merger Agreement; The Stock
Option Agreements" and "Section 16. Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 9. Certain Information Concerning
Purchaser, Parent, Nortel and BCE" of the Offer to Purchase is incorporated
herein by reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a securityholder of the Company whether to sell, tender or hold
Shares.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in "Introduction", "Section 11. Background of
the Transaction", "Section 12. Purpose of the Offer; The Merger Agreement; The
Stock Option Agreements" and "Section 14. Certain Conditions of the Offer" of
the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in "Introduction", "Section 14. Certain
Conditions of the Offer" and "Section 15. Certain Legal Matters" of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in "Section 7. Certain Effects of the
Transaction" of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of May 13, 1996 among the
Company, Purchaser and Parent, the Stock Option Agreements dated as of May 13,
1996 among Purchaser, Parent and certain stockholders of the Company, copies of
which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1), (c)(2) and (c)(3),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
See Exhibit Index.
Page 6 of 8 pages
<PAGE> 7
SIGNATURES
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
NORTHERN TELECOM LIMITED
By: /s/ WILLIAM R. KERR
------------------------------------
Name: William R. Kerr
Title: Vice-President and Treasurer
By: /s/ DEBORAH J. NOBLE
------------------------------------
Name: Deborah J. Noble
Title: Assistant Secretary
NORTHERN TELECOM INC.
By: /s/ PETER W. CURRIE
------------------------------------
Name: Peter W. Currie
Title: Attorney-in-Fact
ELDER CORPORATION
By: /s/ ANTHONY J. LAFLEUR
------------------------------------
Name: Anthony J. Lafleur
Title: Vice-President and Assistant
Secretary
Dated: May 17, 1996
Page 7 of 8 pages
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
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<S> <C> <C>
(a)(1) Offer to Purchase dated May 17, 1996.......................................
(a)(2) Form of Letter of Transmittal..............................................
(a)(3) Form of Notice of Guaranteed Delivery......................................
(a)(4) Form of Letter from CS First Boston Corporation to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.......................
(a)(5) Form of Letter to Clients from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees...............................................
(a)(6) Summary Advertisement published May 17, 1996...............................
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute
Form W-9...................................................................
(a)(8) Text of Press Release issued on May 13, 1996...............................
(a)(9) Text of Press Release issued on May 17, 1996...............................
(b) Not applicable.............................................................
(c)(1) Agreement and Plan of Merger dated as of May 13, 1996 among MICOM
Communications Corp., Northern Telecom Inc. and Elder Corporation..........
(c)(2) Stock Option Agreement dated as of May 13, 1996 among Northern Telecom
Inc., Elder Corporation and Odyssey Partners L.P. .........................
(c)(3) Stock Option Agreement dated as of May 13, 1996 among Northern Telecom
Inc., Elder Corporation and E.R. Yost......................................
(c)(4) Confidentiality Agreement dated February 27, 1996..........................
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
Page 8 of 8 pages
<PAGE> 1
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
MICOM COMMUNICATIONS CORP.
at
$12.00 NET PER SHARE
by
ELDER CORPORATION
an indirect wholly owned subsidiary of
NORTHERN TELECOM LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 14, 1996,
UNLESS THE OFFER IS EXTENDED.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY, BY THE UNANIMOUS VOTE OF THE DIRECTORS
PRESENT, HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, HAS APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES.
------------------------
ELDER CORPORATION AND NORTHERN TELECOM INC., A WHOLLY OWNED SUBSIDIARY OF
NORTHERN TELECOM LIMITED, HAVE ENTERED INTO STOCK OPTION AGREEMENTS WITH
CERTAIN STOCKHOLDERS WHO OWN AN AGGREGATE OF APPROXIMATELY 39% OF THE
OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK (ON A FULLY DILUTED
BASIS), PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH STOCKHOLDERS
HAVE AGREED TO VALIDLY TENDER (AND NOT TO WITHDRAW) ALL
SUCH SHARES PURSUANT TO THE OFFER AND GRANTED ELDER
CORPORATION AN OPTION TO PURCHASE ALL SUCH SHARES AT A
PRICE OF $12.00 PER SHARE UNDER CERTAIN
CIRCUMSTANCES.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES WHICH,
WHEN ADDED TO THE SHARES ELDER CORPORATION HAS THE RIGHT TO ACQUIRE
PURSUANT TO THE STOCK OPTION AGREEMENTS, WOULD CONSTITUTE A MAJORITY OF
THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK ON A FULLY
DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
CONTAINED IN THIS OFFER TO PURCHASE. SEE INTRODUCTION AND SECTIONS 1
AND 14.
------------------------
IMPORTANT
Any stockholder desiring to tender all or a portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal or a
facsimile thereof in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other required documents to the
Depositary and either deliver the certificates for such Shares to the Depositary
along with the Letter of Transmittal or deliver such Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. Any stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such stockholder desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be directed to the Information Agent or the
Dealer Manager at their respective addresses and telephone numbers set forth on
the back cover of this Offer to Purchase.
------------------------
The Dealer Manager for the Offer is:
CS First Boston
May 17, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION........................................................................... 1
1. Terms of the Offer................................................................ 3
2. Acceptance for Payment and Payment for Shares..................................... 4
3. Procedure for Tendering Shares.................................................... 5
4. Withdrawal Rights................................................................. 8
5. Certain U.S. Federal Income Tax Consequences...................................... 9
6. Price Range of the Shares; Dividends.............................................. 9
7. Certain Effects of the Transaction................................................ 10
8. Certain Information Concerning the Company........................................ 11
9. Certain Information Concerning Purchaser, Parent, Nortel and BCE.................. 15
10. Source and Amount of Funds........................................................ 16
11. Background of the Transaction..................................................... 16
12. Purpose of the Offer; The Merger Agreement; The Stock Option Agreements........... 18
13. Dividends and Distributions....................................................... 30
14. Certain Conditions of the Offer................................................... 30
15. Certain Legal Matters............................................................. 32
16. Certain Fees and Expenses......................................................... 34
17. Miscellaneous..................................................................... 35
</TABLE>
Annex I -- Directors And Executive Officers of Purchaser, Parent, Nortel And BCE
i
<PAGE> 3
To the Holders of Common Stock of
MICOM Communications Corp.:
INTRODUCTION
Elder Corporation, a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of Northern Telecom Inc., a Delaware corporation ("Parent") which is,
in turn, a wholly owned subsidiary of Northern Telecom Limited, a corporation
organized under the laws of Canada ("Nortel" and, together with Purchaser and
Parent, the "Nortel Entities"), hereby offers to purchase all of the outstanding
shares of the common stock, $.0000001 par value (the "Shares"), of MICOM
Communications Corp., a Delaware corporation (the "Company"), at a purchase
price of $12.00 per Share (the "Offer Price"), net to the seller in cash, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, together with any supplements or
amendments thereto, collectively constitute the "Offer"). Tendering stockholders
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. However, any tendering stockholder or
other payee who fails to complete and sign the Substitute Form W-9 that is
included in the Letter of Transmittal may be subject to a required backup U.S.
federal income tax withholding of 31% of the gross proceeds payable to such
holder or other payee pursuant to the Offer. See Section 5. Purchaser will pay
all charges and expenses of CS First Boston Corporation ("CS First Boston"), as
the dealer manager (in such capacity, the "Dealer Manager"), First Chicago Trust
Company of New York, as the depositary (the "Depositary"), and MacKenzie
Partners, Inc., as the information agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of May 13, 1996 (the "Merger Agreement") among Purchaser, Parent and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by Purchaser and further provides that, following the Offer and
subject to the satisfaction or waiver of certain conditions, Purchaser will be
merged with and into the Company (the "Merger"), with the Company surviving the
Merger as a wholly owned subsidiary of Parent (the "Surviving Corporation"). As
a result of the Merger, each outstanding Share (other than Shares owned by
Parent or Purchaser or any of their subsidiaries or held in the treasury of the
Company or by stockholders who have properly exercised their appraisal rights
under Delaware law) will be converted at the effective time of the Merger (the
"Effective Time") into the right to receive $12.00 in cash, without interest
(the "Merger Consideration"). For a description of the Merger Agreement, see
Section 12. Certain U.S. federal income tax consequences of the sale of Shares
pursuant to the Offer and the exchange of Shares for cash pursuant to the Merger
(whether as Merger Consideration or pursuant to the exercise of appraisal
rights) are described in Section 5.
Concurrently with the execution of the Merger Agreement, and as a condition
to Parent and Purchaser entering into the Merger Agreement, Purchaser and Parent
entered into stock option agreements dated as of May 13, 1996 (together, the
"Stock Option Agreements") with each of Odyssey Partners L.P. ("Odyssey") and
E.R. Yost (together with Odyssey, the "Investors"), the owners of 4,737,733 and
413,412 Shares, respectively (together representing approximately 39% of the
outstanding Shares on a fully diluted basis) (collectively, the "Option
Shares"). Pursuant to the Stock Option Agreements, each of the Investors has (i)
agreed to validly tender (and not to withdraw, except as set forth below) such
Investor's respective Option Shares pursuant to and in accordance with the Offer
and (ii) granted Purchaser options (together, the "Investor Options"), to
purchase such Investor's respective Option Shares at a price of $12.00 per
Share. The Investor Options are exercisable, subject to certain conditions set
forth in the Stock Option Agreements, upon the occurrence of (i) the Offer's
termination, abandonment or withdrawal, (ii) the consummation of the Offer
without Purchaser's acceptance for payment and payment for the Option Shares or
(iii) the Merger Agreement's termination. In the Stock Option Agreements, each
of the Investors has agreed not to tender (or to withdraw any tender of) such
Investor's respective Option Shares if Purchaser, in its sole discretion,
increases the Offer Price. In that event, Purchaser will be obligated to
exercise the Investor Options and purchase the Option Shares (at the $12.00 per
Option Share exercise price) on the business day following the
<PAGE> 4
purchase of any Shares pursuant to the Offer. For a description of the Stock
Option Agreements, see Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY, BY THE UNANIMOUS VOTE OF THE
DIRECTORS PRESENT, HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND
IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
MONTGOMERY SECURITIES ("MONTGOMERY"), THE COMPANY'S INDEPENDENT FINANCIAL
ADVISOR, HAS ADVISED THE COMPANY'S BOARD OF DIRECTORS THAT, IN ITS OPINION, THE
CONSIDERATION TO BE PAID IN THE OFFER AND THE MERGER TO THE COMPANY'S
STOCKHOLDERS IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH STOCKHOLDERS. A
COPY OF THE OPINION OF MONTGOMERY IS CONTAINED IN THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9")
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN
CONNECTION WITH THE OFFER, A COPY OF WHICH (WITHOUT CERTAIN EXHIBITS) IS BEING
FURNISHED TO STOCKHOLDERS CONCURRENTLY HEREWITH.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, AT THE EXPIRATION DATE
(AS DEFINED IN SECTION 1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN THAT
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES WHICH PURCHASER HAS THE RIGHT
TO ACQUIRE PURSUANT TO THE STOCK OPTION AGREEMENTS, WOULD CONSTITUTE A MAJORITY
OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION").
THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE SECTIONS 1 AND 14.
The Company has represented pursuant to the Merger Agreement that, as of
April 29, 1996, 11,449,918 Shares were issued and outstanding and that, as of
that date and the date of the Merger Agreement, not more than 13,115,994 Shares
were issued and outstanding on a fully diluted basis. Parent, Purchaser and
their affiliates do not currently beneficially own any Shares or rights to
acquire Shares other than the rights to acquire the Option Shares pursuant to
the Stock Option Agreements under certain circumstances. Assuming the Stock
Option Agreements remain in full force and effect, the Minimum Condition will be
satisfied if 1,406,853 Shares (other than the Option Shares) are duly tendered
and not withdrawn pursuant to the Offer.
The consummation of the Merger also is subject to the satisfaction or
waiver of a number of conditions, including, if required, the approval of the
Merger by the requisite vote or consent of the stockholders of the Company.
Under the Delaware General Corporation Law (the "DGCL"), the stockholder vote
necessary to approve the Merger will be the affirmative vote of a majority of
the outstanding Shares, including any Shares held by Parent and Purchaser as a
result of the purchase of Shares pursuant to the Offer and the Stock Option
Agreements. The Offer is conditioned on, among other things, satisfaction of the
Minimum Condition. If the Minimum Condition is satisfied and Option Shares not
acquired in the Offer are purchased pursuant to the Stock Option Agreements,
Purchaser will be able to approve the Merger without regard to the vote of any
other stockholder of the Company. See Sections 12 and 14. In addition, if
Purchaser acquires at least 90% of the outstanding Shares pursuant to the Offer,
the Stock Option Agreements or otherwise, Purchaser would be able to effect the
Merger pursuant to the "short-form" merger provisions of Section 253 of the
DGCL, without prior notice to, or any action by, any other stockholder. In such
event, Purchaser intends to effect the Merger promptly following the purchase of
Shares pursuant to the Offer and the Stock Option Agreements. In connection with
the Merger, holders of Shares who have not sold their Shares pursuant to the
Offer (or otherwise) will have certain rights under the DGCL to demand appraisal
of, and payment in cash of the fair value (as judicially determined) of, their
Shares. See Section 12.
The Offer is not being made for the Company's outstanding warrants (the
"Warrants") issued pursuant to the Warrant Agreement dated as of January 28,
1992 among the Company and the other parties thereto (the "Warrant Agreement").
Holders of Warrants who wish to participate in the Offer must exercise such
Warrants and tender the Shares issued upon such exercise prior to expiration of
the Offer. Following the Merger, pursuant to the terms of the Warrant Agreement,
each outstanding Warrant will be exercisable solely for cash in an amount equal
to $12.00 multiplied by the number of Shares for which such Warrant was
exercisable immediately prior to the Merger.
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THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL AND THE SCHEDULE 14D-9
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BY STOCKHOLDERS
BEFORE THEY MAKE ANY DECISION WHETHER TO TENDER THEIR SHARES PURSUANT TO THE
OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will, and Parent has agreed in the Merger Agreement to
cause Purchaser to, accept for payment, and pay for, all Shares validly tendered
and not properly withdrawn as provided in Section 4 prior to the Expiration
Date. As used herein, the term "Expiration Date" shall mean 12:00 midnight, New
York City time, on Friday, June 14, 1996, unless and until Purchaser shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Purchaser, shall expire. Pursuant to the Merger Agreement,
Parent and Purchaser may, without the consent of the Company, (i) extend the
Offer, if at any scheduled expiration date of the Offer any of the conditions of
the Offer shall not be satisfied or waived, until such time as such conditions
are satisfied or waived, (ii) extend the Offer for any period required by
statute, rule, regulation, interpretation or position of the Commission or any
other governmental authority or agency thereof applicable to the Offer, and
(iii) extend the Offer for any reason on one or more occasions for an aggregate
of not more than 15 business days beyond the latest expiration date of the Offer
that would otherwise be permitted under clauses (i) and (ii) of this sentence.
In addition, Purchaser and Parent have agreed that if at any scheduled
expiration date of the Offer any of the conditions of the Offer are not
satisfied or waived by Parent or Purchaser but are capable of being satisfied in
the reasonable opinion of Parent and Purchaser, on the written request of the
Company, Purchaser will from time to time extend the Offer for up to thirty
business days in the aggregate from the originally scheduled expiration date of
the Offer. As used in this Offer to Purchase, "business day" means any day other
than a Saturday, Sunday or a U.S. federal holiday, and consists of the time
period from 12:01 a.m. through 12:00 Midnight, New York City time.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, EXPIRATION OR
TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), AND THE MINIMUM CONDITION
BEING SATISFIED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTIONS 14 AND 15.
Purchaser reserves the right (but will not be obligated), in accordance
with applicable rules and regulations of the Commission, to waive or reduce the
Minimum Condition or to waive any other condition to the Offer. If the Minimum
Condition or any of the other conditions set forth in Section 14 has not been
satisfied by the scheduled expiration date of the Offer, Purchaser may elect (1)
to extend the Offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the Offer, as extended, subject to the
terms of the Offer, (2) subject to complying with applicable rules and
regulations of the Commission, to waive the unsatisfied conditions and accept
for payment all Shares so tendered and not extend the Offer, (3) subject to the
terms of the Merger Agreement, to terminate the Offer and not accept for payment
any Shares and return all tendered Shares to tendering stockholders, or (4)
subject to the terms of the Merger Agreement, to amend the Offer.
Subject to the limitations set forth in the Merger Agreement as described
above, Purchaser reserves the right (but will not be obligated), at any time or
from time to time in its sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that Purchaser will exercise its right to extend the Offer.
Subject to the applicable rules and regulations of the Commission,
Purchaser also expressly reserves the right, in its sole discretion at any time
and from time to time, (1) to delay payment for any Shares regardless of whether
such Shares were theretofore accepted for payment, or, subject to the
limitations set forth in the Merger Agreement, to terminate the Offer and not to
accept for payment or pay for any Shares not theretofore accepted for payment or
paid for, if the Minimum Condition or any other condition to the Offer is not
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<PAGE> 6
satisfied, by giving oral or written notice of such delay or termination to the
Depositary, and (2) subject to the limitations set forth in the Merger
Agreement, at any time or from time to time, to amend the Offer in any respect.
However, in the Merger Agreement, Purchaser has agreed that it will not, without
the consent of the Company, (1) decrease or change the form of consideration
payable in the Offer, (2) decrease the number of Shares sought pursuant to the
Offer, (3) impose additional conditions of the Offer other than those set forth
in Section 14, (4) change the conditions of the Offer (provided that Parent or
Purchaser in its sole discretion may waive any such conditions) or (5) make any
other change to the terms or conditions of the Offer which is materially adverse
to the holders of Shares. Purchaser's right to delay payment for any Shares or
not to pay for any Shares theretofore accepted for payment is subject to the
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
relating to Purchaser's obligation to pay for or return tendered Shares promptly
after the termination or withdrawal of the Offer. The obligation of Purchaser to
consummate the Offer and to accept for payment and to pay for any Shares
tendered pursuant to the Offer will be subject to the conditions of the Offer.
See Section 14.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, or termination or amendment of the Offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rule
14d-4(c) under the Exchange Act. Without limiting the obligation of Purchaser
under such rule or the manner in which Purchaser may choose to make any public
announcement, Purchaser currently intends to make announcements by issuing a
press release to the Dow Jones News Service and making any appropriate filing
with the Commission.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer (including a waiver of the Minimum Condition), Purchaser will disseminate
additional tender offer materials and extend the Offer if and to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which a tender offer must remain open following a material
change in the terms of the Offer or information concerning the Offer, other than
a change in the price or in the number of Shares sought, will depend on the
facts and circumstances then existing, including the relative materiality of the
change. With respect to a change in the price or number of Shares sought, a
minimum of ten business days is generally required to permit adequate disclosure
to stockholders.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
stockholders. This Offer to Purchase, the related Letter of Transmittal and
certain other relevant materials will be mailed to record holders of Shares and
will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any such extension or amendment),
Purchaser will, and Parent has agreed to cause Purchaser to, accept for payment,
and pay for, all Shares validly tendered and not properly withdrawn prior to the
Expiration Date, promptly after the later to occur of (i) the Expiration Date
and (ii) subject to compliance with Rule 14e-1(c) under the Exchange Act, the
date of satisfaction or waiver of all of the conditions of the Offer set forth
in Section 14 (including expiration or termination of the waiting period under
the HSR Act) applicable to the acquisition of Shares pursuant to the Offer.
Subject to compliance with Rule 14e-1(c) under the Exchange Act and the terms
and conditions of the Merger Agreement, Purchaser expressly reserves the right,
in its discretion, to delay acceptance for payment of or payment for Shares in
order to comply, in whole or in part, with any applicable law or government
regulation or any condition contained herein. See Sections 14 and 15.
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<PAGE> 7
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to such Shares), (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all required
signature guarantees or an Agent's Message, as defined below, in connection with
a book-entry transfer, and (iii) all other documents required by the Letter of
Transmittal. See Section 3. The term "Agent's Message" means a message
transmitted by a Book-Entry Transfer Facility (as defined in Section 3) to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Shares which are the subject of such Book-Entry Confirmation that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that Purchaser may enforce such agreement against such
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
tendering stockholders whose Shares have theretofore been accepted for payment.
If, for any reason, acceptance for payment of any Shares tendered pursuant to
the Offer is delayed, or Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under Section 14, the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent that the tendering stockholders are entitled to withdrawal rights as
described in Section 4 and as otherwise required by Rule 14e-1(c) under the
Exchange Act. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE BE PAID BY
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for such Shares
not purchased or tendered will be returned pursuant to the instructions of the
tendering stockholder without expense to the tendering stockholder (or, in the
case of Shares delivered by book-entry transfer into the Depositary's account at
a Book-Entry Transfer Facility (as defined in Section 3) pursuant to the
procedures set forth in Section 3, such Shares will be credited to an account
maintained at the appropriate Book-Entry Transfer Facility) as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser (in its sole discretion)
increases the consideration to be paid per Share pursuant to the Offer,
Purchaser will pay such increased consideration for all such Shares purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration. Pursuant to the Stock Option Agreements, each of the
Investors has agreed not to tender such Investor's respective Option Shares into
the Offer after the first public announcement of any such increase and to
promptly withdraw any Option Shares theretofore tendered. In such event, if
Purchaser purchases any Shares pursuant to the Offer, Purchaser will be
obligated to exercise the Investor Options and purchase the Investors' Option
Shares at a price of $12.00 per Option Share on the first business day following
such purchase of Shares pursuant to the Offer.
Purchaser reserves the right to transfer or assign, in whole or in part, to
Parent or one or more of Parent's subsidiaries the right to purchase Shares
tendered pursuant to the Offer; provided, however, that no such transfer or
assignment will release Purchaser from its obligations under the Offer or
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (a) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry delivery of Shares and
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<PAGE> 8
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, and either (i) certificates representing Shares must be
received by the Depositary at any such address on or prior to the Expiration
Date or (ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (b)
the tendering stockholder must comply with the guaranteed delivery procedures
set forth below. No alternative, conditional or contingent tenders will be
accepted.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at The Depository Trust Company and the
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and collectively, the "Book-Entry Transfer Facilities") for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in a Book-Entry Transfer Facility's
system may make book-entry delivery of Shares by causing a Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with that Book-Entry Transfer
Facility's procedure for such transfer. However, although delivery of Shares may
be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or an Agent's Message in connection with a book-entry
transfer) and any other required documents, must, in any case, be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS
(INCLUDING AN EXECUTED LETTER OF TRANSMITTAL) TO A BOOK-ENTRY TRANSFER FACILITY
IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agent's
Medallion Program, or by any other bank, broker, dealer, credit union, savings
association or other entity that is an "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing
constituting an "Eligible Institution") unless the Shares tendered thereby are
tendered (i) by a registered holder (which term, for purposes of this Section,
includes any participant in any of the Book-Entry Transfer Facilities' systems
whose name appears on a security position listing as the owner of the Shares) of
Shares who has not completed either the box labeled "Special Delivery
Instructions" or the box labeled "Special Payment Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution. See Instruction
1 of the Letter of Transmittal. If the certificates representing Shares are
registered in the name of a person or persons other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not accepted for payment or not tendered are to be issued to a person other than
the registered holder, then the certificates representing Shares must be
endorsed or accompanied by appropriate stock powers, in each case signed exactly
as the name or names of the registered holder or holders appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
as described above and as provided in the Letter of Transmittal. See
Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, such Shares may nevertheless be tendered if all of the
following guaranteed delivery procedures are complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
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<PAGE> 9
(iii) the certificates for all tendered Shares in proper form for
transfer, or a Book-Entry Confirmation with respect to all tendered Shares,
in either case together with a properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile thereof), with any requested
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by the Letter of Transmittal,
are received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the New York Stock Exchange, Inc. is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include
an endorsement by an Eligible Institution in the form set forth in such Notice
of Guaranteed Delivery.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of (i) certificates for (or a Book-Entry Confirmation
with respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message, and (iii) all other documents
required by the Letter of Transmittal.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8
(Certificate of Foreign Status), a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 10 to the
Letter of Transmittal.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares that are determined by it not to be in
proper form or the acceptance of or payment for which, in the opinion of
Purchaser, may be unlawful. Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender of Shares. Subject to the terms of the
Merger Agreement, Purchaser also reserves the absolute right to waive or to
amend any of the conditions of the Offer. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent, Nortel, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights
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with respect to the Shares tendered by such stockholder and accepted for payment
by Purchaser (and with respect to any and all other Shares or other securities
issued or issuable in respect of such Shares on or after May 13, 1996). All such
powers of attorney and proxies shall be considered coupled with an interest in
the tendered Shares. Such powers of attorney and proxies shall be irrevocable
and shall be effective when, and only to the extent that, Purchaser accepts such
Shares for payment. Upon such acceptance for payment, all prior powers of
attorney and proxies given by such stockholder with respect to such Shares (and
any other Shares or other securities so issued in respect of such purchased
Shares) will be revoked, without further action, and no subsequent powers of
attorney and proxies may be given (and, if given, will not be deemed effective)
by such stockholder. The designees of Purchaser will be empowered to exercise
all voting and other rights of such stockholder with respect to such Shares (and
any other Shares or securities so issued in respect of such accepted Shares) as
they in their sole discretion may deem proper, including, without limitation, in
respect of any annual or special meeting of the Company's stockholders, or any
adjournment or postponement thereof, or in connection with any action by written
consent in lieu of any such meeting or otherwise (including any such meeting or
action by written consent to approve the Merger). Purchaser reserves the
absolute right to require that, in order for Shares to be validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting and other rights with respect to such
Shares (and any other Shares or securities so issued in respect of such accepted
Shares), including voting at any meeting of stockholders then scheduled or
giving or withdrawing written consents as to which the record date has passed.
Binding Agreement. The valid tender of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided herein, may also be withdrawn at
any time after July 15, 1996. If Purchaser extends the Offer, is delayed in its
purchase of or payment for Shares or is unable to purchase or pay for Shares for
any reason, then, without prejudice to the rights of Purchaser hereunder,
tendered Shares may be retained by the Depositary on behalf of Purchaser and may
not be withdrawn except to the extent that tendering stockholders are entitled
to withdrawal rights as set forth in this Section 4. The reservation by
Purchaser of the right to delay the acceptance or purchase of, or payment for,
Shares is subject to the provisions of Rule 14e-1(c) under the Exchange Act,
which requires Purchaser to pay the consideration offered or return Shares
deposited by or on behalf of stockholders promptly after the termination or
withdrawal of the Offer.
For a withdrawal of tendered Shares to be effective, a written, telegraphic
or facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If certificates evidencing Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then prior to the
physical release of such certificates, the tendering stockholder must also
submit the serial numbers shown on such certificates, and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution (except
in the case of Shares tendered for the account of an Eligible Institution). If
Shares have been tendered pursuant to the procedure for book-entry transfer set
forth in Section 3, any notice of withdrawal with respect to such Shares must
specify the name and number of the account at the applicable Book-Entry Transfer
Facility to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding on all parties. No withdrawal of
Shares shall be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent, Nortel, the
Dealer Manager, the Depositary, the
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Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failing to give such notification.
Any Shares properly withdrawn will be deemed not to have been validly
tendered for purposes of the Offer, but may be retendered at any subsequent time
prior to the Expiration Date by following any of the procedures described in
Section 3.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal U.S. federal income tax
consequences of the Offer and the Merger to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted into the right to receive
cash in the Merger (whether upon receipt of the Merger Consideration or pursuant
to the exercise of appraisal rights). The discussion applies only to holders of
Shares in whose hands Shares are capital assets, and may not apply to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation, or to holders of Shares who are not citizens or residents of the
United States.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON PRESENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of the Offer Price and the receipt of cash pursuant to the
Merger (whether as Merger Consideration or pursuant to the exercise of appraisal
rights) will be a taxable transaction for U.S. federal income tax purposes (and
also may be a taxable transaction under applicable state, local and other income
tax laws). In general, for U.S. federal income tax purposes, a holder of Shares
will recognize gain or loss equal to the difference between such holder's
adjusted tax basis in the Shares sold pursuant to the Offer or converted to cash
in the Merger and the amount of cash received therefor. Gain or loss must be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted to
cash in the Merger. Such gain or loss will be capital gain or loss and will be
long-term gain or loss if, on the date of sale (or, if applicable, the date of
the Merger), the Shares were held for more than one year.
Payments in connection with the Offer or the Merger may be subject to
backup withholding at a 31% rate. Backup withholding generally applies if the
stockholder (a) fails to furnish such stockholder's social security number or
TIN, (b) furnishes an incorrect TIN, (c) fails properly to report interest or
dividends or (d) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is such
stockholder's correct number and that such stockholder is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax. Certain persons generally are exempt from backup withholding, including
corporations and financial institutions. Certain penalties apply for failure to
furnish correct information and for failure to include the reportable payments
in income. Each stockholder should consult with such stockholder's own tax
advisor as to such stockholder's qualification for exemption from withholding
and the procedure for obtaining such exemption.
6. PRICE RANGE OF THE SHARES; DIVIDENDS
According to the Company's Annual Report on Form 10-K for the year ended
April 2, 1995 (the "Company 10-K"), the Shares commenced trading on The Nasdaq
Stock Market Inc.'s National Market System ("Nasdaq") under the symbol MICM on
June 6, 1994. According to the Company 10-K, the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1995 (the "Company 10-Q") and
information supplied to Purchaser by the Company, since that date the Company
has not paid any cash dividends on the Shares. The following table sets forth,
for the periods indicated, the high and low sales prices per Share on Nasdaq, as
reported in published financial sources.
9
<PAGE> 12
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Fiscal Year Ended April 2, 1995:
First Quarter (commencing June 6, 1994).............................. $13.50 $10.50
Second Quarter....................................................... $15.75 $ 8.125
Third Quarter........................................................ $15.50 $ 8.25
Fourth Quarter....................................................... $ 9.00 $ 5.875
Fiscal Year Ended March 31, 1996:
First Quarter........................................................ $ 7.875 $ 5.50
Second Quarter....................................................... $12.50 $ 6.50
Third Quarter........................................................ $11.75 $ 6.00
Fourth Quarter....................................................... $ 9.75 $ 6.50
Fiscal Year Ended March 30, 1997:
First Quarter (through May 16, 1996)................................. $14.375 $ 7.50
</TABLE>
On May 7, 1996, the last full trading day before the Dow Jones News Service
reported "rumors that [the Company] is a buyout target", the closing price per
Share on Nasdaq was $10.75. On May 10, 1996, the last full trading day before
the public announcement of the execution of the Merger Agreement and Purchaser's
intention to make the Offer, the closing price per Share on Nasdaq was $14.00.
On May 16, 1996, the last full trading day before the commencement of the Offer,
the closing price per Share on Nasdaq was $11.875. STOCKHOLDERS ARE ENCOURAGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. CERTAIN EFFECTS OF THE TRANSACTION
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of Shares,
which could adversely affect the liquidity and market value of the remaining
Shares held by the public. Based on information provided by the Company, as of
May 14, 1996, there were 241 stockholders of record of the Shares (not taking
into account ownership through nominees and depositaries).
The extent of the public market for the Shares and, according to the
published guidelines of The Nasdaq Stock Market, Inc., the continued trading of
the Shares on Nasdaq after the purchase of Shares pursuant to the Offer, will
depend upon the number of holders of Shares remaining at such time, the interest
in maintaining a market in such Shares on the part of securities firms, the
possible termination of registration of such Shares under the Exchange Act, as
described below, and other factors. If, as a result of the purchase of Shares
pursuant to the Offer or otherwise, trading of the Shares on Nasdaq is
discontinued, the liquidity of and market for the Shares could be adversely
affected. Purchaser cannot predict whether or to what extent the reduction in
the number of Shares that might otherwise trade publicly would result in the
suspension of trading of the Shares on Nasdaq or would have an adverse or
beneficial effect on the market price for or marketability of the Shares or
whether it would cause future prices to be greater or less than the Offer Price.
The Shares are currently "margin securities", as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, following
consummation of the Offer it is possible that the Shares might no longer
constitute "margin securities" for purposes of the margin regulations of the
Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange or quoted on Nasdaq and there are fewer than 300 record holders of the
Shares. Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of
10
<PAGE> 13
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement in connection with stockholders' meetings pursuant to Section 14(a) of
the Exchange Act, and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Company. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. It is the present intention of Purchaser to seek to cause the Company
to make an application for the termination of the registration of the Shares
under the Exchange Act as soon as possible after the purchase of all validly
tendered Shares in the Offer if the requirements for termination of registration
are met. If registration of the Shares under the Exchange Act were terminated,
the Shares would no longer be "margin securities" or be eligible for Nasdaq
reporting. If registration of the Shares is not terminated prior to the Merger,
the registration of the Shares under the Exchange Act will be terminated
following consummation of the Merger. See Section 12.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources including, but not limited to, the Company 10-K and the Company
10-Q. Although none of Nortel, Parent or Purchaser has any knowledge that any
statements contained herein based on such documents and records are untrue, none
of Nortel, Parent or Purchaser takes any responsibility for the accuracy or
completeness of the information concerning the Company, furnished by the Company
or contained in such documents and records, or for any failure by the Company to
disclose events that may have occurred and may affect the significance or
accuracy of any such information.
The Company is a Delaware corporation with its principal executive offices
and facilities located at 4100 Los Angeles Avenue, Simi Valley, California
93063. The Company designs, manufactures, markets and services wide area
networking ("WAN") products that provide cost-effective remote connectivity
solutions for small and medium-size network users and divisions of larger
corporations worldwide. The Company's Marathon(R), NetRunner(R) and Sprinter(R)
integration product families integrate remote data, voice, facsimile and local
area network ("LAN") traffic over low-cost, low-speed analog and digital lines,
both private networks, or leased lines, and public networks such as frame relay,
enabling users to reduce the operating costs of their data and voice
communications networks while increasing network capacity and capability . These
products combine the Company's fast-packet, cell-relay technology with advanced
data and voice compression technologies in a low-cost design. The Company
distributes its products worldwide in more than 85 countries through a large
established group of independent resellers.
For a description of a joint development project between the Company and
Nortel relating to the development, supply, support and marketing of a
multimedia access device, see Section 11.
11
<PAGE> 14
MICOM COMMUNICATIONS CORP.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS)
Set forth below are selected historical financial data and other historical
operating data of the Company as of and for the periods indicated that have been
taken or derived from the audited financial statements contained in the Company
10-K. More comprehensive financial information and other information is included
in the Company 10-K and other documents filed by the Company with the
Commission, and the following summary financial information is qualified in its
entirety by reference to such reports and other documents including the
financial statements and related notes contained therein.
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Revenues.............................................. $88,257 $81,103 $67,337
Gross Profit.......................................... 48,246 45,441 36,503
Operating Income (Loss)............................... 12,398 12,437 (212)+
Net Income (Loss)..................................... 7,176 5,135* (714)*
</TABLE>
- ---------------
+ Includes a $9.0 million non-recurring charge and excludes corporate overhead
expenses absorbed by former parent.
* Pro forma to show results as if Company had not been subject to a tax-sharing
agreement with its former parent.
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1995 1994
--------- ---------
<S> <C> <C>
Total Assets................................................... $65,347 $55,381
Total Liabilities.............................................. 21,054 37,919
Stockholders' Equity........................................... 44,293 17,462
</TABLE>
Set forth below is an excerpt from the Company's press release dated May
15, 1996 with respect to the Company's unaudited financial statements at March
31, 1996 and its results for the quarter and year then ended:
MICOM Communications Corp. (NASDAQ:MICM) announced today revenues for its fiscal
fourth quarter ended March 31, 1996 of $22.0 million, versus $21.5 million for
the year-ago fourth quarter. Net income for the quarter was $1.9 million, or
$0.16 per share, of which approximately $1.6 million (net of tax), or $0.13 per
share, was associated with the reversal of accrued 1994 Northridge earthquake
costs. The Company reported net income of $1.6 million, or $0.13 per share for
last year's fiscal fourth quarter.
Revenues for the fiscal year ended March 31, 1996 were approximately $84.4
million, compared to $88.3 million for the prior year. After taking into
consideration the accounting treatment for the 1994 Northridge earthquake in the
fourth quarter, net income for the year was approximately $2.7 million, or $0.22
per share, versus net income of $7.2 million, or $0.61 per share, for the prior
fiscal year.
12
<PAGE> 15
MICOM COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 419 $ 259
Trade accounts receivable, net...................... 26,377 26,089
Inventories, net.................................... 10,597 9,501
Other current assets................................ 2,639 2,367
--------- ---------
Total current assets............................. 40,032 38,216
--------- ---------
Property, plant and equipment, net.................... 18,650 18,445
Other assets.......................................... 9,333 8,686
--------- ---------
Total assets..................................... $68,015 $65,347
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit obligation......................... $ 5,040 $ 890
Current portion of obligations under capital
leases........................................... 158 316
Trade accounts payable.............................. 9,000 7,502
Accrued taxes and expenses.......................... 6,343 12,155
--------- ---------
Total current liabilities........................ 20,541 20,863
--------- ---------
Obligations under capital leases, net of current
portion............................................. 28 191
Stockholders' equity:
Common stock and paid-in capital.................... 27,623 27,124
Retained earnings................................... 19,823 17,169
--------- ---------
Total stockholders' equity....................... 47,446 44,293
--------- ---------
Total liabilities and stockholders' equity....... $68,015 $65,347
======= =======
</TABLE>
13
<PAGE> 16
MICOM COMMUNICATIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED YEAR ENDED
--------------------- ---------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.............................. $22,004 $21,477 $84,369 $88,257
Gross profit.......................... 10,317 10,895 40,205 48,246
Operating expenses:
Research and development............ 2,824 2,208 10,902 8,911
Selling, general and administrative
expenses......................... 6,796 5,990 26,955 26,937
Total operating expenses....... 9,620 8,198 37,857 35,848
--------- --------- --------- ---------
Income from operations................ 697 2,697 2,348 12,398
Interest expense, net................. 105 22 469 130
Reversal of accrued earthquake
costs............................... 2,661 -- 2,661 --
--------- --------- --------- ---------
Income before income taxes............ 3,253 2,675 4,540 12,268
Income taxes.......................... 1,352 1,111 1,886 5,092
--------- --------- --------- ---------
Net income............................ $ 1,901 $ 1,564 $ 2,654 $ 7,176
======= ======= ======= =======
Earnings per share.................... $ 0.16 $ 0.13 $ 0.22 $ 0.61
======= ======= ======= =======
Average common and common equivalent
shares outstanding.................. 11,839 11,694 11,838 11,780
======= ======= ======= =======
</TABLE>
The earnings per share are based on the weighted average number of shares
outstanding during the period after consideration of the dilutive effect of
stock options and warrants. In determining such dilutive effect, the average
market price calculation for the year ended March 31, 1995 was based on the
short trading period of June 6, 1994 through March 31, 1995.
Certain Company Projections. During the course of discussions between the
Nortel Entities and the Company that led to the execution of the Merger
Agreement (see Section 11), the Company provided the Nortel Entities with
certain information relating to the Company that Purchaser believes is not
publicly available. This information included projections of the operating
performance of the Company for the years ended on or about March 31, 1997
through 1999, based on financial projections developed by the Company. The
projections do not reflect consummation of the Offer or the Merger.
The projections include the following information regarding the Company's
anticipated results of operations (in millions) for the years ended March 31,
1997, 1998 and 1999:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------
1997 1998 1999
------ ------ ------
<S> <C> <C> <C>
Revenues..................................................... $105.0 $132.0 $164.0
Gross Profit................................................. 52.5 63.5 78.1
Operating Income............................................. 12.5 17.5 25.1
Net Income................................................... 7.2 10.1 14.6
</TABLE>
These projections are based on a variety of estimates and assumptions,
which involve judgments with respect to future economic and competitive
conditions, inflation rates and technology trends.
The Company does not as a matter of course make public any projections as
to future performance or earnings, and the projections set forth above are
included in this Offer to Purchase only because the information was made
available to the Nortel Entities by the Company. The Nortel Entities understand
that the projections were not prepared with a view to public disclosure or
compliance with the published guidelines
14
<PAGE> 17
of the Commission or the guidelines established by the American Institute of
Certified Public Accountants
regarding projections or forecasts. Projected information of this type is based
on estimates and assumptions that are inherently subject to significant economic
and competitive uncertainties and contingencies, all of which are difficult to
predict and many of which are beyond the control of the Company and the Nortel
Entities. Accordingly, actual results may vary materially from such projections
and none of the Company or the Nortel Entities assumes any responsibility for
the accuracy or validity of any of the projections. The inclusion of the
foregoing projections should not be regarded as an indication that the Company,
the Nortel Entities or any other person who received such information considers
it an accurate prediction of future events, and the Nortel Entities have not
relied on them as such.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance therewith, the Company files
periodic reports, proxy statements and other information with the Commission
under the Exchange Act relating to its business, financial condition and other
matters. The Company is required to disclose in such proxy statements certain
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at the regional offices of the Commission located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
reports, proxy statements and other information should be obtainable upon
payment of the Commission's prescribed fees by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
9. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT, NORTEL AND BCE.
Purchaser, a Delaware corporation, was incorporated in May 1996 for the
purpose of entering into the Merger Agreement and consummating the transactions
contemplated thereby. It has conducted no business other than related to its
formation and the transactions contemplated by the Merger Agreement. All the
outstanding capital stock of Purchaser is owned by Parent.
Parent is a Delaware corporation. All of the outstanding capital stock of
Parent is owned by Nortel, a corporation organized under the laws of Canada.
Nortel, directly and through its subsidiaries, is a leading supplier of
telecommunications equipment products, the only business in which it operates.
The telecommunications business consists of the research and design,
development, manufacture, marketing, sale, financing, installation, servicing
and support of switching networks, enterprise networks, wireless networks,
broadband networks and other products and services. The common stock of Nortel
is listed on the Toronto, New York, Montreal, Vancouver and London Stock
Exchanges. For the year ended December 31, 1995, Nortel had revenues of U.S.
$10.67 billion and net earnings applicable to common shares of U.S. $469
million. Nortel's shareholders' equity at December 31, 1995 was U.S. $3.87
billion.
BCE Inc. ("BCE") is the owner of approximately 51.4% of the outstanding
common stock of Nortel and, accordingly, may be deemed to control Nortel. BCE is
Canada's largest telecommunications company. In addition to its ownership
interest in Nortel and its operations in other business segments, BCE owns all
the outstanding voting shares of Bell Canada, the largest Canadian supplier of
telecommunications services.
The principal executive offices of Nortel are located at 2920 Matheson
Boulevard East, Mississauga, Ontario L4W 4M7.
The principal executive offices of Parent and Purchaser are located at
Northern Telecom Plaza, 200 Athens Way, Nashville, Tennessee 37228.
The principal executive offices of BCE are located at 1000, rue de La
Gauchetiere Ouest, Montreal, Quebec H3B 4Y7.
See Annex I to this Offer to Purchase for information concerning the
executive officers and directors of Purchaser, Parent, Nortel and BCE.
15
<PAGE> 18
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent or Nortel nor, to the best knowledge of Purchaser, Parent and Nortel, any
of BCE or the persons listed in Annex I or any associate or majority owned
subsidiary of any such persons, beneficially owns or has a right to acquire any
equity security of the Company and (ii) none of Purchaser, Parent or Nortel nor,
to the best knowledge of Purchaser, Parent and Nortel, any of the other persons
referred to above, or any of the respective directors, executive officers or
subsidiaries of any of the foregoing, has effected any transaction in any equity
security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent or Nortel nor, to the best knowledge of Purchaser, Parent and Nortel, BCE
or any of the persons listed in Annex I, has any contract, arrangement,
understanding or relationship (whether or not legally enforceable) with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any such securities, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against
loss, or the giving or withholding of proxies; (ii) there have been no contacts,
negotiations or transactions between Purchaser, Parent and Nortel or any of
their respective subsidiaries or, to the best knowledge of Purchaser, Parent and
Nortel, BCE or any of the persons listed in Annex I on the one hand, and the
Company or any of its directors, officers or affiliates on the other hand,
concerning a merger, consolidation or acquisition, a tender offer or other
acquisition of securities, election of directors or a sale or transfer of a
material amount of assets, that are required to be disclosed pursuant to the
rules and regulations of the Commission.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser to purchase all outstanding
Shares (including the Option Shares) and to pay related fees and expenses in
connection with the Offer, the Merger and the Stock Option Agreements, is
estimated to be approximately $150 million. Purchaser expects to obtain the
necessary funds directly or indirectly from Parent or Nortel from existing cash
reserves and conventional sources of short-term financing.
11. BACKGROUND OF THE TRANSACTION
In order to complement its existing Magellan product line, Nortel conducted
an evaluation of a number of branch access vendors from April to October 1995.
Members of Nortel's Multimedia Networks business unit contacted the Company
in June 1995 to discuss the Company's business and products. During July and
August 1995, the Company shared certain technological information with Nortel as
part of Nortel's evaluation of the Company.
In early September 1995, George Abou-Arrage, Nortel's Assistant Vice
President and Business Manager -- Magellan Access, telephoned Del Willis,
Director of Business Development of the Company, to discuss the results of
Nortel's evaluation.
On September 14, 1995, Mr. Abou-Arrage and other members of Nortel's
Multimedia Networks business unit met with Mr. Willis, Simon Lam, Vice President
Product Development and D. Wayne Shackelford, Manager -- Major Account Sales, of
the Company to discuss the commercial terms of potential cooperative efforts
with respect to the development, supply, support and marketing of a multimedia
access device. This initial contact led to various meetings and telephone
conversations between Nortel and the Company during the months of October,
November and December 1995.
On December 7, 1995, Mr. Abou-Arrage suggested the possibility of the
Nortel Entities taking an equity interest in the Company to Gilbert Cabral,
President and Chief Operating Officer of the Company.
On December 21, 1995, Nortel and the Company entered into a memorandum of
understanding with respect to the development, supply, support and marketing of
a multimedia access device, which contemplated the parties negotiating a
definitive development agreement by February 29, 1996. The memorandum of
understanding was generally not binding, except that it required Nortel to make
an initial $400,000 payment to the Company for the Company to continue
development work in advance of a definitive development
16
<PAGE> 19
agreement and gave Nortel the right to begin purchasing certain existing Company
products and reselling those products as part of equipment manufactured and sold
by Nortel. The memorandum of understanding contemplated that, upon execution of
a definitive development agreement, the Company would deliver a final project
plan and Nortel would make an additional payment of $400,000 to the Company,
with subsequent payments to be made to continue to fund certain of the Company's
development efforts.
On January 27, 1996, Mr. Abou-Arrage spoke to Warren Phelps, Chairman of
the Board and Chief Executive Officer of the Company, and Mr. Cabral concerning
the possible benefits that might result from an acquisition of the Company by
the Nortel Entities. This was followed by a further discussion on February 13,
1996 between Klaus Buechner, Nortel's Group Vice President and General Manager
Multimedia Networks, and Mr. Phelps and Mr. Cabral.
On February 23, 1996, Mr. Buechner telephoned Brian Young, a director of
the Company and a former general partner of Odyssey, and, in response to Mr.
Buechner's inquiry, Mr. Young indicated that Odyssey might be interested in
selling its Shares in connection with a potential acquisition of the Company by
the Nortel Entities.
In view of these preliminary discussions, Nortel and the Company entered
into a confidentiality agreement (see Section 12 hereof) on February 27, 1996
pursuant to which the Company provided to Nortel certain requested financial and
operating information to assist Nortel in considering its options.
During the week of March 11, 1996, Nortel conducted a preliminary diligence
review of the Company. On March 27, 1996, Mr. Buechner, Mr. Phelps, Mr. Young
and a representative of Montgomery, the Company's financial advisor, met to
review the status of Nortel's diligence review and discuss potential transaction
structures.
On April 17, 1996, a representative of Montgomery had a discussion with Mr.
Buechner in order to quantify and evaluate Nortel's potential interest in the
Company. As a result of that conversation, the Company agreed to proceed with,
and provide information with respect to, the more thorough due diligence review
requested by Nortel.
During the week of April 29, 1996, Nortel conducted a further diligence
review. Various discussions were held during that week and during the week of
May 6, 1996 between the respective representatives of and advisors to the
Company and the Nortel Entities as to matters related to the Company's business.
Since a multimedia access device development agreement had not been
finalized or entered into by February 29, 1996, as contemplated by the
memorandum of understanding, Nortel did not make the payment to be made upon
execution of the agreement. Concurrently with Nortel's due diligence, the
parties continued to work on the development project and to negotiate the terms
of the development agreement. In view of the Merger Agreement, the development
agreement was not finalized.
On the evening of May 9, 1996, a representative of CS First Boston, the
Nortel Entities' financial advisor, communicated to a representative of
Montgomery that, if so requested by the Company's Board of Directors, the Nortel
Entities would be prepared to make a proposal to the Board of Directors to
acquire the Company for a price of $11 per Share, subject to execution of
satisfactory agreements. The CS First Boston representative stated that any
proposal by the Nortel Entities would be conditioned upon obtaining a
satisfactory stock option agreement with respect to the Option Shares.
Substantially contemporaneously, counsel to the Nortel Entities furnished the
Company and Odyssey and their respective advisors with drafts of the Merger
Agreement and a Stock Option Agreement.
On May 10, 1996, a representative of Montgomery indicated to a
representative of CS First Boston that an acquisition price of $11 per Share was
unacceptable but that the Company would be willing to enter into an acquisition
transaction at a price of $13 per Share.
During the evening of May 10, 1996, and over the May 11-12, 1996 weekend,
representatives of CS First Boston and Montgomery continued discussions and
negotiations regarding the proposed acquisition, including the proposed price,
and counsel for the Nortel Entities negotiated the terms of the Merger Agreement
and the Stock Option Agreements with counsel for the Company and Odyssey,
respectively. On the afternoon of
17
<PAGE> 20
May 12, 1996, representatives of Montgomery and CS First Boston indicated that
they believed that their respective clients would be prepared to enter into a
transaction with an acquisition price of $12 per Share, subject to finalization
of satisfactory agreements.
On May 12, 1996, the Board of Directors of the Company, by the unanimous
vote of the directors present, approved the Merger Agreement and determined to
recommend that stockholders tender their shares pursuant to the Offer. The
Company's Board also approved, for purposes of Section 203 of the DGCL (see
Section 15 hereof), the Stock Option Agreements. Early on May 13, 1996, the
Merger Agreement and the Stock Option Agreements were executed and the
transactions were publicly announced.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCK OPTION AGREEMENTS
General
The purposes of the Offer and the Stock Option Agreements are to enable
Purchaser to acquire, in one or more transactions, control of, and the entire
equity interest in, the Company. The purpose of the Merger is for Purchaser to
acquire all Shares not purchased pursuant to the Offer and the Stock Option
Agreements. The acquisition of the entire equity interest in the Company is
structured as a cash tender offer followed by a merger in order to provide a
prompt and orderly transfer of ownership of the Company from the public
stockholders to Purchaser.
Upon consummation of the Merger, the Company will become a wholly owned
subsidiary of Parent. The Offer is being made in accordance with the Merger
Agreement.
Under the DGCL, the approval of the Board of Directors of the Company and
the affirmative vote of the holders of a majority of the outstanding Shares is
required to approve and adopt the agreement of merger contained in the Merger
Agreement. The Board of Directors of the Company has approved and adopted the
agreement of merger contained in the Merger Agreement and the transactions
contemplated thereby and, unless the Merger is consummated pursuant to the
short-form merger provisions under the DGCL described below, the only remaining
required corporate action of the Company is the approval and adoption of the
agreement of merger contained in the Merger Agreement by the affirmative vote of
the holders of a majority of the outstanding Shares. Accordingly, if the Minimum
Condition is satisfied, Purchaser will have sufficient voting power to cause the
approval and adoption of the agreement of merger contained in the Merger
Agreement without the affirmative vote of any other stockholder.
In the Merger Agreement, the Company has agreed to convene a meeting of its
stockholders as soon as practicable after the consummation of the Offer for the
purpose of adopting the agreement of merger contained in the Merger Agreement
and the transactions contemplated thereby, if such action is required by the
DGCL, and, subject to the fiduciary duties of its Board of Directors under
applicable law, to include in the proxy statement with respect to such meeting
the recommendation of its Board of Directors that stockholders of the Company
vote in favor of the adoption of the Merger Agreement. Purchaser and Parent have
each agreed that all Shares acquired pursuant to the Offer, the Stock Option
Agreements or otherwise by Purchaser or Parent or any of their affiliates will
be voted in favor of the Merger.
Under the "short-form" merger provisions of the DGCL, if Purchaser
acquires, pursuant to the Offer, the Stock Option Agreements or otherwise, at
least 90% of the outstanding Shares, Purchaser will be able to approve the
agreement of merger contained in the Merger Agreement without a vote of the
Company's stockholders promptly following the transfer of record ownership into
the name of Purchaser of the Shares so acquired. If, however, Purchaser does not
acquire at least 90% of the outstanding Shares pursuant to the Offer, the Stock
Option Agreements or otherwise and a vote of the Company's stockholders is
required under the DGCL, a significantly longer period of time would be required
to effect the Merger by reason of the need for the preparation and distribution
of a proxy statement or information statement in advance of a meeting of
stockholders.
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The Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Schedule 14D-1 (including
the Merger Agreement and other exhibits) may be examined, and copies thereof may
be obtained, as set forth in Section 17.
The Offer. The Merger Agreement provides for the making of the Offer.
Without the prior written consent of the Company, Purchaser has agreed that it
will not (i) decrease or change the form of consideration payable in the Offer,
(ii) decrease the number of Shares sought pursuant to the Offer (iii) impose
additional conditions to the Offer other than those set forth in Section 14,
(iv) change the conditions of the Offer (provided that Parent or Purchaser in
its sole discretion may waive any such conditions) or (v) make any other change
in the terms or conditions of the Offer which is materially adverse to the
holders of the Shares. The obligation of Purchaser to consummate the Offer and
to accept for payment and to pay for any Shares tendered pursuant to the Offer
will be subject only to the conditions set forth in Section 14. Notwithstanding
the foregoing, Parent and Purchaser may, without the consent of the Company, (i)
extend the Offer, if at the scheduled expiration date of the Offer any of the
conditions of the Offer shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (ii) extend the Offer for any period
required by statute rule, regulation, interpretation or position of the
Commission or any other governmental authority or agency thereof applicable to
the Offer, and (iii) extend the Offer for any reason on one or more occasions
for an aggregate of not more than 15 business days beyond the latest expiration
date that would otherwise be permitted under clauses (i) and (ii) of this
sentence. In addition, Purchaser and Parent have agreed that if at any scheduled
expiration date of the Offer any of the conditions of the Offer are not
satisfied or waived by Parent or Purchaser but are capable of being satisfied in
the reasonable opinion of Parent and Purchaser, on the written request of the
Company, Purchaser shall from time to time extend the Offer for up to thirty
business days in the aggregate from the originally scheduled expiration date.
Board Representation. If, immediately following the consummation of the
Offer, Purchaser is unable to cause the Merger to be effected pursuant to
Section 253 of the DGCL, promptly upon the purchase by Purchaser pursuant to the
Offer and the Investor Options of such number of Shares as represents at least a
majority of the outstanding Shares and from time to time thereafter, Purchaser
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company as will give Purchaser
representation on the Board of Directors of the Company equal to the product of
the number of directors on the Board of Directors of the Company and the
percentage that such number of Shares so purchased bears to the number of Shares
outstanding, and the Company shall, upon request by Purchaser, promptly increase
the size of the Board of Directors of the Company or use its best efforts to
secure the resignations of such number of directors as is necessary to provide
Purchaser with such level of representation and shall cause Purchaser's
designees to be so elected; provided that neither Parent nor Purchaser shall
take any action to prevent at least two persons who are directors of the Company
on May 13, 1996 from remaining as directors of the Company until the Effective
Time, and so long as there shall be at least one such continuing director,
following the election of Purchaser's designees and prior to the Effective Time,
any amendment of the Merger Agreement requiring action by the Board of Directors
of the Company, any extension of time for the performance of any of the
obligations or other acts of Parent or Purchaser under the Merger Agreement, and
any waiver of compliance with any of the agreements or conditions under the
Merger Agreement for the benefit of the Company will require the concurrence of
a majority of such continuing directors. The Company will also use its best
efforts to cause persons designated by Purchaser to constitute the same
percentage as is on the entire Board of Directors of the Company to be on (i)
each committee of the Board of Directors of the Company and (ii) each Board of
Directors and each committee thereof of each subsidiary of the Company. The
Company's obligations to appoint designees to its Board of Directors shall be
subject to Section 14(f) of the Exchange Act. At the request of Purchaser and
subject to applicable law, the Company has agreed to take, at its expense, all
action necessary to effect any such election or appointment of Purchaser's
designees, including mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder.
Purchaser and Parent are obligated to supply to the Company all
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<PAGE> 22
information with respect to themselves and their officers, directors and
affiliates required by such Section and Rule. At Parent's request, the Company
is furnishing to its stockholders, as Schedule I to the Schedule 14D-9, the
information required by such Section and Rule.
The Merger. The Merger Agreement provides that upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with relevant law,
Purchaser shall be merged with and into the Company as soon as practicable
following the satisfaction or waiver, if permissible, of the conditions to the
Merger. The Company shall be the Surviving Corporation and shall continue its
existence under the laws of Delaware, and the Certificate of Incorporation and
the Bylaws of Purchaser as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation and Bylaws of the Surviving
Corporation (except the name of the Surviving Corporation shall be MICOM
Communications Corp.). The directors of Purchaser immediately prior to the
Effective Time and the officers of the Company immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation until their respective successors are duly elected and
qualified. Each share of the common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation, which will thereupon become
a direct wholly owned subsidiary of Parent. The parties to the Merger Agreement
shall cause the Merger to be consummated by filing with the Secretary of State
of the State of Delaware a duly executed and verified certificate of merger, as
required by the DGCL. The Merger will become effective upon such filing or at
such time thereafter as is provided under applicable law (referred to herein as
the "Effective Time").
Consideration to be Paid in the Merger. In the Merger, each Share issued
and outstanding immediately prior to the Effective Time (other than Shares held
by Purchaser, Parent or any subsidiary of Purchaser or Parent or in the treasury
of the Company, all of which shall be canceled, and other than Dissenting Shares
(as defined in the Merger Agreement)) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive in cash an amount per Share (subject to any applicable withholding tax)
equal to $12.00, without interest.
Termination of Stock Options and Stock Option Plans. At the Effective Time
(or at such earlier time as Purchaser shall designate, which time may be
immediately prior to the acceptance of Shares pursuant to the Offer), each
holder of a stock option issued by the Company shall, in settlement thereof,
receive from the Surviving Corporation for each Share subject to such option an
amount (subject to any applicable withholding tax) in cash equal to the excess,
if any, of the Merger Consideration over the per share exercise or purchase
price of such option. Upon receipt of such amount by the holder of the option
(or in the case of an option with an exercise price of $12.00 or greater, at the
Effective Time), the option shall be canceled. At the Effective Time, all the
Company's stock option plans shall be terminated. In the Merger Agreement, the
Company has agreed to use its best efforts, prior to the Effective Time, to
obtain all necessary consents or releases from holders of options and to take
all such other action as may be reasonably necessary to give effect to these
provisions regarding options.
Cancellation of Purchase Rights. At the Effective Time, each holder of a
stock purchase right issued by the Company shall in settlement thereof receive
from the Surviving Corporation for each Share the holder of the purchase right
would have been entitled to with respect to such purchase right under the
Company's employee stock purchase plan, as calculated in accordance with the
terms of such plan (for purposes of such calculation the date of the Effective
Time shall be deemed to be the last day of any purchase right period under such
plan which commenced on or prior to May 13, 1996), subject to applicable
withholding tax, an amount in cash equal to the Merger Consideration, with
appropriate adjustment for fractional Shares otherwise purchasable. Upon receipt
of such amounts, the purchase right shall be canceled. In the Merger Agreement,
the Company has agreed to use its best efforts to obtain all necessary consents
or releases from holders of purchase rights and to take all other action as may
be necessary to give effect to these provisions regarding purchase rights. In
the Merger Agreement, the Company has represented that not more than 6,500
Shares are issuable upon the exercise of outstanding purchase rights issued by
the Company.
Effect on Warrants. After the Effective Time, the Warrants issued by the
Company will remain outstanding but, pursuant to the Warrant Agreement, will
only be exercisable for cash in an amount equal to
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<PAGE> 23
$12.00 multiplied by the number of Shares for which each Warrant was exercisable
immediately prior to the Merger.
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law, the Company will, as soon as practicable following consummation
of the Offer, duly call a meeting of its stockholders for the purpose of
adopting the plan of merger contained in the Merger Agreement and the
transactions contemplated thereby. The Merger Agreement also provides that,
subject to the fiduciary duties of its Board of Directors under applicable law
as set forth in a written opinion of outside counsel, the Company shall
recommend that stockholders of the Company vote in favor of the adoption of the
agreement of merger set forth in the Merger Agreement. Parent and Purchaser have
each agreed under the Merger Agreement that, at such stockholder meeting, all of
the Shares acquired pursuant to the Offer, the Option or otherwise by Parent or
Purchaser or any of their affiliates will be voted in favor of the Merger.
If Purchaser or Parent acquires at least 90% of the outstanding Shares, the
Merger may be effected without a meeting of the stockholders in accordance with
the provisions of Section 253 of the DGCL.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and good standing, capital structure, subsidiaries, corporate
authorization, absence of changes, Commission filings, consents and approvals,
no violations of other agreements, investment banking fees, employee benefits,
labor relations, litigation, taxes, compliance with applicable laws,
environmental matters, intellectual property, real property, insurance, material
contracts, related party transactions, liens and other matters.
Purchaser and Parent have also made certain representations and warranties
with respect to corporate existence and good standing, corporate authorization,
Commission filings, consents and approvals, no violations of other agreements
and other matters.
Conduct of Business and Other Covenants Pending the Merger. The Company
has agreed that, except as expressly contemplated by the Merger Agreement,
during the period from the date of the Merger Agreement to the date on which a
majority of the Company's directors are designees of Parent or Purchaser, the
Company will conduct, and will cause each of its subsidiaries to conduct, its
operations according to its ordinary and usual course of business and consistent
with past practice and the Company will use, and will cause each of its
subsidiaries to use, its best efforts to preserve intact its business
organization, to keep available the services of its current officers and
employees and to preserve the goodwill of, and maintain satisfactory
relationships with, those having business relationships with the Company and its
subsidiaries. The Company has agreed to promptly advise Parent and Purchaser in
writing of any change in the Company's or any of its subsidiaries' condition
(financial or otherwise), properties, customer or supplier relationships,
assets, liabilities, business prospects or results of operations which may
reasonably be likely to have a Material Adverse Effect (as defined in the Merger
Agreement).
In addition, without limiting the generality of the foregoing and except as
otherwise expressly provided in or contemplated by the Merger Agreement, prior
to the time specified in the first sentence in the preceding paragraph, the
Company has agreed that, without the prior written consent of Parent, it will
not (and will not permit any of its subsidiaries to): (i) issue, sell, grant
options or rights to purchase, pledge, or authorize or propose the issuance,
sale, grant of options or rights to purchase or pledge of (A) any securities of
the Company or any of its subsidiaries, or grant or accelerate any right to
convert or exchange any securities of the Company or any of its subsidiaries,
other than Shares issuable upon exercise of the options or warrants outstanding
on the date hereof or (B) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date of the Merger Agreement, (ii)
otherwise acquire or redeem, directly or indirectly, or amend any of the
securities of the Company or any of its subsidiaries, (iii) split, combine or
reclassify its capital stock or declare, set aside, make or pay any dividend or
distribution (whether in cash, stock or property) on any shares of capital stock
of the Company or any of its subsidiaries (other than cash dividends paid to the
Company by its wholly-owned subsidiaries with regard to their capital stock),
(iv) (1) make or offer to make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or other
disposition of assets or securities, in each case involving the payment or
receipt of
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consideration of $25,000 or more, except for purchases of inventory made in the
ordinary course of business and consistent with past practice, or (2) enter into
a contract which (x) involves or could involve aggregate payments of more than
$250,000, (y) is with MB Communications, Inc., Black Box Corporation or any of
their affiliates, (c) is with Odyssey or any of its affiliates or (d) is or
could reasonably be expected to be material to the Company and its subsidiaries
taken as a whole (such contracts, "Material Contracts"), or amend any Material
Contract, except with respect to a one year renewal of the Company's existing
policies of directors' and officers' liability insurance (scheduled to expire
prior to the Effective Time) or the purchase of policies that are substantially
equivalent to such existing policies, or grant any release or relinquishment of
any rights under any Material Contract, (v) incur or assume any long-term debt
or short-term debt except for short-term debt incurred in the ordinary course of
business consistent with past practice, (vi) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except wholly owned
subsidiaries of the Company, (vii) make any loans, advances or capital
contributions to, or investments in, any other person (other than wholly owned
subsidiaries of the Company), (viii) change any of the accounting principles or
practices used by it, (ix) make any tax election or settle or compromise any
material U.S. federal, state or local income tax liability, (x) propose or adopt
any amendments to its Certificate of Incorporation or Bylaws (or similar
documents), (xi) grant any stock-related, performance or similar awards or
bonuses, (xii) forgive any loans to employees, officers or directors or any of
their respective affiliates or associates, (xiii) enter into any new employment,
severance, consulting or salary continuation agreements with any officers,
directors or employees, or grant any increases in the compensation or benefits
to officers, directors and employees other than normal increases to persons who
are not officers or directors in the ordinary course of business consistent with
past practices and that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company, (xiv) make any deposits or
contributions of cash or other property to or take any other action to fund or
in any other way secure the payment of compensation or benefits under the
Company's employee benefit plans or agreements subject to such plans or any
other plan, agreement, contract or arrangement of the Company, (xv) enter into,
amend, or extend any collective bargaining or other labor agreement, (xvi)
adopt, amend or terminate any employee benefit plan or arrangement, (xvii)
settle or agree to settle any suit, action, claim, proceeding or investigation
(including any suit, action, claim, proceeding or investigation relating to the
Merger Agreement or the transactions contemplated thereby) or pay, discharge or
satisfy or agree to pay, discharge or satisfy any claim, liability or obligation
(absolute or accrued, asserted or unasserted, contingent or otherwise) other
than the payment, discharge or satisfaction of liabilities reflected or reserved
against in full in the financial statements as at December 31, 1995 or incurred
in the ordinary course of business subsequent to December 31, 1995 or (xviii)
agree in writing or otherwise to take any of the foregoing actions or any action
which would make any representation or warranty in the Merger Agreement untrue
or incorrect as of the date when made or as of a future date or would result in
any of the conditions of the Offer (as set forth in Section 14 hereof) not being
satisfied.
No Solicitation. The Company has agreed that it will not and will not
permit any of its subsidiaries and their respective officers, directors,
employees, representatives, agents or affiliates to, directly or indirectly,
solicit, encourage, initiate or participate in any discussions or negotiations
with, or provide any non-public information or access to the Company or any of
its subsidiaries concerning any Acquisition Transaction (as defined below), to
any third party, and to cause any such existing activities to cease and be
terminated; provided that the Board of Directors of the Company shall not be
prohibited from furnishing information to or entering into discussions or
negotiations with any person or entity that makes an unsolicited bona fide
proposal to engage in an Acquisition Transaction that the Board of Directors of
the Company in good faith determines, with the assistance of its financial
advisor, represents a financially superior transaction for the stockholders of
the Company when compared to the Offer and the Merger if, and only to the extent
that, the Board of Directors determines after consultation with outside legal
counsel that failure to take any such action would be inconsistent with the
compliance by the Board of Directors with its fiduciary duties to the
stockholders of the Company under the DGCL. Except as required in the exercise
of the fiduciary duty of its Board of Directors, the Company has also agreed not
to release any third party from any confidentiality or standstill agreement to
which the Company is a party without Parent's prior written consent.
"Acquisition Transaction", as defined in the Merger Agreement, means any tender
offer or exchange offer, any merger, consolidation, liquidation,
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<PAGE> 25
dissolution, recapitalization, reorganization or other business combination, any
acquisition, sale or other disposition of all or a substantial portion of the
assets or securities of the Company or any other similar transaction involving
the Company, its securities or any of its material subsidiaries or divisions.
Fees and Expenses. The Merger Agreement provides that all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
expenses, except that the Company will be required to pay a termination fee and
reimburse certain expenses of Parent and Purchaser to Parent under certain
circumstances described in "Termination" below.
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, prior to the proposed Effective Time, of the following conditions:
(a) unless the Merger is consummated pursuant to the "short-form" merger
provisions of Section 253 of the DGCL, the Merger Agreement shall have been
adopted by the affirmative vote of the stockholders of the Company required by
and in accordance with applicable law; (b) all necessary waiting periods under
the HSR Act applicable to the Merger shall have expired or been terminated; (c)
no statute, rule, regulation, executive order, decree or injunction shall have
been enacted, entered, promulgated or enforced by any court or governmental
authority against Parent, Purchaser or the Company and be in effect that
prohibits or restricts the consummation of the Merger or makes such consummation
illegal or otherwise restricts Parent's or Purchaser's exercise of full rights
to own and operate the Company (each party agreeing to use all reasonable effort
to have such prohibition lifted); and (d) Purchaser shall have accepted for
purchase and paid for the Shares validly tendered and not withdrawn pursuant to
the Offer; provided, however, that this condition will be deemed satisfied with
respect to Purchaser and Parent if Purchaser shall have failed to purchase
Shares pursuant to the Offer in violation of the terms of the Offer.
The obligations of Purchaser and Parent to effect the Merger are further
subject to the satisfaction on or prior to the proposed Effective Time of the
following conditions: (a) the Company shall have performed and complied in all
material respects with all agreements and obligations required by the Merger
Agreement to be performed or complied with by it on or prior to the Effective
Time; (b) the representations and warranties of the Company qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, in each case on the date of the Merger
Agreement and at the proposed Effective Time as though such representations and
warranties were made at such time; and (c) the Company shall have delivered to
Parent and Purchaser an officer's certification that each of the preceding
conditions have been satisfied.
The obligations of the Company to effect the Merger are further subject to
the satisfaction or waiver, where permissible, on or prior to the proposed
Effective Time of the following conditions: (a) Purchaser and Parent shall have
performed and complied in all material respects with all agreements and
obligations required by the Merger Agreement to be performed or complied with by
them on or prior to the proposed Effective Time; (b) the representations and
warranties of Purchaser and Parent qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in all material
respects; and (c) Parent or Purchaser shall have delivered to the Company an
officer's certification that each of the preceding conditions have been
satisfied.
For a description of conditions of the Offer, see Section 14.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time notwithstanding approval thereof by the stockholders of
the Company, but prior to the Effective Time: (a) by mutual written consent of
the Boards of Directors of Company and Parent; (b) by Parent or the Company if
the Effective Time shall not have occurred on or before December 31, 1996
(provided that this right to terminate the Merger Agreement will not be
available to any party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date); (c) by Parent or the Company if any court
of competent jurisdiction in the United States or Canada or other United States
or Canadian governmental body shall have issued an order, decree or ruling, or
taken any other action restraining, enjoining or otherwise prohibiting any of
the transactions contemplated by the Merger Agreement or the Stock Option
Agreements and such order, decree,
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ruling or other action shall have become final and non-appealable; (d) by Parent
if the Offer expires or is terminated on account of the failure of a condition
to the Offer without any Shares being purchased thereunder; (e) by Parent (x) if
the Board of Directors or any committee thereof of the Company withdraws or
modifies or amends in a manner adverse to Parent or Purchaser its authorization,
approval or recommendation of the Offer or the Merger or the Merger Agreement or
shall have resolved to do any of the foregoing or shall have failed to have
reiterated its recommendation within five business days of any written request
by the Parent or Purchaser therefor or (y) if the Company or any of its
subsidiaries (or the Board of Directors or any committee thereof of the Company)
shall have approved, recommended, authorized, proposed, publicly announced its
intention to enter into, or filed a Schedule 14D-9 not opposing any Acquisition
Transaction with a party other than Parent or Purchaser or any of their
affiliates; (f) by Parent if the Company or any of its subsidiaries participates
in discussions or negotiations with, or provides any information to or affords
any access to the properties, books and records of the Company to, or otherwise
assists or facilitates any corporation, partnership, person or other entity or
group (other than Parent or Purchaser or any affiliate or associate of Parent or
Purchaser) concerning any Acquisition Transaction; (g) by Parent if the Company
shall have breached or failed to comply in any material respect with any of its
obligations, covenants or agreements under the Merger Agreement, or any of the
representations and warranties of the Company set forth in the Merger Agreement
which is qualified as to materiality, shall not be true and correct, or any such
representation or warranty that is not so qualified, shall not be true and
correct when made or at any time prior to the Effective Time as if made at and
as such time; (h) by Parent if at any time prior to the purchase by Purchaser of
all of the Shares subject to the Investor Options, the Stock Option Agreements
shall not be in full force and effect, the Investors shall have asserted that
the Stock Option Agreements are not valid, binding or enforceable or is not in
full force and effect, there shall be a material condition to the exercise of
the Investor Options outstanding and not satisfied or the Investors shall have
breached in any material respect any representation, warranty or covenant
contained in the Stock Option Agreements; or (i) by the Company if either Parent
or Purchaser shall have breached or failed to comply in any material respect
with any of its obligations, covenants or agreements under the Merger Agreement,
or any of the representations and warranties of such party set forth in the
Merger Agreement which is qualified as to materiality, shall not be true and
correct, or any such representation and warranty that is not so qualified, shall
not be true and correct in all material respects when made or at any time prior
to the Effective Time as if made at and as such time. If the Merger Agreement is
terminated and the Merger is abandoned, the Merger Agreement, except for
obligations under the Merger Agreement to keep information confidential, as well
as the termination fees and expenses provisions and any provisions of the Merger
Agreement relating to the Stock Option Agreements, shall become void.
Notwithstanding the above, all parties to the Merger Agreement shall remain
liable for any breach of the Merger Agreement.
In the event that the Merger Agreement is terminated (i) pursuant to
clauses (e) or (f) of the prior paragraph or (ii) pursuant to any other
provision of the prior paragraph (regardless of whether such termination is by
Parent or the Company) and (in the case of clause (ii) only) either (y) prior to
such termination a Trigger Event (as defined below) has occurred or (z) prior to
such termination the Offer shall have expired without the purchase of any Shares
by Purchaser pursuant thereto and within twelve months from the date of such
expiration an Acquisition Event (as defined below), other than with the Parent
or any of its affiliates, has occurred, then the Company shall pay to Parent a
fee equal to 2.5% of an amount equal to $12.00 multiplied by the fully diluted
number of outstanding shares of common stock of the Company on the date of the
Merger Agreement. In addition, in the event that the Merger Agreement is
terminated pursuant to the prior paragraph and unless such termination results
solely from a material breach by Parent or Purchaser of its obligations under
the Merger Agreement, the Company will promptly, in addition to any termination
fee, pay, or reimburse Parent for, the reasonable and documented out-of-pocket
fees and expenses actually incurred by or on behalf of Parent and Purchaser in
connection with the transactions contemplated by the Merger Agreement, including
all legal, investment banking, accounting, printing and other fees and expenses
whether incurred prior to or following the execution of or the termination of
the Merger Agreement. "Trigger Event", as defined in the Merger Agreement, means
the occurrence of any of (i) the Company or any of its subsidiaries (or the
Board of Directors or any committee thereof of the Company) shall have
recommended, approved, authorized, proposed, filed a Schedule 14D-9 not
opposing, or publicly announced its intention to
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enter into, any Acquisition Transaction (other than with Parent, Purchaser or
any of its affiliates); (ii) the Board of Directors or any committee thereof of
the Company shall have withdrawn or modified or amended in any manner adverse to
Parent or Purchaser its authorization, approval or recommendation to the
stockholders of the Company with respect to the Offer, the Merger or the Merger
Agreement, or shall have failed to have reiterated its recommendation within
five business days of any written request by Parent or Purchaser therefor; and
(iii) the Company shall have knowingly breached or willfully failed to comply in
any material respect with any of its obligations, covenants or agreements under
the Merger Agreement, or any of the representations and warranties of the
Company set forth in the Merger Agreement shall, to the knowledge of the
Company, not have been true and correct in all material respects as of the date
of the Merger Agreement or shall cease to be true in all material respects prior
to the Effective Time by reason of the willful acts of the Company. "Acquisition
Event", as defined in the Merger Agreement, means the consummation of any (i)
Acquisition Transaction or (ii) series of transactions that results in any
person, entity or "group" (other than the Investors and their affiliates and
other than Parent, Purchaser or any of their affiliates) acquiring more than 50%
of the outstanding Shares or assets of the Company or the Investors acquiring
more than an additional 10% of the outstanding Shares or assets of the Company
(through any open market purchases, merger, consolidation, recapitalization,
reorganization or other business combination).
Indemnification and Insurance. Purchaser and Parent have agreed that all
rights to indemnification existing in favor of the present or former directors,
officers and employees of the Company (as such) or any of its subsidiaries as
provided in the Company's Certificate of Incorporation or Bylaws, or the
articles of incorporation, bylaws or similar documents of any of the Company's
subsidiaries as in effect as of the date hereof with respect to matters
occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect for a period of not less than the statutes of
limitations applicable to such matters. In addition, the Parent shall be
responsible for assuring that any successors to the Company assume such
indemnification obligations.
The Surviving Corporation will cause to be maintained in effect for a
period of four years after the Effective Time, in respect of acts or omissions
occurring prior to the Effective Time (but only in respect thereof), policies of
directors' and officers' liability insurance covering the persons currently
covered by the Company's existing directors' and officers' liability insurance
policies and providing substantially similar coverage to such existing policies;
provided, however, that the Surviving Corporation will not be required to
maintain directors' and officers' liability insurance policies to the extent
that the aggregate annual cost of maintaining such policies exceeds 150% of the
aggregate annual amounts currently paid by the Company to maintain the existing
policies.
Employee Plans and Benefits and Employment Contracts. Prior to the
Effective Time, the Company will, and will cause its subsidiaries to, and from
and after the Effective Time, Parent will, and will cause the Surviving
Corporation to, honor, in accordance with their terms, all existing employment
and severance agreements between the Company or any of its subsidiaries and any
officer, director or employee of the Company or certain of its subsidiaries.
Parent has also stated in the Merger Agreement that it intends to cause the
Surviving Corporation and its subsidiaries, until the first anniversary of the
Effective Time, to provide pension and welfare benefits to their employees
(considered as a group) (excluding employees covered by collective bargaining
agreements and excluding benefits that are contingent on a change in control or
that are based on, or require the issuance of, securities) that are in the
aggregate no less favorable than those currently provided by the Company and its
subsidiaries in the aggregate to such employees. The statement of such intention
shall not be deemed to constitute an amendment of any employee benefit plan,
program or arrangement or to prevent the Surviving Corporation from making any
change in any plan, program or arrangement, including any change required by law
or deemed necessary or appropriate to comply with applicable law or regulation.
The Company has agreed to take all action necessary to amend any plan (other
than its stock option plans) maintained by the Company or any of its
subsidiaries to eliminate all provisions for the purchase of Shares directly
from the Company. In particular, the Company has agreed to take all action
necessary to ensure that the Company's stock purchase plan for employees shall
terminate as of the Effective Time, no purchase right period under such plan
will commence after the date of the Merger Agreement, the current purchase right
period will be terminated prior to the Effective Time, and no funds will be
contributed
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in the current purchase period other than funds that were contributed prior to
the date of the Merger Agreement.
Parties in Interest. Nothing in the Merger Agreement is intended to confer
upon any person, other than the parties thereto, any rights or remedies, except
for the provisions described under "Indemnification and Insurance" above (which
are intended to be for the benefit of, and may be enforced by, the persons
referred to therein).
Amendment. Subject to applicable law, the Merger Agreement may be amended,
by an instrument in writing signed on behalf of all the parties, by action taken
by or on behalf of the Boards of Directors of the Company, Parent and Purchaser
at any time before or after adoption of the Merger Agreement by the stockholders
of the Company but, after any such stockholder approval, no amendment shall be
made which decreases the consideration to be received by holders of Shares at
the time of the Merger or which adversely affects the rights of the Company's
stockholders thereunder without the approval of such stockholders.
Other Agreements. Each party has agreed to use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement. However, nothing in the Merger Agreement shall obligate
Parent or Purchaser to keep the Offer open beyond the expiration date of the
offer (as it may be extended from time to time in accordance with the terms of
the Merger Agreement) and nothing in the Merger Agreement shall obligate Parent
or Purchaser or any of their respective subsidiaries or affiliates to agree (i)
to limit or not to exercise any rights of ownership of any securities (including
the Shares), or to divest, dispose of or hold separate any securities or all or
a portion of their respective businesses, assets or properties or of the
business, assets or properties of the Company or any of its subsidiaries or (ii)
to limit the ability of such entities (A) to conduct their respective businesses
or own such assets or properties or to conduct the businesses or own the
properties or assets of the Company and its subsidiaries or (B) to control their
respective businesses or operations or the businesses or operations of the
Company and its subsidiaries. In addition, among other things, (i) the Company
has agreed to use its reasonable best efforts, and Parent and Purchaser have
agreed to use their best efforts to cause BCE, their "ultimate parent entity"(as
defined in the HSR Act) to use its reasonable best efforts, to make promptly any
required submissions under the HSR Act and (ii) the parties have agreed to
cooperate in preparing filings that are required under or approvals or consents
that are required by any law or regulation. In the event that any action, suit,
proceeding or investigation relating to the Merger Agreement, the Stock Option
Agreements or the transactions contemplated thereby is commenced, whether before
or after the Effective Time, the parties to the Merger Agreement have agreed to
cooperate and use their best efforts to defend vigorously against it and respond
thereto.
Timing. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer or the Stock Option Agreements.
Although Parent has agreed to cause the Merger to be consummated on the terms
and subject to the conditions set forth above, there can be no assurance as to
the timing of the Merger.
Delaware Law. The Board of Directors of the Company has approved the
Merger Agreement and the transactions contemplated thereby, including the Offer,
the Stock Option Agreements and the Merger. Accordingly, the restrictions of
Section 203 do not apply to the transactions contemplated by the Offer, the
Stock Option Agreements and the Merger Agreement. Section 203 of the DGCL
prevents an "interested stockholder" (generally, a stockholder owning or having
the right to acquire 15% or more of a corporation's outstanding voting stock or
an affiliate or associate thereof) from engaging in a "business combination"
(defined to include a merger and certain other transactions) with a Delaware
corporation for a period of three years following the date on which such
stockholder became an interested stockholder unless (i) prior to such time, the
corporation's board of directors approved either the business combination or the
transaction which resulted in such stockholder becoming an interested
stockholder, (ii) upon consummation of the transaction which resulted in such
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the corporation's voting stock outstanding at the time the
transaction commenced (excluding shares owned by certain employee stock plans
and persons who are directors and also officers of the
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corporation) or (iii) at or subsequent to such time the business combination is
approved by the corporation's board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the affirmative
vote of at least 66 2/3% of the outstanding voting stock not owned by the
interested stockholder. As described above, the foregoing description of Section
203 of the DGCL does not apply to the Offer, the Stock Option Agreements or the
Merger.
Appraisal Rights
No appraisal rights are available to holders of Shares in connection with
the Offer. However, if the Merger is consummated, holders of Shares will have
certain rights under Section 262 of the DGCL to demand appraisal of, and payment
in cash for the fair value of, their Shares. Such rights, if the statutory
procedures are complied with, could lead to a judicial determination of the fair
value (excluding any element of value arising from accomplishment or expectation
of the Merger) required to be paid in cash to such holders for their Shares. Any
such judicial determination of the fair value of Shares could be based upon
considerations other than or in addition to the Offer Price and the market value
of the Shares, including asset values and the investment value of the Shares.
The value so determined could be more or less than the Offer Price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses such stockholder's right to
appraisal, as provided in the DGCL, the Shares of such holder will be converted
into the Merger Consideration in accordance with the Merger Agreement. A
stockholder may withdraw such stockholder's demand for appraisal by delivery to
Purchaser of a written withdrawal of such stockholder's demand for appraisal and
acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Stock Option Agreements
The following is a summary of the material terms of each of the Stock
Option Agreements. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The Stock
Option Agreements may be examined, and copies thereof may be obtained, as set
forth in Section 8.
Tender of Shares. Each of the Investors has agreed to validly tender and
not to withdraw pursuant to and in accordance with the terms of the Offer, not
later than the fifth business day after commencement of the Offer, such
Investor's respective Option Shares. However, each of the Investors has agreed
that if the purchase price per Share of the Offer is increased to an amount
greater than $12.00, such Investor will not tender such Investor's respective
Option Shares into the Offer after the first public announcement of such
increase and if any Option Shares were tendered prior to such first public
announcement, the Investors will promptly withdraw their tender of such Option
Shares. In such event, Purchaser has agreed that it will exercise the Investor
Options on the first business day following the purchase of any Shares pursuant
to the Offer (the "Option Closing"). The Investors own an aggregate of 5,151,145
Shares, constituting approximately 45% of the currently outstanding Shares
(approximately 39% of the outstanding Shares on a fully diluted basis).
Voting of Shares. At any meeting of the stockholders of the Company or in
connection with any written consent of stockholders of the Company from the date
of the Stock Option Agreements until the first to occur of the Effective Time
and the termination of the Stock Option Agreements, each of the Investors has
agreed to vote (or cause to be voted) all of its respective Option Shares (i) in
favor of the Merger and the terms of the Merger Agreement, (ii) in favor of any
other action related to the Merger or in furtherance of the transactions
contemplated by the Merger Agreement and the Stock Option Agreements, (iii)
against any action or agreement that would result in a breach by the Company
under the Merger Agreement or the Stock Option Agreements and (iv) except as
otherwise agreed to in writing in advance by Purchaser, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement):
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(x) any Acquisition Transaction; and (y) (1) any change in a majority of the
persons who constitute the Board of Directors of the Company; (2) any change in
the present capitalization of the Company or any amendment of Company's
Certificate of Incorporation or By-laws; (3) any other material change in the
Company's corporate structure or business; and (4) any other action involving
the Company or its subsidiaries which is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or otherwise adversely
affect the Offer, the Merger and the transactions contemplated by the Merger
Agreement and the Stock Option Agreements.
Option. To induce Parent and Purchaser to enter into the Merger Agreement
and subject to the terms and conditions set forth herein, each of the Investors
has granted Purchaser its respective Investor Option to purchase its respective
Option Shares at $12.00 per Share. If (i) the Offer is terminated, abandoned or
withdrawn by Parent or Purchaser (whether due to failure of any of the
conditions thereto or otherwise), (ii) the Offer is consummated but Purchaser
has not accepted for payment and paid for the Option Shares or (iii) the Merger
Agreement is terminated in accordance with its terms (other than for the failure
of Parent or Purchaser to fulfill any obligation under the Merger Agreement or
by mutual agreement of the parties thereto), the Investor Options shall, in any
such case, become exercisable, in whole but not in part, upon the first to occur
of any such event and remain exercisable in whole but not in part until 60 days
after the date of the occurrence of such event, so long as: (a) all waiting
periods under the HSR Act required for the purchase of the Option Shares upon
such exercise shall have expired or been waived and (b) there shall not be in
effect any preliminary or final injunction or other order issued by any court or
governmental, administrative or regulatory agency or authority prohibiting the
exercise of the Investor Options pursuant to the Stock Option Agreements. In the
event that the Investor Options are not exercisable because the circumstances
described in clauses (a) and (b) do not exist, then the Investor Options shall
be exercisable for a period not exceeding an additional 30 days after the 60-day
period referred to in the preceding sentence.
In the event the Option Shares are acquired by Purchaser pursuant to the
exercise of the Investor Options ("Acquired Option Shares"), each of the
Investors shall be entitled to receive, upon any subsequent disposition,
transfer or sale (other than to an affiliate who takes such Acquired Option
Shares subject to Purchaser's obligations under the Stock Option Agreements)
("Sale") of the Acquired Option Shares for which a binding contract of sale is
entered into within 180 days of the Option Closing, an amount in cash equal to
50% of the excess (if any) of the aggregate proceeds received in the Sale (net
of selling commissions, if any) over the aggregate purchase price for the
Acquired Option Shares subject to such Sale. If any of the consideration
received by Purchaser in such Sale consists of securities, for purposes hereof
the proceeds of such Sale shall be deemed to be the net amount that would
actually have been received in an orderly sale of such securities commencing on
the first business day following actual receipt of such securities by Purchaser,
in the written opinion of an investment banking firm of national reputation
selected by Purchaser and reasonably satisfactory to the Investors.
Restrictions on Transfer. Except as contemplated by the Stock Option
Agreements, each of the Investors have agreed that they will not directly or
indirectly, (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to, or consent to the offer for sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
their respective Option Shares or any interest therein; (ii) grant any proxies
or powers of attorney, deposit any of their respective Option Shares into a
voting trust or enter into a voting agreement with respect to any such Option
Shares; or (iii) take any action that would make any of their representations or
warranties contained therein untrue or incorrect or have the effect of
preventing or disabling the Investors from performing their obligations
thereunder.
No Solicitation. The Investors have agreed that they (and in the case of
Odyssey, its officers, directors, employees, controlling persons and
representatives) will not, directly or indirectly, solicit, encourage or respond
to any inquiries or the making of any proposal with respect to an Acquisition
Proposal. Each of the Investors has agreed to immediately cease and cause to be
terminated any such activities. Each of the Investors has agreed that if it
receives any inquiry or proposal regarding any Acquisition Proposal, it will
promptly inform Purchaser of that inquiry or proposal and will in the case of
written proposals or inquiries, furnish Purchaser with a copy of such proposal
or inquiry (and all amendments and supplements thereto). In
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addition, the Stock Option Agreement with Odyssey provides that the covenants
and agreements set forth therein will not prevent any of Odyssey's designees on
the Company's Board of Directors from taking any action, subject to the
applicable provisions of the Merger Agreement, while acting in compliance with
such designee's fiduciary duties in its capacity as a director of the Company.
Termination of Services Agreement. Pursuant to the Stock Option Agreement
with Odyssey, Odyssey Investors, Inc., a Delaware corporation ("OII") and an
affiliate of Odyssey, agreed that the Services Agreement between OII and the
Company (pursuant to which OII performs certain services for the Company and
receives compensation of $75,000 per year plus reimbursement of expenses) shall
be automatically terminated, without notice, immediately upon the consummation
of the Offer and that upon such termination (i) each party thereto shall have no
further rights, duties or liabilities under the Services Agreement, (ii) upon
OII's receipt of a binding written agreement from the Company and the Surviving
Corporation (the "Releasees") similarly releasing and discharging OII, the
Releasees shall automatically be released and discharged by OII from all
actions, suits, debts, sums of money, covenants, obligations, controversies,
agreements, promises, damages, judgments, claims, and demands whatsoever, in law
or equity, against the Releasees which OII ever had, now have or hereafter shall
or may have, for, upon, or by reason of any matter, cause or thing whatsoever
arising out of or in any way relating to the Releasees' obligations under the
Services Agreement, and (iii) OII shall automatically waive any amounts that it
would have otherwise received over and above an amount equal to the pro rata
portion of the annual fee under the Services Agreement for the period through
the consummation of the Offer or the Option Closing, as the case may be, plus
any reimbursable expenses incurred by Investors prior to such date and not yet
reimbursed by the Company.
Confidentiality Agreement
Pursuant to an agreement dated as of February 27, 1996 (the
"Confidentiality Agreement") between the Company and Nortel, the Company has
supplied Nortel with certain non-public, confidential and proprietary
information about the Company. Nortel has agreed in the Confidentiality
Agreement that it, together with its directors, officers, employees, agents and
representatives, will keep confidential all such information supplied by the
Company and that it will not, without the prior written consent of the Board of
Directors of the Company, until February 27, 1998, acquire or offer to acquire
any securities or assets of the Company or enter into or propose to enter into
any business combination involving the Company. In the Merger Agreement, the
Company has represented and warranted that the making of any offer and proposal
and the taking of any other action by Parent or Purchaser in connection with the
Merger Agreement and the Stock Option Agreements and the transactions
contemplated thereby have been consented to by the Board of Directors of the
Company in accordance with the terms and provisions of the Confidentiality
Agreement.
Plans for the Company
It is expected that, initially following the Offer and the Merger, the
business and operations of the Company will, except as set forth in this Offer
to Purchase, be continued by the Company substantially as they are currently
being conducted, and that the Company's current management, under the direction
of the Board of Directors of Parent, will continue to manage the Company.
Following consummation of the Merger, however, Purchaser intends to conduct a
review of the Company and its assets, its corporate structure, operations,
properties, management and personnel and consider what, if any, changes would be
desirable in light of the circumstances which then exist. Such changes could
include the acquisition or disposition of assets or other changes in the
Company's capitalization, dividend policy, corporate structure, business,
certificate of incorporation, by-laws, board of directors or management. It is
anticipated that Nortel and the Company will continue their technology
development efforts as contemplated by the memorandum of understanding referred
to in Section 11.
Except as noted in this Offer to Purchase, Purchaser has no present plans
or proposals that would result in an extraordinary corporate transaction, such
as a merger, reorganization, liquidation, or sale or transfer of a material
amount of assets, involving the Company or any of its subsidiaries, or any
material changes in the Company's capitalization, dividend policy, corporate
structure, business or composition of its management.
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13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (a)
issue, sell or pledge, grant options or rights to purchase, pledge, or authorize
or propose the issuance, sale, grant of options or rights to purchase or pledge
of (i) any securities of the Company or any of its subsidiaries (including the
Shares), or grant or accelerate any right to convert or exchange any securities
of the Company or any of its subsidiaries, other than Shares issuable upon
exercise of the options or warrants outstanding on the date hereof, or (ii) any
other securities in respect of, in lieu of or in substitution for Shares
outstanding on the date hereof; (b) split, combine or reclassify its capital
stock; or (c) acquire or redeem, directly or indirectly, any of its outstanding
securities (including the Shares), then subject to the provisions of Section 14,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate to the terms of the Offer, including, without limitation, the number
or type of securities offered to be purchased.
If, on or after the date of the Merger Agreement, the Company should (a)
declare, set aside, make or pay any dividend or distribution (whether in cash,
stock or property) on the Shares, (b) issue or grant options or rights to
purchase any securities of the Company or any of its subsidiaries (including the
Shares), or grant or accelerate any right to convert or exchange any securities
of the Company or any of its subsidiaries, other than Shares issuable upon
exercise of the options or warrants outstanding on the date hereof, or (c) issue
or grant options or rights to purchase any other securities in respect of, in
lieu of or in substitution for Shares outstanding on the date hereof, payable or
distributable to stockholders of record on a date prior to the transfer of the
Shares purchased pursuant to the Offer to Purchase, then, subject to the
provisions of Section 14, (i) the Offer Price may, in the sole discretion of
Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (ii) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders (A) will be received and
held by the tendering stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (B) at the direction of Purchaser, will be
exercised for the benefit of Purchaser, in which case the proceeds of such
exercise will promptly be remitted to Purchaser. Pending such remittance and
subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer Price or deduct from the Offer Price
the amount or value thereof, as determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing herein shall constitute a waiver by Purchaser or Parent of any of their
rights under the Merger Agreement or a limitation of remedies available to
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, purchase or pay for any Shares tendered until
the expiration of any applicable waiting period for the Offer and the Investor
Options granted pursuant to the Stock Option Agreements under the HSR Act, and
Purchaser may terminate or, subject to the terms and conditions of the Merger
Agreement, amend the Offer as to any Shares not then accepted for payment, shall
not be required to accept for payment or pay for any Shares, or may delay the
acceptance for payment of Shares tendered, if (i) at the expiration of the
Offer, the number of Shares validly tendered and not withdrawn, together with
the Shares beneficially owned by Parent and its affiliates or which Parent and
its affiliates have the right to acquire pursuant to the Stock Option
Agreements, shall not constitute a majority of the outstanding Shares on a fully
diluted basis, or (ii) at any time on or after the date of the Merger Agreement,
and prior to the acceptance for payment of Shares, any of the following events
shall occur:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction, promulgated, enacted, entered,
enforced or deemed applicable to the Offer, the Investor Options or the
Merger, that would or is reasonably likely to (i) make the acceptance for
payment of, or payment for or purchase of some or all of the Shares
pursuant to the Offer or the Investor Options illegal,
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or otherwise restrict or prohibit or make materially more costly the
consummation of the Offer, the Investor Options or the Merger, (ii) result
in a significant delay in or restrict the ability of Purchaser to accept
for payment, pay for or purchase some or all of the Shares pursuant to the
Offer or the Investor Options or to effect the Merger, (iii) render
Purchaser unable to accept for payment or pay for or purchase some or all
of the Shares pursuant to the Offer or the Investor Options, (iv) impose
material limitations on the ability of Parent, Purchaser or any of their
respective subsidiaries or affiliates to acquire or hold, transfer or
dispose of, or effectively to exercise all rights of ownership of, some or
all of the Shares including the right to vote the Shares purchased by it
pursuant to the Offer or the Investor Options on all matters properly
presented to the stockholders of the Company, (v) require the divestiture
by Parent, Purchaser or any of their respective subsidiaries or affiliates
of any Shares, or require Parent, Purchaser, the Company, or any of their
respective subsidiaries or affiliates to dispose of or hold separate all or
any material portion of their respective businesses, assets or properties
or impose any material limitations on the ability of any of such entities
to conduct their respective businesses or own such assets, properties or
Shares or on the ability of Parent or Purchaser to conduct the business of
the Company and its subsidiaries and own the assets and properties of the
Company and its subsidiaries, (vi) impose any material limitations on the
ability of Parent, Purchaser or any of their respective subsidiaries or
affiliates effectively to control the business or operations of the
Company, Parent, Purchaser, or any of their respective subsidiaries or
affiliates or (vii) otherwise materially adversely affect Parent,
Purchaser, the Company or any of their respective subsidiaries or
affiliates or the value of the Shares or otherwise make consummation of the
Offer, the Investor Options or the Merger unduly burdensome;
(b) there shall have been threatened, instituted or pending any
action, proceeding or counterclaim by or before any governmental,
administrative or regulatory agency or instrumentality or before any court,
arbitration tribunal or any other tribunal, domestic or foreign,
challenging the making of the Offer or the acquisition by Purchaser of the
Shares pursuant to the Offer or the Investor Options or the consummation of
the Merger, or seeking to obtain any material damages, or seeking to,
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vii) of paragraph (a) above;
(c) the Stock Option Agreements shall not be in full force and effect
(except due to the exercise by Purchaser) or there shall be a material
condition to the exercise of the Investor Options outstanding and not
satisfied or the Investors shall have breached in any material respect any
representation, warranty or covenant contained therein and such breach
shall have remained outstanding and uncured;
(d) there shall have occurred (i) for a period of more than one full
trading day any general suspension of, or limitation on prices for, trading
in securities on any national securities exchange or in the
over-the-counter market in the United States or the Toronto Stock Exchange,
(ii) the declaration of any banking moratorium or any suspension of
payments in respect of banks or any limitation (whether or not mandatory)
on the extension of credit by lending institutions in the United States or
Canada, (iii) the commencement of a war, armed hostilities or any other
international or national calamity involving the United States or Canada,
(iv) a material adverse change in the United States or Canadian currency
exchange rates or a suspension of, or limitation on, the markets therefor
or (v) in the case of any of the foregoing existing at the time of the
execution of the Merger Agreement, a material acceleration or worsening
thereof;
(e) any person, entity or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) other than Parent, Purchaser or the Investors
or any of their respective affiliates shall have become the beneficial
owner (as that term is used in Rule 13d-3 under the Exchange Act) of more
than 14.9% of the outstanding Shares;
(f) the Company (or the Board of Directors or any committee thereof of
the Company) shall have approved, recommended, authorized, proposed, filed
a Schedule 14D-9 not opposing, or publicly announced its intention to enter
into, any Acquisition Transaction (other than with Parent, Purchaser or any
of their affiliates);
(g) there shall have occurred any change, condition, event or
development in the business, condition (financial or otherwise), assets,
liabilities, results of operations or prospects of the Company or
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any of its subsidiaries that is, or is reasonably likely to be, materially
adverse to the Company and its subsidiaries taken as a whole or that
materially impairs, or is reasonably likely to materially impair the
ability of the parties to consummate the Offer or the Merger;
(h) the Company shall have breached or failed to comply in any
material respect with any of its obligations, covenants, or agreements
under the Merger Agreement or any representation or warranty of the Company
contained in the Merger Agreement which is qualified as to materiality,
shall not be true and correct, or any such representation or warranty that
is not so qualified, shall not be true and correct in any material respect,
in each case either as of when made or at any time thereafter;
(i) the Merger Agreement shall have been terminated pursuant to its
terms or shall have been amended pursuant to its terms to provide for such
termination or amendment of the Offer; or
(j) the Board of Directors or any committee thereof of the Company
shall have modified or amended in any manner adverse to Parent or Purchaser
or shall have withdrawn its authorization, approval or recommendation of
the Offer, the Merger or the Merger Agreement or shall have failed to have
reiterated its recommendation within five business days of any written
request by Parent or Purchaser therefor;
which, in the sole judgment of Parent or Purchaser, in any case, and regardless
of the circumstances (including any action or inaction by Parent or Purchaser or
any of their affiliates other than any action or inaction constituting a
material breach by Parent or Purchaser of their obligations under the Merger
Agreement) giving rise to any such condition, makes it inadvisable to proceed
with the Offer or with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted regardless of the circumstances (including any action or
inaction by Parent or Purchaser giving rise to any such condition other than any
action or inaction constituting a material breach by Parent or Purchaser of
their obligations under the Merger Agreement) or waived by Parent or Purchaser
in whole or in part at any time or from time to time in its discretion subject
to the terms and conditions of the Merger Agreement. The failure of Parent or
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. Any
determination by Parent or Purchaser concerning the events described above will
be final and binding on all parties.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, Purchaser is not aware of any
license or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by Purchaser's acquisition of Shares as contemplated herein or of any approval
or other action by any governmental authority that would be required for the
acquisition or ownership of Shares by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser currently contemplates
that such approval or other action will be sought, except as described below
under "State Takeover Laws." While, except as otherwise expressly described in
this Section 15, Purchaser does not presently intend to delay the acceptance for
payment of or payment for Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of if
such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, Purchaser could
decline to accept for payment or pay for any Shares tendered. See Section 14 for
certain conditions of the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v.
32
<PAGE> 35
MITE Corp., the Supreme Court of the United States held that the Illinois
Business Takeover Act, which involved state securities laws that made the
takeover of certain corporations more difficult, imposed a substantial burden on
interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics
Corp. of America, however, the Supreme Court of the United States held that a
state may, as a matter of corporate law and, in particular, those laws
concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that it
properly approved, among other things, the Offer, the Investor Options and the
Merger for purposes of Section 203 of the DGCL.
Based on information supplied by the Company, Purchaser does not believe
that any other state takeover statutes apply to the Offer or the Merger.
Purchaser has not currently complied with any state takeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer, the Stock Option
Agreements or the Merger and nothing in this Offer to Purchase or any action
taken in connection with the Offer, the Stock Option Agreements or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer, the Stock Option Agreements or the Merger
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer, the Stock Option Agreements or the Merger, Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger. In such case, Purchaser may not be
obligated to accept for payment or pay for any Shares tendered pursuant to the
Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar-day waiting period following the filing by BCE as
the "ultimate parent entity" of Purchaser of a Notification and Report Form with
respect to the Offer, unless BCE receives a request for additional information
or documentary material from the Antitrust Division of the Department of Justice
(the "Antitrust Division") or the Federal Trade Commission (the "FTC") or unless
early termination of the waiting period is granted. BCE's filing under the HSR
Act will also be made with respect to the Purchaser's acquisition of Shares
under the Stock Option Agreements. BCE is expected to make its filing with the
Antitrust Division and the FTC on or about May 21, 1996. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or documentary material from BCE, the waiting period will
be extended and would expire at 11:59 P.M., New York City time, on the tenth
calendar day after the date of substantial compliance by BCE with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may be
extended only by court order or with the consent of BCE. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, at the discretion of Purchaser (subject to the terms of the Merger
Agreement), be extended and, in any event, the purchase of or any payment for
Shares will be deferred until ten days following the date the request is
complied with by BCE, unless the waiting period is sooner terminated by the FTC
and the Antitrust Division. Unless the Offer is extended, any extension of the
waiting period will not give rise to any additional withdrawal rights. See
Section 4. Although the Company is required to file certain information and
documentary material with the FTC and the Antitrust Division in connection with
the Offer, neither the Company's failure to make such filings nor a request from
the FTC or the Antitrust Division for additional information or documentary
material made to the Company will extend the waiting period.
In practice, complying with a request for additional information or
documentary material can take a significant amount of time. In addition, if the
Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant
33
<PAGE> 36
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Purchaser or its
subsidiaries, or the Company or its subsidiaries. Private parties or state
officials may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result thereof. If any such action by the FTC, the Antitrust Division or any
other person should be threatened or commenced, Purchaser may extend, terminate
or amend the Offer. See Section 14 for certain conditions of the Offer.
Purchaser believes that consummation of the Offer would not violate any
antitrust laws; there can be no assurance, however, that a challenge to the
Offer on antitrust grounds will not be made or, if a challenge is made, what the
result will be.
Although the parties to the Merger Agreement are required to remove or
satisfy, if reasonably practicable, any objections to the validity or legality
of the Merger, Parent is not required to satisfy any legal requirement that it
divest or hold separate any assets or business operations of Parent or the
Company.
Exon-Florio Provision. Section 721 of the Defense Production Act of 1950,
as amended (the "Exon-Florio Provision") applies to acquisitions by or with
foreign persons which could result in foreign control of persons engaged in
interstate commerce in the United States. The Exon-Florio Provision empowers the
President of the United States to prohibit or suspend mergers, acquisitions or
takeovers by or with foreign persons if the President finds, after
investigation, credible evidence that the foreign person might take action that
threatens to impair the national security of the United States and that other
provisions of existing law do not provide adequate and appropriate authority to
protect the national security. The President has designated The Committee on
Foreign Investment in the United States ("CFIUS") as the agency authorized under
the Exon-Florio Provision to receive notices and other information, to determine
whether investigations should be undertaken and to make investigations. CFIUS is
comprised of representatives of the Departments of Treasury, State, Commerce,
Defense and Justice, the Office of Management and Budget, the United States
Trade Representative's Office and the Council of Economic Advisors. Any
determination by CFIUS that an investigation is called for must be made within
30 days after its acceptance of written notification concerning a proposed
transaction. In the event that CFIUS determines to undertake an investigation,
such investigation must be completed within 45 days after such determination.
Upon completion or termination of any such investigation, the Committee must
report to the President and present its recommendation. The President then has
15 days in which to suspend or prohibit the proposed transaction or to seek
other appropriate relief.
Based upon information made available to Parent by the Company as of the
date of the Offer, Parent believes that the purchase of the Shares does not
raise any national security issues and, as a result, Parent does not currently
intend to deliver any notification to CFIUS. If notice of a proposed acquisition
is not submitted to CFIUS, the transaction remains indefinitely subject to
review by the President under the Exon-Florio Provision. If CFIUS asserts that
the Offer or Merger raises any national security issues, Purchaser will not be
obligated to accept for payment or pay for any Shares tendered pursuant to the
Offer. See Section 14.
16. CERTAIN FEES AND EXPENSES
CS First Boston is acting as Dealer Manager in connection with the Offer
and is acting as financial advisor to Parent with respect to the proposed
acquisition of the Company. Parent has agreed to pay CS First Boston for its
services a financial advisory fee of $150,000 and, if Purchaser acquires a
majority of the voting power of the Company's outstanding voting securities, an
additional fee of $750,000. Parent has also agreed to reimburse CS First Boston
for all of its reasonable out-of-pocket expenses. In addition, Parent has agreed
to indemnify CS First Boston and certain related persons against certain
liabilities and expenses in connection with its services, including certain
liabilities under the U.S. federal securities laws.
34
<PAGE> 37
In the ordinary course of its business, CS First Boston engages in
securities trading, market-making and brokerage activities and may, at any time,
hold long or short positions and may trade or otherwise effect transactions in
securities of the Company. As of May 15, 1996, CS First Boston did not hold a
long or a short position in the Shares for its own account.
Purchaser has retained MacKenzie Partners, Inc. to act as the Information
Agent and First Chicago Trust Company of New York to act as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the U.S. federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering materials to their customers.
17. MISCELLANEOUS
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with any such state statute. If, after such
good faith effort, Purchaser cannot comply with any such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser or by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
The Nortel Entities have filed with the Commission a Tender Offer Statement
on Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange
Act containing certain additional information with respect to the Offer and may
file amendments thereto. The Company has filed with the Commission the Schedule
14D-9 (including exhibits) containing the Company's recommendation with respect
to the Offer and other information required to be disseminated to stockholders
of the Company pursuant to Rule 14d-9. Such Statements and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
Commission in the manner set forth in Section 8 (except that they will not be
available at the regional offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
ELDER CORPORATION
May 17, 1996
35
<PAGE> 38
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF
PURCHASER, PARENT, NORTEL AND BCE
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, citizenship, business address,
present principal occupation or employment, and the material occupation,
positions, offices or employment for the past five years of each director and
executive officer of Purchaser. Unless otherwise indicated below, the address of
each director and executive officer is c/o Northern Telecom Inc., Northern
Telecom Plaza, 200 Athens Way, Nashville, Tennessee 37228 and each director and
executive officer is an American citizen.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Roger A. Schecter......................... Director and Vice-President and Secretary (May
1996 to present); and Associate General Counsel
and Assistant Secretary (prior to May 1991 to
present) of Parent.
Robert L. Ashby........................... Assistant Treasurer (May 1996 to present); and
Treasurer and Vice-President, Taxes (December
1995 to present), Assistant Treasurer (February
1995 to November 1995) and Assistant
Vice-President, Taxes (prior to May 1991 to
December 1995) of Parent.
Peter W. Currie........................... President (May 1996 to present); Senior
Canadian citizen Vice-President and Chief Financial Officer (June
c/o Northern Telecom Limited 1994 to present) of Nortel; Executive
2920 Matheson Boulevard East Vice-President and Chief Financial Officer
Mississauga, Ontario L4W 4M7 (October 1992 to June 1994) of North American
Life Assurance Company; and various senior
management positions (prior to May 1991 to
October 1992) with Nortel.
Deborah A. Dupre.......................... Assistant Secretary (May 1996 to present); and
Assistant Secretary (December 1995 to present)
and Attorney (July 1994 to present) of Parent.
William R. Kerr........................... Vice-President and Treasurer (May 1996 to
Canadian citizen present); Vice-President and Treasurer (November
c/o Northern Telecom Limited 1995 to present) and Vice-President and
2920 Matheson Boulevard East Controller (September 1994 to November 1995) of
Mississauga, Ontario L4W 4M7 Nortel; Vice-President and Comptroller (September
1993 to September 1994) of BCE; and
Vice-President and Chief Financial Officer (prior
to May 1991 to September 1993) of Lear Siegler
Inc.
Anthony J. Lafleur........................ Vice-President and Assistant Secretary (May 1996
Canadian citizen to present); and Vice-President and Associate
c/o Northern Telecom Limited General Counsel (prior to May 1991 to present) of
2920 Matheson Boulevard East Nortel.
Mississauga, Ontario L4W 4M7
Blair F. Morrison......................... Assistant Secretary (May 1996 to present);
Canadian citizen Securities Counsel (March 1995 to present) of
c/o Northern Telecom Limited Nortel; and Lawyer (prior to May 1991 to March
2920 Matheson Boulevard East 1995) with the law firm of Tory Tory DesLauriers
Mississauga, Ontario L4W 4M7 & Binnington.
</TABLE>
1
<PAGE> 39
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, citizenship, business address,
present principal occupation or employment, and the material occupation,
positions, offices or employment for the past five years of each director and
executive officer of Parent. Unless otherwise indicated below, the address of
each director and executive officer is c/o Northern Telecom Inc., Northern
Telecom Plaza, 200 Athens Way, Nashville, Tennessee 37228 and each director and
executive officer is an American citizen.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Peter W. Currie........................... Director (June 1994 to present); Senior
Canadian citizen Vice-President and Chief Financial Officer (June
c/o Northern Telecom Limited 1994 to present) of Nortel; President (May 1996
2920 Matheson Boulevard East to present) of Purchaser; and Executive
Mississauga, Ontario L4W 4M7 Vice-President and Chief Financial Officer
(October 1992 to June 1994) of North American
Life Assurance Company; and various senior
management positions (prior to May 1991 to
October 1992) with Nortel.
Gary R. Donahee........................... Director and President (December 1994 to
Canadian citizen present); and Senior Vice-President and
President, Nortel CALA (January 1996 to present),
Senior Vice-President and President, Major
Accounts, Nortel North America (January 1994 to
July 1995), Senior Vice-President and President,
Northern Telecom Canada (July 1993 to July 1995)
and Senior Vice-President, Human Resources (prior
to May 1991 to July 1993) of Nortel.
Donald J. Schuenke........................ Director and Chairman (February 1994 to present);
c/o Northern Telecom Limited Director (prior to May 1991 to present), Chairman
2920 Matheson Boulevard East of the Board (April 1994 to present) and
Mississauga, Ontario L4W 4M7 Vice-Chairman of the Board (September 1993 to
April 1994) of Nortel; and Chairman (October 1993
to January 1994) and Chairman and Chief Executive
Officer (prior to May 1991 to September 1993) of
The Northwestern Mutual Life Insurance Company.
Robert L. Ashby........................... Treasurer and Vice-President, Taxes (December
1995 to present); Assistant Treasurer (May 1996
to present) of Purchaser; and Assistant Treasurer
(February 1995 to November 1995) and Assistant
Vice-President, Taxes (prior to May 1991 to
November 1995).
J. Paul DeJongh........................... Assistant Secretary (September 1993 to present),
Assistant General Counsel (November 1994 to
present) and various senior management positions
(prior to May 1991 to October 1994).
Deborah A. Dupre.......................... Assistant Secretary (December 1995 to present);
Assistant Secretary (May 1996 to present) of
Purchaser; and Attorney (July 1994 to present).
Richard P. Faletti........................ Vice-President (prior to May 1991 to present);
and Senior Vice-President and President,
Multimedia Communications Systems (March 1993 to
present) and Senior Vice-President, Private
Networks (prior to May 1991 to February 1993) of
Nortel.
</TABLE>
2
<PAGE> 40
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Peter C. Farranto......................... Assistant Secretary (February 1995 to present)
and Senior Counsel (prior to May 1991 to
present).
Donald R. Grassman........................ Assistant Treasurer (December 1995 to present);
Controller U.S. (December 1994 to present) of
Nortel North America; and various senior
management positions (prior to May 1991 to
November 1994).
Robert L. Robson.......................... Vice-President, Finance (December 1995 to
present), Vice-President, Finance Services and
Controller, Nortel North America (October 1994 to
December 1995), Vice-President Accounting
Services and Controller, U.S. (February 1994 to
October 1994) and Corporate Controller U.S.
(prior to May 1991 to February 1994).
John A. Roth.............................. Vice-Chairman of the Board (February 1995 to
Canadian citizen present); and Chief Operating Officer and
c/o Northern Telecom Limited President, Nortel North America (July 1995 to
2920 Matheson Boulevard East present), Executive Vice-President and President,
Mississauga, Ontario L4W 4M7 Nortel North America (January 1994 to June 1995)
and Senior Vice-President and President, Wireless
Systems (prior to May 1991 to December 1993) of
Nortel.
Gedas A. Sakus............................ Vice-President (February 1995 to present); and
Canadian citizen Senior Vice-President and President, Nortel
c/o Northern Telecom Limited Technology and Chairman, Bell-Northern Research
2920 Matheson Boulevard East Ltd. (January 1996 to present), Senior
Mississauga, Ontario L4W 4M7 Vice-President and President, Switching Networks
(July 1993 to December 1995) and Senior
Vice-President and President, Northern Telecom
Canada (prior to May 1991 to June 1993) of
Nortel.
Roger A. Schecter......................... Associate General Counsel and Assistant Secretary
(prior to May 1991 to present); and
Vice-President and Secretary (May 1996 to
present) of Purchaser.
Richard R. Standel, Jr. .................. Vice-President, General Counsel and Secretary
(prior to May 1991 to present).
David A. Twyver........................... Vice-President (February 1995 to present); and
Canadian citizen Senior Vice-President and President, Wireless
Systems (January 1994 to present) and various
senior management positions (prior to May 1991 to
January 1994) with Nortel.
</TABLE>
3
<PAGE> 41
C. DIRECTORS AND EXECUTIVE OFFICERS OF NORTEL
The following table sets forth the name, citizenship, business address,
present principal occupation or employment, and the material occupation,
positions, offices or employment for the past five years of each director and
executive officer of Nortel. Unless indicated below, the address of each
director and executive officer is c/o Northern Telecom Limited, 2920 Matheson
Boulevard East, Mississauga, Ontario L4W 4M7 and each director and executive
officer is a Canadian citizen.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Ralph M. Barford.......................... Director (April 1994 to present); and President
c/o BCE Inc. (prior to May 1991 to present) of Valleydene
1000, rue de La Gauchetiere Ouest Corporation Limited.
Montreal, Quebec, H3B 4Y7
Frank C. Carlucci......................... Director (prior to May 1991 to present); and
American citizen Chairman (February 1993 to present) and
Vice-Chairman (prior to May 1991 to February
1993) of The Carlyle Group.
Gerald V. Dirvin.......................... Director (April 1994 to present); and Executive
American citizen Vice- President (prior to May 1991 to April 1994)
of Procter & Gamble Company.
L. Yves Fortier........................... Director (April 1992 to present); Senior Partner
and Chairman (January 1992 to present) of Ogilvy
Renault; and Ambassador and Permanent
Representative of Canada to the United Nations
(prior to May 1991 to January 1992).
Bowie K. Kuhn............................. Director (prior to May 1991 to present);
American citizen President (prior to May 1991 to present) of The
Kent Group, Inc.; and President (June 1992 to
present) of Sports Franchises, Inc.
The Hon. E. Peter Lougheed................ Director (prior to May 1991 to present); and
Partner (prior to May 1991 to present) of Bennett
Jones Verchere.
Jean C. Monty............................. Director (September 1992 to present), President
and Chief Executive Officer (March 1993 to
present) and President and Chief Operating
Officer (October 1992 to February 1993); and
Chairman and Chief Executive Officer (July 1991
to September 1992) and Chief Executive Officer
(prior to May 1991 to June 1991) of Bell Canada.
Paul F. Oreffice.......................... Director (prior to May 1991 to present); and
American citizen Chairman of the Board (prior to May 1991 to
November 1992) of The Dow Chemical Company.
Ronald W. Osborne......................... Director (April 1996 to present); President (May
c/o BCE Inc. 1996 to present) and Executive Vice-President and
1000, rue de La Gauchetiere Ouest Chief Financial Officer (January 1995 to May
Montreal, Quebec H3B 4Y7 1996) of BCE; and President and Chief Executive
Officer (prior to May 1991 to December 1994) of
Maclean Hunter Limited.
</TABLE>
4
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
John A. Roth.............................. Director (April 1996 to present); and Chief
Operating Officer and President, Nortel North
America (July 1995 to present), Executive
Vice-President and President, Nortel North
America (January 1994 to June 1995) and Senior
Vice-President and President, Wireless Systems
(prior to May 1991 to December 1993).
Donald J. Schuenke........................ Director (prior to May 1991 to present); Chairman
American citizen of the Board (April 1994 to present) and
Vice-Chairman of the Board (September 1993 to
April 1994); and Chairman (October 1993 to
January 1994) and Chairman and Chief Executive
Officer (prior to May 1991 to September 1993) of
The Northwestern Mutual Life Insurance Company.
Sherwood H. Smith, Jr. ................... Director (April 1994 to present); and Chairman of
American citizen the Board and Chief Executive Officer (September
1992 to present) and Chairman of the Board,
President and Chief Executive Officer (prior to
May 1991 to August 1992) of Carolina Power &
Light Company.
Lynton R. Wilson.......................... Director (April 1991 to present); and Chairman
c/o BCE Inc. and Chief Executive Officer (May 1996 to
1000, rue de La Gauchetiere Ouest present), Chairman, President and Chief Executive
Montreal, Quebec H3B 4Y7 Officer (April 1993 to May 1996), President and
Chief Executive Officer (April 1992 to March
1993) and President and Chief Operating Officer
(prior to May 1991 to March 1992) of BCE.
Clive V. Allen............................ Senior Vice-President and General Counsel (prior
to May 1991 to present).
David D. Archibald........................ Vice-President and Deputy General Counsel (March
1995 to present); and Vice-President, General
Counsel and Secretary (prior to May 1991 to
present) of Northern Telecom Canada Limited.
David A. Ball............................. Senior Vice-President and President, Nortel
British citizen Limited (April 1995 to present) and various
senior management positions (prior to May 1991 to
April 1995).
Jacques B. Berube......................... Senior Vice-President and President, Nortel
Europe (April 1995 to present) and Senior
Vice-President, Special Projects (May 1994 to
April 1995); Executive Vice-President (Corporate)
(November 1992 to May 1994) of Bell Canada; Group
Vice-President, Telecom International (July 1991
to October 1992) of BCE; and Executive
Vice-President, Quebec Region (prior to May 1991
to July 1991) of Bell Canada.
David L. Burn............................. Vice-President, Taxation (prior to May 1991 to
present).
</TABLE>
5
<PAGE> 43
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
1993).Peter J. Chilibeck.................. Corporate Secretary and Assistant General Counsel
(December 1994 to present), Assistant General
Counsel (October 1992 to December 1994),
Assistant Secretary (prior to May 1991 to
December 1994) and Senior Securities Counsel
(prior to May 1991 to September 30, 1992).
John (Ian) A. Craig....................... Senior Vice-President and President, Broadband
Networks (August 1994 to present), Senior Vice-
President and President, Northern Telecom Europe
(February 1993 to August 1994) and various senior
management positions (prior to May 1991 to
February 1993).
Peter W. Currie........................... Senior Vice-President and Chief Financial Officer
(June 1994 to present); President (May 1996 to
present) of Purchaser; Executive Vice-President
and Chief Financial Officer (October 1992 to June
1994) of North American Life Assurance Company;
and various senior management positions (prior to
May 1991 to October 1992) with Nortel.
Gary R. Donahee........................... Senior Vice-President and President, Nortel CALA
(January 1996 to present) and Senior
Vice-President and President, Major Accounts,
Nortel North America (January 1994 to July 1995);
President (December 1994 to present) of Parent;
Senior Vice-President and President, Northern
Telecom Canada (July 1993 to July 1995) and
Senior Vice-President, Human Resources (prior to
May 1991 to July 1993).
Adrian J. Donoghue........................ Vice-President and Controller (December 1995 to
present); Vice-President, Finance, Wireless
Networks (July 1994 to November 1995) of Parent;
and various senior management positions (prior to
May 1991 to July 1994).
Frank A. Dunn............................. Vice-President Operations Finance and
Vice-President Finance, Nortel North America
(March 1996 to present), Vice-President, Finance,
Nortel North America (February 1994 to March
1996), Vice-President and Controller (March 1993
to February 1994), Deputy Controller (July 1992
to February 1993), and various senior management
positions (prior to May 1991 to July 1992).
</TABLE>
6
<PAGE> 44
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Richard P. Senior Vice-President and President, Multimedia
Faletti................................... Communications Systems (March 1993 to present)
c/o Northern Telecom Inc., and Senior Vice-President, Private Networks
Northern Telecom Plaza, (prior to May 1991 to February 1993); and
200 Athens Way, Vice-President (prior to May 1991 to present) of
Nashville, Tennessee 37228 Parent.
W. Brian Hewat............................ Executive Vice-President (January 1996 to
present) and Executive Vice-President and
Chairman and Chief Executive Officer of
Bell-Northern Research (June 1993 to January
1996); President and Chief Executive Officer
(January 1993 to June 1993) of Stentor Resource
Centre Inc.; and Executive Vice-President,
Marketing (prior to May 1991 to December 1992) of
Bell Canada.
Jerome P. Huret........................... Senior Vice-President Strategy and International
French citizen Development, Nortel World Trade (February 1996 to
present) and various senior management positions
(prior to May 1991 to February 1996).
Margaret G. Kerr.......................... Senior Vice-President, Environment, Ethics and
Quality (December 1994 to present), Senior
Vice-President, Environment and Ethics (January
1994 to November 1994), and Vice-President,
Environment, Health and Safety (prior to May 1991
to December 1993).
William R. Kerr........................... Vice-President and Treasurer (November 1995 to
present) and Vice-President and Controller
(September 1994 to November 1995); Vice-President
and Treasurer (May 1996 to present) of Purchaser;
Vice-President and Comptroller (September 1993 to
September 1994) of BCE; and Vice-President and
Chief Financial Officer (prior to May 1991 to
September 1993) of Lear Siegler Inc.
Anthony J. Lafleur........................ Vice-President and Associate General Counsel
(prior to May 1991 to present); and
Vice-President and Assistant Secretary (May 1996
to present) of Purchaser.
James R. Long............................. Executive Vice-President and President, Nortel
American citizen World Trade (January 1994 to present), Executive
Vice-President, International (July 1993 to
December 1993), Senior Vice-President and
President, Northern Telecom Asia/Pacific
(November 1992 to June 1993), and various senior
management positions (June 1991 to November
1992); and Senior Vice-President, Marketing
(prior to May 1991 to June 1991) of Rolm Co.
Arthur A. MacDonald....................... Senior Vice-President (January 1996 to present),
Chairman, Nortel China (October 1993 to January
1996) and various senior management positions
(prior to May 1991 to October 1993).
</TABLE>
7
<PAGE> 45
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Donald S. McCreesh........................ Senior Vice-President, Human Resources (August
1993 to present), Vice-President, Human Resources
Operations, North America (March 1993 to July
1993) and various senior management positions
(prior to May 1991 to March 1993).
Gedas A. Sakus............................ Senior Vice-President and President, Nortel
Technology and Chairman, Bell-Northern Research
Ltd. (January 1996 to present); Vice-President
(February 1995 to present) of Parent; and Senior
Vice-President and President, Switching Networks
(July 1993 to December 1995) and Senior
Vice-President and President, Northern Telecom
Canada (prior to May 1991 to June 1993).
Elliot S. Schreiber....................... Senior Vice-President, Corporate Communications
American citizen (April 1995 to present); and various senior
management positions (prior to May 1991 to April
1995) with Bayer Corporation.
C. Wesley M. Scott........................ Executive Vice-President, Corporate (July 1995 to
present); President and Chief Executive Officer
(July 1993 to July 1995) of Stentor Resource
Centre Inc.; President (April 1992 to July 1993)
of Bell Ontario and Executive Vice-President of
Ontario Region (prior to May 1991 to April 1992)
of Bell Canada.
George C. Smyth........................... Senior Vice-President and President,
Bell-Northern Research (prior to May 1991 to
present).
Gordon H. Sumner.......................... Vice-President and General Auditor (March 1996 to
present); Vice-President, Finance and Information
Systems (February 1992 to March 1996) of Northern
Telecom Canada Limited; and Vice-President,
Finance (prior to May 1991 to February 1992) of
Bell-Northern Research Ltd.
David A. Twyver........................... Senior Vice-President and President, Wireless
Systems (January 1994 to present) and various
senior management positions (prior to May 1991 to
January 1994); and Vice-President (February 1995
to present) of Parent.
David J.S. Winfield....................... Senior Vice-President, Government Relations
(August 1995 to present); and Canadian Ambassador
to Mexico (prior to May 1991 to July 1995).
Philip Yu................................. Senior Vice-President and Chairman and Chief
American citizen Executive Officer, Nortel China (February 1996 to
present) and Senior Vice-President, Nortel China
(June 1995 to January 1996); President, Network
Systems (January 1994 to March 1995) of AT&T
China Inc.; and various senior management
positions (prior to May 1991 to December 1993)
with Hewlett-Packard Asia Pacific Limited.
</TABLE>
8
<PAGE> 46
D. DIRECTORS AND EXECUTIVE OFFICERS OF BCE
The following table sets forth the name, citizenship, business address,
present principal occupation or employment, and the material occupation,
positions, offices or employment for the past five years of each director and
executive officer of BCE. The address of each director and executive officer is
c/o BCE Inc., 1000, rue de La Gauchetiere Ouest, Montreal, Quebec, H3B 4Y7. All
directors and executive officers are Canadian citizens.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Ralph M. Barford.......................... Director (prior to May 1991 to present); and
President (prior to May 1991 to present) of
Valleydene Corporation Limited.
Warren Chippindale........................ Director (prior to May 1991 to present); and a
consultant (prior to May 1991 to present).
Richard J. Currie......................... Director (May 1995 to present); and President of
Loblaw Companies Limited (prior to May 1991 to
present).
Jeannine Guillevin Wood................... Director (prior to May 1991 to present); Chairman
of the Board (April 1995 to present) and Chairman
of the Board and Chief Executive Officer (prior
to May 1991 to April 1995) of Guillevin
International Inc.
Gerald J. Maier........................... Director (prior to May 1991 to present); Chairman
(October 1994 to present), Chairman and Chief
Executive Officer (January 1994 to October 1994),
Chairman, President and Chief Executive Officer
(February 1992 to December 1993) and President
and Chief Executive Officer (prior to May 1991 to
February 1992) of TransCanada Pipelines Limited.
John H. McArthur.......................... Director (May 1995 to present); Faculty Member
(September 1995 to present) and Dean (prior to
May 1991 to September 1995) of Harvard University
Graduate School of Business Administration.
J. Edward Newall.......................... Director (prior to May 1991 to present);
Vice-Chairman and Chief Executive Officer
(February 1995 to present) of NOVA Corporation
Ltd.; President and Chief Executive Officer
(September 1991 to February 1995) of NOVA
Corporation of Alberta; and Chairman and Chief
Executive Officer (prior to May 1991 to September
1991) of DuPont Canada Inc.
Ronald W. Osborne......................... Director (May 1996 to present), President (May
1996 to present) and Executive Vice-President and
Chief Financial Officer (January 1995 to May
1996); and President and Chief Executive Officer
(prior to May 1991 to December 1994) of Maclean
Hunter Limited.
Guy Saint-Pierre.......................... Director (May 1995 to present); Chairman (May
1996 to present) and President and Chief
Executive Officer (prior to May 1991 to May 1996)
of SNC-Lavalin Group Inc.
</TABLE>
10
<PAGE> 47
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------ -------------------------------------------------
<S> <C>
Louise B. Vaillancourt.................... Director (prior to May 1991 to present); and a
corporate director (prior to May 1991 to present)
of various companies.
Lynton R. Wilson.......................... Director (prior to May 1991 to present), Chairman
and Chief Executive Officer (May 1996 to
present), Chairman, President and Chief Executive
Officer (May 1993 to May 1996), President and
Chief Executive Officer (April 1992 to March
1993) and President and Chief Operating Officer
(prior to May 1991 to March 1992).
Victor L. Young........................... Director (May 1995 to present); and Chairman and
Chief Executive Officer (prior to May 1991 to
present) of Fishery Products International
Limited.
Frederick J. Andrew....................... Vice-President and Treasurer (July 1991 to
present); and Corporate Treasurer (prior to May
1991 to June 1991) of Bell Canada.
Thomas J. Bourke.......................... Group Vice-President, Directories (prior to May
1991 to present); and President and Chief
Executive Officer (prior to May 1991 to present)
of Tele-Direct (Publications) Inc.
Josef J. Fridman.......................... Senior Vice-President, Law and Corporate
Secretary (January 1995 to present), Senior
Vice-President, Law (July 1993 to December 1994)
and Senior Vice-President, Law and Corporate
Services (prior to May 1991 to July 1993).
David A. Lazzarato........................ Vice-President and Comptroller (February 1995 to
present) and Assistant Comptroller (May 1994 to
February 1995); and Senior Vice-President Finance
and Administration (September 1992 to April 1994)
and Vice-President, Finance (prior to May 1991 to
August 1992) of CAE Electronics Ltd.
Peter J.M. Nicholson...................... Senior Vice-President, Corporate Strategy
(September 1995 to present); Clifford Clark
Visiting Economist (March 1994 to September 1995)
of Department of Finance, Government of Canada;
and Senior Vice-President and Executive Assistant
to the Chairman (prior to May 1991 to March 1994)
of The Bank of Nova Scotia.
Peter M. Sharpe........................... Vice-President, Corporate Services (April 1995 to
present); and Vice-President, Human Resources and
Administration (prior to May 1991 to March 1995)
of Redpath Sugar.
Siim A. Vanaselja......................... Vice-President, Taxation (February 1995 to
present) and Assistant Vice-President, Taxation
(February 1994 to February 1995); and Partner
(prior to May 1991 to January 1994) of KPMG Peat
Marwick Thorne.
</TABLE>
11
<PAGE> 48
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission By Hand or Overnight Courier:
(For Eligible Institutions
Only):
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2559 or 14 Wall Street
Suite 4660-MCM (201) 222-4721 8th Floor, Suite 4680-MCM
Jersey City, NJ New York, NY 10005
07303-2559 Confirm Receipt of
Notice of Guaranteed
Delivery:
(201) 222-4707
</TABLE>
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent and the Dealer Manager at the
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank or trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
CS First Boston
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Call Toll-Free (888) 675-8650
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
MICOM COMMUNICATIONS CORP.
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 17, 1996
BY
ELDER CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
NORTHERN TELECOM LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, JUNE 14, 1996,
UNLESS THE OFFER IS EXTENDED.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand or
By Mail: Overnight Courier:
Tenders & Exchanges Tenders & Exchanges
P.O. Box 2559 14 Wall Street
Suite 4660-MCM 8th Floor, Suite 4680-MCM
Jersey City, NJ New York, NY 10005
07303-2559
</TABLE>
Confirm Receipt of
Notice of Guaranteed
Delivery:
(201) 222-4707
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of MICOM Communications Corp. (the "Stockholders") if
certificates evidencing Shares ("Certificates") are to be forwarded herewith or
if delivery of Shares is to be made by book-entry transfer to an account
maintained by First Chicago Trust Company of New York (the "Depository") at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3 of the Offer to Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as defined
in Section 3 of the Offer to Purchase) with respect to, their Shares and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) must tender their Shares
according to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. See Instruction 2 hereof. DELIVERY OF DOCUMENTS TO A BOOK-
ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED(2)
APPEAR(S) ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares Tendered:
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by holders of Shares delivering Shares by Book-Entry
Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by Certificates delivered to the Depositary are being tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
(N)ame of Tendering Institution:
(C)heck Box of Book-Entry Transfer Facility:
/ / DTC
/ / PDTC
(A)ccount Number:
(T)ransaction Code Number:
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
(N)ame(s) of Registered Holder(s):
(W)indow Ticket Number (if any):
(D)ate of Execution of Notice of Guaranteed Delivery:
(N)ame of Institution which Guaranteed Delivery:
(I)f delivered by Book-Entry Transfer, check box of Applicable Book-Entry
Facility:
/ / DTC
/ / PDTC
(A)ccount Number:
(T)ransaction Code Number:
<PAGE> 4
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Elder Corporation, a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Northern Telecom Inc., a Delaware
corporation ("Parent"), which is, in turn, a wholly owned subsidiary of Northern
Telecom Limited, a corporation organized under the laws of Canada, the
above-described shares of common stock, $.0000001 par value (the "Shares"), of
MICOM Communications Corp., a Delaware corporation (the "Company"), for $12.00
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated May 17, 1996 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). The undersigned understands
that Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Parent or one or more of Parent's subsidiaries, the right to
purchase Shares tendered pursuant to the Offer; provided, however, that no such
transfer or assignment will release Purchaser from its obligations under the
Offer or prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, Purchaser all right,
title and interest in and to all of the Shares that are being tendered hereby
and any and all other Shares or other securities issued or issuable in respect
of such Shares on or after May 13, 1996 (a "Distribution"), and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and any Distributions) on the account books maintained
by a Book-Entry Transfer Facility together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Purchaser, upon receipt by the Depositary as the undersigned's agent, of the
purchase price with respect to such Shares, (ii) present such Shares (and any
Distributions) for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of Purchaser, and
each of them, as the attorney-in-fact and proxy of the undersigned, each with
full power of substitution, to the full extent of the undersigned's rights with
respect to all Shares tendered hereby and accepted for payment and paid for by
Purchaser (and any Distributions), including, without limitation, the right to
vote such Shares (and any Distributions) in such manner as each such attorney
and proxy or his substitute shall, in his or her sole discretion, deem proper.
All such powers of attorney and proxies, being deemed to be irrevocable, shall
be considered coupled with an interest in the Shares tendered herewith. Such
appointment will be effective when, and only to the extent that, Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
powers of attorney and proxies given by the undersigned with respect to such
Shares (and any Distributions) will be revoked, without further action, and no
subsequent powers of attorneys and proxies may be given with respect thereto
(and, if given, will be deemed ineffective). The designees of Purchaser will,
with respect to the Shares (and any Distributions) for which such appointment is
effective, be empowered to exercise all voting and other rights of the
undersigned with respect to such Shares (and any Distributions) as they in their
sole discretion may deem proper. Purchaser reserves the absolute right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the acceptance for payment of such Shares, Purchaser or its designees are
able to exercise full voting rights with respect to such Shares (and any
Distributions).
<PAGE> 5
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions issued to the undersigned on or after May
13, 1996, in respect of the Shares tendered hereby, accompanied by appropriate
documentation of transfer; and pending such remittance and transfer or
appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser with respect to such Shares upon the terms and subject to the
conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered". In the event that both the
"Special Payment Instructions" and the "Special Delivery Instructions" are
completed, please issue the check for the purchase price and/or return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return such certificates (and accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
under "Special Payment Instructions", in the case of a book-entry delivery of
Shares, please credit the account maintained at the Book-Entry Transfer Facility
indicated above with respect to any Shares not accepted for payment. The
undersigned recognizes that Purchaser has no obligation pursuant to the "Special
Payment Instructions" to transfer any Shares from the name of the registered
holder thereof if Purchaser does not accept for payment any of the Shares
tendered hereby.
<PAGE> 6
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility other than the account
indicated above.
Issue: / / Check / / Certificate(s) to:
Name
----------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
/ / Credit unpurchased Common Shares delivered by book-entry transfer to
the Book-Entry Transfer Facility account set forth below:
Check appropriate Box:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that above.
Mail: (check appropriate box(es))
/ / Check to:
/ / Certificate(s) to:
Name
(PLEASE TYPE OR PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
- ------------------------------------------------------------
<PAGE> 7
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
- --------------------------- , 1996
(Must be signed by registered holder(s) as name(s) appear(s) on the Certificate
or on a security position listing or by person(s) authorized to become
registered holder(s) by Certificates and documents transmitted herewith. If
signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please provide the following information. See
Instruction 5.)
Name(s) ------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title)
----------------------------------------------------------------
(SEE INSTRUCTION 5)
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Codes and Telephone Numbers: ( )
---------------------------------------------------
(HOME)
( )
---------------------------------------------------
(BUSINESS)
Taxpayer Identification or Social Security Number:
------------------------------------------
(ALSO COMPLETE SUBSTITUTE FORM W-9 ON
REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
----------------------------------------------------------------
Name --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Name of Firm
- --------------------------------------------------------------------------------
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ( )
Dated:
- --------------------------- , 1996
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member in good standing of
the Securities Transfer Agent's Medallion Program, or by any other bank, broker,
dealer, credit union, savings association or other entity that is an "eligible
guarantor institution", as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (each of the
foregoing constituting an "Eligible Institution"), unless the Shares tendered
hereby are tendered (i) by the registered holder (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
such Shares who has completed neither the box entitled "Special Payment
Instructions" nor the box entitled "Special Delivery Instructions" hereby or
(ii) for the account of an Eligible Institution. See Instruction 5. If the
Certificates are registered in the name of a person other than the signer of
this Letter of Transmittal, or if payment is to be made or delivered to, or
Certificates evidencing unpurchased Shares are to be issued or returned to, a
person other than the registered owner, then the tendered Certificates must be
endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
Certificates, with the signatures on the Certificates or stock powers guaranteed
by an Eligible Institution as provided herein. See Instruction 5.
2. Requirement of Tender. This Letter of Transmittal is to be completed by
Stockholders if Certificates evidencing Shares are to be forwarded herewith or
if delivery of Shares is to be made pursuant to the procedures for book-entry
transfer set forth in Section 3 of the Offer to Purchase. For a Stockholder to
validly tender Shares pursuant to the Offer, either (a) a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof),
with any required signature guarantees and any other required documents, must be
received by the Depositary at one of its addresses set forth herein prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) and either
(i) Certificates for tendered Shares must be received by the Depositary at one
of such addresses prior to the Expiration Date or (ii) Shares must be delivered
pursuant to the procedures for book-entry transfer set forth in Section 3 of the
Offer to Purchase and a Book-Entry Confirmation must be received by the
Depositary on or prior to the Expiration Date or (b) the tendering Stockholder
must comply with the guaranteed delivery procedures set forth below and in
Section 3 of the Offer to Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer prior to the Expiration Date may
tender their Shares by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender
must be made by or through an Eligible Institution, (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date, and (iii) the Certificates representing all tendered Shares in
proper form for transfer, or a Book-Entry Confirmation with respect to all
tendered Shares, together with a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange, Inc. trading days after the date of such Notice of Guaranteed
Delivery. If Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE> 9
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
information required under "Description of Shares Tendered" should be listed on
a separate signed schedule attached hereto.
4. Partial Tenders. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, if Purchaser accepts the tendered
Shares for payment, a new Certificate for the remainder of the Shares that were
evidenced by your old certificate(s) will be sent, without expense, to the
person(s) signing this Letter of Transmittal, unless otherwise provided in the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal, as soon as practicable
after the Expiration Date. All Shares represented by Certificate(s) delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority to so act
must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on such Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
such Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
6. Transfer Taxes. Except as set forth in this Instruction 6, Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder(s) or such person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
<PAGE> 10
7. Special Payment and Delivery Instructions. If a check and/or
Certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be sent
and/or such Certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. If any
tendered Shares are not purchased for any reason and such Shares are delivered
by Book-Entry Transfer Facility, such Shares will be credited to an account
maintained at the appropriate Book-Entry Transfer Facility.
8. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Offer to Purchase, this
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Information Agent or the Dealer Manager at their addresses or telephone
numbers set forth below.
9. Waiver of Conditions. The conditions of the Offer may be waived by
Purchaser, in whole or in part, at any time or from time to time, in Purchaser's
sole discretion subject to the conditions described in the Offer to Purchase.
10. Backup Withholding Tax. Each tendering Stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below
and to certify that the stockholder is not subject to backup withholding.
FAILURE TO PROVIDE THE INFORMATION ON THE SUBSTITUTE FORM W-9 MAY SUBJECT THE
TENDERING STOCKHOLDER TO 31% FEDERAL INCOME TAX BACKUP WITHHOLDING ON THE
PAYMENT OF THE PURCHASE PRICE FOR THE SHARES. The tendering Stockholder should
indicate in the box in Part III of the Substitute Form W-9 if the tendering
Stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the Stockholder has indicated in the box
in Part III that a TIN has been applied for and the Depositary is not provided
with a TIN by the time of payment, the Depositary will withhold 31% of all
payments of the purchase price, if any, made thereafter pursuant to the Offer
until a TIN is provided to the Depositary.
11. Lost or Destroyed Certificates. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's transfer agent, American Stock Transfer & Trust Company. The holders
will then be instructed as to the procedure to be followed in order to replace
the Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND
ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION
DATE.
<PAGE> 11
IMPORTANT TAX INFORMATION
Under federal income tax law, a Stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payor) with such
Stockholder's correct TIN on Substitute Form W-9 below. If such Stockholder is
an individual, the TIN is his or her social security number. If the tendering
Stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, such Stockholder should so indicate on
the Substitute Form W-9. See Instruction 10. If the Depositary is not provided
with the correct TIN, the Stockholder may be subject to a $50 penalty imposed by
the Internal Revenue Service. In addition, payments that are made to such
Stockholders with respect to Shares purchased pursuant to the Offer may be
subject to backup federal income tax withholding.
Certain Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such Stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Forms for such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such Stockholder is awaiting a TIN) and that (1) such
Stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of failure to report all interest or
dividends or (2) the Internal Revenue Service has notified the Stockholder that
he is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- ----------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN Social security number
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY SIGNING -----------------------------------
AND DATING BELOW OR
-----------------------------------
Employer Identification Number
----------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because (i) I am exempt from
backup withholding, (ii) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of
a failure to report all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup withholding.
----------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2)
PAYER'S REQUEST FOR in Part 2 above if you have been notified by the IRS that PART 3 --
TAXPAYER IDENTIFICATION you are subject to backup withholding because of
NUMBER ("TIN") underreporting interest or dividends on your tax return. Awaiting TIN / /
However, if after being notified by the IRS that you were
subject to backup withholding you received another
notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
SIGNATURE DATE , 1996
NAME (Please Print)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND SOLICITATION.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF THE SUBSTITUTE FORM W-9.
<PAGE> 13
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
or (2) I intend to mail or deliver an application in the near future. I
understand that if I have not provided a taxpayer identification number,
31% of all reportable payments made to me will be withheld until I provide
a number.
<TABLE>
<S> <C>
______________________________, 1996
Signature Date
Name (Please Print)
</TABLE>
- --------------------------------------------------------------------------------
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
CS First Boston
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Call Toll-Free (888) 675-8650
May 17, 1996
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
MICOM COMMUNICATIONS CORP.
BY
ELDER CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
NORTHERN TELECOM LIMITED
(Not to be used for Signature Guarantees)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, JUNE 14, 1996,
UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
the common stock, par value $.0000001 (the "Shares"), of MICOM Communications
Corp., a Delaware corporation, are not immediately available or the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach First Chicago Trust Company of New York
(the "Depositary") prior to the Expiration Date (as defined in the Offer to
Purchase). This Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission or mail to the Depositary. See Section 3
of the Offer to Purchase.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission By Hand or
Tenders & Exchanges (For Eligible Institutions Overnight Courier:
P.O. Box 2559 Only): Tenders & Exchanges
Suite 4660-MCM (201) 222-4720 14 Wall Street
Jersey City, NJ or 8th Floor, Suite 4680-MCM
07303-2559 (201) 222-4721 New York, NY 10005
Confirm Receipt of
Notice of Guaranteed
Delivery:
(201) 222-4707
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN THE ONES LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Elder Corporation, a Delaware corporation
and an indirect wholly owned subsidiary of Northern Telecom Limited, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated May
17, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any supplements or amendments thereto, collectively
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of shares indicated below pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
Certificate Nos. (if available):
(PLEASE TYPE OR PRINT)
Check ONE box if Shares will be tendered by Address(es):
book-entry transfer:
/ / The Depository Trust Company (INCLUDE ZIP CODE)
/ / Philadelphia Depository Trust Company
Area Code and Tel. No.:
Account Number: Signature(s):
Dated:
</TABLE>
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, an Eligible Institution (as such term is defined in
Section 3 of the Offer to Purchase), hereby guarantees to deliver to the
Depositary the certificates representing the Shares tendered hereby, in proper
form for transfer, or a Book-Entry Confirmation (as defined in Section 3 of the
Offer to Purchase) with respect to such Shares, in either case together with a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees, and any other
documents required by the Letter of Transmittal, all within three trading days
(as defined in Section 3 of the Offer to Purchase) after the date hereof.
<TABLE>
<S> <C>
Name of Firm:
(AUTHORIZED SIGNATURE)
Address: Name:
(PLEASE TYPE OR PRINT)
Title:
(INCLUDE ZIP CODE)
Area Code and Tel. No.: Date:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH OUR
LETTER OF TRANSMITTAL.
<PAGE> 1
CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Call Toll-Free (888) 675-8650
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICOM COMMUNICATIONS CORP.
AT
$12.00 NET PER SHARE
BY
ELDER CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
NORTHERN TELECOM LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, JUNE 14, 1996,
UNLESS THE OFFER IS EXTENDED.
May 17, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Elder Corporation, a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Northern Telecom Inc., a Delaware
corporation ("Parent") which is, in turn, a wholly owned subsidiary of Northern
Telecom Limited, a corporation organized under the laws of Canada ("Nortel"), to
act as Dealer Manager in connection with Purchaser's offer to purchase for cash
all of the outstanding shares of common stock, $.0000001 par value (the
"Shares"), of MICOM Communications Corp., a Delaware corporation (the
"Company"), at $12.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated May 17, 1996 (the "Offer to Purchase"), and in the related Letter
of Transmittal (which, together with any supplements or amendments thereto,
collectively constitute the "Offer") enclosed herewith. Please furnish copies of
the enclosed materials to those of your clients for whom you hold Shares in your
name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. A letter to stockholders of the Company from Warren B. Phelps, III,
Chairman of the Board and Chief Executive Officer of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company and mailed to the
stockholders of the Company.
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if neither of the two procedures for tendering Shares set forth
in Section 3 of the Offer to Purchase can be completed on a timely basis.
<PAGE> 2
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to First Chicago Trust Company of New
York, the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 14, 1996, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message and any other required
documents should be sent to the Depositary and (ii) certificates representing
the tendered Shares or a timely Book-Entry Confirmation should be delivered to
the Depositary in accordance with the instructions set forth in the Letter of
Transmittal and the Offer to Purchase.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares (or a timely Book-Entry Confirmation (as defined in Section 3 of the
Offer to Purchase) with respect to such Shares), (ii) the Letter of Transmittal
(or a manually signed facsimile thereof) properly completed and duly executed,
with all required signature guarantees or an Agent's Message (as defined in
Section 2 of the Offer to Purchase), and (iii) all other documents required by
the Letter of Transmittal.
If holders of the Shares wish to tender, but it is impracticable for them
to forward their certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures specified in Section 3
of the Offer to Purchase.
Purchaser will not pay any fees or commission to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent, as described in the Offer to Purchase) for soliciting tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or will cause to be paid
any transfer taxes payable on the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., the Information Agent for the Offer, at 156 Fifth
Avenue, New York, NY 10010, (800) 322-2885, or CS First Boston Corporation, the
Dealer Manager, Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055,
(888) 675-8650.
Requests for copies of the enclosed materials may be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
CS First Boston Corporation
------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, THE DEPOSITARY,
THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY STATEMENT
OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICOM COMMUNICATIONS CORP.
AT
$12.00 NET PER SHARE
BY
ELDER CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
NORTHERN TELECOM LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 14, 1996,
UNLESS THE OFFER IS EXTENDED.
May 17, 1996
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated May 17,
1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any supplements or amendments thereto, collectively constitute the
"Offer") relating to the offer by Elder Corporation, a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Northern Telecom Inc., a Delaware
corporation ("Parent"), which is, in turn, a wholly owned subsidiary of Northern
Telecom Limited, a corporation organized under the laws of Canada, to purchase
all the outstanding shares of common stock, $.0000001 par value (the "Shares"),
of MICOM Communications Corp., a Delaware corporation (the "Company"), at a
purchase price of $12.00 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer. Holders of Shares whose
certificates for such Shares (the "Certificates") are not immediately available
or who cannot deliver their Certificates and all other required documents to the
depositary, First Chicago Trust Company of New York (the "Depositary"), or
complete the procedures for book-entry transfer prior to the Expiration Date (as
defined in the Offer to Purchase), must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
<PAGE> 2
Please note the following:
1. The tender price is $12.00 per Share, net to the seller in cash.
2. The Offer is being made for all the outstanding Shares. The Offer
is being made pursuant to an Agreement and Plan of Merger dated as of May
13, 1996 (the "Merger Agreement") among Purchaser, Parent and the Company.
3. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn at the expiration of the Offer that
number of Shares which, when added to the Shares Purchaser has the right to
acquire pursuant to certain Stock Option Agreements, described in the Offer
to Purchase, would constitute a majority of the outstanding Shares on a
fully diluted basis. The Offer is also subject to certain other conditions
contained in the Offer to Purchase. See Sections 1 and 14 of the Offer to
Purchase.
4. The Board of Directors of the Company, by the unanimous vote of the
directors present, has determined that the Offer and the Merger are fair
to, and in the best interests of, the Company's stockholders, has approved
the Merger Agreement and the transactions contemplated thereby, and
recommends that stockholders accept the Offer and tender their Shares.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, June 14, 1996, unless the Offer is extended.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes with respect to the transfer and sale of Shares
pursuant to the Offer. However, any tendering stockholder or other payee
who fails to complete and sign the Substitute Form W-9 that is included in
the Letter of Transmittal may be subject to a required backup federal
income tax withholding of 31% of the gross proceeds payable to such holder
or other payee pursuant to the Offer. See Sections 3 and 5 of the Offer to
Purchase.
7. In all cases, payment for Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (i)
Certificates evidencing such Shares (or a timely Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to such
Shares), (ii) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed with all required signature
guarantees or an Agent's Message (as defined in Section 2 of the Offer to
Purchase), and (iii) all other documents required by the Letter of
Transmittal.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth below. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified below. An
envelope to return your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD
BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. Purchaser is not aware of any jurisdiction where the making of the
Offer is prohibited by administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with any such state statute. If, after
such good faith effort, Purchaser cannot comply with any such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by CS First
Boston Corporation or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK OF
MICOM COMMUNICATIONS CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated May 17, 1996, and the related Letter of Transmittal, in
connection with the offer by Elder Corporation, a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Northern Telecom Inc., a Delaware
corporation which is, in turn, a wholly owned subsidiary of Northern Telecom
Limited, a corporation organized under the laws of Canada, to purchase all
outstanding shares of common stock, par value $.0000001, of MICOM Communications
Corp., a Delaware corporation.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase.
Number of Shares to be Tendered:*
Date:
SIGN HERE
Signature(s):
Print Name(s):
Print Address(es):
Area Code(s) and Telephone Number(s):
Taxpayer Identification or Social Security Number(s):
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is being made solely by the Offer to Purchase
dated May 17, 1996, and the related Letter of Transmittal and is not being made
to (nor will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In those jurisdictions
where the securities laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed made on behalf of Purchaser by CS First Boston
Corporation ("CS First Boston"), the Dealer Manager, or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICOM COMMUNICATIONS CORP.
AT
$12.00 NET PER SHARE
BY
ELDER CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
NORTHERN TELECOM LIMITED
Elder Corporation, a Delaware corporation ("Purchaser"), which is an
indirect wholly owned subsidiary of Northern Telecom Limited, a corporation
organized under the laws of Canada ("Nortel"), is offering to purchase all
outstanding shares of Common Stock, par value $.0000001 per share (the
"Shares"), of MICOM Communications Corp., a Delaware corporation (the
"Company"), at $12.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated May 17, 1996
(the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JUNE 14, 1996, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, WHEN ADDED TO THE SHARES THAT PURCHASER HAS THE RIGHT TO ACQUIRE
PURSUANT TO THE STOCK OPTION AGREEMENTS (AS DEFINED BELOW), WOULD CONSTITUTE A
MAJORITY OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS. SEE SECTION 14 OF
THE OFFER TO PURCHASE FOR THE OTHER CONDITIONS OF THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of May 13, 1996 (the "Merger Agreement"), among Northern Telecom Inc.,
a wholly owned subsidiary of Nortel and the sole stockholder of Purchaser
("Parent"), Purchaser and the Company. The Merger Agreement provides that
following the consummation of the Offer and the satisfaction or waiver of
certain conditions, Purchaser will be merged with and into the Company (the
"Merger"). On the effective date of the Merger, each outstanding Share (other
than Shares owned by Parent or Purchaser or any of their subsidiaries or held
in the treasury of the Company or by stockholders, if any, who are entitled to
and who properly exercise appraisal rights under Delaware law) will be
converted into the right to receive $12.00 in cash, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY, BY THE UNANIMOUS VOTE OF THE
DIRECTORS PRESENT, HAS APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES.
Purchaser and Parent have also entered into Stock Option Agreements
dated as of May 13, 1996 (together, the "Stock Option Agreements"), with
certain stockholders who own an aggregate of approximately 39% of the
outstanding Shares (on a fully diluted basis). Under the Stock Option
Agreements, those stockholders have agreed to tender their Shares into the
Offer and have granted Purchaser an option to purchase their Shares at $12.00
per Share in certain circumstances.
For purposes of the Offer, Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when Purchaser gives oral or written notice to the Depositary of
Purchaser's acceptance of such Shares for payment. In all cases, payment for
Shares purchased pursuant to the Offer will be made by deposit of the purchase
price therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders whose Shares have theretofore
been accepted for payment. Payment for Shares accepted for payment pursuant to
the Offer in all cases will be made only after timely receipt by the Depositary
of (a) certificates for (or a book-entry transfer with respect to) such Shares,
(b) a Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase), and (c) all other
documents required by the Letter of Transmittal. Under no circumstances will
interest be paid by Purchaser on the purchase price of the Shares, regardless
of any extension of the Offer or any delay in making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, June 14, 1996, unless and until Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire. Subject to the limitations set forth in
the Merger Agreement, Purchaser reserves the right (but will not be obligated),
at any time or from time to time in its sole discretion, to extend the period
of time during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension. There can be no assurance that Purchaser will exercise its right to
extend the Offer. Any such extension will be followed by a public announcement
thereof no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date. If Purchaser extends the Offer,
then without prejudice to the rights of Purchaser, tendered Shares may be
retained by the Depositary on behalf of Purchaser and may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights, as set forth below.
<PAGE> 3
Except as otherwise provided below, tenders of Shares made pursuant to
the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
at any time after July 15, 1996. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase. Any such notice of withdrawal must specify the name
of the person who tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name of the registered holder, if different from the name
of the person who tendered such Shares. If certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the physical release of such certificates, the tendering stockholder
must also submit the serial numbers shown on such certificates, and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), except in the case of Shares
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal with respect to
such Shares must specify the name and number of the account at the applicable
Book-Entry Transfer Facility (as defined in the Offer to Purchase) to be
credited with the withdrawn Shares. Any Shares properly withdrawn will be
deemed not to have been validly tendered for purposes of the Offer, but may be
retendered at any subsequent time prior to the Expiration Date by following any
of the procedures described in Section 3 of the Offer to Purchase. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by Purchaser, in its sole discretion, whose
determination shall be final and binding on all parties.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the stockholders lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under
the Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE OFFER.
No fees or commissions will be payable to brokers, dealers or other
persons other than the Information Agent and the Dealer Manager for soliciting
tenders of Shares pursuant to the Offer. Requests for copies of the Offer to
Purchase, the Letter of Transmittal and all other tender offer materials may be
directed to the Information Agent or the Dealer Manager as set forth below, and
copies will be furnished promptly at Purchaser's expense.
The Information Agent for the Offer is:
[MACKENZIE
PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
[CS FIRST BOSTON LOGO]
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Call Toll-Free (888) 675-8650
May 17, 1996
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------------
- ---------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security number or your Employer Identification
number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments including
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1) of the Code.
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding including the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt interest dividends under
Section 852 of the Code).
- Payments described in Section 6049(b)(5) of the Code to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041(a), 6045, 6050A and 6050N of
the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 1
MICOM NORTEL
Communications Corp. NORTHERN TELECOM
NEWS RELEASE
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE May 13, 1996
NORTHERN TELECOM (NORTEL) AND MICOM COMMUNICATIONS
EXECUTE ACQUISITION AGREEMENT
TORONTO, Ontario and SIMI VALLEY, California--Northern Telecom Limited (Nortel)
[TSE: NTL; NYSE: NT] and MICOM Communications Corp. [NASDAQ: MICM] announced
today execution of a definitive agreement providing for Nortel's acquisition of
MICOM for approximately $US 150 million.
Under the agreement, Nortel will commence a cash tender offer, through an
indirect wholly owned subsidiary, later this week for all of MICOM's
approximately 11,450,000 outstanding common shares at a price of $US 12.00 net
per share. By unanimous vote of all directors present at a meeting, the MICOM
Board of Directors approved the agreement and recommended that MICOM
stockholders tender their shares pursuant to the offer. Following the successful
completion of the tender offer, remaining shares of MICOM will be acquired at
that price through a merger with the Nortel subsidiary. The MICOM Board of
Directors has received the opinion of Montgomery Securities that the
consideration payable in the tender offer and merger is fair, from a financial
point of view, to MICOM stockholders.
In connection with the acquisition agreement, certain stockholders including
Odyssey Partners L.P. have agreed to tender their 5,151,145 MICOM shares
(approximately 44% of MICOM's current outstanding stock), and have also granted
Nortel an option on such shares at $12.00 per share, which can be exercised
under certain circumstances.
- more -
<PAGE> 2
"MICOM's product portfolio, technologies and distribution channels
complement our rapidly expanding multimedia networks business which encompasses
legacy data, frame relay and ATM products and services for enterprises and
service providers", said Jean C. Monty, president and chief executive officer,
Northern Telecom Limited. "We are delighted to welcome the fine people of MICOM
to Nortel."
"We believe this transaction is an attractive one for our shareholders and
begins an exciting new era for MICOM", said Barry Phelps, chairman of the board
and chief executive officer of MICOM. "The acquisition had its origins in the
exploration of a strategic alliance between our two companies to co-develop a
new access platform, and evolved as the management of each company recognized
the advantages a closer relationship could bring. Nortel's commitment to our
product portfolio and accelerating new product development and market
penetration should result in greater opportunities for our people and more
exciting offerings for our customers."
CS First Boston will act as Dealer Manager for the tender offer. The
consummation of the tender offer is subject to a number of customary conditions,
including the tender of a majority of MICOM's outstanding shares (on a fully
diluted basis) and expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act.
MICOM Communications Corp. is an active member of the Frame Relay Forum and
the worldwide market leader in providing integrated networking solutions under
the brand names, "Marathon," "Netrunner," and "ClearVoice." MICOM products save
companies money by integrating remote data, voice, fax and LAN traffic over
private and public networks. Located in Simi Valley, California, MICOM is
represented by certified distributors in over 85 countries.
- more -
<PAGE> 3
Page 3
Nortel works with customers worldwide to design, build, and integrate
digital networks - for information, entertainment, education, and business -
offering one of the broadest choices of network solutions in the industry.
Nortel has shipped and installed more digital lines worldwide than any other
company.
Nortel's research capabilities around the world include a network of
research and development facilities, affiliated joint ventures, and other
collaborations fostering innovative product development and advanced design
research in 14 countries.
Nortel's common shares are listed on the New York, Toronto, Montreal,
Vancouver and London stock exchanges. Nortel had 1995 revenues of $US 10.7
billion and has approximately 63,000 employees worldwide.
-end-
For more information:
Robert O'Brien Francine Good
Nortel, Media Relations Vice President and CFO
(905) 566-3214 MICOM
(805) 583-8600 x3317
Bob Kaye / David Long Dawn Dover
Nortel, Investor Relations Kekst and Company
(905) 566-3178 / (905) 566-3098 (212) 593-2655
[email protected]
Or visit Nortel's web-site at http://www.nortel.com
<PAGE> 1
Restricted
- ----------
NORTEL
News Release NORTHERN TELECOM
- -----------------------------------------------------------------------------
DRAFT #2/MAY 16 8:15PM May 17, 1996
Northern Telecom (Nortel) Commences $12.00 Per Share Tender Offer
for MICOM Communications Corp.
TORONTO - Northern Telecom Limited (Nortel) [TSE: NTL; NYSE: NT] announced
today that its indirect, wholly owned subsidiary, Elder Corporation, has
commenced its previously announced tender offer for all outstanding shares of
common stock of MICOM Communications Corp. [NASDAQ: MICM] at a price of $US
12.00 per share.
The tender offer is being made pursuant to the previously announced
Agreement and Plan of Merger. Following the successful completion of the tender
offer, Elder Corporation will be merged with and into MICOM Communications
Corp., and each remaining MICOM share will be converted into the right to
receive $US 12.00.
As previously disclosed, Elder Corporation acquired options from
certain stockholders to acquire approximately 5.15 million MICOM shares owned
by such stockholders (approximately 39% of MICOM's outstanding shares on a
fully diluted basis) at a price of $US 12.00 per share. The tender offer is
conditioned upon, among other things, there being validly tendered and not
withdrawn that number of shares which, when added to the shares subject to such
options, would constitute a majority of the outstanding MICOM shares on a fully
diluted basis.
- more -
<PAGE> 2
Page 2
The Board of Directors of MICOM, by the unanimous vote of the directors
present, has determined that the offer and the merger are fair to, and in the
best interest of, the stockholders of MICOM; has approved the Agreement and
Plan of Merger and the transactions contemplated thereby; and recommends that
stockholders accept the offer and tender their shares.
The tender offer and withdrawal of rights under the tender offer are
scheduled to expire at 12:00 midnight, New York City time, on June 14, 1996,
unless extended.
CS First Boston is acting as dealer manager for the tender offer.
MacKenzie Partners, Inc. is the information agent.
Nortel works with customers worldwide to design, build, and integrate
digital networks--for information, entertainment, education, and
business--offering one of the broadest choices of network solutions in the
industry. Nortel has shipped and installed more digital lines worldwide than
any other company.
Nortel's research capabilities around the world include a network of
research and development facilities, affiliated joint ventures, and other
collaborations fostering innovative product development and advanced design
research in 14 countries.
Nortel had 1995 revenues of $US 10.7 billion and has approximately
63,000 employees worldwide.
-end-
For more information:
Robert O'Brien Bob Kaye/David Long
Nortel, Media Relations Nortel, Investor Relations
(703) 712-8526 MICOM
(905) 566-3178 / (905) 566-3098
bob,[email protected]
<PAGE> 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
NORTHERN TELECOM INC.
ELDER CORPORATION
AND
MICOM COMMUNICATIONS CORP.
Dated as of May 13, 1996
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.01 The Offer .......................................................1
SECTION 1.02 Company Actions..................................................3
SECTION 1.03 Stockholder Lists................................................4
SECTION 1.04 Directors .......................................................4
ARTICLE II
THE MERGER
SECTION 2.01 The Merger ......................................................5
SECTION 2.02 Consummation of the Merger.......................................5
SECTION 2.03 Effects of the Merger............................................6
SECTION 2.04 Certificate of Incorporation and Bylaws..........................6
SECTION 2.05 Directors and Officers...........................................6
SECTION 2.06 Conversion of Shares.............................................6
SECTION 2.07 Conversion of Common Stock of the Sub............................6
SECTION 2.08 Stockholders' Meeting............................................7
SECTION 2.09 Merger Without Meeting of Stockholders...........................7
SECTION 2.10 Withholding Taxes................................................7
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 Dissenting Shares................................................8
SECTION 3.02 Payment for Shares...............................................8
SECTION 3.03 Closing of the Company's Transfer Books.........................10
SECTION 3.04 Options ........................................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification..................................11
SECTION 4.02 Capitalization..................................................12
SECTION 4.03 Authority for this Agreement....................................13
SECTION 4.04 Absence of Certain Changes......................................14
SECTION 4.05 Reports ........................................................14
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SECTION 4.06 Schedule 14D-9; Offer Documents and Proxy Statement.............16
SECTION 4.07 Consents and Approvals; No Violation............................17
SECTION 4.08 Brokers ........................................................17
SECTION 4.09 Employee Benefit Matters........................................18
SECTION 4.10 Litigation, etc.................................................21
SECTION 4.11 Tax Matters ....................................................21
SECTION 4.12 Compliance with Law.............................................23
SECTION 4.13 Environmental Compliance........................................23
SECTION 4.14 Intellectual Property...........................................27
SECTION 4.15 Real Property...................................................29
SECTION 4.16 Insurance ......................................................30
SECTION 4.17 Material Contracts..............................................30
SECTION 4.18 Related Party Transactions......................................31
SECTION 4.19 Liens ..........................................................32
SECTION 4.20 State Takeover Statutes Inapplicable............................32
SECTION 4.21 Required Vote of Company Stockholders...........................32
SECTION 4.22 New Jersey ISRA.................................................33
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE SUB
SECTION 5.01 Organization and Qualification..................................33
SECTION 5.02 Authority Relative to this Agreement............................33
SECTION 5.03 Offer Documents; Proxy Statement................................34
SECTION 5.04 Consents and Approvals; No Violation............................34
SECTION 5.05 Interim Operation of the Sub....................................35
SECTION 5.06 Financing ......................................................35
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company..............................35
SECTION 6.02 No Solicitation.................................................38
SECTION 6.03 Access to Information...........................................39
SECTION 6.04 Reasonable Best Efforts.........................................40
SECTION 6.05 Indemnification.................................................41
SECTION 6.06 Employee Plans and Benefits and Employment Contracts............41
SECTION 6.07 State Takeover Statutes.........................................42
SECTION 6.08 Proxy Statement.................................................43
SECTION 6.09 Notification of Certain Matters.................................43
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SECTION 6.10 Subsequent Filings..............................................43
SECTION 6.11 Termination Fee; Expenses.......................................44
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger......45
SECTION 7.02 Conditions to the Obligations of the Parent and the Sub to
Effect the Merger...........................................46
SECTION 7.03 Conditions to the Obligations of the Company to Effect the
Merger......................................................46
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination ....................................................47
SECTION 8.02 Effect of Termination...........................................49
SECTION 8.03 Amendment ......................................................49
SECTION 8.04 Extension; Waiver...............................................49
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties......................50
SECTION 9.02 Entire Agreement; Assignment....................................50
SECTION 9.03 Enforcement of the Agreement....................................50
SECTION 9.04 Validity .......................................................50
SECTION 9.05 Notices ........................................................50
SECTION 9.06 Governing Law...................................................52
SECTION 9.07 Descriptive Headings............................................52
SECTION 9.08 Parties in Interest.............................................52
SECTION 9.09 Counterparts ...................................................53
SECTION 9.10 Fees and Expenses...............................................53
SECTION 9.11 Certain Definitions.............................................53
SECTION 9.12 Press Releases..................................................54
EXHIBIT A
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
May 13, 1996 among Northern Telecom Inc., a Delaware corporation (the "Parent"),
Elder Corporation, a Delaware corporation and a wholly-owned subsidiary of the
Parent (the "Sub"), and MICOM Communications Corp., a Delaware corporation (the
"Company").
RECITALS
WHEREAS, the Board of Directors of each of the Parent, the Sub
and the Company has determined that it is in the best interests of their
respective stockholders for the Sub to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has adopted, by
the unanimous vote of all directors present, resolutions approving, among other
things, the acquisition of the Company by the Sub, this Agreement and the
transactions contemplated hereby, and has agreed to recommend that the Company's
stockholders approve the agreement of merger (as such term is used in Section
251 of the Delaware General Corporation Law (the "DGCL")) contained in this
Agreement and the transactions contemplated hereby and tender their Shares (as
hereinafter defined) in the Offer (as hereinafter defined);
WHEREAS, concurrently with the execution hereof and in order
to induce the Parent and the Sub to enter into this Agreement, the Parent and
the Sub are entering into stock option agreements (together, the "Stock Option
Agreement") with Odyssey Partners L.P. and E.R. Yost (together, the "Option
Grantor") under which the Option Grantor has granted the Sub an irrevocable
option (together the "Odyssey Option") to purchase a total of 5,151,145 Shares
upon the terms and conditions specified therein;
WHEREAS, the Parent, the Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth 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 Section 8.01 hereof and that none of the events
set forth in clause (2) of Exhibit A hereto shall have occurred or be existing,
the Parent shall cause the Sub promptly (but in no event later than five
business days following the public announcement of the terms of this Agreement)
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) an offer to purchase all outstanding
shares
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(the "Shares") of common stock of the Company, par value $0.0000001 per share
(the "Common Stock"), at a price of $12.00 per Share, net to the seller in cash
(the "Offer"). The obligation of the Sub to consummate the Offer and to accept
for payment and to pay for any Shares tendered pursuant thereto shall be subject
to only the conditions set forth on Exhibit A (the "Offer Conditions"), which
are for the sole benefit of the Parent and the Sub and may be asserted by the
Parent or the Sub regardless of the circumstances giving rise to any such
condition, or waived by the Parent or the Sub in whole or in part at any time
and from time to time in its sole discretion. The Company agrees that no Shares
held by the Company or any of its subsidiaries (as defined in Section 9.11
hereof) will be tendered to the Sub pursuant to the Offer. The Sub will not,
without the prior written consent of the Company, (i) decrease or change the
form of the consideration payable in the Offer, (ii) decrease the number of
Shares sought pursuant to the Offer, (iii) impose additional conditions to the
Offer other than the Offer Conditions, (iv) change the Offer Conditions
(provided, that the Parent or the Sub in its sole discretion may waive any such
conditions) or (v) make any other change in the terms or conditions of the Offer
which is materially adverse to the holders of the Shares. Notwithstanding the
foregoing, the Parent and the Sub may, without the consent of the Company, (x)
extend the Offer, if at the scheduled expiration date of the Offer any of the
Offer Conditions shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (xi) extend the Offer for any period
required by any statute, rule, regulation, interpretation or position of the
Securities and Exchange Commission ("SEC") or any other governmental authority
or agency thereof applicable to the Offer, and (xii) extend the Offer for any
reason on one or more occasions for an aggregate of not more than 15 business
days beyond the latest expiration date that would otherwise be permitted under
clauses (x) and (xi) of this sentence; and, if at any scheduled expiration date
of the Offer any of the Offer Conditions are not satisfied or waived by the
Parent or the Sub but are capable of being satisfied in the reasonable opinion
of the Parent and the Sub, on the written request of the Company, the Sub shall
from time to time extend the Offer for up to thirty business days in the
aggregate from the originally scheduled expiration date thereof. Subject to the
Offer Conditions and the terms and conditions of this Agreement, the Sub shall,
and the Parent shall cause Sub to, accept for payment, and pay for, all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the expiration of the Offer.
(b) On the date of commencement of the Offer, the Parent and
the Sub shall file or cause to be filed with the SEC a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer which shall contain the offer to
purchase and related letter of transmittal and other ancillary Offer documents
and instruments pursuant to which the Offer will be made (collectively with any
supplements or amendments thereto, the "Offer Documents"). The
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Company and its counsel shall be given a reasonable opportunity to review and
comment on the Offer Documents prior to their filing with the SEC.
(c) The Parent shall provide to the Sub on a timely basis the
funds necessary to accept for payment and pay for the Shares that the Sub
becomes obligated to accept for payment and pay for pursuant to the Offer.
SECTION 1.02 Company Actions. (a) The Company hereby consents
to the Offer and represents and warrants that (i) the making of any offer and
proposal and the taking of any other action by the Parent or the Sub in
connection with this Agreement and the Stock Option Agreement and the
transactions contemplated hereby and thereby have been consented to by the Board
of Directors of the Company in accordance with the terms and provisions of the
Confidentiality Agreement (as hereinafter defined), (ii) its Board of Directors
(at a meeting or meetings duly called and held) has, by the unanimous vote of
all directors present, (w) determined that the Offer and the Merger are fair to
and in the best interests of the stockholders of the Company, (x) resolved to
recommend acceptance of the Offer and approval and adoption of agreement of
merger (as such term is used in Section 251 of the DGCL) contained in this
Agreement by such stockholders of the Company, (y) taken all necessary steps to
render Section 203 of the DGCL inapplicable to the Merger, the Stock Option
Agreement and the acquisition of Shares pursuant to the Offer and the Odyssey
Option and (z) resolved to elect, to the extent permitted by law, not to be
subject to any state takeover law other than Section 203 of the DGCL that may
purport to be applicable to the Offer, the Merger, the Stock Option Agreement or
the transactions contemplated by this Agreement or the Stock Option Agreement
and (iii) Montgomery Securities, the Company's independent financial advisor,
has advised the Company's Board of Directors that, in its opinion, the
consideration to be paid in the Offer and the Merger to the Company's
stockholders is fair, from a financial point of view, to such stockholders.
(b) On the date of commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the "Schedule
14D-9") containing the recommendations of its Board of Directors described in
Section 1.02(a) and hereby consents to the inclusion of such recommendations in
the Offer Documents and to the inclusion of a copy of the Schedule 14D-9 with
the Offer Documents mailed or furnished to the Company's stockholders. The
Parent, the Sub and their counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-9 prior to its filing with the SEC. The
Company agrees to provide the Parent and the Sub with any comments that may be
received from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt thereof.
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(c) The Company hereby agrees that, subject to the terms and
conditions of this Agreement and except as is required in the exercise of the
fiduciary duties of the Board of Directors of the Company in the written opinion
of outside counsel to the Company, in the event there shall occur a change in
law or in a binding judicial interpretation of existing law which would, in the
absence of action by the Company or the Board of Directors of the Company
specified in such law or interpretation, prevent the Sub, were it to acquire a
specified percentage of the Shares then outstanding, from approving and adopting
this Agreement by its affirmative vote as the holder of a majority of Shares and
without the affirmative vote of any other holder of Shares, the Company will use
its best efforts to promptly take or cause such action to be taken.
SECTION 1.03 Stockholder Lists. In connection with the Offer,
the Company shall cause its transfer agent to promptly furnish the Parent and
the Sub with mailing labels, security position listings and any available
listing or computer file containing the names and addresses of the record
holders of the Shares as of the latest practicable date and shall cause its
transfer agent to furnish the Sub with such information and assistance
(including periodic updates of such information) as the Sub or its agents may
reasonably request in communicating the Offer to the record and beneficial
stockholders of the Shares.
SECTION 1.04 Directors. (a) If, immediately following the
consummation of the Offer, the Sub is unable to cause the Merger to be effected
pursuant to Section 253 of the DGCL, promptly upon the purchase by the Sub
pursuant to the Offer and the Odyssey Option of such number of Shares as
represents at least a majority of the outstanding Shares and from time to time
thereafter, the Sub shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
will give the Sub representation on the Board of Directors of the Company equal
to the product of the number of directors on the Board of Directors of the
Company and the percentage that such number of Shares so purchased bears to the
number of Shares outstanding, and the Company shall, upon request by the Sub,
promptly increase the size of the Board of Directors of the Company or use its
best efforts to secure the resignations of such number of directors as is
necessary to provide the Sub with such level of representation and shall cause
the Sub's designees to be so elected. The Company will also use its best efforts
to cause persons designated by the Sub to constitute the same percentage as is
on the entire Board of Directors of the Company to be on (i) each committee of
the Board of Directors of the Company and (ii) each Board of Directors and each
committee thereof of each subsidiary of the Company. The Company's obligations
to appoint designees to its Board of Directors shall be subject to Section 14(f)
of the Exchange Act. At the request of the Sub and subject to applicable law,
the Company shall take, at its expense, all action necessary to effect any such
election or appointment of the Sub's designees, including mailing to its
stockholders the information
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required by Section 14(f) of the Exchange Act and Rule 14f-l promulgated
thereunder which, unless the Sub otherwise elects, shall be so mailed together
with the Schedule 14D-9. The Parent and the Sub will supply to the Company all
information with respect to themselves and their respective officers, directors
and affiliates required by such Section and Rule.
(b) Notwithstanding anything set forth in Section 1.04(a),
neither the Parent nor the Sub shall take any action to prevent at least two
persons who are directors of the Company on the date hereof from remaining as
directors of the Company (the "Continuing Directors") until the Effective Time
(as hereinafter defined). Following the election or appointment of the Sub's
designees pursuant to Section 1.04(a) and prior to the Effective Time, and so
long as there shall be at least one Continuing Director, any amendment of this
Agreement requiring action by the Board of Directors of the Company, any
extension of time for the performance of any of the obligations or other acts of
the Parent or the Sub under this Agreement, and any waiver of compliance with
any of the agreements or conditions under this Agreement for the benefit of the
Company will require the concurrence of a majority of the Continuing Directors.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the relevant provisions of the DGCL,
the Sub shall be merged with and into the Company (the "Merger") as soon as
practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII hereof. The Company shall be the surviving
corporation in the Merger (the "Surviving Corporation") under the name "MICOM
Communications Corp." and shall continue its existence under the laws of
Delaware. The separate corporate existence of the Sub shall cease.
SECTION 2.02 Consummation of the Merger. Subject to the
provisions of this Agreement, the Sub and the Company shall cause the Merger to
be consummated by filing with the Secretary of State of the State of Delaware a
duly executed and verified certificate of merger, as required by the DGCL, and
shall take all such other and further actions as may be required by law to make
the Merger effective. Prior to the filing referred to in this Section, a closing
(the "Closing") will be held at the offices of Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York (or such other place as the
parties may agree) for the purpose of confirming all the foregoing. The time the
Merger becomes effective in accordance with applicable law is referred to as the
"Effective Time."
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SECTION 2.03 Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the DGCL and set forth herein.
SECTION 2.04 Certificate of Incorporation and Bylaws. The
Certificate of Incorporation and the Bylaws of the Sub, in each case as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation; provided, however, that
Article I of the Certificate of Incorporation of the Surviving Corporation shall
be amended to read in its entirety as follows: "ARTICLE I. The name of the
Corporation is MICOM Communications Corp."
SECTION 2.05 Directors and Officers. The directors of the Sub
immediately prior to the Effective Time and the officers of the Company
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective successors are
duly elected and qualified.
SECTION 2.06 Conversion of Shares. Each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
the Parent, the Sub or any subsidiary of the Parent or the Sub or held in the
treasury of the Company, all of which shall be canceled, and other than
Dissenting Shares, as defined in Section 3.01 hereof) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive in cash an amount per Share (subject to any applicable
withholding tax as specified in Section 2.10 hereof) equal to $12.00, without
interest (the "Merger Consideration"), upon the surrender of the certificate
representing such Shares as provided in Section 3.02. At the Effective Time,
each holder of an Option (as hereinafter defined) with an exercise price of less
than $12.00 per share shall be entitled to receive the Option Consideration (as
hereinafter defined) pursuant to Section 3.04.
SECTION 2.07 Conversion of Common Stock of the Sub. Each share
of common stock, no par value, of the Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one share
of common stock of the Surviving Corporation.
SECTION 2.08 Stockholders' Meeting. Unless the Merger is
consummated in accordance with Section 253 of the DGCL as contemplated by
Section 2.09, and subject to applicable law, 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 (the "Special Meeting") of its
stockholders as soon as practicable following the consummation of the Offer for
the purpose of adopting the agreement of merger (within the meaning of Section
251 of the DGCL) set forth in this Agreement; and, subject to the fiduciary
duties of its Board of
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Directors under applicable law as set forth in a written opinion of outside
counsel, include in the Proxy Statement the recommendation of its Board of
Directors that stockholders of the Company vote in favor of the adoption of the
plan of merger set forth in this Agreement. The Parent and the Sub each agree
that, at the Special Meeting, all of the Shares acquired pursuant to the Offer,
the Option or otherwise by the Parent or the Sub or any of their affiliates will
be voted in favor of the Merger.
SECTION 2.09 Merger Without Meeting of Stockholders. If the
Sub, or any other direct or indirect subsidiary of the Parent, shall acquire at
least 90 percent of the outstanding shares of each class of capital stock of the
Company, each of the Parent, the Sub and the Company shall take all necessary
and appropriate action to cause the Merger to become effective, as soon as
practicable after the consummation of the Offer, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
SECTION 2.10 Withholding Taxes. The Parent and the Sub shall
be entitled to deduct and withhold from the consideration otherwise payable to a
holder of Shares, Options or Purchase Rights (as hereinafter defined) pursuant
to the Offer or the Merger, any stock transfer taxes and such amounts as are
required to be withheld under the Internal Revenue Code of 1986, as amended (the
"Code"), or any applicable provision of state, local or foreign tax law, as
specified in the Offer Documents. To the extent that amounts are so withheld by
the Parent or the Sub, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by the Parent or the Sub.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
did not vote in favor of the Merger and who comply with all of the relevant
provisions of Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into or be exchangeable for the right to receive the Merger
Consideration, and the holders of such Shares will be entitled to receive
payment of the appraised value of such Shares in accordance with the provisions
of Section 262, unless and until such holders shall have failed to perfect or
shall have effectively withdrawn or lost their rights to appraisal under the
DGCL. If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right to appraisal, such holder's Shares shall thereupon
be converted into and become exchangeable only for the right to receive, as of
the Effective Time, the Merger Consideration without any interest thereon. The
Company shall
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<PAGE> 12
give the Parent and the Sub (i) prompt notice of any written demands for
appraisal of any Shares received by the Company, attempted written withdrawals
of such demands, and any other instruments served pursuant to the DGCL and
received by the Company relating to stockholders' rights of appraisal and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. The Company shall not, except with the
prior written consent of the Parent, voluntarily make any payment with respect
to any demands for appraisals of capital stock of the Company, offer to settle
or settle any such demands or approve any withdrawal of any such demands.
SECTION 3.02 Payment for Shares.
(a) Prior to the Effective Time, the Parent will cause the Sub
to make available to a bank or trust company designated by the Parent (the
"Paying Agent") sufficient funds to make the payments pursuant to Section 2.06
hereof on a timely basis to holders (other than the Parent or the Sub or any of
their respective subsidiaries) of Shares that are issued and outstanding
immediately prior to the Effective Time (such amounts being hereinafter referred
to as the "Payment Fund"). The Paying Agent shall, pursuant to irrevocable
instructions, make the payments provided for in the preceding sentence out of
the Payment Fund. The Payment Fund shall not be used for any other purpose,
except as provided in this Agreement.
(b) As soon as practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each record
holder, as of the Effective Time, of an outstanding certificate or certificates
which immediately prior to the Effective Time represented Shares (the
"Certificates") 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 effecting the surrender of the Certificate and payment
therefor. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be paid in exchange therefor cash in an amount (subject to any applicable
withholding tax as specified in Section 2.10 hereof) equal to the product of the
number of Shares represented by such Certificate multiplied by the Merger
Consideration, and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. From and after the Effective Time and until
surrendered in accordance with the provisions of this Section 3.02, each
Certificate (other than Certificates
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representing Shares owned by the Parent or the Sub or any of their respective
subsidiaries and Certificates representing Dissenting Shares) shall represent
for all purposes solely the right to receive the Merger Consideration in cash
multiplied by the number of Shares evidenced by such Certificate, without any
interest thereon.
(c) Any portion of the Payment Fund (including the proceeds of
any investments thereof) that remains unclaimed by the former stockholders of
the Company for six months after the Effective Time shall be repaid to the
Surviving Corporation. Any former stockholders of the Company who have not
complied with Section 3.01 hereof prior to such six-month period shall
thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) but only as general creditors thereof
for payment of their claim for the Merger Consideration, without any interest
thereon. Neither the Parent nor the Surviving Corporation shall be liable to any
holder of Shares for any monies delivered from the Payment Fund or otherwise to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to two
years after the Effective Time, unclaimed funds payable with respect to such
certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
SECTION 3.03 Closing of the Company's Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of Shares shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for cash as provided in this Article III, subject to applicable
law in the case of Dissenting Shares.
SECTION 3.04 Options; Purchase Rights.
(a) At the Effective Time (or at such earlier time as the Sub
shall designate, which time may be immediately prior to the acceptance of Shares
pursuant to the Offer), each holder of a then outstanding option to purchase
shares of Common Stock, whether or not then exercisable (the "Options"), which
theretofore has been granted under either the Company's 1994 Employee Stock
Option Plan or the Company's 1994 Directors Stock Option Plan (together, the
"Stock Option Plans") shall, in settlement thereof, receive from the Surviving
Corporation for each Share subject to such Option an amount (subject to any
applicable withholding tax as specified in Section 2.10 hereof) in cash equal to
the excess, if any, of the Merger Consideration over the per share exercise or
purchase price of such Option (such amount being hereinafter referred to as the
"Option Consideration"). Upon receipt of the Option Consideration (or in the
case of an Option with an exercise price of $12.00 or greater, at the Effective
Time), the Option shall be canceled. The surrender of an Option to the Surviving
Corporation in exchange for the Option Consideration shall be deemed a release
of
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any and all rights the holder had or may have had in respect of such Option.
Prior to the Effective Time, the Company shall use its best efforts to obtain
all necessary consents or releases from holders of Options and take all such
other action as may be reasonably necessary to give effect to the transactions
contemplated by this Section 3.04. Except as otherwise agreed to by the parties,
(i) the Stock Option Plans shall terminate as of the Effective Time and, except
with respect to the right to receive the Option Consideration under this Section
3.04, any and all rights under any provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary thereof shall be canceled
as of the Effective Time, and (ii) the Company shall take all reasonable action
necessary to ensure that no person shall have any right under any Stock Option
Plan (or any Option granted thereunder) or other plan, program or arrangement
with respect to, including any right to acquire, equity securities of the
Company, the Surviving Corporation, the Parent or any subsidiary of any of the
foregoing following the Effective Time.
(b) At the Effective Time each holder of a Purchase Right
shall in settlement thereof receive from the Surviving Corporation for each
Share the holder of the Purchase Right would have been entitled to with respect
to such Purchase Right under the 1995 Plan (as hereinafter defined), as
calculated in accordance with the terms of the 1995 Plan (for purposes of such
calculation the date of the Effective Time shall be deemed to be the last day of
the Current Purchase Period (as hereinafter defined)) (subject to applicable
withholding tax as specified in Section 2.10 hereof) an amount in cash equal to
the Merger Consideration, with appropriate adjustment for fractional Shares
otherwise purchaseable. Upon receipt of such amounts, the Purchase Right shall
be canceled. Prior to the Effective Time, the Company shall use its best efforts
to obtain all necessary consents or releases from holders of Purchase Rights and
shall take such other action, including pursuant to Section 6.05(d), as may be
necessary to give effect to the transactions contemplated by this Section
3.04(b).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Parent and the Sub
as follows:
SECTION 4.01 Organization and Qualification. Each of the
Company and its subsidiaries is a duly organized and validly existing
corporation in good standing under the laws of its jurisdiction of
incorporation, with all corporate power and other authority to own its
properties and conduct its business and is duly qualified and in good standing
as a foreign corporation authorized to do business in each of the jurisdictions
in which the character of the
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properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing, in the aggregate, could not be reasonably
expected to have a Material Adverse Effect. The Company has heretofore delivered
to the Parent and the Sub accurate and complete copies of the Certificates of
Incorporation and Bylaws as currently in effect of the Company and its
subsidiaries. All of the outstanding shares of capital stock of each of the
Company's subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and all of such shares owned by the Company or another of its
subsidiaries are owned free and clear of all liens, claims or encumbrances.
Except with respect to the Company's ownership of its subsidiaries or the
ownership of one of the Company's subsidiaries by another of the Company's
subsidiaries neither the Company nor any of its subsidiaries, directly or
indirectly, owns any interest in any corporation, partnership, joint venture or
other business association or entity.
SECTION 4.02 Capitalization. (a) The authorized capital stock
of the Company consists of 40,000,000 shares of the Common Stock and 5,000,000
shares of preferred stock, par value $0.01 per share (the "Preferred Stock"). As
of the close of business on April 29, 1996: 11,449,918 Shares were issued and
outstanding; no shares of Preferred Stock were issued and outstanding; no Shares
were held in the Company's treasury; and there were outstanding Options to
purchase an aggregate of 1,362,328 Shares under the Stock Option Plans, and
warrants (the "Warrants") to purchase an aggregate of 291,525 Shares pursuant to
the Warrant Agreement, dated as of January 28, 1992, among the Company and the
parties thereto, and certain stock purchase rights under the Company's 1995
Employee Stock Purchase Plan (the "1995 Plan"), respectively (copies of which
have previously been made available to the Parent and the Sub), and there are no
stock appreciation rights or limited stock appreciation rights granted under the
Stock Option Plans or otherwise outstanding. The Purchase Rights do not (and at
the Effective Time will not) represent in the aggregate the right to purchase in
excess of 6,500 Shares. Since such date, the Company (i) has not issued any
Shares other than upon the exercise of Options, Warrants and Purchase Rights
outstanding on such date, (ii) has not granted any options, warrants or rights
or entered into other agreements or commitments to purchase Shares (under the
Stock Option Plans, the 1995 Plan or otherwise) and (iii) has not split,
combined or reclassified any of its shares of capital stock. All of the
outstanding Shares have been duly authorized and validly issued and are fully
paid and nonassessable and are free of preemptive rights. Section 4.02(a) of the
disclosure letter, dated the date hereof, delivered by the Company to the Parent
and the Sub prior to the execution of this Agreement setting forth certain
information with respect to certain matters referred to in this Agreement (the
"Disclosure Letter"), contains a true, accurate and complete list, as of the
close of business on the day immediately preceding the date hereof, of the name
of each Option holder, the number of outstanding Options held by such holder,
the grant date
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of each such Option, the number of Shares such holder is entitled to receive
upon the exercise of each Option and the corresponding exercise price. Except as
set forth in this Section 4.02(a) and in Section 4.02(a) of the Disclosure
Letter, there are no outstanding (i) shares of capital stock or other voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities or ownership
interests in the Company and (iii) options, warrants, rights or other agreements
or commitments to acquire from the Company, and no obligation of the Company to
issue, any capital stock, voting securities or other ownership interests in, or
securities convertible into or exchangeable for capital stock or voting
securities or other ownership interests in the Company, and no obligation of the
Company to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security or other similar agreement or commitment
(the items in clauses (i), (ii) and (iii) being referred to collectively as
"Company Securities") and no obligations by the Company or any of its
subsidiaries to make payments based on the price of the Common Stock. Except
pursuant to the 1995 Plan, there are no outstanding obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities and there are no performance awards outstanding under the
Company's Stock Option Plans or any other outstanding stock related awards.
There are no voting trusts or other agreements or understandings to which the
Company or any of its subsidiaries is a party with respect to the voting of
capital stock of the Company or any of its subsidiaries.
(b) The Company is, directly or indirectly, the record and
beneficial owner of all the outstanding shares of capital stock of each of its
subsidiaries, free and clear of any lien, mortgage, pledge, charge, security
interest or encumbrance of any kind, and there are no irrevocable proxies with
respect to any such shares. There are outstanding (i) no securities of the
Company or any subsidiary convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any subsidiary, and
(ii) no options, warrants, rights or other agreements or commitments to acquire
from the Company or any of its subsidiaries, and no other obligation of the
Company or any of its subsidiaries to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable for any capital stock, voting securities or ownership interests
in, any of its subsidiaries, and no other obligation of the Company or any of
its subsidiaries to grant, extend or enter into any subscription, warrant,
right, convertible or exchangeable security or other similar agreement or
commitment (the items in clauses (i) and (ii) being referred to collectively as
the "Subsidiary Securities"). There are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any outstanding Subsidiary Securities.
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SECTION 4.03 Authority for this Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of the Company and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions so contemplated (other than the approval and adoption of the
agreement of merger (as such term is used in Section 251 of the DGCL) contained
in this Agreement by the holders of a majority of the Shares prior to the
consummation of the Merger if required by applicable law). This Agreement has
been duly and validly executed and delivered by the Company and, assuming this
Agreement constitutes the legal, valid and binding obligation of each of the
Parent and the Sub, constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general principles of
equity (whether considered in a proceeding in equity or at law).
SECTION 4.04 Absence of Certain Changes. Except as disclosed
in the SEC Reports (as defined in Section 4.05), since December 31, 1995, (i)
the Company and its subsidiaries have not suffered any Material Adverse Effect,
(ii) the Company and its subsidiaries have conducted their respective businesses
only in the ordinary course consistent with past practice, except in connection
with the negotiation and execution and delivery of this Agreement, and (iii)
there has not been (a) any declaration, setting aside or payment of any dividend
or other distribution in respect of the Shares or any repurchase, redemption or
other acquisition by the Company or any of its subsidiaries of any outstanding
shares of capital stock or other securities in, or other ownership interests in,
the Company or any of its subsidiaries; (b) any entry into any employment
agreement or severance compensation agreement with, or any increase in the rate
or terms (including any acceleration of the right to receive payment), of
compensation payable or to become payable by the Company or any of its
subsidiaries to, their respective directors, officers or employees, except
increases to employees who are not officers or directors occurring in the
ordinary course of business in accordance with its customary past practices; (c)
any increase in the rate or terms (including any acceleration of the right to
receive payment) of any Plan (as hereinafter defined) or any other bonus,
severance, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any such directors, officers or employees; (d)
any action by the Company which, if taken after the date hereof, would
constitute a breach of any of clauses (iii) through (vii) inclusive, clause (x)
or clause (xii) of Section 6.01 hereof; (e) any change by the Company in
accounting methods, principles or practices except as required by changes in
United States generally accepted accounting principles; (f) any labor dispute,
other than
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routine individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
subsidiary, which employees were not then subject to a collective bargaining
agreement or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees; or (g) any revaluation by the Company or
any of its subsidiaries of any of their respective assets, including write-downs
of inventory or of accounts receivable other than in the ordinary course of
business consistent with past practice; or (h) any entry into any agreement,
commitment or transaction by the Company which is material to the Company and
its subsidiaries taken as a whole other than in the ordinary course of business.
SECTION 4.05 Reports.
(a) The Company has timely filed with the SEC all forms,
reports and documents required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder since June 4, 1994,
all of which have complied as of their respective filing dates in all material
respects with all applicable requirements of the Exchange Act and the rules
promulgated thereunder. True and correct copies of all filings made by the
Company with the SEC (the "SEC Reports"), whether or not required under
applicable laws, rules and regulations and including any registration statement
filed by the Company under the Securities Act of 1933, as amended (the
"Securities Act"), have been furnished to the Parent and the Sub. None of the
SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, at the time filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The audited and unaudited consolidated financial
statements of the Company included (or incorporated by reference) in the SEC
Reports have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis (except as may be indicated
in the notes thereto) and present fairly the consolidated financial position of
the Company as of their respective dates, and the consolidated balance sheets,
statements of changes in stockholders' equity, statements of operations and
statements of cash flows at and for the periods presented therein, except that
unaudited interim financial statements were or are subject to normal and
necessary year end adjustments.
(c) The Company has furnished to the Parent and the Sub the
condensed consolidated balance sheet of the Company as at March 31, 1996 and the
condensed consolidated statements of operations for the fourth fiscal quarter
and the fiscal year, in each case ending on March 31, 1996. Such balance sheet
and statements of operations have been prepared in accordance with United States
generally accepted accounting principles applied on
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a consistent basis and present fairly the information set forth therein. The
audited consolidated balance sheet and the audited consolidated statements of
operations of the Company at March 31, 1996 and for the year then ended will not
differ in any material respect from such unaudited balance sheet and statement
of operations.
(d) Except (i) as reflected or reserved against or disclosed
in the financial statements of the Company (and the notes thereto) included in
the SEC Reports or as otherwise disclosed in the SEC Reports or in the condensed
consolidated balance sheet referred to in Section 4.05(c), (ii) as incurred
subsequent to March 31, 1996 in the ordinary course of business consistent with
past practice and (iii) as may arise pursuant to this Agreement, neither the
Company nor any of its subsidiaries has any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, whether due or to become due and
whether required to be recorded or reflected on a balance sheet (or the notes
thereto) under United States generally accepted accounting principles. Since
April 2, 1995, neither the Company nor any of its subsidiaries has incurred any
liabilities other than liabilities which (i) have been incurred in the ordinary
course of business consistent with past practice and (ii) have not had and will
not have a Material Adverse Effect.
SECTION 4.06 Schedule 14D-9; Offer Documents and Proxy
Statement.
(a) None of the information supplied or to be supplied by or
on behalf of the Company or any affiliate of the Company for inclusion in the
Offer Documents and any other schedule or document required to be filed with the
SEC in connection with the Offer and the Merger will, at the times such
documents are filed with the SEC and are first mailed to stockholders of the
Company, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, or to correct any statement made in any communication with respect
to the Offer previously filed with the SEC or disseminated to the stockholders
of the Company. The Schedule 14D-9 will not, at the time the Schedule 14D-9 is
filed with the SEC and at all times prior to the purchase of Shares by the Sub
pursuant to the Offer, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading, except that no representation or warranty is being made by the
Company with respect to information supplied by the Parent, the Sub or any
affiliate of the Parent or the Sub for inclusion therein. The Schedule 14D-9
will comply as to form in all material respects with the provisions of the
Exchange Act.
(b) The Proxy Statement, if any, will not, at the time Proxy
Statement is first mailed and at the Special Meeting, contain any untrue
statement of a material fact or omit to
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state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, or to correct any statement made in any earlier communication with
respect to the solicitation of any proxy or approval for the Merger in
connection with which the Proxy Statement shall be mailed, except that no
representation or warranty is being made by the Company with respect to
information supplied by the Parent, the Sub or an affiliate of the Parent or the
Sub for inclusion therein. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act. The letter to
stockholders, notice of meeting, proxy statement and form of proxy, or the
information statement, as the case may be, that may be provided to stockholders
of the Company in connection with the Merger (including any supplements), and
any schedules required to be filed with the SEC in connection therewith, as from
time to time amended or supplemented, are collectively referred to as the "Proxy
Statement".
(c) The Company agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 or the Proxy Statement if and to
the extent that such information shall have become false and misleading in any
material respect, and to take all steps necessary to cause the Schedule 14D-9 or
the Proxy Statement, as the case may be, as so corrected, to be filed with the
SEC and to be disseminated to all holders of Shares, in each case as and to the
extent required by applicable federal securities laws.
SECTION 4.07 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation or Bylaws
(or other similar governing documents) of the Company or any of its
subsidiaries, (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(A) as disclosed in Section 4.07(ii) of the Disclosure Letter and (B) as may be
required under, and other applicable requirements of, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Exchange Act
and the DGCL, (iii) require any consent, waiver or approval or result in a
default (or give rise to any right of termination, cancellation, modification or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement, contract or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its assets or subsidiaries may be bound, except (x) for such defaults (or rights
of termination, cancellation, modification or acceleration) which would not in
the aggregate have a Material Adverse Effect, or (y) as disclosed in Section
4.07(iii) of the Disclosure Letter, (iv) result in the creation or imposition of
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
on any asset of the Company or any of its subsidiaries which would have a
Material Adverse Effect;
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or (v) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or by which any of their
respective assets are bound, except for violations which would not in the
aggregate have a Material Adverse Effect.
SECTION 4.08 Brokers. No broker, finder or other investment
banker (other than Montgomery Securities, whose fee has heretofore been
disclosed to the Parent and the Sub, and a copy of whose engagement letter will
be furnished to the Parent and the Sub on the execution of this Agreement) is
entitled to receive any brokerage, finder's or other fee or commission in
connection with this Agreement or the transactions contemplated hereby based
upon agreements made by or on behalf of the Company, any of its subsidiaries or
any of their respective officers, directors or employees.
SECTION 4.09 Employee Benefit Matters.
(a) Except as set forth in Section 4.09(a) of the Disclosure
Letter, neither the Company nor any of its subsidiaries maintains or contributes
to, or has any obligation to contribute to or has any liability (including a
liability arising out of an indemnification, guarantee, hold harmless or similar
agreement) with respect to any plan, program, arrangement, agreement or
commitment which is an employment, consulting or deferred compensation
agreement, or an executive compensation, incentive bonus or other bonus,
employee pension, profit-sharing, savings, retirement, stock option, stock
purchase, stock appreciation rights, severance pay, life, health, disability or
accident insurance plan, or other employee benefit plan, program, arrangement,
agreement or commitment, including any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (individually, a "Plan," or collectively, the "Plans"). Each such Plan
with an aggregate annual cost of providing benefits exceeding $50,000 is
identified in Section 4.09(a) of the Disclosure Letter to the extent applicable,
as one or more of the following: an "employee pension plan" (as defined in
Section 3(2) of ERISA) or an "employee welfare plan" (as defined in Section 3(1)
of ERISA). No Plan is a "defined benefit plan" (as defined in Section 414 of the
Code) or a "multiemployer plan" (as defined in Section 3(37) of ERISA). No Plan
is subject to Section 302 of ERISA, Section 412 of the Code or Title IV of
ERISA.
(b) Neither the Company nor any of its subsidiaries is subject
to any actual or contingent liability under Title IV of ERISA, Section 302 of
ERISA, Section 412 or 4971 of the Code or any similar provision of foreign law
or regulation, whether in respect of any employer benefit plan maintained by the
Company or any of its subsidiaries or by any other employer or person or
otherwise.
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(c) No event has occurred, and no circumstance exists, in
connection with which the Company, any of its subsidiaries or any Plan, directly
or indirectly, could be subject to any material liability under ERISA, the Code
or any other law, regulation or governmental order applicable to any Plan,
including Section 406, 409, 502(i) or 502(1) of ERISA, or Part 6 of Title I of
ERISA, or Section 4971, 4972, 4975, 4976, 4977 or 4980B of the Code, or under
any agreement, instrument, statute, rule of law or regulation pursuant to or
under which the Company or any of its subsidiaries has agreed to indemnify or is
required to indemnify any person against liability incurred under, or for a
violation or failure to satisfy the requirements of, any such statute,
regulation or order.
(d) With respect to each Plan, (i) all material payments due
from the Company or any of its subsidiaries to date have been timely made and
all material amounts properly accrued to date or as of the Effective Time as
liabilities of the Company or any of its subsidiaries which have not been paid
have been and will be properly recorded on the books of the Company; (ii) each
such Plan which is an "employee pension benefit plan" (as defined in Section
3(2) of ERISA) and intended to qualify under Section 401 of the Code has
received a favorable determination letter from the Internal Revenue Service with
respect to such qualification, its related trust has been determined to be
exempt from taxation under Section 501(a) of the Code, and, to the knowledge of
the Company, nothing has occurred since the date of such letter that has or is
likely to adversely affect such qualification or exemption; (iii) there are no
actions, suits or claims pending (other than routine claims for benefits) or, to
the knowledge of the Company, threatened with respect to such Plan or against
the assets of such Plan and (iv) the Company has complied with, and such Plan
conforms in form and operation to, all applicable laws and regulations,
including ERISA and the Code, in all material respects.
(e) No deduction for federal income tax purposes has been or
is expected by the Company to be disallowed for remuneration paid by the Company
or any of its subsidiaries by reason of Section 162(m) of the Code.
(f) No Plan is under audit or is the subject of an
investigation by the Internal Revenue Service, the U.S. Department of Labor or
any other federal or state governmental agency.
(g) To the Company's knowledge, the transactions contemplated
by this Agreement will not result in the payment or series of payments by the
Company or any of its subsidiaries to any person of an "excess parachute
payment" within the meaning of Section 280G of the Code, or any other payment
which is not deductible for federal income tax purposes under the Code.
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(h) Except as set forth in Section 4.09(h) of the Disclosure
Letter, the consummation of the transactions contemplated by this Agreement
(alone or together with any other event) will not (i) entitle any person to any
benefit under any Plan or (ii) accelerate the time of payment or vesting, or
increase the amount, of any compensation due to any person under any Plan.
(i) Except as disclosed in the financial statements referred
to in Section 4.05(b) above or in Section 4.09(i) of the Disclosure Letter,
neither the Company nor any of its subsidiaries has any material liability with
respect to an obligation to provide benefits, including death or medical
benefits (whether or not insured) with respect to any person beyond their
retirement or other termination of service other than (i) coverage mandated by
Part 6 of Title I of ERISA or Section 4980B of the Code or state law, (ii)
retirement or death benefits under any employee pension plan, (iii) disability
benefits under any employee welfare plan that have been fully provided for by
insurance or otherwise, (iv) deferred compensation benefits accrued as
liabilities on the books of the Company, or (v) benefits in the nature of
severance pay.
(j) The Company has delivered to the Parent and the Sub, with
respect to each Plan for which the following exists:
(i) a copy of the Form 5500 with respect to each Plan;
(ii) a copy of the Summary Plan Description, together with
each Summary of Material Modifications, required under ERISA with
respect to such Plan in the past two years, all material employee
communications relating to such Plan, and, unless the Plan is embodied
entirely in an insurance policy to which the Company or any of its
subsidiaries is a party, a true and complete copy of such Plan;
(iii) if the Plan is funded through a trust or any third party
funding vehicle (other than an insurance policy), a copy of the trust
or other funding agreement delivered under the cover of Section
4.09(j)(iii) of the Disclosure Letter; and
(iv) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan that is intended to
be a "qualified plan" under Section 401 of the Code.
(k) With respect to each Plan for which financial statements
are required by ERISA, there has been no material adverse change in the
financial status of such Plan since the date of the most recent such statements
provided to the Parent and the Sub.
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(l) With respect to each Plan that is funded wholly or
partially through an insurance policy, all material amounts of the premiums
required to have been paid to date under the insurance policy have been paid,
all material amounts of the premiums required to be paid under the insurance
policy through the Effective Time will have been paid on or before the Effective
Time and, as of the Effective Time, there will be no material liability of the
Company or any of its subsidiaries under any such insurance policy or ancillary
agreement with respect to such insurance policy in the nature of a retroactive
rate adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events occurring prior to the
Effective Time.
(m) Neither the Company nor any of its subsidiaries has any
announced plan or legally binding commitment to create any additional Plans or
to amend or modify any existing Plan, other than amendments required by law or
those that would not materially increase costs under any such Plan.
(n) Except as disclosed in Section 4.09(n) of the Disclosure
Letter, neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreements. With the exception of such agreements, there
are no labor unions or other organizations representing, purporting to represent
or attempting to represent, any employee of the Company or any of its
subsidiaries.
(o) To the knowledge of the Company, neither the Company nor
any of its subsidiaries has violated any statute, law, ordinance, rule or
regulation, or any order, ruling, decree, judgment or arbitration award of any
court, arbitrator or any government agency regarding the terms and conditions of
employment of employees, former employees or prospective employees or other
labor related matters, including laws, rules, regulations, orders, rulings,
decrees, judgments and awards relating to discrimination, fair labor standards
and occupational health and safety, wrongful discharge or violation of the
personal rights of employees, former employees or prospective employees which,
taken alone or together with any other such violation or violations, could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.10 Litigation, etc. Except as set forth in Section
4.10 of the Disclosure Letter, there is no claim, action, proceeding or
governmental investigation pending or, to the knowledge of the Company,
threatened against or relating to the Company or any of its subsidiaries or with
respect to any of their employee benefit or pension plans before any court or
governmental or regulatory authority or body acting in an adjudicative capacity
which in the aggregate could be reasonably expected to have a Material Adverse
Effect or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Offer or the Merger or any of the other transactions
contemplated hereby. Neither the Company nor any
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subsidiary of the Company is subject to any outstanding order, writ, injunction
or decree that has had or could be reasonably expected to have a Material
Adverse Effect.
SECTION 4.11 Tax Matters.
(a) All returns and reports relating to Taxes (as defined in
Section 9.11 hereof) required to be filed with respect to each of the Company
and its subsidiaries or any of their income, properties or operations as of the
date hereof have been duly filed in a timely manner (taking into account all
extensions of due dates), except with respect to state sales tax returns
relating to insignificant sums. All information provided in such returns,
declarations and reports was true, correct and complete as of the date filed.
Taxes attributable to each of the Company and its subsidiaries that were due and
payable as reflected on such returns or otherwise due have been paid.
(b) Adequate provisions in accordance with United States
generally accepted accounting principles consistently applied to each of the
Company and its subsidiaries have been made in the audited consolidated
financial statements included in the SEC Reports for the payment of all Taxes
for which each of the Company and its subsidiaries may be liable for the periods
covered thereby that were not yet due and payable as of the dates thereof,
regardless of whether the liability for such Taxes is disputed.
(c) Except as set forth in Section 4.11(c) of the Disclosure
Letter, there is no claim or assessment pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against the Company or any of its
subsidiaries for any alleged deficiency in Taxes attributable to the Company or
any of its subsidiaries, and neither the Company nor any of its subsidiaries
knows of any audit or investigation with respect to any liability of the Company
or any of its subsidiaries for Taxes attributable to the Company or any of its
subsidiaries.
(d) Each of the Company and the subsidiaries has satisfied for
all periods through the date hereof all applicable withholding Tax requirements.
(e) No consent has been filed relating to the Company or any
of its subsidiaries pursuant to Section 341(f) of the Code.
(f) Except disclosed in Section 4.11(f) of the Disclosure
Letter, there is no contract, agreement or intercompany account system in
existence under which the Company or any of its subsidiaries has, or may at any
time in the future have, an obligation to contribute to the payment of any
portion of a Tax (or pay any amount calculated with reference to any portion of
a Tax) of any group of corporations of which the Company or its subsidiaries is
or was a part.
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(g) Except as set forth in Section 4.11(g) of the Disclosure
Letter, the Company has made available to the Parent and the Sub complete and
accurate copies of the portions applicable to each of the Company and its
subsidiaries of all income and franchise Tax returns, and any amendments
thereto, filed by or on behalf of the Company or any of its subsidiaries or any
member of a group of corporations including the Company or any of its
subsidiaries for the taxable years ending 1990 through 1995.
(h) There are no agreements in effect to extend the period of
limitations for the assessment or collection of any Tax for which the Company or
any of its subsidiaries may be liable.
(i) The Company has maintained the books and records required
to be maintained pursuant to Section 6001 of the Code and the rules and
regulations thereunder, and comparable laws, rules and regulations of the
countries, states, counties, provinces, localities and other political divisions
wherein it is required to file returns and reports relating to Taxes.
SECTION 4.12 Compliance with Law. Neither the Company nor any
of its subsidiaries is in conflict with, or in default or violation of, (i) any
statute, law, ordinance, rule, regulation, order, judgment or decree applicable
to the Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected, or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or affected, in each case except for any such conflicts, defaults or
violations that in the aggregate have not had and are not reasonably expected to
have a Material Adverse Effect. The Company and its subsidiaries have all
permits, licenses, authorizations, consents, approvals and franchises from
governmental agencies required to conduct their businesses as now being
conducted (the "Company Permits"), except for such permits, licenses,
authorizations, consents, approvals and franchises the absence of which in the
aggregate have not had and are not reasonably expected to have a Material
Adverse Effect. The Company and its subsidiaries are in compliance with the
terms of the Company Permits, except where the failure so to comply in the
aggregate has not had and is not reasonably expected to have a Material Adverse
Effect. Without limiting any other provision herein, the Company and its
subsidiaries have timely filed with the relevant governmental authorities or
agencies thereof all forms, reports and documents required to be filed by them
pursuant to all relevant laws, rules and regulations since January 1, 1994,
except failures to file that have not, and are not reasonably expected to have,
a Material Adverse Effect.
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SECTION 4.13 Environmental Compliance.
(a) Except as set forth in Section 4.13(a) of the Disclosure
Letter, to the knowledge of the Company:
(i) the Company and each of its subsidiaries have been at all
times and are in material compliance with all applicable Environmental
Laws (as hereinafter defined) (including compliance with standards,
schedules and timetables therein);
(ii) the Company and each of its subsidiaries have obtained
all permits, licenses, consents, approvals, waivers, variances and
other authorizations ("Authorizations") that are required by and
material to the operation of its business, property and assets under
the Environmental Laws and all such Authorizations are in full force
and effect, and the Company and each of its subsidiaries are in
compliance with all terms and conditions of such Authorizations;
(iii) the Company and its subsidiaries have filed as required
all applications, notices and other documents necessary to effect the
timely renewal or issuance of all Authorizations necessary for each
facility of the Company and its subsidiaries under any Environmental
Law in order to allow the continued conduct of the business and
operations of the Company and its subsidiaries in the manner now
conducted;
(iv) there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions, plans or
pending changes in any Environmental Law or Authorization that are
likely to interfere with or otherwise materially and adversely affect
the continued operation of the facilities or the business of the
Company and of its subsidiaries in the manner now conducted, to
interfere substantially with compliance or continued compliance of the
facilities of the Company and its subsidiaries with any Environmental
Law or Authorization, or to give rise to any material liability under
Environmental Laws;
(v) no real property or facility currently or formerly owned,
used, operated, leased or managed by the Company, each of its
subsidiaries or any predecessor in interest, is listed or proposed for
listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation, and Liability Information System
("CERCLIS"), both promulgated under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or on any comparable state or local list established
pursuant to any Environmental Law;
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(vi) neither the Company, any of its subsidiaries nor any
predecessor in interest has received any written notification of
potential or actual liability or request for information under CERCLA
or any comparable state or local law;
(vii) there is no civil, criminal or administrative action,
suit, demand, hearing, notice of violation or deficiency,
investigation, proceeding, notice, demand letter, decree, judgment,
complaint, agreement, claim or citation pending or threatened against
the Company or any of its subsidiaries under any Environmental Law,
except where such liability or action, suit, demand, hearing, notice,
investigation, proceeding, notices demand letter, decree, judgment,
complaint, agreement, claim or citation would not in the aggregate have
a Material Adverse Effect and, also would not adversely affect the
ability to continue to operate each facility in the manner in which it
is presently operating;
(viii) no Hazardous Material has been at any time or is on the
date hereof treated, recycled, or disposed of at, in, on or under any
facility or real property owned, operated, leased or managed by the
Company or any of its subsidiaries, and none of the Company or any of
its subsidiaries presently require or previously required interim
status or a hazardous waste permit for the treatment, storage or
disposal of hazardous waste pursuant to the Resource Conservation and
Recovery Act, as amended, or pursuant to any comparable state hazardous
waste statute or regulation; or
(ix) neither the Company nor any of its subsidiaries has
leased, operated or owned any facilities which are not elsewhere
identified as being currently leased, operated or owned by the Company
or its subsidiaries.
(b) Except as set forth in Section 4.13(b) of the Disclosure
Letter, to the knowledge of the Company, all the items enumerated below would
not in the aggregate have a Material Adverse Effect:
(i) the presence of an underground storage tank or related
piping on any real property or facility owned, operated, leased or
managed by the Company or any of its subsidiaries;
(ii) the presence of asbestos in, at, on or under any real
property or facility owned, operated, leased or managed by the Company
or any of its subsidiaries;
(iii) the presence of polychlorinated biphenyls in, at, on or
under any facility or real property owned, leased or managed by the
Company or any of its subsidiaries;
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(iv) any Release at, on, under, from or into any facility or
real property owned, operated, leased or managed by the Company or any
of its subsidiaries; and
(v) any Release at, on, under, from or into any facility or
real property in the vicinity of any facility or real property owned,
operated, leased or managed by the Company or any of its subsidiaries
or any predecessor in interest, which Release has affected or is
reasonably likely to affect said facility or real property.
(c) The Company has given the Parent and the Sub access to all
records and files in its possession, if any, at both its corporate headquarters
and its facilities currently owned, operated, leased or managed by the Company,
or any of its subsidiaries, including all reports, studies, analyses, tests or
monitoring results, pertaining to the existence of Hazardous Material or any
other environmental concerns relating to facilities or real property owned,
operated, leased or managed by the Company or any of its subsidiaries or
concerning compliance with or liability under any Environmental Laws.
(d) For purposes of this Section 4.13, the definition of the
Company shall include all of the Company's subsidiaries.
(e) Prior to the Effective Time, the Company shall have made
all notifications, registrations, and filings, if any, required under and have
taken all other necessary steps to comply with all State and Local Real Property
Disclosure Requirements applicable to its assets and the assets of its
subsidiaries, including the use of forms provided by state or local agencies,
where such forms exist, to or with the state or local agency; provided, however,
that where notification, registration, or filing was made to a state or local
agency, a copy of such notification, registration, or filing shall be provided
to the Sub prior to the Effective Time.
(f) For purposes of this Agreement, "Environmental Law" means
any law, statute, ordinance, code, rule, regulation, standard, requirement,
order, writ, injunction, decree, demand, judgment, ruling, decision,
determination, award or binding agreement, issued or entered into by any
governmental, judicial, legislative, executive, administrative or regulatory
authority of the United States or of any state, local or foreign government,
relating to: (i) pollution, contamination, cleanup, preservation, protection or
reclamation of the environment (including any ambient, workplace or indoor air,
surface water, drinking water, groundwater, land surface, subsurface strata,
river sediment, plant or animal life, natural resources, workplace and real
property and the physical buildings, structures, improvement and fixtures
thereon); (ii) health or safety, including the exposure of employees and other
persons to any Hazardous Material; (iii) any Release or threatened Release,
including investigation, study, assessment, testing, monitoring, containment,
removal, remediation, cleanup and abatement of such Release or threatened
Release; (iv) the management of any Hazardous Material, including the
manufacture, generation, formulation,
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processing, labeling, distribution, introduction into commerce, registration,
use, treatment, handling, storage, disposal, transportation, re-use, recycling
or reclamation of any Hazardous Material; and (v) the physical structure or
condition, or appropriate use of a building, facility, fixture or other
structure.
(g) For purposes of this Agreement, "Hazardous Material" means
any pollutant, contaminant, constituent, chemical, mixture, raw material,
intermediate, product or by-product, petroleum or any fraction thereof, asbestos
or asbestos-containing-material, polychlorinated biphenyls, urea formaldehyde
foam insulation, or industrial, solid, toxic, radioactive, infectious,
disease-causing or hazardous substance, material, waste or agent, including all
substances, materials or wastes which are identified or regulated under any
Environmental Law.
(h) For purposes of this Agreement, "Release" means any spill,
discharge, leak, emission, injection, escape, dumping, leaching, dispersal,
emanation, migration or release of any kind whatsoever of any Hazardous
Substance or noxious noise or odor, at, in, on, into or onto the Environment,
including the movement of any Hazardous Substance through or in the Environment,
the abandonment or discard of barrels, containers, tanks or other receptacles
containing or previously containing any Hazardous Substance, or any release,
emission or discharge as those terms are defined in any Environmental Law.
(i) For the purposes of this Agreement, "State and Local Real
Property Disclosure Requirements" means any state and local laws requiring
notification of the buyer of real property, or notification, registration, or
filing with any state or local agency, prior to the sale of any real property or
transfer of control of an establishment, of the actual or threatened presence or
release into the environment, or the use, disposal, or handling of Hazardous
Materials on, at, under, or near the real property to be sold or the
establishment for which control is to be transferred.
SECTION 4.14 Intellectual Property.
(a) Section 4.14(a) of the Disclosure Letter sets forth a
true, correct and complete list of all Intellectual Property (as hereinafter
defined) (other than that Intellectual Property included in clauses (vi) and
(vii) of Section 4.14(d)) owned or held by the Company or any of its
subsidiaries (or otherwise used in the business of the Company and its
subsidiaries) on the date hereof and identifies all license agreements in effect
on the date hereof pursuant to which any such Intellectual Property is licensed
to or by the Company or its subsidiaries, in each case, which have been, are, or
may in the forseeable future be, material to the Company and its subsidiaries
taken as a whole.
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(b) Except as otherwise indicated in Section 4.14(b) of the
Disclosure Letter or in the license agreements referred to in the immediately
preceding paragraph (a), (i) the Company and its subsidiaries at the Effective
Time will be the sole and exclusive owners or holders of such Intellectual
Property free and clear of any royalty or other payment obligation, lien or
charge, (ii) the Intellectual Property is fully assignable, without conditions,
limitations or restrictions of any kind, (iii) there are no agreements which
restrict or limit the use by the Company or its subsidiaries of the Intellectual
Property and (iv) record title to all Intellectual Property owned or held by the
Company or its subsidiaries or otherwise used in the business of the Company or
its subsidiaries is registered (or a registration application for which has been
submitted) in the name of the Company or any of its subsidiaries in the
respective patent, trademark and copyright offices of countries indicated in
Section 4.14(a) of the Disclosure Letter.
(c) Except as set forth in Section 4.14(c) of the Disclosure
Letter and except to the extent that it in the aggregate would not have a
Material Adverse Effect:
(i) to the knowledge of the Company, (w) such Intellectual
Property is valid and enforceable, (x) such Intellectual Property does
not infringe on any patents, trademarks, copyrights or any other
intellectual property or proprietary rights of any person or entity in
any country, (y) all maintenance taxes, annuities and renewal fees have
been paid and all other necessary actions to maintain such Intellectual
Property have been taken through the date hereof and will continue to
be paid or taken by the Company through the Effective Time and (z)
there exists no impediment which would impair the Company's rights to
conduct its business or the business of its subsidiaries after the
Effective Time pursuant to such Intellectual Property;
(ii) during the two-year period immediately preceding the date
of this Agreement, neither the Company nor any of its subsidiaries has
received any written notice of claim that any of such Intellectual
Property is not valid or enforceable in any country or that it
infringes upon or conflicts with any patent, trademark, service mark,
copyright or trade name of any third party, and, to the knowledge of
the Company, no such claims or controversies, whenever filed or
threatened, currently exist;
(iii) during the two-year period immediately preceding the date
of this Agreement, neither the Company nor any of its subsidiaries has
given any notice of infringement to any third party with respect to any
of such Intellectual Property or has become aware of facts or
circumstances evidencing the infringement by any third party of any of
such Intellectual Property, and, to the knowledge of the Company, no
claim or controversy with respect as any such alleged infringement
currently exists; and
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(iv) certificates of registration and renewal, letter patents
and copyright registration certificates and all other instruments
evidencing ownership of such Intellectual Property are in the
possession of the Company or its subsidiaries.
(d) The term "Intellectual Property" shall mean:
(i) all trademarks, service marks, trademark registrations,
service mark registrations, trade names and applications for
registration of trademarks and service marks;
(ii) all licenses which create rights in or to the trademark,
service mark or trade name properties described in clause (i) above;
(iii) all copyrights, copyright registrations and applications
for registration of copyrights;
(iv) all renewals, modifications and extensions of any items
referred to in clauses (i) through (iii) above;
(v) all patents, design patents and utility patents, all
applications for grant of any such patents pending as of the date
hereof or as of the Effective Date or filed within five years prior to
the date hereof, and all reissues, divisions, continuations-in-part and
extensions thereof;
(vi) all technical documentation, trade secrets, designs,
inventions, processes, formula, know-how, operating manuals and guides,
plans, new product development, technical and marketing surveys,
material specifications, product specifications, invention records,
research records, labor routings, inspection processes, equipment
lists, engineering reports and drawing, architectural or engineering
plans, know-how agreements and other know-how;
(vii) all marketing and licensing records, sales literature,
customer lists, trade lists, sales forces and distributor networks
lists, advertising and promotional materials, service and parts
records, warranty records, maintenance records and similar records;
(viii) all rights arising under, and rights to develop, use and
sell under, any of the foregoing and all licenses with respect thereto;
and
(ix) all rights and incidents of interest in and to all
noncompetition or confidentiality agreements.
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SECTION 4.15 Real Property.
(a) Section 4.15(a) of the Disclosure Letter sets forth a
true, correct and complete list of all of the real property owned in fee by the
Company and its subsidiaries. Except as set forth in Section 4.15(a) of the
Disclosure Letter, each of the Company and its subsidiaries has good and
marketable title to each parcel of real property owned by it free and clear of
all mortgages, pledges, liens, encumbrances and security interests, except (i)
those reflected or reserved against in the balance sheet of the Company dated as
of December 31, 1995 and included in the SEC Reports, (ii) Taxes and general and
special assessments not in default and payable without penalty and interest, and
(iii) other liens, mortgages, pledges, encumbrances and security interests which
do not materially interfere with the Company's use and enjoyment of such real
property or materially detract from or diminish the value thereof.
(b) Section 4.15(b) of the Disclosure Letter sets forth a
true, correct and complete list of all written leases, subleases and other
agreements under which the Company or any of its subsidiaries uses or occupies
or has the right to use or occupy any real property (the "Real Property
Leases"). The Company has heretofore delivered to the Parent and the Sub true,
correct and complete copies of all Real Property Leases (including all written
modifications, amendments, supplements, waivers and side letters thereto). Each
Real Property Lease is valid, binding and in full force and effect, all rent and
other sums and charges payable by the Company and its subsidiaries as tenants
thereunder are current, and no termination event or condition or uncured default
of a material nature on the part of the Company or any such subsidiary exists
under any Real Property Lease. Each of the Company and its subsidiaries has a
good and valid leasehold interest in each parcel of real property leased by it
free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance sheet
of the Company dated as of December 31, 1995, (ii) Taxes and general and special
assessments not in default and payable without penalty and interest; and (iii)
other liens, mortgages, pledges, encumbrances and security interests which do
not materially interfere with the Company's use and enjoyment of such real
property or materially detract from or diminish the value thereof.
SECTION 4.16 Insurance. Set forth in Section 4.16 of the
Disclosure Letter is a list of insurance policies (including information on the
premiums payable in connection therewith) maintained by the Company or any of
its subsidiaries which policies have been issued by insurers, which, to the
Company's knowledge, are reputable and financially sound and provide coverage
for the operations conducted by the Company and its subsidiaries of a scope and
coverage consistent with customary industry practice. The Company has previously
provided the Parent and the Sub with summaries of such policies and of
outstanding claims thereunder.
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SECTION 4.17 Material Contracts. The Company has filed with
the SEC, or disclosed under Section 4.17 of the Disclosure Letter, a true,
correct and complete list of all Material Contracts (as hereinafter defined),
and made available to the Parent and the Sub, true, correct and complete copies
of all written Material Contracts. For purposes of this Agreement, Material
Contracts shall mean all contracts, agreements, commitments, arrangements,
leases (including with respect to personal property), policies, and other
instruments, but excluding purchase orders and other similar obligations (other
than those disclosed on Section 4.17 of the Disclosure Letter) entered into or
delivered by the Company in the ordinary course of business, to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound which (a) involves or could involve aggregate payments
of more than $250,000, (b) is with MB Communications, Inc., Black Box
Corporation or any of their respective affiliates (collectively, the "Former
Affiliates") (the "Specified Contracts"), (c) is with the Option Grantor or any
of its affiliates, or (d) is or could reasonably be expected to be material to
the Company and its subsidiaries taken as a whole. Except as described under
Section 4.17 of the Disclosure Letter, neither the Company nor any of its
subsidiaries is, or has received any notice or has any knowledge that any other
party is, in default in any respect under any Material Contract, and, to the
knowledge of the Company, there has not occurred any event that with the lapse
of time or the giving of notice or both would constitute such a material
default. Neither the Company nor any Former Affiliate nor any other party to any
of the Specified Contracts has made any claims against, or sought
indemnification from, the Company as to any matter arising under or with respect
to any Specified Contract, and none of the Former Affiliates has advised the
Company or any of its directors or officers of any alleged basis for any such
claims. Except as set forth in Section 6.11, no valid claim against the Company
or its subsidiaries exists for payment of any "topping", "profit-participation",
"termination", "break-up" or "bust-up" fee or any similar compensation or
payment arrangement as a result of the transactions contemplated hereby.
SECTION 4.18 Related Party Transactions. (a) Except as set
forth in Section 4.18 of the Disclosure Letter, no director, officer, partner,
employee, "affiliate" or "associate" (as such terms are defined in Rule 12b-2
under the Exchange Act) of the Company or any of its subsidiaries (i) has
borrowed any monies from or has outstanding any indebtedness or other similar
obligations to the Company or any of its subsidiaries; (ii) owns any direct or
indirect interest of any kind in, or is a director, officer, employee, partner,
affiliate or associate of, or consultant or lender to, or borrower from, or has
the right to participate in the management, operations or profits of, any person
or entity which is (x) a competitor, supplier, customer, distributor, lessor,
tenant, creditor or debtor of the Company or any of its subsidiaries, (y)
engaged in a business related to the business of the Company or any of its
subsidiaries or (z) participating in any transaction to which the Company or any
of
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its subsidiaries is a party; or (iii) is otherwise a party to any contract,
arrangement or understanding with the Company or any of its subsidiaries.
(b) Each of the consulting arrangement between the Company and
Mr. Michael Barker pursuant to which Mr. Barker is compensated at an annual rate
of $75,000 and the consulting arrangement between the Company and Mr. William
Norred pursuant to which Mr. Norred is compensated at an annual rate of $24,000,
has been amended to provide that such consulting arrangement shall be
automatically terminated, without notice, immediately upon the consummation of
the Offer and upon such termination each party thereto shall have no further
rights, duties or liabilities under relevant consulting arrangement, as the case
may be, and each party thereto (the "Releasor") shall release and discharge the
other party thereto (the "Releasee") from all actions, suits, debts, sums of
money, covenants, obligations, controversies, agreements, promises, damages,
judgments, claims, and demands whatsoever, in law or equity, against the
Releasee, which the Releasor ever had, now has or hereafter shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever arising out of
or in any way relating to the Releasee's obligations under the relevant
consulting arrangements, as the case may be; provided that, pursuant to the
relevant amendment, the Company shall be obligated to pay to Mr. Barker and to
Mr. Norred the respective amounts owed to them, if any, under the relevant
consulting arrangement for consulting services rendered prior to the
consummation of the Offer.
SECTION 4.19 Liens. Except as set forth in Section 4.19 of the
Disclosure Letter or as disclosed pursuant to Sections 4.14 and 4.15 hereof and
other than liens, mortgages, security interests, pledges and encumbrances which
do not materially interfere with the Company's use and enjoyment of its property
or assets or materially diminish or detract from the value thereof, neither the
Company nor any of its subsidiaries has granted, created or suffered to exist
with respect to any of its assets, any mortgage, pledge, charge, hypothecation,
collateral, assignment, lien (statutory or otherwise), encumbrance or security
agreement of any kind or nature whatsoever.
SECTION 4.20 State Takeover Statutes Inapplicable. As of the
date hereof and at all times on or prior to the Effective Time, Section 203 of
the DGCL shall be inapplicable to the Offer, the Merger, the Stock Option
Agreement and the transactions contemplated by this Agreement and the Stock
Option Agreement.
SECTION 4.21 Required Vote of Company Stockholders. Unless the
Merger is consummated in accordance with Section 253 of the DGCL as contemplated
by Section 2.09, the only vote of the stockholders of the Company required to
adopt the plan of merger contained in this Agreement and approve the Merger is
the affirmative vote of the holders of not less than a majority of the
outstanding Shares. No other vote of the
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stockholders of the Company is required by law, the Certificate of Incorporation
or Bylaws of the Company as currently in effect or otherwise to adopt the plan
of merger contained in this Agreement and approve the Merger. The Sub will have
full voting power with respect to any Shares purchased pursuant to the Offer or
the Stock Option Agreement, unless such voting power is otherwise restricted by
any action on the part of the Sub or the Parent.
SECTION 4.22 New Jersey ISRA. None of the assets, facilities
or real property of the Company or any of its subsidiaries located in the State
of New Jersey would be considered an "industrial establishment" pursuant to
N.J.S.A. C.13:1K-8, and accordingly the transaction contemplated by this
Agreement is not subject to the New Jersey Industrial Site Recovery Act
("ISRA").
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF THE PARENT AND THE SUB
The Parent and the Sub represent and warrant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Each of the
Parent and the Sub is a duly organized and validly existing corporation in good
standing under the laws of the state of its incorporation with all requisite
corporate power and authority to own its properties and conduct its business.
All of the issued and outstanding capital stock of the Sub is owned directly by
the Parent.
SECTION 5.02 Authority Relative to this Agreement. Each of the
Parent and the Sub has all requisite 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 by all
necessary corporate proceedings on the part of the Parent and the Sub. No vote
of the Parent's shareholders is required to approve this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Parent and the Sub and, assuming this Agreement
constitutes legal, valid and binding obligation of the Company, this Agreement
constitutes a legal, valid and binding agreement of each of the Parent and the
Sub, enforceable against each of the Parent and the Sub in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (whether considered in a proceeding in equity or at law).
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SECTION 5.03 Offer Documents; Proxy Statement.
(a) None of the information contained in the Offer Documents
or any schedule or document required to be filed with the SEC in connection with
the Offer and the Merger will, at the times such documents are filed with the
SEC and are mailed to the stockholders of the Company, contain any untrue
statement of a material fact or omit to state a 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 are made, not misleading, except
that no representation is made by the Parent or the Sub with respect to
information supplied by the Company or an affiliate of the Company for inclusion
therein. The Offer Documents will comply as to form in all material respects
with the provisions of the Exchange Act. Each of the Parent and the Sub agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false and
misleading in any material respect, and to take all steps necessary to cause the
Offer Documents, as so corrected, to be filed with the SEC and to be
disseminated to all holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Parent and the Sub agree to
provide the Company and its counsel in writing with any comments that the
Parent, the Sub or their counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly upon receipt thereof.
(b) None of the information supplied by the Parent, the Sub or
any affiliate of the Parent or the Sub specifically for inclusion in the Proxy
Statement or the Schedule 14D-9 will, at the date of filing with the SEC, and,
in the case of the Proxy Statement, at the time the Proxy Statement is mailed
and at the time of the 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 therein, in light of the
circumstances under which they were made, not misleading.
SECTION 5.04 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by each of the Parent or the Sub nor
the consummation of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the respective Certificates of
Incorporation or Bylaws (or other similar governing documents) of the Parent or
the Sub; (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(A) as may be required under, and other applicable requirements of, the HSR Act,
the Exchange Act, the DGCL, the "takeover" or "blue sky" laws of various states,
Canadian laws or regulations or the laws of jurisdictions outside the United
States or Canada, or (B) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not in
the aggregate have a material adverse effect on the ability of the Parent or the
Sub to consummate the transactions contemplated hereby; (iii) result in a
default
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(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, license, agreement or
other instrument or obligation to which the Parent or the Sub is a party or by
which any of their respective assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained or which would not in the aggregate have
an adverse effect on the financial condition, business or results of operations
of the Parent or the Sub which is material to the Parent and the Sub taken as a
whole or have a material adverse effect on the ability of the Parent or the Sub
to consummate the transactions contemplated hereby; (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Parent
or the Sub or any of their respective assets, except for violations which would
not in the aggregate have an adverse effect on the financial condition, business
or results of operations of the Parent or the Sub which is material to the
Parent and the Sub taken as a whole or has a material adverse effect on the
ability of the Parent or the Sub to consummate the transactions contemplated
hereby.
SECTION 5.05 Interim Operation of the Sub. The Sub was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted and, will conduct, its
operations only as contemplated hereby.
SECTION 5.06 Financing. Parent has sufficient funds available
to purchase all the Shares and all of the Options pursuant to the Offer and to
the terms of this Agreement and to pay all fees and expenses related to the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement to the date on which a majority of the Company's directors are
designees of the Parent or the Sub, the Company will conduct and will cause each
of its subsidiaries to conduct its operations according to its ordinary and
usual course of business and consistent with past practice and the Company will
use and will cause each of its subsidiaries to use its best efforts to preserve
intact its business organization, to keep available the services of its current
officers and employees and to preserve the goodwill of and maintain satisfactory
relationships with those having business relationships with the Company and its
subsidiaries, and the Company will promptly advise the Parent and the Sub in
writing of any change in the Company's or any of its subsidiaries' condition
(financial or otherwise), properties, customer or supplier relationships,
assets, liabilities, business prospects or results of operations which may be
reasonably likely to have a Material Adverse Effect. Without limiting the
generality of the
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foregoing and except as otherwise expressly provided in or contemplated by this
Agreement, prior to the time specified in the preceding sentence, without the
prior written consent of the Parent, the Company will not and will not permit
any of its subsidiaries to:
(i) issue, sell, grant options or rights to
purchase, pledge, or authorize or propose the issuance, sale, grant of
options or rights to purchase or pledge of (A) any Company Securities
(including any Option) or Subsidiary Securities, or grant or accelerate
any right to convert or exchange any Company Securities or Subsidiary
Securities, other than Shares issuable upon exercise of the Options or
Warrants outstanding on the date hereof or (B) any other securities in
respect of, in lieu of or in substitution for Shares outstanding on the
date hereof;
(ii) otherwise acquire or redeem, directly or
indirectly, or amend any of the Company Securities or the Subsidiary
Securities;
(iii) split, combine or reclassify its capital
stock or declare, set aside, make or pay any dividend or distribution
(whether in cash, stock or property) on any shares of capital stock of
the Company or any of its subsidiaries (other than cash dividends paid
to the Company by its wholly-owned subsidiaries with regard to their
capital stock);
(iv) (1) make or offer to make any acquisition, by
means of a merger or otherwise, of assets or securities, or any sale,
lease, encumbrance or other disposition of assets or securities, in
each case involving the payment or receipt of consideration of $25,000
or more, except for purchases of inventory made in the ordinary course
of business and consistent with past practice, or (2) enter into a
material contract or amend any Material Contract, except with respect
to a one year renewal of the Company's existing policies of directors'
and officers' liability insurance or the purchase of policies that are
substantially equivalent to such existing policies, or grant any
release or relinquishment of any rights under any Material Contract;
(v) incur or assume any long-term debt or
short-term debt except for short-term debt incurred in the ordinary
course of business consistent with past practice;
(vi) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except wholly-owned
subsidiaries of the Company;
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(vii) make any loans, advances or capital
contributions to, or investments in, any other person (other than
wholly-owned subsidiaries of the Company);
(viii) change any of the accounting principles or
practices used by it;
(ix) make any tax election or settle or compromise
any material federal, state or local income tax liability;
(x) propose or adopt any amendments to its
Certificate of Incorporation or Bylaws (or similar documents);
(xi) grant any stock-related, performance or
similar awards or bonuses;
(xii) forgive any loans to employees, officers or
directors or any of their respective affiliates or associates;
(xiii) enter into any new employment, severance,
consulting or salary continuation agreements with any officers,
directors or employees, or grant any increases in the compensation or
benefits to officers, directors and employees other than normal
increases to persons who are not officers or directors in the ordinary
course of business consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or
compensation expense to the Company;
(xiv) make any deposits or contributions of cash or
other property to or take any other action to fund or in any other way
secure the payment of compensation or benefits under the Plans or
agreements subject to the Plans or any other plan, agreement, contract
or arrangement of the Company;
(xv) enter into, amend, or extend any collective
bargaining or other labor agreement;
(xvi) adopt, amend or terminate any Plan or other
employee benefit plan or arrangement;
(xvii) settle or agree to settle any suit, action,
claim, proceeding or investigation (including any suit, action, claim,
proceeding or investigation relating to this Agreement or the
transactions contemplated hereby) or pay, discharge or satisfy or agree
to pay, discharge or satisfy any claim, liability or obligation
(absolute accrued, asserted or unasserted, contingent or otherwise)
other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in full in the financial statements
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as at December 31, 1995 or incurred in the ordinary course of business
subsequent to December 31, 1995; or
(xviii) agree in writing or otherwise to take any of
the foregoing actions or any action which would make any representation
or warranty in this Agreement untrue or incorrect as of the date when
made or as of a future date or would result in any of the conditions
set forth in Exhibit A not being satisfied.
Prior to making a general distribution of any communication to
their respective employees relating to the transactions contemplated hereby, the
Company and its subsidiaries shall consult with the Parent and the Sub.
SECTION 6.02 No Solicitation. The Company shall not, and shall
not permit any of its subsidiaries and their respective officers, directors and
employees, representatives, agents or affiliates to, directly or indirectly,
encourage, solicit, initiate or participate in any way in any discussions or
negotiations with, or provide any non-public information to, or afford any
access to the properties, books or records of the Company or any of its
subsidiaries to, or otherwise assist or facilitate, any corporation,
partnership, person or other entity or group (other than the Parent or the Sub
or any affiliate or associate of the Parent or the Sub) concerning any
Acquisition Transaction (as hereinafter defined); provided, however, that
nothing contained in this Section 6.02 shall prohibit the Board of Directors of
the Company from furnishing information to or entering into discussions or
negotiations with any person or entity that makes an unsolicited bona fide
proposal to engage in an Acquisition Transaction that the Board of Directors of
the Company in good faith determines, with the assistance of its financial
advisor, represents a financially superior transaction for the stockholders of
the Company when compared to the Offer and the Merger if, and only to the extent
that, the Board of Directors determines after consultation with outside legal
counsel that failure to take any such action would be inconsistent with the
compliance by the Board of Directors with its fiduciary duties to the
stockholders of the Company under the DGCL; and provided, further, that nothing
contained in this Section 6.02 shall prohibit the Company or its Board of
Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender offer by a third party pursuant to Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act. The Company will immediately notify
the Parent and the Sub if any such information is requested from it or any such
negotiations or discussions are sought to be initiated with the Company and will
immediately communicate to the Parent and the Sub the terms of any proposal or
inquiry and the identity of the party making such proposal or inquiry which it
may receive in respect of any such transaction including in the case of written
proposals or inquiries, furnishing the Parent and the Sub with a copy of such
proposal or inquiry (and all amendments and supplements thereto). Subject to the
first sentence of this Section 6.02, the Company will and will cause its
subsidiaries, affiliates and their respective
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officers, directors, employees, representatives and agents to immediately cease
and cause to be terminated any existing activities, discussions, or negotiations
with any parties other than the Parent, the Sub or any of their respective
affiliates or associates conducted heretofore with respect to any Acquisition
Transaction. Except as is required in the exercise of the fiduciary duties of
the Board of Directors of the Company in the written opinion of outside counsel
to the Company, the Company agrees not to release any third party from any
confidentiality or standstill agreement to which the Company is a party without
the Parent's prior written consent and to take all steps deemed necessary or
appropriate by the Parent to enforce to the fullest extent possible all such
agreements.
SECTION 6.03 Access to Information.
(a) Between the date of this Agreement and the Effective Time,
the Company will (i) give the Parent and the Sub and their authorized
accountants, investment bankers, counsel and other representatives complete
access (during regular business hours upon reasonable advance notice) to all
employees, plants, offices, warehouses and other facilities and to all books,
contracts, commitments and records (including tax returns) of the Company and
its subsidiaries (subject to any outstanding confidentiality agreements between
the Company and any third party, in which case the Company will advise the
Parent and the Sub of any limits on access and use its best efforts to obtain
the consent of such third party to the provision of such access to the Parent
and the Sub) and cause the Company's and its subsidiaries' independent public
accountants to provide access to their work papers and such other information as
the Parent or the Sub may reasonably request, (ii) permit the Parent and the Sub
to make such inspections as they may require, (iii) cause its officers and those
of its subsidiaries to furnish the Parent and the Sub with such financial and
operating data and other information with respect to the business, properties
and personnel of the Company and its subsidiaries as the Parent or the Sub may
from time to time reasonably request and (iv) furnish promptly to the Parent and
the Sub a copy of each report, schedule and other document filed or received by
the Company during such period pursuant to the requirements of the federal or
state securities laws.
(b) Non-public information obtained by the Parent or the Sub
pursuant to Section 6.03(a) shall be subject to the provisions of the
confidential agreement between the Parent and the Company, dated February 27,
1996 (the "Confidentiality Agreement"), the terms of which are incorporated
herein by reference.
SECTION 6.04 Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided for,
each of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all appropriate
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action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement; provided, however, that nothing in this
Agreement (other than as expressly provided for in Section 1.01) shall obligate
the Parent or the Sub to keep the Offer open beyond the expiration date of the
Offer (as it may be extended from time to time) and nothing in this Agreement
shall obligate the Parent, the Sub or any of their respective subsidiaries or
affiliates to agree (i) to limit or not to exercise any rights of ownership of
any securities (including the Shares), or to divest, dispose of or hold separate
any securities or all or a portion of their respective businesses, assets or
properties or of the business, assets or properties of the Company or any of its
subsidiaries or (ii) to limit the ability of such entities (A) to conduct their
respective businesses or own such assets or properties or to conduct the
businesses or own the properties or assets of the Company and its subsidiaries
or (B) to control their respective businesses or operations or the businesses or
operations of the Company and its subsidiaries. In connection with and without
limiting the foregoing, (a) the Company shall, and the Parent and the Sub shall
use their best efforts to cause their ultimate parent to, use its reasonable
best efforts to make promptly any required submissions under the HSR Act which
the Company and the Parent and the Sub determines should be made, in each case,
with respect to the Offer, the Merger or the Stock Option Agreement and the
transactions contemplated by this Agreement and the Stock Option Agreement and
(b) the Parent, the Sub and the Company shall cooperate with one another (i) in
promptly determining whether any filings are required to be or should be made or
consents, approvals, permits or authorizations are required to be or should be
obtained under any other federal, state or foreign law or regulation or whether
any consents, approvals or waivers are required to be or should be obtained from
other parties to loan agreements or other contracts or instruments material to
the Company's business in connection with the consummation of the Offer or the
Merger contemplated by this Agreement and (ii) in promptly making any such
filings, furnishing information required in connection therewith and seeking to
obtain timely any such consents, permits, authorizations, approvals or waivers.
Without limiting the foregoing, the Company shall use its best efforts to obtain
prior to the consummation of the Offer the consents, approvals and waivers
listed in Section 4.07(iii) of the Disclosure Letter. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall take all such necessary action as may be reasonable in the
context thereof.
(b) In the event that any action, suit, proceeding or
investigation relating hereto or to the Stock Option Agreement or to the
transactions contemplated hereby or thereby is commenced, whether before or
after the Effective Time, the parties hereto agree to cooperate and use their
best efforts to defend vigorously against it and respond thereto.
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SECTION 6.05 Indemnification and Insurance.
(a) The Parent and the Sub agree that all rights to
indemnification existing in favor of the present or former directors, officers
and employees of the Company (as such) or any of its subsidiaries as provided in
the Company's Certificate of Incorporation or Bylaws, or the articles of
incorporation, bylaws or similar documents of any of the Company's subsidiaries
as in effect as of the date hereof with respect to matters occurring prior to
the Effective Time shall survive the Merger and shall continue in full force and
effect for a period of not less than the statutes of limitations applicable to
such matters, and the Parent agrees to cause the Surviving Corporation to comply
fully with its obligations hereunder and thereunder.
(b) The Surviving Corporation will cause to be maintained in
effect for a period of four years after the Effective Time, in respect of acts
or omissions occurring prior to the Effective Time (but only in respect
thereof), policies of directors' and officers' liability insurance covering the
persons currently covered by the Company's existing directors' and officers'
liability insurance policies and providing substantially similar coverage to
such existing policies; provided, however, that the Surviving Corporation will
not be required to maintain directors' and officers' liability insurance
policies to the extent that the aggregate annual cost of maintaining such
policies exceeds 150% of the aggregate annual amounts currently paid by the
Company to maintain the existing policies.
(c) This Section 6.05 shall survive the consummation of the
Merger and is intended to benefit, and shall be enforceable by, the Company, the
Surviving Corporation, and any person or entity indemnified hereunder (whether
or not parties to this Agreement).
SECTION 6.06 Employee Plans and Benefits and Employment
Contracts.
(a) Prior to the Effective Time, the Company will, and will
cause its subsidiaries to, and from and after the Effective Time, the Parent
will, and will cause the Surviving Corporation to, honor, in accordance with
their terms all existing employment and severance agreements between the Company
or any of its subsidiaries and any officer, director or employee of the Company
or any of its subsidiaries specified in Section 4.09(a) of the Disclosure
Letter.
(b) The Parent intends to cause the Surviving Corporation and
its subsidiaries, until the first anniversary of the Effective Time, to provide
pension and welfare benefits to their employees (considered as a group)
(excluding employees covered by collective bargaining agreements and excluding
benefits that are contingent on a change in control or that are based on, or
require the issuance of, securities), which benefits will be in the aggregate no
less favorable than those currently provided by the Company and its subsidiaries
in the aggregate to
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such employees. Nothing in this Section 6.06(b) shall be deemed to constitute an
amendment of any employee benefit plan, program or arrangement or to prevent the
Surviving Corporation or any of its subsidiaries from making any change in any
plan, program or arrangement, including any change required by law or deemed
necessary or appropriate to comply with applicable law or regulation.
(c) The Company shall take, or cause to be taken, all action
necessary, as promptly hereafter as reasonably practicable, to amend any plan,
other than the Stock Option Plans, maintained by the Company or any of its
subsidiaries to eliminate, as of the date hereof, all provisions for the
purchase of Shares directly from the Company or any of its subsidiaries or
securities of any subsidiary.
(d) Without limiting the foregoing paragraph (c), the Company
shall take, or cause to be taken, all action necessary, to ensure that (i) the
1995 Plan shall terminate as of the Effective Time, (ii) no purchase right
period under the 1995 Plan commences after the date hereof, (ii) any purchase
right period under the 1995 Plan which commenced on or prior to the date hereof
(the "Current Purchase Period") is terminated, prior to the Effective Time,
(iii) no funds are contributed in the Current Purchase Period other than funds
that were contributed prior to the date hereof (regardless of the amount any
employee elected to contribute in the Current Purchase Period) and (iv) no
person shall have any right under the 1995 Plan (or any Purchase Right granted
thereunder) with respect to, including the right to acquire, equity securities
of the Company, the Surviving Corporation, the Parent or any subsidiary of any
of the foregoing following the Effective Time.
SECTION 6.07 State Takeover Statutes. The Company shall, upon
the request of the Parent or the Sub, take all reasonable steps to assist in any
challenge by the Parent or the Sub to the validity, or applicability to the
Offer or the Merger, of any state takeover law.
SECTION 6.08 Proxy Statement. Unless the Merger is consummated
in accordance with Section 253 of the DGCL as contemplated by Section 2.09, the
Company shall prepare and file with the SEC, subject to the prior approval of
the Parent (which approval shall not be unreasonably withheld), as soon as
practicable after the consummation of the Offer, a preliminary proxy or
information statement (the "Preliminary Proxy Statement") relating to the Merger
as required by the Exchange Act and the rules and regulations thereunder, with
respect to the transactions contemplated hereby. The Company shall obtain and
furnish the information required to be included in the Preliminary Proxy
Statement, shall respond promptly to any comments made by the SEC with respect
to the Preliminary Proxy Statement, shall cause the Proxy Statement to be mailed
to the Company's stockholders at the earliest practicable date and shall use its
best efforts to obtain the necessary approval of the
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Merger by its stockholders. In that regard, the Parent and the Sub agree to vote
all shares held thereby pursuant to the Offer, the Odyssey Option or otherwise
in favor of the Merger.
SECTION 6.09 Notification of Certain Matters. The Company
shall give prompt notice to the Parent and the Sub, and the Parent or the Sub,
as the case may be, shall give prompt notice to the Company, of the occurrence,
or non-occurrence, of any event the occurrence, or non-occurrence, of which is
likely (i) to cause any representation or warranty of such party contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) to result in any material failure of such party 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 6.09 shall not limit or otherwise affect the remedies
available hereunder to any of the parties receiving such notice.
SECTION 6.10 Subsequent Filings. Until the Effective Time, the
Company will timely file (subject to any extension in compliance with applicable
law) with the SEC each form, report and document required to be filed by the
Company under the Exchange Act and will promptly deliver to the Parent and the
Sub copies of each such report filed with the SEC. As of their respective dates,
none of such reports shall contain any untrue statement of a material fact or
omit 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. The audited consolidated financial statements and
unaudited interim financial statements of the Company included in such reports
shall be prepared in accordance with generally accepted accounting principles in
the United States applied on a consistent basis (except as may be indicated in
the notes thereto) and shall fairly present the financial position of the
Company and its consolidated subsidiaries as at the dates thereof and the
results of their operations and changes in financial position for the periods
then ended, subject in the case of unaudited interim financial statements to
normal and recurring year end adjustments.
SECTION 6.11 Termination Fee; Expenses. (a) In the event that
this Agreement is terminated (i) pursuant to Sections 8.01(e) or 8.01(f) or (ii)
pursuant to any other provision of Section 8.01 (regardless of whether such
termination is by the Parent or the Company) and (in the case of clause (ii)
only) either (y) prior to such termination a Trigger Event (as such term is
defined in Section 6.11(b)) has occurred or (z) prior to such termination the
Offer shall have expired without the purchase of any Shares by the Sub pursuant
thereto and within twelve months from the date of such expiration an Acquisition
Event (as such term is defined in Section 6.11(c)) other than with the Parent,
the Sub or any of their affiliates has occurred, then the Company shall pay to
the Parent a fee of 2.5% of an amount equal to $12.00 multiplied by the fully
diluted number of outstanding shares of Common Stock on the date hereof (the
"Termination Fee"). Such fee shall be payable in immediately available funds
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at the time of termination if such fee becomes payable pursuant to clause (i) or
clause (ii)(y) above, or on the second business day following the occurrence of
the Acquisition Event if such fee becomes payable in the circumstances described
in clause (ii)(z) above.
(b) As used herein, "Trigger Event" shall mean the occurrence
of any of the following events:
(i) The Company or any of its subsidiaries (or the Board of
Directors or any committee thereof of the Company) shall have
recommended, approved, authorized, proposed, filed a Schedule 14D-9 not
opposing, or publicly announced its intention to enter into, any
Acquisition Transaction (other than with the Parent, the Sub or any of
its affiliates). For purposes of this Agreement "Acquisition
Transaction" shall mean any tender offer or exchange offer, any merger,
consolidation, liquidation, dissolution, recapitalization,
reorganization or other business combination, any acquisition, sale or
other disposition of all or a substantial portion of the assets or
securities of the Company or any other similar transaction involving
the Company, its securities or any of its material subsidiaries or
divisions; or
(ii) the Board of Directors or any committee thereof of the
Company shall have withdrawn or modified or amended in any manner
adverse to the Parent or the Sub its authorization, approval or
recommendation to the stockholders of the Company with respect to the
Offer, the Merger or this Agreement, or shall have failed to have
reiterated its recommendation within five business days of any written
request by the Parent or the Sub therefor.
(iii) the Company shall have knowingly breached or willfully
failed to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Company set forth in this
Agreement shall, to the knowledge of the Company, not have been true
and correct in all material respects as of the date of this Agreement
or shall cease to be true in all material respects prior to the
Effective Time by reason of the willful acts of the Company.
(c) As used herein, "Acquisition Event" shall mean the
consummation of any (i) Acquisition Transaction or (ii) series of transactions
that results in any person, entity or "group" (other than the Option Grantor and
its affiliates and other than the Parent, the Sub or any of their affiliates)
acquiring more than 50% of the outstanding Shares or assets of the Company or
the Option Grantor acquiring more than an additional 10% of the outstanding
Shares or assets of the Company (through any open market purchases, merger,
consolidation, recapitalization reorganization or other business combination).
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(d) In the event that this Agreement is terminated in the
manner described in Section 6.11(a) and unless such termination results solely
from a material breach by the Parent or the Sub of its obligations hereunder,
the Company shall promptly at such time assume and pay (in addition to any
amounts payable pursuant to Section 6.11(a) hereof), or reimburse the Parent
for, the reasonable documented out-of-pocket fees and expenses actually incurred
by or on behalf of the Parent and the Sub in connection with the transactions
contemplated hereby, including all legal, investment banking, accounting,
printing and other fees and expenses whether incurred prior to or following the
execution of or the termination of this Agreement ("Reimbursable Expenses").
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the proposed
Effective Time, of the following conditions:
(a) unless the Merger is consummated pursuant to Section 253
of the DGCL as contemplated by Section 2.09, the agreement of merger
(as such term is used in Section 251 of the DGCL) contained in this
Agreement shall have been adopted by the affirmative vote of the
stockholders of the Company required by and in accordance with
applicable law;
(b) all necessary waiting periods under the HSR Act
applicable to the Merger shall have expired or been terminated;
(c) no statute, rule, regulation, executive order, judgment,
decree or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or governmental authority against
the Parent, the Sub or the Company and be in effect that prohibits or
restricts the consummation of the Merger or makes such consummation
illegal or otherwise restricts the Parent's or the Sub's exercise of
full rights to own and operate the Company (each party agreeing to use
all reasonable efforts to have such prohibition lifted); and
(d) The Sub shall have accepted for purchase and paid for the
Shares tendered pursuant to the Offer; provided, however, that this
condition will be deemed satisfied with respect to the Parent and the
Sub if the Sub shall have failed to purchase Shares pursuant to the
Offer in violation of the terms of the Offer.
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SECTION 7.02 Conditions to the Obligations of the Parent and
the Sub to Effect the Merger. The obligations of the Parent and the Sub to
effect the Merger are further subject to the satisfaction or waiver, where
permissible, on or prior to the proposed Effective Time of the following
conditions:
(a) the Company shall have performed and complied in all
material respects with all agreements and obligations and conditions
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time and the representations and warranties of
Company contained herein that are qualified as to materiality shall be
true and correct, and the representations and warranties that are not
so qualified shall be true and correct in all material respects, in
each case on the date of this Agreement and at and on the proposed
Effective Time as though such representations and warranties were made
at and as such date; and
(b) the Company shall have furnished such certificates of its
officers to evidence compliance with the conditions set forth in
Section 7.02(a) hereof as may be reasonably requested by the Sub.
SECTION 7.03 Conditions to the Obligations of the Company to
Effect the Merger. The obligations of the Company to effect the Merger are
further subject to the satisfaction or waiver, where permissible, on or prior to
the proposed Effective Time of the following conditions:
(a) the Parent and the Sub shall have performed and complied
in all material respects with all agreements and obligations required
by this Agreement to be performed or complied with by them on or prior
to the proposed Effective Time and the representations and warranties
of the Parent and the Sub contained herein that are qualified as to
materiality shall be true and correct, and the representations that are
not so qualified shall be true and correct in all material respects, in
each case on the date of this Agreement and at and on the proposed
Effective Time as though such representations and warranties were made
at and as such date; and
(b) the Parent and the Sub shall have furnished such
certificates of its officers to evidence compliance with the conditions
set forth in Section 7.03(a) hereof as may be reasonably requested by
the Company.
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ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time notwithstanding approval thereof by the
stockholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of the Boards of Directors of
the Company and the Parent;
(b) by the Parent or the Company if the Effective Time shall
not have occurred on or before December 31, 1996 (provided that the
right to terminate this Agreement under this Section 8.01(b) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before such date);
(c) by the Parent or the Company if any court of competent
jurisdiction in the United States or Canada or other United States or
Canadian governmental body shall have issued an order, decree or
ruling, or taken any other action restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement or
the Stock Option Agreement and such order, decree, ruling or other
action shall have become final and non-appealable;
(d) (i) by the Company if the Sub fails to commence the Offer
as provided in Section 1.01 and (ii) by the Parent if the Offer expires
or is terminated on account of the failure of a condition specified in
Exhibit A hereto without any Shares being purchased thereunder;
(e) by the Parent, (i) (x) if the Board of Directors or any
committee thereof of the Company withdraws or modifies or amends in a
manner adverse to the Parent or the Sub its authorization, approval or
recommendation of the Offer or the Merger or this Agreement or shall
have resolved to do any of the foregoing or shall have failed to have
reiterated its recommendation within five business days of any written
request by the Parent or the Sub therefor or (y) the Company or any of
its subsidiaries (or the Board of Directors or any committee thereof of
the Company) shall have approved, recommended, authorized, proposed,
publicly announced its intention to enter into or filed a Schedule
14D-9 not opposing any Acquisition Transaction with a party other than
the Parent, the Sub or any of their affiliates;
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<PAGE> 51
(f) by the Parent if the Company or any of its subsidiaries
participates in discussions or negotiations with, or provides any
information to or affords any access to the properties, books and
records of the Company to, or otherwise assists or facilitates any
corporation, partnership, person or other entity or group (other than
the Parent or the Sub or any affiliate or associate of the Parent or
the Sub) concerning any Acquisition Transaction, whether or not
permitted by Section 6.02 hereof;
(g) by the Parent if the Company shall have breached or failed
to comply in any material respect with any of its obligations,
covenants or agreements under this Agreement, or any of the
representations and warranties of the Company set forth in this
Agreement which is qualified as to materiality, shall not be true and
correct, or any such representation or warranty that is not so
qualified, shall not be true and correct when made or at any time prior
to the Effective Time as if made at and as such time;
(h) by the Parent if at any time prior to the purchase by the
Sub of all of the Shares subject to the Option, the Stock Option
Agreement shall not be in full force and effect, the Option Grantor
shall have asserted that the Stock Option Agreement is not valid,
binding or enforceable or is not in full force and effect, there shall
be a material condition to the exercise of the Option outstanding and
not satisfied or the Option Grantor shall have breached in any material
respect any representation, warranty or covenant contained in the Stock
Option Agreement; or
(i) by the Company if either the Parent or the Sub shall have
breached or failed to comply in any material respect with any of its
obligations, covenants or agreements under this Agreement, or any of
the representations and warranties of such party set forth in this
Agreement which is qualified as to materiality, shall not be true and
correct, or any such representation and warranty that is not so
qualified, shall not be true and correct in all material respects when
made or at any time prior to the Effective Time as if made at and as
such time.
SECTION 8.02 Effect of Termination. If this Agreement is
terminated and the Merger is abandoned pursuant to Section 8.01 hereof, this
Agreement, except for the provisions of Sections 6.03(b), 6.11 and 9.10 hereof
and except to the extent provisions of this Agreement relate to the Stock Option
Agreement, shall forthwith become void and have no effect, without any liability
on the part of any party or its directors, officers or stockholders. Nothing in
this Section 8.02 shall relieve any party to this Agreement of liability for
breach of this Agreement.
SECTION 8.03 Amendment. To the extent permitted by applicable
law, this Agreement may be amended by action taken by or on behalf of the Boards
of Directors of the
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<PAGE> 52
Company, the Parent and the Sub, subject in the case of the Company to Section
1.04(b), at any time before or after adoption of this Agreement by the
stockholders of the Company but, after any such stockholder approval, no
amendment shall be made which decreases the Merger Consideration or which
adversely affects the rights of the Company's stockholders hereunder without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties hereto.
SECTION 8.04 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken by or on behalf of the
respective Boards of Directors of the Company, the Parent and the Sub, subject
in the case of the Company to Section 1.04(b), may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties. The
representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time.
SECTION 9.02 Entire Agreement; Assignment. This Agreement,
together with the Disclosure Letter and the Confidentiality Agreement,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
The Agreement shall not be assigned by operation of law or otherwise; provided,
however, that the Parent or the Sub may assign any of their respective rights
and obligations to any affiliate of the Parent or the Sub, as the case may be,
but no such assignment shall relieve the Parent or the Sub, as the case may be,
of its obligations hereunder. It is understood and agreed that either the Sub or
any affiliates of the Sub may purchase Shares under the Offer.
SECTION 9.03 Enforcement of the Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were
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<PAGE> 53
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any federal or state court
located in the State of Delaware (as to which the parties agree to submit to
jurisdiction for the purposes of such action), this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 9.04 Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 9.05 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by facsimile transmission with
confirmation of receipt, or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:
if to the Parent or the Sub:
c/o Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario
Canada L42 3C8
Facsimile: 905-566-3082
Attention: Mr. William R. Kerr
Vice President and Treasurer
with a copy to:
Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario
Canada L42 3C8
Facsimile: 905-566-3457
Attention: Anthony J. Lafleur, Esq.
Vice President and Associate General Counsel
49
<PAGE> 54
and to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Facsimile: 212-225-3999
Attention: Victor I. Lewkow, Esq.
if to the Company:
MICOM Communications Corp.
4100 Los Angeles Avenue
Simi Valley, CA 93062
Facsimile: 805-583-3183
Attention: Warren B. Phelps, III
Chairman and Chief Executive Officer
with a copy to:
Riordan & McKinzie
5743 Corsa Avenue, #116
Westlake Village, CA 91362
Facsimile: 818-706-2956
Attention: Lawrence Weeks, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.06 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware regardless
of the laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
SECTION 9.07 Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 9.08 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement except for Section 6.05 (which is intended to
50
<PAGE> 55
be for the benefit of the persons referred to therein, and may be enforced by
any such persons).
SECTION 9.09 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.10 Fees and Expenses. Whether or not the Offer or
the Merger is consummated, all fees, costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, except as contemplated by Section 6.11 hereof.
SECTION 9.11 Certain Definitions.
(a) The term "subsidiary" shall mean, when used with reference
to an entity, any other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions, or a majority of the outstanding
voting securities of which, are owned directly or indirectly by such entity.
(b) "Material Adverse Effect" shall mean any change,
condition, event or development in the business, condition (financial or
otherwise), assets, liabilities, results of operations or prospects of the
Company or any of its subsidiaries that is, or is reasonably likely to be,
material and adverse to the Company and its subsidiaries taken as a whole, or
that materially impairs, or is reasonably likely to materially impair, the
ability of the parties to consummate the transactions contemplated by this
Agreement.
(c) "Tax" shall mean all taxes, charges, fees, levies,
imposts, duties, and other assessments, including any income, alternative
minimum or add-on tax, estimated, gross income, gross receipts, sales, use,
transfer, transactions, intangibles, ad valorem, value-added, franchise,
registration, title, license, capital, paid-up capital, profits, withholding,
employee withholding, payroll, worker's compensation, unemployment insurance,
social security, employment, excise (including the federal communications excise
tax under Section 4251 of the Code), severance, stamp, occupation, premium,
recording, real property, personal property, federal highway use, commercial
rent, environmental (including taxes under Section 59A of the Code) or windfall
profit tax, custom, duty or other tax, fee or other like assessment or charge of
any kind whatsoever, together with any interest, penalties, related liabilities,
fines or additions to tax imposed by any country, any state, county, provincial
or local government or subdivision or agency thereof.
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<PAGE> 56
(d) The term "including" shall be deemed to be followed by
the phrase "without limitation."
SECTION 9.12 Press Releases. The Parent, the Sub and the
Company will consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement except upon advice of counsel that such press
release or public statement is required by law or by obligations pursuant to any
listing agreement with any relevant national securities exchange.
52
<PAGE> 57
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all at or on the day and year first above written.
NORTHERN TELECOM INC.
By: /s/ Peter W. Currie
-----------------------------------------------
Name: Peter W. Currie
Title: Attorney-in-Fact
ELDER CORPORATION
By: /s/ A. J. Lafleur
-----------------------------------------------
Name: A. J. Lafleur
Title: Vice President and Assistant Secretary
MICOM COMMUNICATIONS CORP.
By: /s/ Warren B. Phelps, III
-----------------------------------------------
Name: Warren B. Phelps, III
Title: Chairman and Chief Executive Officer
53
<PAGE> 58
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A and not otherwise
defined herein shall have the meanings assigned to them in the Agreement to
which it is attached (the "Merger Agreement").
Notwithstanding any other provision of the Offer, the Sub
shall not be required to accept for payment, purchase or pay for any Shares
tendered until the expiration of any applicable waiting period for the Offer and
the option granted pursuant to the Stock Option Agreement (the "Option") under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the Sub may terminate or, subject to the terms and conditions of the
Merger Agreement, amend the Offer as to any Shares not then accepted for
payment, shall not be required to accept for payment or pay for any Shares, or
may delay the acceptance for payment of Shares tendered, if (1) at the
expiration of the Offer, the number of Shares validly tendered and not
withdrawn, together with the Shares beneficially owned by the Parent and its
affiliates or which the Parent and its affiliates have the right to acquire
pursuant to the Stock Option Agreement, shall not constitute a majority of the
outstanding Shares on a fully diluted basis, or (2) at any time on or after the
date of the Merger Agreement and prior to the acceptance for payment of Shares,
any of the following events shall occur or exist:
(a) there shall have been any action taken, or any statute,
rule, regulation, judgment, order or injunction, promulgated, enacted,
entered, enforced or deemed applicable to the Offer, the Option or the
Merger, that would or is reasonably likely to (i) make the acceptance
for payment of, or payment for or purchase of some or all of the Shares
pursuant to the Offer or the Option illegal, or otherwise restrict or
prohibit or make materially more costly the consummation of the Offer,
the Option or the Merger, (ii) result in a significant delay in or
restrict the ability of the Sub to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer or the Option
or to effect the Merger, (iii) render the Sub unable to accept for
payment or pay for or purchase some or all of the Shares pursuant to
the Offer or the Option, (iv) impose material limitations on the
ability of the Parent, the Sub or any of their respective subsidiaries
or affiliates to acquire or hold, transfer or dispose of, or
effectively to exercise all rights of ownership of, some or all of the
Shares including the right to vote the Shares purchased by it pursuant
to the Offer or the Option on all matters properly presented to the
stockholders of the Company, (v) require the divestiture by the Parent,
the Sub or any of their respective subsidiaries or affiliates of
A-1
<PAGE> 59
any Shares, or require the Sub, the Parent, the Company, or any of
their respective subsidiaries or affiliates to dispose of or hold
separate all or any material portion of their respective businesses,
assets or properties or impose any material limitations on the ability
of any of such entities to conduct their respective businesses or own
such assets, properties or Shares or on the ability of the Parent or
the Sub to conduct the business of the Company and its subsidiaries and
own the assets and properties of the Company and its subsidiaries, (vi)
impose any material limitations on the ability of the Parent, the Sub
or any of their respective subsidiaries or affiliates effectively to
control the business or operations of the Company, the Parent, the Sub,
or any of their respective subsidiaries or affiliates (vii) otherwise
materially adversely affects the Parent, the Sub, the Company or any of
their respective subsidiaries or affiliates or the value of the Shares
or otherwise make consummation of the Offer, the Option or the Merger
unduly burdensome;
(b) there shall have been threatened, instituted or pending
any action, proceeding or counterclaim by or before any governmental,
administrative or regulatory agency or instrumentality or before any
court, arbitration tribunal or any other tribunal, domestic or foreign,
challenging the making of the Offer or the acquisition by the Sub of
the Shares pursuant to the Offer or the Option or the consummation of
the Merger, or seeking to obtain any material damages, or seeking to,
directly or indirectly, result in any of the consequences referred to
in clauses (i) through (vii) of paragraph (a) above;
(c) the Stock Option Agreement shall not be in full force and
effect (except due to the exercise thereof by the Sub) or there shall
be a material condition to the exercise of the Option outstanding and
not satisfied or the Option Grantor shall have breached in any material
respect any representation, warranty or covenant contained therein and
such breach shall have remained outstanding and uncured;
(d) there shall have occurred (i) for a period of more than
one full trading day any general suspension of, or limitation on prices
for, trading in securities on any national securities exchange or in
the over-the-counter market in the United States or the Toronto Stock
Exchange, (ii) the declaration of any banking moratorium or any
suspension of payments in respect of banks or any limitation (whether
or not mandatory) on the extension of credit by lending institutions in
the United States or Canada, (iii) the commencement of a war, armed
hostilities or any other international or national calamity involving
the United States or Canada, (iv) a material adverse change in the
United States or Canadian currency exchange rates or a suspension of,
or limitation on, the markets therefor, (v) in the case of any of the
foregoing existing at
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<PAGE> 60
the time of the execution of the Merger Agreement, a material
acceleration or worsening thereof;
(e) any Person, entity or "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than the Parent, the Sub or
Option Grantor or any of their respective affiliates shall have become
the beneficial owner (as that term is used in Rule 13d-3 under the
Exchange Act) of more than 14.9% of the outstanding Shares;
(f) the Company (or the Board of Directors or any committee
thereof of the Company) shall have approved, recommended, authorized,
proposed, filed a Schedule 14D-9 not opposing, or publicly announced
its intention to enter into, any Acquisition Transaction (other than
with the Parent, the Sub or any of their affiliates);
(g) there shall have occurred any change, condition, event or
development in the business, condition (financial or otherwise),
assets, liabilities, results of operations or prospects of the Company
or any of its subsidiaries that is, or is reasonably likely to be,
materially adverse to the Company and its subsidiaries taken as a whole
or that materially impairs, or is reasonably likely to materially
impair the ability of the parties to consummate the Offer or the
Merger;
(h) the Company shall have breached or failed to comply in any
material respect with any of its obligations, covenants, or agreements
under the Merger Agreement or any representation or warranty of the
Company contained in the Merger Agreement, which is qualified as to
materiality, shall not be true and correct, or any such representation
or warranty that is not so qualified, shall not be true and correct in
any material respect, in each case either as of when made or at any
time thereafter;
(i) the Merger Agreement shall have been terminated pursuant
to its terms or shall have been amended pursuant to its terms to
provide for such termination or amendment of the Offer; or
(j) the Board of Directors or any committee thereof of the
Company shall have modified or amended in any manner adverse to the
Parent or the Sub or shall have withdrawn its authorization, approval
or recommendation of the Offer, the Merger or the Merger Agreement, or
shall have failed to have reiterated its recommendation within five
business days of any written request by the Parent or the Sub therefor;
which, in the sole judgment of the Parent or the Sub, in any case, and
regardless of the circumstances (including any action or inaction by the Parent
or the Sub or any of their
A-3
<PAGE> 61
affiliates other than any action or inaction constituting a material breach by
the Parent or the Sub of their obligations under the Merger Agreement) giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of the
Parent and the Sub and may be asserted regardless of the circumstances
(including any action or inaction by the Parent or the Sub or any of their
affiliates giving rise to any such condition other than any action or inaction
constituting a material breach by the Parent or the Sub of their obligations
under the Merger Agreement) or waived by the Parent or the Sub in whole or in
part at any time or from time to time in its discretion subject to the terms and
conditions of the Merger Agreement. The failure of the Parent or the Sub 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. Any determination by the Parent or
the Sub concerning the events described above will be final and binding on all
parties.
A-4
<PAGE> 1
STOCK OPTION AGREEMENT
AGREEMENT dated as of May 13, 1996, among Northern Telecom
Inc., a Delaware corporation ("Parent"), Elder Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), Odyssey Partners
L.P., a Delaware limited partnership (the "Stockholder") and (as to Section 5(g)
only) Odyssey Investors, Inc., a Delaware corporation and an affiliate of the
Stockholder ("Investors").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Sub and MICOM
Communications Corp., a Delaware corporation (the "Company"), are entering into
an Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein having the respective meanings given to them in the Merger Agreement),
pursuant to which Sub will be merged with and into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days) after
the execution and delivery of the Merger Agreement, Sub commence a cash tender
offer to purchase all outstanding shares of Company Common Stock (as defined in
Section 1) including all of the Option Shares (as defined in Section 2); and
WHEREAS, as an inducement and a condition to Parent and Sub
entering into the Merger Agreement, Parent and Sub have required that the
Stockholder and Investors (as to Section 5(g) only) agree, and the Stockholder
and Investors (as to Section 5(g) only) have agreed, to enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Acquisition Transaction" shall mean any merger,
consolidation, liquidation, dissolution, recapitalization, reorganization or
other business combination, acquisition or sale or other disposition of a
material amount of assets or securities, tender offer or exchange offer or any
other similar transaction involving the Company, its securities or any of its
material subsidiaries or divisions.
(b) "beneficially own" or "beneficial ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities beneficially owned by a Person
shall include securities beneficially owned by all other Persons with whom such
<PAGE> 2
Person would constitute a "group" as within the meaning of Section 13(d)(3) of
the Exchange Act.
(c) "Company Common Stock" shall mean at any time the common
stock, $0.0000001 par value, of the Company.
(d) "Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization or other entity.
2. Tender of Option Shares. To induce Parent and Sub to
enter into the Merger Agreement and subject to terms and conditions set forth
herein:
(a) Stockholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer pursuant to Section
1.01 of the Merger Agreement and Rule 14d-2 under the Exchange Act, for
acceptance by Sub in the Offer, the number of shares of Company Common Stock set
forth opposite the Stockholder's name on Schedule I hereto (the "Existing
Shares" and, together with any shares of Company Common Stock acquired by the
Stockholder after the date hereof and prior to the termination of this Agreement
whether upon the exercise of options, warrants or rights, the conversion or
exchange of convertible or exchangeable securities, or by means of purchase,
dividend, distribution or otherwise, the "Option Shares"), beneficially owned by
it; provided that, if the purchase price per share of Company Common Stock of
the Offer is for any reason increased to an amount greater than the Purchase
Price (as defined in Section 4), then (i) the Stockholder will not tender the
Option Shares into the Offer after the first public announcement of such
increase, and (ii) if any Option Shares were tendered into the Offer prior to
such first public announcement, the Stockholder will promptly withdraw its
tender of such Option Shares. In the event that the Stockholder is not permitted
to tender (or is required to withdraw) the Option Shares pursuant to the proviso
to the immediately preceding sentence, Sub shall be obligated to, and will,
exercise the Stock Option on the first business day following the purchase of
any shares of Company Common Stock pursuant to the Offer, in which case
(notwithstanding the notice period set forth in Section 4(b)), no notice need be
given to the Stockholder, and the closing of the purchase of the Option Shares
(the "Closing") shall also take place on the first business day following the
purchase of Shares pursuant to the Offer, at 11:00 A.M. (New York time) at
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, NY, or at such
other time and place as the parties shall agree. The Stockholder hereby
acknowledges and agrees that Sub's obligation to accept for payment and pay for
Company Common Stock in the Offer, including the Option Shares, is subject to
the terms and conditions of the Offer.
(b) The Stockholder hereby agrees to permit Parent and Sub
to publish and disclose in the Offer Documents and, if approval of the
stockholders of the Company is required under applicable law, the Proxy
Statement (including all documents and schedules filed with the Securities and
Exchange Commission) its identity and ownership of Company
2
<PAGE> 3
Common Stock and the nature of its commitments, arrangements and understandings
under this Agreement.
3. Provisions Concerning Company Common Stock. The
Stockholder hereby agrees that during the period commencing on the date hereof
and continuing until the first to occur of (i) the Effective Time and (ii) the
termination of this Agreement as set forth in Section 8, at any meeting of the
holders of Company Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock, the Stockholder shall
vote (or cause to be voted) the Option Shares held of record or beneficially
owned by the Stockholder whether issued, heretofore owned or hereafter acquired,
(i) in favor of the approval and adoption of the agreement of merger (as such
term is used in Section 251 of the Delaware General Corporation Law) contained
in the Merger Agreement, (ii) in favor of any other action related to the Merger
or in furtherance of the transactions contemplated by the Merger Agreement and
this Agreement, (iii) against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement, and (iv) except as otherwise agreed to in writing in advance by Sub,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (x) any Acquisition Transaction; and (y)
(1) any change in a majority of the persons who constitute the Board of
Directors of the Company; (2) any change in the present capitalization of the
Company or any amendment of Company's Certificate of Incorporation or By-laws;
(3) any other material change in the Company's corporate structure or business;
and (4) any other action involving the Company or its subsidiaries which is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or otherwise adversely affect the Offer, the Merger and the
transactions contemplated by this Agreement and the Merger Agreement. The
Stockholder shall not enter into any agreement or understanding with any Person
the effect of which would be inconsistent with or violative of the provisions
and agreements contained in this Section 3.
4. Option.
(a) To induce Parent and Sub to enter into the Merger
Agreement and subject to the terms and conditions set forth herein, the
Stockholder hereby grants to Sub an irrevocable option (the "Stock Option") to
purchase the Option Shares at a purchase price per share of $12.00 (the
"Purchase Price"). If (i) the Offer is terminated, abandoned or withdrawn by
Parent or Sub (whether due to the failure of any of the conditions thereto or
otherwise), (ii) the Offer is consummated but Sub has not accepted for payment
and paid for the Option Shares (whether due to the proviso to the first sentence
of Section 2 or otherwise) or (iii) the Merger Agreement is terminated in
accordance with its terms (other than for the failure of Parent or Sub to
fulfill any material obligation under the Merger Agreement or by mutual
agreement of the parties thereto), the Stock Option shall, in any such case,
become exercisable, in whole but not in part, upon the first to occur of any
such event and remain exercisable, in whole but not in part, until the date
which is 60 days after the date of the occurrence of such event, so long as: (x)
all waiting periods under the Hart-Scott-Rodino
3
<PAGE> 4
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), required for the
purchase of the Stock Option upon such exercise shall have expired or been
waived, and (y) there shall not then be in effect any preliminary or final
injunction or other order issued by any court or governmental, administrative or
regulatory agency or authority prohibiting the exercise of the Stock Option
pursuant to this Agreement. In the event that the Stock Option is not
exercisable because the circumstances described in clauses (x) and (y) do not
exist, then the Stock Option shall be exercisable for a period not exceeding an
additional 30 days after the 60-day period referred to in the immediately
preceding sentence.
(b) In the event that Sub wishes to exercise the Stock
Option, and subject to Section 2(a), Sub shall send a written notice to the
Stockholder identifying the place and time for the Closing at least three
business days, and not more than five business days, prior to the Closing.
Subject to the terms and conditions of this Agreement, in reliance on the
representations, warranties and covenants of the Stockholder contained herein
and in full payment for the Option Shares, Sub will deliver at the Closing to
the Stockholder, by wire transfer of immediately available funds to an account
designated by the Stockholder at least one business day in advance, an aggregate
amount equal to the product of (x) the Purchase Price and (y) the number of
Option Shares. At the Closing, the Stockholder will deliver, or cause to be
delivered, to Sub certificates representing the Option Shares duly endorsed to
Sub or accompanied by stock powers duly executed by the Stockholder in blank,
together with any necessary stock transfer stamps properly affixed.
(c) Acquired Option Shares. In the event the Option Shares
are acquired by Sub pursuant to the exercise of the Option ("Acquired Option
Shares"), the Stockholder shall be entitled to receive, upon any subsequent
disposition, transfer or sale (other than to an affiliate who takes such
Acquired Option Shares subject to Sub's obligations under this Section) ("Sale")
of the Acquired Option Shares for which a binding contract of sale is entered
into within 180 days of the Closing, an amount in cash equal to 50% of the
excess (if any) of the aggregate proceeds received in the Sale (net of selling
commissions, if any) over the aggregate Purchase Price for the Acquired Option
Shares subject to such Sale. If any of the consideration received by Sub in such
Sale consists of securities, for purposes hereof the proceeds of such Sale shall
be deemed to be the net amount that would actually have been received in an
orderly sale of such securities commencing on the first business day following
actual receipt of such securities by Sub, in the written opinion of an
investment banking firm of national reputation selected by Sub and reasonably
satisfactory to the Stockholder. Any payment due hereunder shall be paid by Sub
to the Stockholder within five days after receipt of the Sale proceeds or, if
any of the consideration consists of securities, after the receipt of such
investment banking firm's written opinion to the parties. Nothing herein shall
create any duty by Sub to engage in a Sale of the Acquired Option Shares.
5. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
4
<PAGE> 5
(a) Ownership of Option Shares. The Stockholder is the
record and beneficial owner of the number of Option Shares set forth opposite
Stockholder's name on Schedule I hereto. On the date hereof, the Existing Shares
set forth opposite the Stockholder's name on Schedule I hereto constitute all of
the Option Shares owned of record or beneficially owned by the Stockholder. The
Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Sections 2, 3 and 4 hereof, sole power of
disposition, sole power of conversion, sole power to demand appraisal rights and
sole power to agree to all of the matters set forth in this Agreement, in each
case with respect to all of the Existing Shares set forth opposite the
Stockholder's name on Schedule I hereto, with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the terms
of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal
capacity, power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
the Stockholder is a party including, without limitation, any voting agreement,
stockholders' agreement or voting trust. This Agreement has been duly and
validly executed and delivered by the Stockholder and constitutes a valid and
binding agreement of the Stockholder, enforceable against the Stockholder in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which the Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby. The
Stockholder hereby revokes any and all proxies with respect to any of the Option
Shares.
(c) No Conflicts. Except for (i) filings and approvals under
the HSR Act or the Exchange Act, if applicable, (x) no filing with, and no
permit, authorization, consent or approval of, any state or federal public body
or authority or any Person is necessary for the execution of this Agreement by
the Stockholder and the consummation by the Stockholder of the transactions
contemplated hereby and (y) none of the execution and delivery of this Agreement
by the Stockholder, the consummation by the Stockholder of the transactions
contemplated hereby or compliance by the Stockholder with any of the provisions
hereof shall (1) conflict with or result in any breach of any applicable
organizational documents applicable to the Stockholder, (2) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of the Stockholder's properties or assets may be bound, or
(3) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to the Stockholder or any of the Stockholder's
properties or assets.
5
<PAGE> 6
(d) No Finder's Fees. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor or other Person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Stockholder.
(e) No Encumbrances. The Option Shares and the certificates
representing such Option Shares are now, and at all times during the term hereof
will be, held by the Stockholder, or by a nominee or custodian for the benefit
of the Stockholder, free and clear of all liens, claims, options, charges,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other legal or equitable rights or encumbrances whatsoever,
except for any such encumbrances or proxies arising hereunder and except for
certain economic interests therein of employees and former employees of the
Stockholder. The transfer by the Stockholder of the Option Shares to Sub in the
Offer or to Parent hereunder (after payment in full of the purchase price
thereof) shall pass to and unconditionally vest in Sub good and valid title to
all Option Shares, free and clear of all claims, liens, restrictions, security
interests, pledges, limitations and encumbrances whatsoever.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon the Stockholder's execution, delivery and
performance of this Agreement.
(g) Services Agreement. Investors hereby agrees that,
notwithstanding any provision to the contrary of the amended and restated
services agreement, dated as of June 3, 1994 and amended as of January 2, 1995,
between the Company and Investors (the "Services Agreement"), the Services
Agreement shall be automatically terminated, without notice, immediately upon
the consummation of the Offer and upon such termination (i) each party thereto
shall have no further rights, duties or liabilities under the Services
Agreement, (ii) upon Investors' receipt of a binding written agreement from the
Company and the Surviving Corporation (the "Releasees") similarly releasing and
discharging Investors, the Releasees shall automatically be released and
discharged by Investors from all actions, suits, debts, sums of money,
covenants, obligations, controversies, agreements, promises, damages, judgments,
claims, and demands whatsoever, in law or equity, against the Releasees which
Investors ever had, now has or hereafter shall or may have, for, upon, or by
reason of any matter, cause or thing whatsoever arising out of or in any way
relating to the Releasees' obligations under the Services Agreement, and (iii)
Investors shall automatically waive any amounts that it would have otherwise
received over and above an amount equal to the pro rata portion of the annual
fee under the Services Agreement for the period through the consummation of the
Offer or the Closing of the Option, as the case may be, plus any reimbursable
expenses incurred by Investors prior to such date and not yet reimbursed by the
Company pursuant to Section 4(b) of the Services Agreement.
6
<PAGE> 7
6. Additional Covenants of the Stockholder. In addition to
the covenants and agreements included elsewhere herein, the Stockholder
covenants and agrees as follows:
(a) No Solicitation. The Stockholder (and its officers,
directors, employees, controlling persons and representatives) shall not, in
their capacity as such, directly or indirectly, initiate, solicit (including by
way of furnishing information), encourage or respond to or take any other action
knowingly to facilitate, any inquiries or the making of any proposal by any
Person (other than Parent or any affiliate of Parent) with respect to, an
Acquisition Transaction (an "Acquisition Proposal"), or enter into or maintain
or continue discussions or negotiate with any Person (other than Parent or any
affiliate of Parent) in furtherance of such inquiries or to obtain any
Acquisition Proposal, or agree to or endorse any Acquisition Proposal, or
authorize or permit any of its officers, directors, or employees or any Person
acting on behalf of the Stockholder to do any of the foregoing. The Stockholder
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Person conducted heretofore with respect to
any of the foregoing. If the Stockholder receives any inquiry or proposal
regarding any Acquisition Proposal, the Stockholder shall promptly inform Sub of
that inquiry or proposal, the details thereof, the identity of the Person making
such inquiry or proposal and shall in the case of written proposals or
inquiries, furnish Sub with a copy of such proposal or inquiry (and all
amendments and supplements thereto).
(b) Restriction on Transfer, Proxies and Non-Interference.
Except as contemplated by this Agreement, the Stockholder shall not directly or
indirectly, (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to, or consent to the offer for sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Option Shares or any interest therein; (ii) grant any proxies or powers of
attorney, deposit any Option Shares into a voting trust or enter into a voting
agreement with respect to any Option Shares; or (iii) take any action that would
make any representation or warranty of the Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling the Stockholder from
performing the Stockholder's obligations under this Agreement.
(c) Waiver of Appraisal Rights. The Stockholder hereby
irrevocably waives any rights of appraisal or rights to dissent from the Merger
that the Stockholder may have.
(d) Stop Transfer; Changes in Option Shares. The Stockholder
agrees with, and covenants to, Parent and Sub that the Stockholder shall not
request that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Option Shares,
unless such transfer is made in compliance with this Agreement. In the event of
a stock dividend or distribution, or any change in the Company Common Stock by
reason of any stock dividend, split-up, merger, recapitalization, combination,
conversion exchange of shares or the like (in each case with a record date prior
to the termination of this Agreement), (i) the term "Option Shares" shall be
deemed to refer to
7
<PAGE> 8
and include the Option Shares as well as all such stock dividends and
distributions and any securities into which or for which any or all of the
Option Shares may be changed or exchanged and such dividends, distributions and
securities, as the case may be, shall be paid to Sub at the Closing or promptly
following the receipt of such dividend or distribution, if the Closing
theretofor shall have occurred and (ii) the number and kind of shares subject to
this Agreement and Purchase Price shall be appropriately adjusted to reflect
changes made in the Company Common Stock so that Sub shall receive, upon
exercise of the Stock Option and payment of the Purchase Price, the number and
class of shares, other securities, property or cash that Sub would have received
in respect of the Option Shares if the Stock Option had been exercised and the
Option Shares had been issued to Sub immediately prior to such event or the
record date therefor, as applicable.
(e) Confidentiality. The Stockholder recognizes that
successful consummation of the transactions contemplated by this Agreement may
be dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof, the Stockholder
hereby agrees not to disclose or discuss such matters with anyone not a party to
this Agreement (other than the Stockholder's counsel and advisors, if any)
without the prior written consent of Sub, except for filings required pursuant
to the Exchange Act and the rules and regulations thereunder or disclosures the
Stockholder's counsel advises are necessary in order to fulfill the
Stockholder's obligations imposed by law, in which event the Stockholder shall
give notice of such disclosure to Sub as promptly as practicable so as to enable
Sub to seek a protective order from a count of competent jurisdiction with
respect thereto.
(f) Yost Shares. Stockholder hereby consents to the
execution, delivery and performance by E.R. Yost of an agreement with Parent and
Subsubstantially identical hereto.
7. Fiduciary Duties. Notwithstanding anything in this
Agreement to the contrary, the covenants and agreements set forth herein shall
not prevent any of the Stockholder's designees serving on the Company's Board of
Directors from taking any action, subject to the applicable provisions of the
Merger Agreement, while acting in compliance with such designee's fiduciary
duties in its capacity as a director of the Company.
8. Termination. This Agreement (other than Section 4(c) and
if, and to the extent, applicable) shall terminate, and no party shall have any
rights or obligations hereunder and this Agreement shall become null and void
and have no effect from and after the last date on which the Stock Option is
exercisable pursuant to Section 4.
8
<PAGE> 9
9. Miscellaneous.
(a) Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or appropriate to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
(b) Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Merger Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understanding, both written and oral, between the parties with
respect to the subject matter hereof. This Agreement is not intended for the
benefit of or intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
(c) Certain Events. The Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Option Shares and
shall be binding upon any Person to which legal or beneficial ownership of such
Option Shares shall pass, whether by operation of law or otherwise, including,
without limitation, the Stockholder's heirs, guardians, administrators or
successors. Notwithstanding any transfer of Option Shares, the transferor shall
remain liable for the performance of all obligations under this Agreement of the
transferor.
(d) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties provided that Parent and Sub may assign, in their sole discretion, their
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Parent, although no such assignment shall relieve Parent or Sub of
their obligations hereunder if such assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
relevant parties hereto; provided that Schedule I hereto may be supplemented by
Parent and Sub by adding the name and other relevant information concerning any
stockholder of the Company who agrees to be bound by the terms of this Agreement
without the agreement of any other party hereto, and thereafter such added
stockholder shall be treated as a "Stockholder" for all purposes of this
Agreement.
(f) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly received if so given) by hand delivery, telegram or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
9
<PAGE> 10
If to the Stockholder: Odyssey Partners L.P.
31 W. 52nd Street, 17th Fl.
New York, New York 10019
Facsimile: 212-708-0750
Attention: Mr. Stephen Berger
copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Facsimile: 212-310-8007
Attention: Simeon Gold, Esq.
If to Parent or Sub: c/o Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario
Canada L42 3C8
Facsimile: 905-566-3082
Attention: Mr. William R. Kerr
Vice President and Treasurer
copy to: Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario
Canada L42 3C8
Facsimile: 905-566-3457
Attention: Anthony J. Lafleur, Esq.
Vice President and
Associate General Counsel
and to: Cleary, Gottlieb, Steen & Hamilton
1 Liberty Plaza
New York, New York 10006
Facsimile: 212-225-3999
Attention: Victor I. Lewkow, Esq.
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
10
<PAGE> 11
(g) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(h) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(j) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the Court of Chancery in the State of Delaware or
the United States District Court for the Southern District of New York or any
court of the State of New York located in the City of New York in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or any other objection to
venue therein); provided, however, that such consent to jurisdiction is solely
for the purpose referred to in this paragraph (l) and shall not be deemed to be
a general submission to the jurisdiction of said Courts or in the States of
Delaware or New York other than for such purposes. EACH PARTY HERETO HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR
PROCEEDING.
11
<PAGE> 12
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
12
<PAGE> 13
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
NORTHERN TELECOM INC.
By /s/ Peter W. Currie
---------------------------------------------
Name: Peter W. Currie
Title: Attorney-in-Fact
ELDER CORPORATION
By /s/ A. J. Lafleur
---------------------------------------------
Name: A. J. Lafleur
Title: Vice President and Assistant Secretary
ODYSSEY PARTNERS L.P.
By /s/ Stephen Berger
---------------------------------------------
Name: Stephen Berger
Title: General Partner
As to Section 5(g) only:
ODYSSEY INVESTORS, INC.
By /s/ Stephen Berger
---------------------------------------------
Name: Stephen Berger
Title: Vice President
<PAGE> 14
SCHEDULE I TO
STOCK OPTION AGREEMENT
<TABLE>
<CAPTION>
Name of Stockholder Number of Option Shares Owned
- ------------------- -----------------------------
<S> <C>
Odyssey Partners L.P. 4,737,733
</TABLE>
<PAGE> 1
STOCK OPTION AGREEMENT
AGREEMENT dated as of May 13, 1996, among Northern Telecom
Inc., a Delaware corporation ("Parent"), Elder Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub") and E. R.
Yost (the "Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Sub and MICOM
Communications Corp., a Delaware corporation (the "Company"), are entering into
an Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein having the respective meanings given to them in the Merger Agreement),
pursuant to which Sub will be merged with and into the Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days) after
the execution and delivery of the Merger Agreement, Sub commence a cash tender
offer to purchase all outstanding shares of Company Common Stock (as defined in
Section 1) including all of the Option Shares (as defined in Section 2); and
WHEREAS, as an inducement and a condition to Parent and Sub
entering into the Merger Agreement, Parent and Sub have required that the
Stockholder agree, and the Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Acquisition Transaction" shall mean any merger,
consolidation, liquidation, dissolution, recapitalization, reorganization or
other business combination, acquisition or sale or other disposition of a
material amount of assets or securities, tender offer or exchange offer or any
other similar transaction involving the Company, its securities or any of its
material subsidiaries or divisions.
(b) "beneficially own" or "beneficial ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities beneficially owned by a Person
shall include securities beneficially owned by all other Persons with whom such
Person would constitute a "group" as within the meaning of Section 13(d)(3) of
the Exchange Act.
<PAGE> 2
(c) "Company Common Stock" shall mean at any time the common
stock, $0.0000001 par value, of the Company.
(d) "Person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization or other entity.
2. Tender of Option Shares. To induce Parent and Sub to
enter into the Merger Agreement and subject to terms and conditions set forth
herein:
(a) Stockholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer, not later
than the fifth business day after commencement of the Offer pursuant to Section
1.01 of the Merger Agreement and Rule 14d-2 under the Exchange Act, for
acceptance by Sub in the Offer, the number of shares of Company Common Stock set
forth opposite the Stockholder's name on Schedule I hereto (the "Existing
Shares" and, together with any shares of Company Common Stock acquired by the
Stockholder after the date hereof and prior to the termination of this Agreement
whether upon the exercise of options, warrants or rights, the conversion or
exchange of convertible or exchangeable securities, or by means of purchase,
dividend, distribution or otherwise, the "Option Shares"), beneficially owned by
it; provided that, if the purchase price per share of Company Common Stock of
the Offer is for any reason increased to an amount greater than the Purchase
Price (as defined in Section 4), then (i) the Stockholder will not tender the
Option Shares into the Offer after the first public announcement of such
increase, and (ii) if any Option Shares were tendered into the Offer prior to
such first public announcement, the Stockholder will promptly withdraw its
tender of such Option Shares. In the event that the Stockholder is not permitted
to tender (or is required to withdraw) the Option Shares pursuant to the proviso
to the immediately preceding sentence, Sub shall be obligated to, and will,
exercise the Stock Option on the first business day following the purchase of
any shares of Company Common Stock pursuant to the Offer, in which case
(notwithstanding the notice period set forth in Section 4(b)), no notice need be
given to the Stockholder, and the closing of the purchase of the Option Shares
(the "Closing") shall also take place on the first business day following the
purchase of Shares pursuant to the Offer, at 11:00 A.M. (New York time) at
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, NY, or at such
other time and place as the parties shall agree. The Stockholder hereby
acknowledges and agrees that Sub's obligation to accept for payment and pay for
Company Common Stock in the Offer, including the Option Shares, is subject to
the terms and conditions of the Offer.
(b) The Stockholder hereby agrees to permit Parent and Sub to
publish and disclose in the Offer Documents and, if approval of the stockholders
of the Company is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the Securities and Exchange Commission)
its identity and ownership of Company Common Stock and the nature of its
commitments, arrangements and understandings under this Agreement.
2
<PAGE> 3
3. Provisions Concerning Company Common Stock. The
Stockholder hereby agrees that during the period commencing on the date hereof
and continuing until the first to occur of (i) the Effective Time and (ii) the
termination of this Agreement as set forth in Section 8, at any meeting of the
holders of Company Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock, the Stockholder shall
vote (or cause to be voted) the Option Shares held of record or beneficially
owned by the Stockholder whether issued, heretofore owned or hereafter acquired,
(i) in favor of the approval and adoption of the agreement of merger (as such
term is used in Section 251 of the Delaware General Corporation Law) contained
in the Merger Agreement, (ii) in favor of any other action related to the Merger
or in furtherance of the transactions contemplated by the Merger Agreement and
this Agreement, (iii) against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement, and (iv) except as otherwise agreed to in writing in advance by Sub,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (x) any Acquisition Transaction; and (y)
(1) any change in a majority of the persons who constitute the Board of
Directors of the Company; (2) any change in the present capitalization of the
Company or any amendment of Company's Certificate of Incorporation or By-laws;
(3) any other material change in the Company's corporate structure or business;
and (4) any other action involving the Company or its subsidiaries which is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or otherwise adversely affect the Offer, the Merger and the
transactions contemplated by this Agreement and the Merger Agreement. The
Stockholder shall not enter into any agreement or understanding with any Person
the effect of which would be inconsistent with or violative of the provisions
and agreements contained in this Section 3.
4. Option.
(a) To induce Parent and Sub to enter into the Merger
Agreement and subject to the terms and conditions set forth herein, the
Stockholder hereby grants to Sub an irrevocable option (the "Stock Option") to
purchase the Option Shares at a purchase price per share of $12.00 (the
"Purchase Price"). If (i) the Offer is terminated, abandoned or withdrawn by
Parent or Sub (whether due to the failure of any of the conditions thereto or
otherwise), (ii) the Offer is consummated but Sub has not accepted for payment
and paid for the Option Shares (whether due to the proviso to the first sentence
of Section 2 or otherwise) or (iii) the Merger Agreement is terminated in
accordance with its terms (other than for the failure of Parent or Sub to
fulfill any material obligation under the Merger Agreement or by mutual
agreement of the parties thereto), the Stock Option shall, in any such case,
become exercisable, in whole but not in part, upon the first to occur of any
such event and remain exercisable, in whole but not in part, until the date
which is 60 days after the date of the occurrence of such event, so long as: (x)
all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), required for the purchase of the Stock Option
upon such exercise shall have expired or been waived, and (y) there shall not
then be in effect any preliminary or final injunction or other order issued by
any court or
3
<PAGE> 4
governmental, administrative or regulatory agency or authority prohibiting the
exercise of the Stock Option pursuant to this Agreement. In the event that the
Stock Option is not exercisable because the circumstances described in clauses
(x) and (y) do not exist, then the Stock Option shall be exercisable for a
period not exceeding an additional 30 days after the 60-day period referred to
in the immediately preceding sentence.
(b) In the event that Sub wishes to exercise the Stock
Option, and subject to Section 2(a), Sub shall send a written notice to the
Stockholder identifying the place and time for the Closing at least three
business days, and not more than five business days, prior to the Closing.
Subject to the terms and conditions of this Agreement, in reliance on the
representations, warranties and covenants of the Stockholder contained herein
and in full payment for the Option Shares, Sub will deliver at the Closing to
the Stockholder, by wire transfer of immediately available funds to an account
designated by the Stockholder at least one business day in advance, an aggregate
amount equal to the product of (x) the Purchase Price and (y) the number of
Option Shares. At the Closing, the Stockholder will deliver, or cause to be
delivered, to Sub certificates representing the Option Shares duly endorsed to
Sub or accompanied by stock powers duly executed by the Stockholder in blank,
together with any necessary stock transfer stamps properly affixed.
(c) Acquired Option Shares. In the event the Option Shares
are acquired by Sub pursuant to the exercise of the Option ("Acquired Option
Shares"), the Stockholder shall be entitled to receive, upon any subsequent
disposition, transfer or sale (other than to an affiliate who takes such
Acquired Option Shares subject to Sub's obligations under this Section) ("Sale")
of the Acquired Option Shares for which a binding contract of sale is entered
into within 180 days of the Closing, an amount in cash equal to 50% of the
excess (if any) of the aggregate proceeds received in the Sale (net of selling
commissions, if any) over the aggregate Purchase Price for the Acquired Option
Shares subject to such Sale. If any of the consideration received by Sub in such
Sale consists of securities, for purposes hereof the proceeds of such Sale shall
be deemed to be the net amount that would actually have been received in an
orderly sale of such securities commencing on the first business day following
actual receipt of such securities by Sub, in the written opinion of an
investment banking firm of national reputation selected by Sub and reasonably
satisfactory to the Stockholder. Any payment due hereunder shall be paid by Sub
to the Stockholder within five days after receipt of the Sale proceeds or, if
any of the consideration consists of securities, after the receipt of such
investment banking firm's written opinion to the parties. Nothing herein shall
create any duty by Sub to engage in a Sale of the Acquired Option Shares.
5. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Ownership of Option Shares. The Stockholder is the record
and beneficial owner of the number of Option Shares set forth opposite
Stockholder's name on Schedule I hereto. On the date hereof, the Existing Shares
set forth opposite the Stockholder's name on Schedule I hereto constitute all of
the Option Shares owned of record or beneficially owned by
4
<PAGE> 5
the Stockholder. The Stockholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Sections 2, 3 and 4
hereof, sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Existing Shares set
forth opposite the Stockholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement, subject in each case to certain
contractual rights of Odyssey Partners L.P.
(b) Power; Binding Agreement. The Stockholder has the legal
capacity, power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
the Stockholder is a party including, without limitation, any voting agreement,
stockholders' agreement or voting trust. This Agreement has been duly and
validly executed and delivered by the Stockholder and constitutes a valid and
binding agreement of the Stockholder, enforceable against the Stockholder in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which the Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby. The
Stockholder hereby revokes any and all proxies with respect to any of the Option
Shares.
(c) No Conflicts. Except for (i) filings and approvals under
the HSR Act or the Exchange Act, if applicable, (x) no filing with, and no
permit, authorization, consent or approval of, any state or federal public body
or authority or any Person is necessary for the execution of this Agreement by
the Stockholder and the consummation by the Stockholder of the transactions
contemplated hereby and (y) none of the execution and delivery of this Agreement
by the Stockholder, the consummation by the Stockholder of the transactions
contemplated hereby or compliance by the Stockholder with any of the provisions
hereof shall (1) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets may be bound, or (2) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to the Stockholder or
any of the Stockholder's properties or assets.
(d) No Finder's Fees. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(e) No Encumbrances. The Option Shares and the certificates
representing such Option Shares are now, and at all times during the term hereof
will be, held by the
5
<PAGE> 6
Stockholder, or by a nominee or custodian for the benefit of the Stockholder,
free and clear of all liens, claims, options, charges, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other legal or equitable rights or encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder. The transfer by the Stockholder of
the Option Shares to Sub in the Offer or to Parent hereunder (after payment in
full of the purchase price thereof) shall pass to and unconditionally vest in
Sub good and valid title to all Option Shares, free and clear of all claims,
liens, restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon the Stockholder's execution, delivery and
performance of this Agreement.
6. Additional Covenants of the Stockholder. In addition to
the covenants and agreements included elsewhere herein, the Stockholder
covenants and agrees as follows:
(a) No Solicitation. The Stockholder (and Persons acting on
behalf of the Stockholder) shall not directly or indirectly, initiate, solicit
(including by way of furnishing information), encourage or respond to or take
any other action knowingly to facilitate, any inquiries or the making of any
proposal by any Person (other than Parent or any affiliate of Parent) with
respect to, an Acquisition Transaction (an "Acquisition Proposal"), or enter
into or maintain or continue discussions or negotiate with any Person (other
than Parent or any affiliate of Parent) in furtherance of such inquiries or to
obtain any Acquisition Proposal, or agree to or endorse any Acquisition
Proposal, or authorize or permit any Person acting on behalf of the Stockholder
to do any of the foregoing. The Stockholder will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
Person conducted heretofore with respect to any of the foregoing. If the
Stockholder receives any inquiry or proposal regarding any Acquisition Proposal,
the Stockholder shall promptly inform Sub of that inquiry or proposal, the
details thereof, the identity of the Person making such inquiry or proposal and
shall in the case of written proposals or inquiries, furnish Sub with a copy of
such proposal or inquiry (and all amendments and supplements thereto).
(b) Restriction on Transfer, Proxies and Non-Interference.
Except as contemplated by this Agreement, the Stockholder shall not directly or
indirectly, (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to, or consent to the offer for sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Option Shares or any interest therein; (ii) grant any proxies or powers of
attorney, deposit any Option Shares into a voting trust or enter into a voting
agreement with respect to any Option Shares; or (iii) take any action that would
make any representation or warranty of the Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling the Stockholder from
performing the Stockholder's obligations under this Agreement.
6
<PAGE> 7
(c) Waiver of Appraisal Rights. The Stockholder hereby
irrevocably waives any rights of appraisal or rights to dissent from the Merger
that the Stockholder may have.
(d) Stop Transfer; Changes in Option Shares. The Stockholder
agrees with, and covenants to, Parent and Sub that the Stockholder shall not
request that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Option Shares,
unless such transfer is made in compliance with this Agreement. In the event of
a stock dividend or distribution, or any change in the Company Common Stock by
reason of any stock dividend, split-up, merger, recapitalization, combination,
conversion exchange of shares or the like (in each case with a record date prior
to the termination of this Agreement), (i) the term "Option Shares" shall be
deemed to refer to and include the Option Shares as well as all such stock
dividends and distributions and any securities into which or for which any or
all of the Option Shares may be changed or exchanged and such dividends,
distributions and securities, as the case may be, shall be paid to Sub at the
Closing or promptly following the receipt of such dividend or distribution, if
the Closing theretofor shall have occurred and (ii) the number and kind of
shares subject to this Agreement and Purchase Price shall be appropriately
adjusted to reflect changes made in the Company Common Stock so that Sub shall
receive, upon exercise of the Stock Option and payment of the Purchase Price,
the number and class of shares, other securities, property or cash that Sub
would have received in respect of the Option Shares if the Stock Option had been
exercised and the Option Shares had been issued to Sub immediately prior to such
event or the record date therefor, as applicable.
(e) Confidentiality. The Stockholder recognizes that
successful consummation of the transactions contemplated by this Agreement may
be dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof, the Stockholder
hereby agrees not to disclose or discuss such matters with anyone not a party to
this Agreement (other than the Stockholder's counsel and advisors, if any)
without the prior written consent of Sub, except for filings required pursuant
to the Exchange Act and the rules and regulations thereunder or disclosures the
Stockholder's counsel advises are necessary in order to fulfill the
Stockholder's obligations imposed by law, in which event the Stockholder shall
give notice of such disclosure to Sub as promptly as practicable so as to enable
Sub to seek a protective order from a count of competent jurisdiction with
respect thereto.
7. Termination. This Agreement (other than Section 4(c) if,
and to the extent applicable) shall terminate, and no party shall have any
rights or obligations hereunder and this Agreement shall become null and void
and have no effect from and after the last date on which the Stock Option is
exercisable pursuant to Section 4.
8. Miscellaneous.
(a) Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or appropriate to
7
<PAGE> 8
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement.
(b) Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Merger Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understanding, both written and oral, between the parties with
respect to the subject matter hereof. This Agreement is not intended for the
benefit of or intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
(c) Certain Events. The Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Option Shares and
shall be binding upon any Person to which legal or beneficial ownership of such
Option Shares shall pass, whether by operation of law or otherwise, including,
without limitation, the Stockholder's heirs, guardians, administrators or
successors. Notwithstanding any transfer of Option Shares, the transferor shall
remain liable for the performance of all obligations under this Agreement of the
transferor.
(d) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties provided that Parent and Sub may assign, in their sole discretion, their
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Parent, although no such assignment shall relieve Parent or Sub of
their obligations hereunder if such assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
relevant parties hereto; provided that Schedule I hereto may be supplemented by
Parent and Sub by adding the name and other relevant information concerning any
stockholder of the Company who agrees to be bound by the terms of this Agreement
without the agreement of any other party hereto, and thereafter such added
stockholder shall be treated as a "Stockholder" for all purposes of this
Agreement.
(f) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder: Mr. E. R. Yost
Six Ocean Course Drive
Kiaweh Island, South Carolina
Facsimile: (803) 768-5623
8
<PAGE> 9
If to Parent or Sub: c/o Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario
Canada L42 3C8
Facsimile: 905-566-3082
Attention: Mr. William R. Kerr
Vice President and Treasurer
copy to: Northern Telecom Limited
3 Robert Speck Parkway
Mississauga, Ontario
Canada L42 3C8
Facsimile: 905-566-3457
Attention: Anthony J. Lafleur, Esq.
Vice President and
Associate General Counsel
and to: Cleary, Gottlieb, Steen & Hamilton
1 Liberty Plaza
New York, New York 10006
Facsimile: 212-225-3999
Attention: Victor I. Lewkow, Esq.
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(h) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
9
<PAGE> 10
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(j) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the Court of Chancery in the State of Delaware or
the United States District Court for the Southern District of New York or any
court of the State of New York located in the City of New York in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or any other objection to
venue therein); provided, however, that such consent to jurisdiction is solely
for the purpose referred to in this paragraph (l) and shall not be deemed to be
a general submission to the jurisdiction of said Courts or in the States of
Delaware or New York other than for such purposes. EACH PARTY HERETO HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR
PROCEEDING.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
10
<PAGE> 11
IN WITNESS WHEREOF, Parent, Sub and the Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
NORTHERN TELECOM INC.
By /s/ Peter W. Currie
--------------------------------------------------
Name: Peter W. Currie
Title: Attorney-in-Fact
ELDER CORPORATION
By /s/ A. J. Lafleur
--------------------------------------------------
Name: A. J. Lafleur
Title: Vice President and Assistant Secretary
/s/ E. R. Yost
--------------------------------------------------
E. R. Yost
<PAGE> 12
SCHEDULE I TO
STOCK OPTION AGREEMENT
<TABLE>
<CAPTION>
Name of Stockholder Number of Option Shares Owned
- ------------------- -----------------------------
<S> <C>
E. R. Yost 413,412
</TABLE>
<PAGE> 1
CONFIDENTIAL AGREEMENT
February 27, 1996
MICOM Communications Corp.
4100 Los Angeles Avenue
Simi Valley, CA 93063-3397
Dear Sirs:
In connection with our interest in a possible transaction involving us
and MICOM Communications Corp. (the "Company"), the Company is furnishing us
with certain information which is either non-public, confidential or proprietary
in nature. All information furnished to us, our directors, officers, employees,
agents or representatives, including without limitation attorneys, accountants,
consultants and financial advisors (collectively, "representatives"), by the
Company, or any of its representatives, and all analyses, compilations, data,
studies or other documents prepared by us or our representatives containing or
based in whole or in part on any such furnished information or reflecting our
review of, or interest in, the Company is hereinafter referred to as the
"Information." In consideration of our being furnished with the Information, we
agree that:
1. The Information will be kept confidential and will not, without the
prior written consent of the Company, be disclosed by us or our representatives
to any other person, in any manner whatsoever, in whole or in part, and will
not be used by us or our representatives directly or indirectly for any purpose
other than evaluating the transactions referred to above. Moreover, we agree to
transmit the Information only to those of our representatives who need to know
the Information for the purpose of evaluating the transactions referred to
above, who are informed by us of the confidential nature of the Information
and who agree to be bound by the terms of this Agreement. We agree to notify
the Company prior to the delivery or disclosure of any Information to our
representatives, as to the identity of such representatives. We will be
responsible for any breach of this Agreement by our representatives. In that
regard, without the prior consent of the Company, we will not disclose any of
the Information to any entity that is our affiliate (as such term is defined in
Rule 12B-2 of the Securities Exchange Act of 1934, as amended) except with
respect to Northern Telecom Inc. and Bell Northern Research Ltd.
2. Without the prior written consent of the Company, except to the
extent provided by this Agreement, we and our representatives will not disclose
to any other person the fact that the Information has been made available, that
discussions or negotiations are taking place concerning a possible transaction
involving us and the Company, or any of the terms, conditions or other facts
with respect to any such possible transaction, including the status thereof,
except as required by law and then only with proper prior written notice as
soon as possible to the Company in order to provide the Company with a
reasonable opportunity to evaluate the legal necessity and content of the
proposed disclosures. The term "person" as used in this letter shall be
broadly interpreted to include without limitation any corporation, company,
government agency, group, partnership or individual.
<PAGE> 2
MICOM Communications Corp.
February 27, 1996
Page 2
3. The Information and all copies thereof will be destroyed or
returned immediately without retaining any copies thereof, if we do not within
a reasonable time proceed with a transaction involving the Company, or upon
request by the Company at any time. Our obligation of confidentiality shall
expire three years after the Information is destroyed or returned.
4. This Agreement shall be inoperative as to such portions of the
Information which (i) are or become generally available to the public other than
as a result of a disclosure by us or our representatives; (ii) become available
to us on a non-confidential basis from a source other than the Company or one
of its representatives which has represented to us (and which we have no
reason to believe after due inquiry) is entitled to publicly disclose it; or
(iii) are known to us on a non-confidential basis prior to their disclosure to
us by the Company or one of its representatives.
5. Until the earlier of (i) a definitive agreement regarding the
acquisition of substantially all of the assets or stock of the Company by us
has been executed; (ii) an acquisition of substantially all of the assets or
stock of the Company by a third party has been consummated; or (iii) two years
from the date of this Agreement, we agree not to initiate or maintain contact
(except for those contacts made in the ordinary course of our business) with
any officer, director or employee of the Company regarding the Company's
business, prospects, operations or finances, except with the express permission
of the Company acting through its authorized representative. It is understood
that the Company or its authorized representatives will arrange for appropriate
contacts for due diligence purposes. All (i) communications regarding a
possible transaction; (ii) requests for additional Information; (iii) requests
for facility tours or management meetings; and (iv) discussions or questions
regarding procedures, will be submitted or directed to the Company or its
representatives.
6. We agree that, without the Company's prior written consent, we will
not, for a period of one year from the date of this Agreement, directly or
indirectly, knowingly solicit the employment of any key employee, officer or
senior manager of the Company or any former key employee, officer or senior
manager whose employment with the Company has ceased within six months of such
solicitation.
7. In consideration of the Information being furnished to us, we agree
that, without the prior written consent of the Board of Directors of the
Company, for a period of two years from the date of this Agreement, we will not
(i) acquire or offer or agree to acquire, directly or indirectly, by purchase
or otherwise, any securities or material assets (or direct or indirect rights
or options to acquire any such securities or assets) of the Company; (ii)
enter, agree to enter or propose to enter into, directly or indirectly, any
merger or business combination involving the Company; (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" (as such
terms are used in the rules of the Securities and Exchange Commission) or
consent to vote, or seek to advise or influence any person or entity with
respect to the voting of, any voting securities of the Company; (iv) make any
public announcement with respect to any extraordinary transactions involving the
Company or its securities or assets; (v) form, join or in any way participate in
a "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) with respect to
<PAGE> 3
MICOM Communications Corp.
February 27, 1996
Page 3
any of the foregoing; or (vi) otherwise seek to influence or control, in any
manner whatsoever, the Board of Directors or the business, management, or
policies of the Company.
8. We understand that the Company has endeavored to include in the
Information those materials which it believes to be suitable and relevant for
the purpose of our evaluation, but we acknowledge that neither the Company nor
any of its representatives or advisors makes any representation or warranty as
to the accuracy or completeness of the Information. We agree that neither the
Company nor any of its representatives or advisors shall have any liability to
us or to any of our representatives as a result of the use of the Information
by us and our representatives, and we understand that only those particular
representations and warranties which may be made by the Company to the
purchaser of the assets, stock or business of the Company in a definitive
agreement, when, as and if it is executed, and subject to such limitations and
restrictions as may be specified in such definitive agreement, shall have any
legal effect.
We hereby acknowledge that we are aware and that we will advise our
directors, officers, employees and representatives who are informed as to the
matters which are the subject of this Agreement, that the United States
securities laws prohibit any person who has received from an issuer material,
non-public information concerning the issuer from purchasing or selling
securities of such issuer or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell securities.
9. In the event that we or anyone to whom we transmit the
Information pursuant to this Agreement are requested in connection with legal
proceedings or become legally compelled (by oral questions, interrogatories,
request for information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the Information, we will provide the Company
with prompt written notice so that the Company may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this
Agreement. In the event that such protective order or other remedy is not
obtained, or that the Company waives compliance with the provisions of this
Agreement, we will furnish only that portion of the Information which is legally
required and will exercise our best efforts to obtain reliable assurance that
confidential treatment will be accorded the Information.
10. We agree that money damages would not be a sufficient remedy for
any breach of this Agreement by us or our representatives and the Company shall
be entitled to seek, in a court of appropriate jurisdiction, equitable relief,
including injunction and specific performance, in the event of any breach of
the provisions of paragraphs 1, 2, 3, 5, 6, 7, or 9 of this Agreement. Such
remedies shall not be deemed to be the exclusive remedies for a breach of this
Agreement by us or our representatives but shall be in addition to all other
remedies available at law or equity. We agree to waive, and to use our best
efforts to cause our directors, officers, employees or agents to waive, any
requirement for the accounting or posting of any bond in connection with such
remedy. We understand and agree that in the event that there is a sale of a
controlling interest in the Company, the acquiror of such interest shall, should
the Company so elect, also acquire all rights of the Company pursuant
<PAGE> 4
MICOM Communications Corp.
February 27, 1996
Page 4
to this Agreement including without limitation, the right to enforce all terms
of this Agreement. We understand that this Agreement is for the benefit of the
Company and the Company shall have the right to enforce all the terms of this
Agreement.
11. It is further understood and agreed that no failure or delay by
the Company in exercising any right, power or privilege under this Agreement
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercises of any right, power or
privileges hereunder.
12. This Agreement shall be governed and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed within such state.
Very truly yours,
Northern Telecom Limited
By: /s/ KLAUS BUECHNER
------------------
Title: GVP - Multimedia Networks
------------------------
