-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WlisP29VGs7eFTg89rqyqGQMyEtNOAbeCuidSTFfU7CPCjD4dldOMkpjA7znYPn4 nMnoqI8WyHyF6yI0dgpEsA== 0000950123-96-002545.txt : 19960520 0000950123-96-002545.hdr.sgml : 19960520 ACCESSION NUMBER: 0000950123-96-002545 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19960517 SROS: NONE GROUP MEMBERS: ELDER CORP GROUP MEMBERS: NORTHERN TELECOM INC. GROUP MEMBERS: NORTHERN TELECOM LIMITED SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MICOM COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000920611 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 770191345 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-43391 FILM NUMBER: 96569304 BUSINESS ADDRESS: STREET 1: 4100 LOS ANGELES AVE CITY: SIMI VALLEY STATE: CA ZIP: 93063 BUSINESS PHONE: 8055838600 MAIL ADDRESS: STREET 1: 4100 LOS ANGELES AVE CITY: SIMI VALLEY STATE: CA ZIP: 93063 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MICOM COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000920611 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 770191345 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-43391 FILM NUMBER: 96569305 BUSINESS ADDRESS: STREET 1: 4100 LOS ANGELES AVE CITY: SIMI VALLEY STATE: CA ZIP: 93063 BUSINESS PHONE: 8055838600 MAIL ADDRESS: STREET 1: 4100 LOS ANGELES AVE CITY: SIMI VALLEY STATE: CA ZIP: 93063 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ELDER CORP CENTRAL INDEX KEY: 0001014766 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 621640287 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: NORTHERN TELCOM PLAZA STREET 2: 200 ATHENS WAY CITY: NASHVILLE STATE: TN ZIP: 37220 BUSINESS PHONE: 6157344000 MAIL ADDRESS: STREET 1: NORTHERN TELECOM PLAZA STREET 2: 200 ATHENS WAY CITY: NASHVILLE STATE: TN ZIP: 37220 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ELDER CORP CENTRAL INDEX KEY: 0001014766 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 621640287 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: NORTHERN TELCOM PLAZA STREET 2: 200 ATHENS WAY CITY: NASHVILLE STATE: TN ZIP: 37220 BUSINESS PHONE: 6157344000 MAIL ADDRESS: STREET 1: NORTHERN TELECOM PLAZA STREET 2: 200 ATHENS WAY CITY: NASHVILLE STATE: TN ZIP: 37220 SC 14D1 1 SCHEDULE 14D1 AND SCHEDULE 13D 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- TRANSACTION VALUATION* AMOUNT OF FILING FEE** - ------------------------------------------------------------------------------------------------- $137,439,036.00 $27,487.81 - ------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------
* 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. Amount Previously Paid: Not applicable. Filing Party: Form or Registration No.: Date Filed
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 SCHEDULE 14D-1 - -------------------------- ----------------------- CUSIP No. 59478P 10 3 Page 2 of 8 Pages - -------------------------- ----------------------- - ------------------------------------------------------------------------------------------------ NAME OF REPORTING PERSONS: 1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Elder Corporation 62-1640287 - ------------------------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / 2 (See Instructions) (b) / / - ------------------------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------------------------ SOURCES OF FUNDS (See Instructions) 4 AF - ------------------------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(e) or 2(f) / / - ------------------------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING 7 PERSON 5,151,145 - ------------------------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES (See Instructions) / / - ------------------------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 9 45.0% - ------------------------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 10 CO - ------------------------------------------------------------------------------------------------
3 SCHEDULE 14D-1 - -------------------------- ----------------------- CUSIP No. 59478P 10 3 Page 3 of 8 Pages - -------------------------- ----------------------- - ------------------------------------------------------------------------------------------------ NAME OF REPORTING PERSONS: 1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Northern Telecom Inc. 04-2486332 - ------------------------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / 2 (See Instructions) (b) / / - ------------------------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------------------------ SOURCES OF FUNDS (See Instructions) 4 WC - ------------------------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(e) or 2(f) / / - ------------------------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING 7 PERSON 5,151,145 - ------------------------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES (See Instructions) / / - ------------------------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 9 45.0% - ------------------------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 10 HC, CO - ------------------------------------------------------------------------------------------------
4 SCHEDULE 14D-1 - -------------------------- ----------------------- CUSIP No. 59478P 10 3 Page 4 of 8 Pages - -------------------------- ----------------------- - ------------------------------------------------------------------------------------------------ NAME OF REPORTING PERSONS: 1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Northern Telecom Limited 62-1262580 - ------------------------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / 2 (See Instructions) (b) / / - ------------------------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------------------------ SOURCES OF FUNDS (See Instructions) 4 Not Applicable - ------------------------------------------------------------------------------------------------ CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(e) or 2(f) / / - ------------------------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Canada - ------------------------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING 7 PERSON 5,151,145 - ------------------------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES 8 CERTAIN SHARES (See Instructions) / / - ------------------------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 9 45.0% - ------------------------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 10 HC, CO - ------------------------------------------------------------------------------------------------
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 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 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 8 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO. - ------- --------------------------------------------------------------------------- -------- (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
Page 8 of 8 pages EX-99.A1 2 OFFER TO PURCHASE 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 2 TABLE OF CONTENTS
PAGE ---- 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
Annex I -- Directors And Executive Officers of Purchaser, Parent, Nortel And BCE i 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 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. 2 5 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 3 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. 4 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 5 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 6 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 7 10 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 8 11 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 12
HIGH LOW -------- -------- 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
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 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 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:
YEAR ENDED MARCH 31, ------------------------------- 1995 1994 1993 ------- ------- ------- 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)*
- --------------- + 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:
MARCH 31, MARCH 31, 1995 1994 --------- --------- Total Assets................................................... $65,347 $55,381 Total Liabilities.............................................. 21,054 37,919 Stockholders' Equity........................................... 44,293 17,462
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 15 MICOM COMMUNICATIONS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
MARCH 31, MARCH 31, 1996 1995 --------- --------- 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 ======= =======
13 16 MICOM COMMUNICATIONS CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) THREE MONTHS ENDED YEAR ENDED --------------------- --------------------- MARCH 31, MARCH 31, MARCH 31, MARCH 31, 1996 1995 1996 1995 --------- --------- --------- --------- 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 ======= ======= ======= =======
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:
YEAR ENDED MARCH 31, ------------------------ 1997 1998 1999 ------ ------ ------ 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
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 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 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 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 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. 18 21 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 19 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 20 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 21 24 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, 22 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, 23 26 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 24 27 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 25 28 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 26 29 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): 27 30 (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 28 31 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. 29 32 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, 30 33 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 31 34 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 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 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 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 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.
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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.
1 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.
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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.
2 40
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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.
3 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.
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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.
4 42
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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).
5 43
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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).
6 44
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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).
7 45
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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.
8 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.
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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.
10 47
PRESENT PRINCIPAL OCCUPATION NAME, CITIZENSHIP AND BUSINESS ADDRESS OR EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY - ------------------------------------------ ------------------------------------------------- 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.
11 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 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
------------------------ 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 EX-99.A2 3 FORM OF LETTER OF TRANSMITTAL 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 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
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. 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 - ------------------------------------------------------------------------------------------------------------------ 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: ------------------------------------------------------------------------------------------------------------------
(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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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: 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). 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. 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) - ------------------------------------------------------------ 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 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. 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. 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. 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. 12 - ---------------------------------------------------------------------------------------------------------- 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) - ----------------------------------------------------------------------------------------------------------
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. 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. ______________________________, 1996 Signature Date Name (Please Print)
- -------------------------------------------------------------------------------- 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 EX-99.A3 4 FORM OF NOTICE OF GUARANTEED DELIVERY 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 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
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 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. 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:
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. Name of Firm: (AUTHORIZED SIGNATURE) Address: Name: (PLEASE TYPE OR PRINT) Title: (INCLUDE ZIP CODE) Area Code and Tel. No.: Date:
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. EX-99.A4 5 FORM OF BROKER DEALER LETTER 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. 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. EX-99.A5 6 FORM OF CLIENT LETTER 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. 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. 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. EX-99.A6 7 SUMMARY ADVERTISEMENT 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. 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. 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 EX-99.A7 8 TAX GUIDELINES 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. - --------------------------------------------------------- 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
- -------------------------------------------------------------------------------- (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. 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 EX-99.A8 9 PRESS RELEASE - MAY 13, 1996 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 - 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 - 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 bob.kaye@nortel.com Or visit Nortel's web-site at http://www.nortel.com EX-99.A9 10 PRESS RELEASE - MAY 17, 1996 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 - 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,kaye@nortel.com EX-99.C1 11 AGREEMENT AND PLAN OF MERGER 1 EXECUTION COPY AGREEMENT AND PLAN OF MERGER AMONG NORTHERN TELECOM INC. ELDER CORPORATION AND MICOM COMMUNICATIONS CORP. Dated as of May 13, 1996 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 i 3 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 ii 4 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 iii 5 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 6 (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 2 7 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. 3 8 (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 4 9 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." 5 10 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 6 11 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 7 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 8 13 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 9 14 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 10 15 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 11 16 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. 12 17 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 13 18 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 14 19 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 15 20 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; 16 21 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. 17 22 (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. 18 23 (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. 19 24 (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 20 25 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. 21 26 (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. 22 27 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; 23 28 (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; 24 29 (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, 25 30 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. 26 31 (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 27 32 (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. 28 33 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. 29 34 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 30 35 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 31 36 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). 32 37 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 33 38 (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 34 39 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; 35 40 (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 36 41 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 37 42 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 38 43 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. 39 44 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 40 45 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 41 46 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 42 47 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). 43 48 (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. 44 49 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. 45 50 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; 46 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 47 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 48 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 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 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. 51 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 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 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 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 A-2 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 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 EX-99.C2 12 STOCK OPTION AGREEMENT - ODYSSEY 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 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 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 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 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 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 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 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 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 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 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 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 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 14 SCHEDULE I TO STOCK OPTION AGREEMENT
Name of Stockholder Number of Option Shares Owned - ------------------- ----------------------------- Odyssey Partners L.P. 4,737,733
EX-99.C3 13 STOCK OPTION AGREEMENT - E.R. YOST 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. 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 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 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 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 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 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 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 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 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 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 12 SCHEDULE I TO STOCK OPTION AGREEMENT
Name of Stockholder Number of Option Shares Owned - ------------------- ----------------------------- E. R. Yost 413,412
EX-99.C4 14 CONFIDENTIALITY AGREEMENT 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. 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 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 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 ------------------------ -----END PRIVACY-ENHANCED MESSAGE-----