Company Name: Black Box Inc.
Public Availability Date:  June 26, 1990

INQUIRY LETTER

WEIL, GOTSHAL & MANGES
767 FIFTH AVENUE
NEW YORK, N.Y. 10153
(212) 310-8000

June 25, 1990

Section 2(4)
Section 4(2)
Rule 152
Regulation D
Rule 10b-6
Rule 13e-4
Rule 14e-1
Regulation 14

June 25, 1990

William E. Morley, Esq.

Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Re: Black Box Incorporated

Gentlemen:

On behalf of our client, Black Box Incorporated, a Delaware corporation (the "Company"), we request that the Division of Corporation Finance (the "Division") concur with our view with respect to each of the following, or, in the alternative, advise us that the Division will not recommend any enforcement action to the Securities and Exchange Commission (the "Commission") if the following transactions are consummated as described herein, in reliance on our view that:

(i) if the Company files a registration statement relating to an initial public offering (the "IPO") of its common stock after the Company, the Participating Noteholders (as defined herein), holders of the Companys Senior Preferred (as defined herein) and Odyssey Partners, L.P. ("Odyssey") have executed a recapitalization agreement (the "Recapitalization Agreement") which involves the private placement to such securityholders of certain securities of the Company and MICOM Communications Corp., a wholly owned subsidiary of the Company ("MCC"), the "safe harbor" provisions of Rule 152 under the Securities Act of 1933, as amended (the "Securities Act"), will be deemed to be satisfied and such private placements will not be integrated with the IPO;

(ii) if the Company files the registration statement relating to the IPO after the Company and certain investors have negotiated and executed definitive securities purchase agreements pursuant to which the Company will sell its convertible senior subordinated debentures (the "Convertible Debentures") to such investors in a private placement, with the pricing terms therefor to be governed by a formula based upon the pricing of the IPO, the "safe harbor" provisions of Rule 152 under the Securities Act will be deemed to be satisfied and such private placement will not be integrated with the IPO;

(iii) if the Company does not negotiate and execute definitive purchase agreements relating to the private placement of the Convertible Debentures prior to the filing of the registration statement for the IPO (and therefore the Rule 152 safe harbor may not be available), as long as the Convertible Debentures are sold in a concurrent transaction only to (a) a limited number (expected to be 35 or fewer) of purchasers, which will consist of "qualified institutional buyers" (within the meaning of such term under Rule 144A under the Securities Act) and not more than three Participating Institutional Noteholders (as defined herein), or (b) not more than four purchasers, all of which are "accredited investors" within the meaning of such term under paragraph (a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) of Rule 501 under the Securities Act ("Institutional Investors") plus up to three Participating Institutional Noteholders, in either case in a transaction which would be a valid private placement if viewed separately, such private placement of Convertible Debentures would not be deemed to be part of, or integrated with, such IPO, and the offer and sale of the Convertible Debentures, even if consummated simultaneously with the consummation of the IPO, would not require registration under the Securities Act;

(iv) if after filing the registration statement for the IPO the Company commences a private placement of the Convertible Debentures to investors as described above, and if the Company subsequently seeks to register the offer and sale of the Convertible Debentures, the subsequent filing by the Company of a registration statement relating to the offer and sale of the Convertible Debentures would be within the safe harbor provided by Rule 152 under the Securities Act;

(v) if pursuant to the Recapitalization Agreement, (a) the Company agrees to cause MCC to issue to the Company: MCC Notes, MCC Senior Preferred, MCC Junior Preferred and MCC Common Stock (as such terms are defined herein, collectively the "MCC Securities"), and (b) the Company delivers (x) MCC Notes, MCC Senior Preferred and MCC Common Stock to the holders of the Notes (as defined herein) who execute the Recapitalization Agreement, (y) MCC Senior Preferred to the holders of the Companys Senior Preferred and (z) MCC Junior Preferred to Odyssey, MCC will be deemed to be the "issuer" (as defined in Section 2(4) of the Securities Act) of the MCC Securities for purposes of determining the applicability of any exemption from the registration requirements of the Securities Act for delivery of the MCC Securities pursuant to the Recapitalization Agreement;

(vi) if pursuant to the Recapitalization Agreement, (a) certain holders of Notes who execute the Recapitalization Agreement elect to receive an additional cash payment in lieu of MCC Notes, MCC Senior Preferred and MCC Common Stock and (b) Odyssey agrees in the Recapitalization Agreement to provide the additional consideration needed by the Company to satisfy such election by purchasing such MCC Securities from the Company at the closing under the Recapitalization Agreement, (x) MCC will be deemed to be the "issuer" (as defined in Section 2(4) of the Securities Act) of such MCC Securities for purposes of determining the applicability of any exemption from the registration requirements of the Securities Act for delivery of such MCC Securities to Odyssey pursuant to the Recapitalization Agreement, (y) solely for purposes of Rule 10b-6 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the MCC Spinoff (as defined herein) would not be deemed to be a "distribution" (as such term is defined in Rule 10b-6) of such MCC Securities and (z) if the Amended Exchange Offer constitutes a "distribution" for purposes of Rule 10b-6, the Division of Market Regulation would not recommend any enforcement action to the Commission under Rule 10b-6 if the Odyssey Placement (as defined herein) is consummated as described herein;

(vii) the elements of the Recapitalization relating to the Senior Preferred and the Junior Preferred do not constitute an issuer tender offer or exchange offer for the Senior Preferred or the Junior Preferred, respectively, for purposes of Rule 13e-4 and Regulation 14E under the Exchange Act.

We also request that the Division advise us that it will not recommend any enforcement action to the Commission if the MCC Spinoff is consummated without registration under the Securities Act as described herein and if the Company consummates its Amended Exchange Offer (as defined herein) for the Notes as described herein.

In accordance with Release No. 33-6269 under the Securities Act, an original and seven copies of this letter are enclosed.

Background

The Company was acquired in September 1988 pursuant to a tender offer and subsequent merger by a corporation organized at the direction of Odyssey Partners, L.P. ("Odyssey"), for a purchase price, including fees, expenses and refinancing of existing debt, totaling approximately $334.0 million (the "Acquisition"). The Companys capital structure, as of March 31, 1990, was as follows:

(i) approximately $80.5 million in senior bank financing;

(ii) $110 million aggregate principal amount of Series A and Series B Senior Subordinated Increasing Rate Notes (collectively, the "Notes") beneficially owned by approximately 33 holders, all of which the Company believes are accredited investors and seven of which the Company believes are individuals;

(iii) approximately $5.4 million of other indebtedness to third parties;

(iv) approximately $32 million aggregate liquidation preference of Series A and Series B Senior Increasing Rate Preferred Stock, par value $1.00 per share (collectively, the "Senior Preferred"), which the Company believes is beneficially owned by four institutions;

(v) approximately $11.5 million aggregate liquidation preference of Junior Preferred Stock, par value $1.00 per share (the "Junior Preferred"), approximately 84% of which is beneficially owned by Odyssey and the balance of which is owned by approximately 40 of the Companys employees (fewer than 35 of whom the Company believes are not accredited investors); and

(vi) Common stock, par value $.01 per share (the "Common Stock"), beneficially owned by Odyssey (approximately 65%), Chesterfield Investments, a California limited partnership one of the general partners of which is an affiliate of Drexel Burnham Lambert Group, Inc. and Drexel Burnham Lambert Incorporated (approximately 20%), an affiliate of Manufactures Hanover Trust Company (approximately 1%) and approximately 50 of the Companys employees or former employees (approximately 14% and greater than 35 of whom the Company believes are not accredited investors).

The Company had been a reporting company pursuant to Section 15(d) of the Exchange Act because pursuant to the terms of registration rights agreements, each dated as of September 15, 1988, a "shelf" registration statement on Form S-1 under the Securities Act (No. 33-29363, as amended, the "Registration Statement"), with respect to the Companys Notes and Senior Preferred was declared effective on November 15, 1989 (the "Effective Date"). However, as of the beginning of the Companys most recent fiscal year, the Notes and the Senior Preferred were held of record by fewer than 300 persons in the aggregate. Accordingly, although the Company is required to file its annual report on Form 10-K for its fiscal year ended April 1, 1990, it no longer is a reporting company.

Subsequent to the Effective Date, members of the Companys management considered and analyzed various refinancing and business alternatives for the Company, including a plan of recapitalization. The Company has been in technical default under its senior bank financing agreements since the end of March 1990 and defaulted on certain principal and interest payments thereunder on June 1, 1990. In addition, the Company failed to make a required interest payment on the Notes on June 15, 1990.

On April 20, 1990, the Company commenced an effort to refinance its outstanding subordinated indebtedness, amend the terms of its outstanding preferred stock and recapitalize its capital structure through a series of related transactions which included, among other things, an exchange offer and related consent solicitation with respect to the Notes (the "Exchange Offer") and a consent solicitation with respect to its Senior Preferred (the "Senior Preferred Consent Solicitation").

In connection with the Exchange Offer, the Company distributed an Exchange Offer Circular and Consent Statement pursuant to which it sought to exchange all of its issued and outstanding Notes for new debentures and to effect certain amendments to the indenture relating to the Notes (the "Indenture"). In connection with the Senior Preferred Consent Solicitation, the Company also distributed a Consent Statement-Confidential Private Placement Memorandum pursuant to which it sought the consent of the holders of its Senior Preferred to amendments affecting certain terms of the Senior Preferred including, among others, reductions in the rate of accrual of dividends and implementation of certain conversion and redemption rights. The Company proposed that such conversions and redemptions be effected automatically upon the consummation by the Company of an initial public offering of Common Stock which, among other things, (a) results in gross proceeds to the Company of at least $40 million and (b) is consummated on or prior to July 31, 1991.

The Company also desired to implement changes to certain terms of its Junior Preferred which, among other things, would have (a) added thereto a mandatory conversion feature (which also would have been effected upon the consummation of such an initial public offering) and (b) permitted the Company to create, and to issue to Odyssey and certain of Odysseys related persons and entities, in exchange for the shares of Junior Preferred owned by them, a new series of junior preferred stock having substantially similar terms as the existing Junior Preferred (with the exception of certain redemption rights).

As a result of the commencement of the Exchange Offer, Noteholders holding approximately 76% of the outstanding principal amount of Notes formed a Bondholders Steering Committee (the "Committee") and, at the Companys expense, retained counsel and financial advisors of their choice. The Committees legal and financial advisors promptly commenced a substantial due diligence review of the Company, including meetings with members of the Companys management and visits to the Companys facilities. As a result of long, detailed and complicated negotiations among the Company, the Committee and their respective legal and financial advisors, the Company proposes to distribute an Amended and Restated Exchange Offer Circular and Solicitation of Consents to all of its existing securityholders (the "Offering Materials") and to extend its Exchange Offer in accordance with Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In the Offering Materials, the Company would propose to enter into a Recapitalization Agreement with the holders of at least such percentage of the outstanding Senior Preferred as is required to effect certain amendments to the Certificates of Designation for the Senior Preferred, Odyssey (which holds such percentages of the outstanding Junior Preferred and Common Stock as are required to effect certain amendments to the Companys Restated Certificate of Incorporation, as amended (the "Charter")), and the holders of not less than a significant percentage (expected to be 90%) of the outstanding principal amount of the Notes. The Company would not enter into the Recapitalization Agreement with any of its securityholders until the expiration of the Companys Amended Exchange Offer and Consent Solicitation (the "Amended Exchange Offer"), which would be at least 10 business days following the distribution of the Offering Materials. Any Noteholder that surrendered its Notes in connection with the Companys original Exchange Offer would be required to submit a new letter of transmittal (which will be distributed with the Offering Materials) in order for a surrender of its Notes to be effective in the Amended Exchange Offer.

In order to induce Noteholders to execute the Recapitalization Agreement, the Company will issue to the Noteholders who execute the Recapitalization Agreement (the "Participating Noteholders"), promptly following the execution of the Recapitalization Agreement, an aggregate number of shares of Common Stock which will represent 5% of the Companys outstanding Common Stock as of the date of execution of the Recapitalization Agreement after giving effect to such issuance (the "Initial Shares"). The Initial Shares will be distributed pro rata among all Participating Noteholders.

Upon consummation of the Amended Exchange Offer (including execution of the Recapitalization Agreement), all of the Notes surrendered by Participating Noteholders will be legended to provide that such Notes are the subject of the Recapitalization Agreement with the Company pursuant to which, among other things, upon the occurrence of certain events, such Notes are required to be surrendered to the Company for consideration which is set forth in such Recapitalization Agreement. The Recapitalization Agreement also will provide that such Notes may not be sold or transferred in the absence of an effective registration statement under the Securities Act or an applicable exemption therefrom and will require the Noteholder to provide the Company with a satisfactory opinion of counsel to the foregoing effect. In addition, a legend to the foregoing effect also will be placed on such surrendered Notes. The surrendered Notes, as so legended, thereupon promptly will be returned to the Participating Noteholders.

It is anticipated that the Recapitalization Agreement will provide for the following:

1. Notes.

The Company will agree that, subject to its ability to obtain the financing described below, the restructuring of its senior bank financing and certain other conditions not within the direct or indirect control of the Noteholders, the Company will purchase on the closing date of the Recapitalization Agreement (the "Closing Date") the Notes held by all Participating Noteholders, for the consideration described below.

Each Participating Noteholder may elect, by checking the appropriate box on the Letter of Transmittal relating to the Amended Exchange Offer, the consideration it will receive from among the following three options. Except where elections will be deemed to have been made as provided below, each Participating Noteholder may elect only one option with respect to all the Notes delivered by such Participating Noteholder pursuant to the Amended Exchange Offer.

A. Cash/Combined Securities Option. (i) $700 in cash for every $1,000 in principal amount of Notes (without any additional payment in respect of accrued interest) and (ii) the Participating Noteholders Pro Rata Portion (as defined below) of the following securities: (a) shares of Common Stock (the "Noteholder Shares") having a value (based upon the public offering price of the Common Stock in the IPO (the "IPO Price")) equal to $7,364,000, (b) warrants (the "Company Warrants") to purchase up to 5% of the outstanding Common Stock (after giving effect to the Recapitalization) at an exercise price equal to 140% of the IPO Price, (c) shares of common stock, par value $.01 per share ("MCC Common Stock"), of MCC, representing upon issuance 20% of the issued and outstanding shares of MCC Common Stock (on a fully diluted basis, after giving effect to the MCC Spinoff), (d) shares of senior preferred stock, par value $.01 per share, of MCC ("MCC Senior Preferred") having a liquidation preference equal to $10,667,000 and (e) subordinated zero-coupon notes of MCC due 1997 (the "MCC Notes") having a face amount equal to $5,000,000. For purposes of determining the consideration deliverable to a Participating Noteholder pursuant to the Cash/Combined Securities Option and the Cash/Company Securities Option described below, a Participating Noteholders "Pro Rata Portion" will be a fraction, the numerator of which will be the aggregate principal amount of Notes validly delivered by such Participating Noteholder and the denominator of which shall be the aggregate principal amount of Notes validly delivered in respect of which the Cash/Combined Securities Option or the Cash/Company Securities Option shall have been elected. Participating Noteholders receiving the Initial Shares, the Noteholder Shares and the Company Warrants also will receive demand registration rights that will be exercisable six months after consummation of the Recapitalization, as well as certain incidental registration rights.

B. Cash/Company Securities Option. (i) $700 in cash for every $1,000 in principal amount of Notes (without any additional payment in respect of accrued interest), (ii) a cash payment equal to Participating Noteholders Pro Rata Portion of $5,000,000 (the "Cash Election Payment"), and (iii) the Participating Noteholders Pro Rata Portion of the Noteholder Shares and the Company Warrants. Participating Noteholders receiving the Initial Shares, the Noteholder Shares and the Company Warrants also will receive demand registration rights that will be exercisable six months after consummation of the Recapitalization, as well as certain incidental registration rights.

C. Securities Option. 8% Senior Subordinated Notes of the Company (the "New Notes") in an aggregate principal amount equal to the aggregate principal amount of Notes validly delivered by the Participating Noteholder pursuant to the Amended Exchange Offer. The New Notes will have the benefit of substantially similar (albeit somewhat less restrictive) covenants as contained in the Indenture and will rank senior in right of payment to the Notes, except with respect to the proceeds of certain asset sales. The New Notes will have registration rights. In addition, Participating Noteholders receiving Initial Shares will receive demand registration rights that will be exercisable six months after consummation of the Recapitalization, as well as certain incidental registration rights.

Notwithstanding the foregoing, if Participating Noteholders validly deliver more than $99,000,000 in aggregate principal amount of Notes in respect of which the Cash/Combined Securities Option or the Cash/Company Securities Option shall have been elected, then each such Participating Noteholder will be deemed to have elected the Securities Option with respect to a portion of the principal amount of the Notes validly delivered by such Participating Noteholder, which portion will be equal to the product of (i) the aggregate principal amount of Notes validly delivered by such Participating Noteholder, multiplied by (ii) a fraction, the numerator of which will be the sum of the aggregate principal amount of all Notes validly delivered by Participating Noteholders in respect of which the Cash/Combined Securities Option or the Cash/Company Securities Option was elected (the "Aggregate Amount") minus $99,000,000, and the denominator of which shall be the Aggregate Amount. To the extent any such calculation yields a result in an amount other than an integral multiple of $1.00, the amount will be rounded down to the nearest $1.00.

In addition, the maximum aggregate principal amount of New Notes that the Company will be required to issue pursuant to the Recapitalization Agreement will be $11,000,000. If Participating Noteholders validly deliver more than $11,000,000 in aggregate principal amount of Notes in respect of which the Securities Option has been elected, then each Participating Noteholder that elected the Securities Option will be deemed to have elected the Cash/Combined Securities Option or the Cash/Company Securities Option, as such Participating Noteholder will have indicated in its Letter of Transmittal, with respect to a portion of the Notes so delivered, which portion will be equal to the product of (i) the aggregate principal amount of Notes validly delivered by such Participating Noteholder, multiplied by (ii) a fraction, the numerator of which will be the sum of the aggregate principal amount of Notes validly delivered in respect of which the Securities Option was elected (the "Securities Option Amount") minus $11,000,000, and the denominator of which will be the Securities Option Amount. A Participating Noteholders failure to check the appropriate box on the Letter of Transmittal under the Securities Option will mean such Participating Noteholder will have made a Cash/Combined Securities Option election in the event that the Securities Option Amount is greater than $11,000,000.

No fractional securities of the Company or MCC will be delivered to a Participating Noteholder pursuant to the Cash/Combined Securities Option or the Cash/Company Securities Option. The Company either will make cash payments in lieu of delivering fractional securities or will round any fractions.

Simultaneously with the consummation of the Amended Exchange Offer, Odyssey will agree to purchase (the "Odyssey Placement") the number of shares of MCC Common Stock and MCC Senior Preferred and the aggregate principal amount of MCC Notes that would have been issued to Participating Noteholders that elected the Cash/Company Securities Option if such Participating Noteholders had instead elected the Cash/Combined Securities Option for an aggregate purchase price equal to the aggregate Cash Election Payments.

The Recapitalization Agreement will terminate on the earlier to occur of (i) certain events of bankruptcy, (ii) October 16, 1990 if the purchase of the Notes pursuant to the Recapitalization Agreement has not been consummated prior to such date or (iii) the date of expiration or termination of the agreement among the Company and its senior bank lenders not to exercise their remedies (as the same may be extended) (the "Termination Date").

The Companys obligation to consummate the transactions contemplated by the Recapitalization Agreement, other than the issuance of the Initial Shares, will be subject to, among other things, (i) the Companys obtaining, on or prior to the Termination Date, the proceeds of financing sufficient to consummate the purchase of Notes contemplated by the Recapitalization Agreement, (ii) the Companys ability to refinance its senior bank financing and (iii) the arrangement by MCC of a revolving credit facility satisfactory to MCC. The Company presently anticipates that the proceeds will be obtained from a combination of (i) the consummation of the IPO on or prior to the Termination Date, (ii) an offering of the Companys Convertible Debentures, (iii) a refinancing of the Companys senior debt and (iv) the Odyssey Placement.

At the request of the Participating Noteholders and pursuant to the Recapitalization Agreement, the Company will advise its financial advisors in connection with the issuance of the Convertible Debentures that certain of the Participating Noteholders may be interested in purchasing such Convertible Debentures. Accordingly, the Company will request that its financial advisors permit any Participating Noteholder that is a "qualified institutional buyer" (within the meaning of such term under Rule 144A under the Securities Act) (a "Participating Qualified Buyer"), plus not more than three Participating Noteholders each of which is an Institutional Investor (a "Participating Institutional Investor") to purchase such Convertible Debentures, subject to applicable law, if each such Participating Qualified Buyer or Participating Institutional Noteholder provides an indication of interest relating to the purchase of Convertible Debentures.

By executing the Recapitalization Agreement, the Participating Noteholders will consent to the execution of a supplemental indenture effecting certain amendments to the terms of the Indenture. The Participating Noteholders also will agree not to direct the Trustee under the Indenture to accelerate the maturity of the Notes under the Indenture for any reason on or prior to the Termination Date, and not to institute against the Company, or join any other person in instituting against the Company, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or any other similar proceeding under the laws of the United States, any state of the United States or any other jurisdiction. In addition, the Participating Noteholders will agree to certain amendments to the registration rights agreement relating the Notes which, among other things, will permit the Company to withdraw the Registration Statement relating to the Notes.

Upon the consummation of all of the transactions contemplated by the Recapitalization Agreement, non-Participating Noteholders will continue to own their Notes having the original economic terms thereof, but with substantially fewer restrictive covenants.

2. Senior Preferred.

Holders of the Companys Senior Preferred, by executing the Recapitalization Agreement, will be consenting to certain amendments to Certificates of Designations with respect to the Senior Preferred. ¹ Such amendments will provide, among other things, that if the transactions contemplated by the Recapitalization Agreement are consummated on or before a specified date (currently contemplated to be October 15, 1990), and subject to the satisfaction of certain conditions described below, the Senior Preferred will be mandatorily converted into and redeemed for a combination of shares of the Companys Common Stock having an aggregate value of $8,727,000 million (based upon the IPO Price) and shares of MCC Senior Preferred having a value of $5,333,000 million (valued at the liquidation preference thereof). The holders of Senior Preferred also will agree to certain amendments to the registration rights agreement relating to the Senior Preferred which, among other things, will permit the Company to withdraw the Registration Statement relating to the Senior Preferred.

3. Junior Preferred.

The Company expects to obtain the requisite consents from holders of its Junior Preferred to certain amendments to the Companys Certificate of Designations with respect to the Junior Preferred which will provide, among other things, that if the transactions contemplated by the Recapitalization Agreement are consummated on or before a specified date (currently contemplated to be October 15, 1990), and subject to the satisfaction of certain conditions described below, except as described in the following sentence, the Junior Preferred will be mandatorily converted into Common Stock of the Company (based upon the IPO Price). The shares of Junior Preferred beneficially owned by Odyssey will be exchanged for shares of a new class of junior preferred stock of the Company that will be redeemed for shares of junior preferred stock of MCC ("MCC Junior Preferred") if the transactions contemplated by the Recapitalization Agreement are consummated on or before a specified date (currently contemplated to be October 15, 1990), and subject to the satisfaction of certain other conditions described below.

4. Common Stock.

Simultaneously with the consummation by the Company of the transactions contemplated by the Recapitalization Agreement, the Company proposes to separate MCC from the Company in a "private" spinoff transaction. In this transaction, the board of directors of the Company will declare a dividend of all of the MCC Common Stock owned by the Company (other than the MCC Common Stock to be delivered to the Participating Noteholders and/or Odyssey as described above), payable upon the consummation of the IPO to the Companys common stockholders of record as of a date following the execution of the Recapitalization Agreement but prior to the issuance of the Initial Shares and the consummation of the IPO (the "MCC Spinoff"). The Companys common stockholders are not being asked to approve the MCC Spinoff.

Consummation of the Recapitalization

The conditions to the Noteholders, Senior Preferred holders and Odysseys obligation to consummate the transactions contemplated by the Recapitalization Agreement will be that (i) the Companys representations and warranties ² are true and correct in all material respects on the Closing Date, (ii) the Company shall have performed and complied in all material respects with its covenants and agreements, (iii) the Company and MCC shall have entered into the various agreements required in connection with the issuance of their respective securities substantially in the form attached to the Recapitalization Agreement (for example, the indenture for the MCC Notes and the Warrant Agreement for the Warrants) and (iv) the Company shall not have commenced a voluntary bankruptcy or an involuntary bankruptcy shall not have been commenced. It also will be a condition to Odysseys obligation to consummate the transaction that (i) MCC shall have issued the required securities to the Company and (ii) that the Company shall have delivered to Odyssey the Odyssey Junior Preferred. In addition, it will be a condition to the respective obligations of all parties to the Recapitalization Agreement that (i) there shall not have been issued and in effect on the Closing Date an order or injunction restraining, prohibiting or delaying consummation of the Recapitalization, (ii) MCC shall have delivered to the Company the securities to be issued by the Company and (iii) the Company shall have sufficient legal surplus to consummate the transactions contemplated by the Recapitalization Agreement. The Division should assume for purposes of its response, that upon the due execution and delivery of the Recapitalization Agreement by all of the parties thereto, the Noteholders obligation to sell their Notes to the Company for the consideration set forth in the Recapitalization Agreement will be subject only to the conditions set forth in the Recapitalization Agreement the satisfaction of which conditions are not within the control of the Noteholders.

The Company proposes to deliver to the Noteholders as well as the holders of its Senior Preferred, Junior Preferred and Common Stock, the Offering Materials, which will constitute the private placement memorandum for all of the private placements contemplated by the Recapitalization Agreement. The Offering Materials also will constitute the information statement to be delivered to the Companys common stockholders in connection with the MCC Spinoff. The Company intends to require each Noteholder that executes the Recapitalization Agreement to represent, among other things, that such Noteholder has received the Offering Materials, read the Offering Materials and has had an opportunity to ask questions of the representatives of the Company regarding the contents of the Offering Materials.

All of the securities to be issued under and pursuant to the Recapitalization Agreement will be issued on the Closing Date (except for the Initial Shares, which will be issued promptly following the execution of the Recapitalization Agreement), which will be the date the Company consummates the IPO, the offering of Convertible Debentures and the Odyssey Placement. The Company believes that its ability to consummate an IPO and the offering of Convertible Debentures is dependent upon its ability to demonstrate to investors that the Companys existing securityholders are committed to the transactions contemplated by the Recapitalization Agreement. Accordingly, the Recapitalization Agreement is intended to obligate the securityholders to accept the securities having the terms set forth in the Recapitalization Agreement and other documents and instruments substantially in the form annexed thereto. The only material condition to the Participating Noteholders obligation to "close" the transactions contemplated by the Recapitalization Agreement will be the delivery by the Company of the consideration thereunder.

In order to obtain a portion of the funds to pay the cash portion of the consideration offered by the Company to the Noteholders as soon as possible, the Company proposes to file a registration statement on Form S-1 relating to an IPO as promptly as possible under applicable authority without causing the private placements contemplated by the Recapitalization to be integrated with the IPO.

Discussion

Rule 152

Rule 152 provides that:

"_the phrase transactions by an issuer not involving any public offering in Section 4(2) shall be deemed to apply to transactions not involving any public offering at the time of said transactions although subsequently thereto the issuer decides to make a public offering and/or files a registration statement."

The Division has issued a number of "no action" letters in which it has taken the position that under Rule 152, an otherwise valid private placement will not be integrated with a subsequent registered public offering of additional similar securities if the private placement is completed before the commencement of the public offering, even if the public offering is contemplated at the time of the private placement. See, e.g., JBI Incorporated (available September 28, 1989); Country First Bank (available March 31, 1989); Vintage Group, Inc. (available May 11, 1988); The Immune Response Corp. (available November 2, 1987); Vulture Petroleum Corporation (available February 2, 1987); BBI Associates (available December 29, 1986); and Verticom Inc. (available February 12, 1986). The text of Rule 152 suggests that a public offering is deemed to commence upon the initial filing of the registration statement relating thereto. However, at what point in time a private placement is deemed "completed" for purposes of Rule 152 is uncertain.

In our view, it would be consistent with the purposes of the Securities Act and the protection of investors for a private placement to be deemed completed for purposes of Rule 152 when the investment decision to purchase or accept the securities offered is made, not when the securities offered in such private placement actually are issued. Furthermore, the securityholders investment decisions in connection with the Recapitalization should be deemed to be made when the Recapitalization Agreement is executed because at such time, consummation of the transactions contemplated thereby will not be subject to conditions within their control.

Essential to a companys ability to consummate a recapitalization transaction is the ability to obtain the commitment of its existing securityholders at the earliest possible stage (at which time it is likely that events of default which could result in the exercise of remedies already exist or are imminent). Obtaining such commitments, which is a common first step in a recapitalization transaction, will facilitate a companys negotiations with bank lenders as well as its ability to raise any funds needed to consummate the recapitalization.

Since the Recapitalization involves several private placements, as well as a registered public offering, the Company presently has one of only two alternatives. The Company either must register the portions of the Recapitalization that otherwise could be consummated as private placements, or delay filing the registration statement relating to the public offering until the private placements are completed in order to rely on the safe harbor provisions of Rule 152.

Registration of the securities contemplated by the Recapitalization Agreement would likely take several months and, as a matter of law, the Company would not be in a position to have binding arrangements until at least 20 business days after the registration statement relating thereto is declared effective. Accordingly, there would be no assurance that when the registration statement is declared effective, the parties will be willing to enter into the transaction. Therefore, the entire plan of recapitalization may be in jeopardy by virtue of this delay. The Company believes that there is a risk that if it is unable to bind the holders of its Notes and the holders of its Senior Preferred to the Recapitalization Agreement promptly, and then consummate the Recapitalization as soon as possible thereafter, the transaction has the potential to unwind.

Convertible Debentures

As described above, the Company intends to obtain a portion of the cash required to be paid to the Participating Noteholders upon consummation of the Recapitalization from an offering of Convertible Debentures. If the Company offers the Convertible Debentures in a private placement, in order to expedite consummation of the Recapitalization, the Company would seek to negotiate and execute definitive purchase agreements relating to the Convertible Debentures prior to or simultaneously with the filing of the registration statement relating to the IPO. The purchase agreements are expected to contain pricing terms for the Convertible Debentures that will be governed by a formula based upon the pricing of the IPO. Assuming that the Convertible Debentures and the Companys Common Stock would constitute the same class or similar classes of securities for purposes of Rule 152, if the Division concurs with our view expressed above that a private placement is deemed consummated for purposes of Rule 152 when the investor has made its investment decision, we request that the Division concur with our view that upon the due execution and delivery of definitive purchase agreements relating to the Convertible Debentures by all of the parties thereto pursuant to which the purchasers would be obligated to purchase Convertible Debentures having terms which are governed by a formula based upon the pricing of the IPO subject only to conditions to be set forth in such purchase agreements the satisfaction of which will not be within the control of the purchasers, such purchasers such investment decision would be deemed made for purposes of Rule 152. Therefore, the private placement of the Convertible Debentures pursuant to such purchase agreements would not be integrated with the IPO by virtue of Rule 152 if the Company were to file the registration statement relating to the IPO immediately following the execution of such purchase agreements.

If the Company does not negotiate and execute definitive purchase agreements relating to the private placement of the Convertible Debentures prior to the filing of the registration statement for the IPO (and therefore the Rule 152 safe harbor may not be available), as long as the Convertible Debentures are sold in a concurrent transaction only to (a) a limited number (expected to be 35 or fewer) of purchasers, which will consist of "qualified institutional buyers" (within the meaning of such term under Rule 144A under the Securities Act) and no more than three Participating Institutional Investors, or (b) not more than four purchasers, all of which are Institutional Investors plus up to three Participating Institutional Noteholders, in either case in a transaction which would be a valid private placement if viewed separately, we request that the Division concur with our view that it would be consistent with the purposes of the Securities Act and the protection of investors for such private placement of Convertible Debentures not to be deemed to be part of, or integrated with, such IPO, and for the offer and sale of the Convertible Debentures, even if consummated simultaneously with the consummation of the IPO, not to require registration under the Securities Act.

It is our view that if the nature of the Convertible Debenture purchasers is such that they are capable of fending for themselves and do not need the protections afforded by registration under the Securities Act, then no purpose is served by integrating the offering to such purchasers with the registered offering. Furthermore, the Companys ability to bind these sophisticated investors as soon as possible may be material to the Companys ability to consummate the Recapitalization and it would be inefficient for the Company to incur the expense associated with the registration process for a transaction that, if viewed separately, would be a valid private placement, if the registration process results in little or no benefit to the purchasers. The Commission has acknowledged the foregoing policy considerations, at least in part, by its adoption of Rule 144A under the Securities Act.

If, after offering the Convertible Debentures in a private placement, the Company determines to terminate such private placement and register the offer and sale of the Convertible Debentures, if the Division concurs with our view that the sale of Convertible Debentures to the foregoing types of investors in a private placement should not be integrated with the concurrent IPO, as long as the offer of Convertible Debentures was conducted in a manner consistent with private placements under the Securities Act, we are of the view that Rule 152 should permit the Company to subsequently file a registration statement relating to the offer and sale of the Convertible Debentures.

MCC Securities

The Recapitalization Agreement will require the Company to cause MCC to issue the MCC Securities to the Company immediately prior to the consummation of the transactions contemplated by the Recapitalization Agreement. At the time the Company causes MCC to issue such securities, the Company already will have a preexisting obligation to deliver such securities to the Participating Noteholders, the holders of Senior Preferred and Odyssey, contingent upon the consummation of the transactions contemplated by the Recapitalization Agreement (including the refinancing of the Companys senior bank facility and certain other conditions). Accordingly, MCC should be deemed to be the "issuer" (as defined in Section 2(4) of the Securities Act) of the MCC Securities for purposes of determining the applicability of any exemption from the registration requirements of the Securities Act for delivery of the MCC Securities pursuant to the Recapitalization Agreement.

Rule 10b-6

Assuming Odyssey would be deemed to be an "affiliated purchaser" (as such term is defined in Rule 10b-6) of the Company and/or MCC, if either the Company or MCC is deemed to be engaged in a "distribution" of such MCC securities for purposes of Rule 10b-6, unless the Odyssey Placement falls within one of the exceptions to Rule 10b-6 set forth in Rule 10b-6(a)(4)(i) through (xiii), the Odyssey Placement would be prohibited by the express provisions of Rule 10b-6. The two transactions that might be deemed to be a Rule 10b-6 distribution are the MCC Spinoff and offer by the Company to deliver MCC Securities to Participating Noteholders that elect the Cash/Combined Securities Option in the Amended Exchange Offer. We request that the Division of Market Regulation confirm our view that, based upon International Income Property, Inc. (available October 24, 1980), because the Companys common stockholders are not being asked to vote on the MCC Spinoff, the MCC Spinoff should not be deemed to be a distribution for purposes of Rule 10b-6.

Assuming that the Amended Exchange Offer constitutes a "distribution" of the MCC Securities solely for purposes of Rule 10b-6, because the Odyssey Placement does not result in any of the abuses at which Rule 10b-6 is directed, we request that the Division of Market Regulation advise us that it will not recommend any enforcement action to the Commission under Rule 10b-6 if the Odyssey Placement is consummated as described herein.

MCC Spinoff

In the past, the Division has permitted privately-held corporations to spin off the stock of subsidiaries without registration under the Securities Act in limited circumstances. The Division has permitted such spinoffs Where there is a valid business purpose for the spinoff, trading in the securities to be spun off is restricted so as to preclude the creation of a public market in such securities and certain information is distributed to the recipients of such spinoff dividend. See, e.g., Guardian Bank, N.A. (available January 9, 1987); Mustang Fuel Corp. (available August 25, 1986); Block 16 Office Partners (available June 19, 1986); Bay Area Sports Enterprises (available February 7, 1986); S.C. Johnson & Son (available July 22, 1985); Yarway Corp. (available December 17, 1984); Telesensory Systems, Inc. (available July 11, 1984); A.J. Sparks & Co. (available December 18, 1981); and Sulpetro of Canada, Ltd. (available December 19, 1973).

The MCC Spinoff falls within the pattern of "private" spinoffs established by the foregoing letters. The MCC Spinoff is being consummated because the Company, based upon the advice of its financial advisors, believes that it will not be able to consummate an IPO unless MCC is separated from the Company. Because the consummation of an IPO is the cornerstone of the Recapitalization, there is a valid business purpose to support the Companys desire to consummate the MCC Spinoff.

The Offering Materials to be prepared and circulated by the Company to, among others, its common stockholders, will contain information with respect to the MCC Spinoff substantially similar to that which would be provided in a Schedule 14C information statement and, accordingly, should satisfy the Divisions informational requirements. In addition, MCC and the Company will place restrictive legends on all shares of MCC Common Stock distributed in the MCC Spinoff, which will state that such securities have not been registered under the Securities Act and that such securities may not be sold or transferred in the absence of an effective registration statement under the Securities Act or pursuant to an available exemption from registration under the Securities Act. Restrictive legends of this sort are the standard types of legends used by issuers in private placement transactions to insure that no public market in the issuers securities develops and, accordingly, should be sufficient for purposes of assuring MCC and the Company that no public market will develop in the MCC Common Stock.

We request that the Division confirm that, under the circumstances set forth herein, it would not recommend enforcement action to the Commission if the MCC Spinoff is consummated without registration under the Securities Act.

Regulation 14E

We request that the Division of Corporation Finance and Division of Market Regulation advise us that it will not recommend any enforcement action to the Commission if the Company consummates its Amended Exchange Offer for the Notes as described herein.

We also request the concurrence of the Division with our view that the obtaining of the consent of the holders of the Senior Preferred and the Junior Preferred, respectively, to amendments to the Certificates of Designations relating thereto, does not constitute an issuer tender offer or exchange offer for purposes of Rule 13e-4 or Regulation 14E and Rule 14e-1 under the Exchange Act. We believe that the process of obtaining the consents of these securityholders is missing a material element for a tender or exchange offer: the ability of investors to make individual choices and therefore to receive different (or no) consideration. Either the requisite percentage of the holders of the various classes of securityholders entitled to vote on the amendments will be obtained or it will not. If it is obtained, all of the holders of Senior Preferred and Junior Preferred will be bound thereby regardless of the disagreement therewith by any of the holders and if it is not obtained, none are bound. We are of the view that because these securityholders will be bound (or not bound) as a class, and not on an individual basis, the solicitation of their consent to the approval of the proposed amendments should not constitute an issuer tender offer or exchange offer as defined.

The Company is anxious to proceed with the transactions contemplated herein as soon as possible. Accordingly we appreciate your prompt consideration of this matter. If you have any questions or comments concerning any of the issues addressed herein, please feel free to contact me at (212) 310-8200, Howard Chatzinoff at (212) 310-8340 or Robert M. Gervis at (212) 310-8510.

Kindly acknowledge your receipt of this letter and the enclosures submitted herewith by stamping the enclosed copy of this letter and returning it to our awaiting messenger.

Sincerely,

Robert Todd Lang

STAFF REPLY LETTER

June 26, 1990

RESPONSE OF THE OFFICE OF CHIEF COUNSEL

DIVISION OF CORPORATION FINANCE

AND

THE OFFICE OF TRADING PRACTICES

DIVISION OF MARKET REGULATION

Re: Black Box Incorporated (the "Company")

Incoming letter dated June 25, 1990

Based on the facts presented in your letter, the positions of the Divisions are stated below. You should note that the Division of Corporation Finances positions relating to integration address only the specific integration issues raised. In this regard, the Division of Corporation Finance does not issue interpretive or no-action letters as to the availability of the Section 4(2) private offering exemption of the Securities Act of 1933 (see Release No. 33-6253, October 28, 1980).

1. Notwithstanding the Companys proposed registered initial public offering of its common stock after the Participating Noteholders (as defined), Participating Senior Preferred stockholders (as defined), Odyssey Partners, L.P. ("Odyssey" and collectively referred to as "Securityholders") and the Company have executed the Recapitalization Agreement which involves private placement offerings to such Securityholders of specified securities of the Company and MICOM Communications Corp. ("MCC"), it is the Division of Corporation Finances view that the private placements need not be integrated with the later public common stock offering. In reaching this position, the Division is relying on its view that under Rule 152 under the Securities Act of 1933 ("Securities Act") the filing of a registration statement subsequent to an offering otherwise exempt from registration under Section 4(2) of the Act does not vitiate the exemption provided by the Section 4(2) private offering exemption. In this regard, the staff assumes that upon due execution and delivery of the Recapitalization Agreement by all of the parties thereto, the Securityholders obligations to sell their securities to the Company for the consideration set forth in the Recapitalization Agreement will be subject only to the conditions set forth in the Recapitalization Agreement the satisfaction of which conditions will be not within the control of the Securityholders. You should note that the renegotiation of the terms or the agreement to additional terms after execution of the Recapitalization Agreement and subsequent to the filing of the registration statement may constitute a new offering rendering the staffs view as to Rule 152 inapplicable. You also should note that you have not raised and we have not addressed whether consents to the execution of a supplemental indenture effecting certain amendments to the terms of the existing indenture would constitute the offer and sale of a new security as to non-participating Noteholders.

2. Notwithstanding the Companys proposed registered initial public offering of its common stock after the Company and certain investors have negotiated and executed definitive securities purchase agreements which involve the private placement of Convertible Debentures to such investors, it is the Division of Corporation Finances view that the private placement need not be integrated with the later public common stock offering. in reaching this position the Division is relying on its view that under Rule 152 under the Securities Act the filing of a registration statement subsequent to an offering otherwise exempt from registration under Section 4(2) of the Act does not vitiate the exemption provided by the Section 4(2) private offering exemption. In this regard, the staff particularly notes your representation that the purchasers of the Convertible Debentures will be obligated to purchase such securities subject only to satisfaction of specified conditions which will not be within the control of the purchasers. You should note that the renegotiation of the terms or the agreement to additional terms after execution of the definitive purchase agreements and subsequent to the filing of the registration statement may constitute a new offering rendering the staffs view as to Rule 152 inapplicable.

3. The Division of Corporation Finance, for policy reasons, is of the view that offers and sales of the Convertible Debentures to a limited number of purchasers, as described, in a transaction subsequent to the filing of the registration statement covering the Companys proposed public common stock offering need not be integrated with the registered public offering. In reaching this position, the staff notes your representation that the Convertible Debenture transaction would be a valid private placement if viewed separately.

4. Notwithstanding the Companys possible decision to register the Convertible Debenture offering, subsequent to its determination to terminate the private placement of such securities, the Division of Corporation Finance of the view that the terminated private placement need not be integrated with a later registered public offering of the Convertible Debentures. In reaching this position, the Division is relying on its view that under Rule 152 under the Securities Act the filing of a registration statement covering the Convertible Debentures subsequent to termination of an offering of the same securities otherwise exempt from registration under Section 4(2) of the Act does not vitiate the exemption provided by the Section 4(2) private offering exemption.

5. The Division of Corporation Finance is of the view that under Section 2(4) of the Securities Act MCC would be deemed to be the issuer of the MCC Securities (as defined) to be delivered pursuant to the Recapitalization Agreement.

6. The Division of Corporation Finance, without necessarily agreeing with your legal analysis, will not recommend any enforcement action to the Commission if the Company, in reliance on your opinion that registration is not required, consummates the MCC Spinoff as described. In reaching this position the staff particularly notes your representations that (1) the Offering Circular to be distributed to the Companys common stockholders, among others, will contain substantially the same information that would be provided in a Schedule 14C information statement, (2) the MCC common stock to be distributed in the MCC Spinoff will bear restrictive legends, and (3) no public market will develop in the MCC Common Stock.

7. It is the Divisions view that the elements of the Recapitalization relating to the Senior Preferred and the Junior Preferred, including the solicitation of consents to amend the Certificates of Designation, do not constitute an issuer tender offer or exchange offer within the meaning of Rule 13e-4, or Regulation 14E under the Securities Exchange Act of 1934 ("Exchange Act"). In addition, neither Divisions will recommend enforcement action under Rule 14e-1 to the Commission if the Company consummates the Amended Exchange Offer for the Notes as described in the letter.

8. The Division of Market Regulation will not recommend that the Commission take enforcement action under Rule 10b-6 if the Odyssey Placement occurs during the MCC Spinoff and the Amended Exchange Offer, as described in your letter.

Further, your attention is directed to the antifraud and anti-manipulation provisions of the Exchange Act, particularly Sections 10(b) and 14(e) and Rule 10b-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws must rest with the Company, Odyssey and any other person affiliated with the transaction. The Divisions express no view with respect to other questions that the proposed transactions may raise, including, but not limited to, the adequacy of disclosure concerning, and the applicability of other federal or state laws to, the proposed transactions.

Because these positions are based on the representations made to the Divisions in your letter, it should be noted that any different facts or conditions might require different conclusions. Moreover, this response as it relates to the MCC Spinoff, the Amended Exchange Offer for the Notes, and Rule 10b-6 only represents the Divisions positions on enforcement action and does not purport to express any legal conclusions on the questions presented.

Sincerely,

Abigail Arms

Deputy Chief Counsel

Division of Corporation Finance

Nancy J. Sanow

Assistant Director

Division of Market Regulation

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