AGREEMENT AND PLAN OF MERGER
dated as of
January 27, 1999
among
AFC CABLE SYSTEMS, INC.
XXXXXX & XXXXX CORPORATION
and
TB ACQUISITION CORP.
TABLE OF CONTENTS
-------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
THE MERGER
SECTION 2.01. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.02. CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. SURRENDER AND EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.04. STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.05. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.06. FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.07. WITHHOLDING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.08. LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. CERTIFICATE OF INCORPORATION. . . . . . . . . . . . . . . . . . . . 11
SECTION 3.02. BYLAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.03. DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. CORPORATE EXISTENCE AND POWER . . . . . . . . . . . . . . . . . . . 11
SECTION 4.02. CORPORATE AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.03. GOVERNMENTAL AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.04. NON-CONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.05. CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.06. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.07. SEC FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.08. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.09. REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. . . . . . 15
SECTION 4.10. ABSENCE OF CERTAIN CHANGES. . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.11. NO UNDISCLOSED MATERIAL LIABILITIES . . . . . . . . . . . . . . . . 18
SECTION 4.12. COMPLIANCE WITH LAWS AND COURT ORDERS . . . . . . . . . . . . . . . 18
i
PAGE
----
SECTION 4.13. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.14. FINDERS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.15. OPINION OF FINANCIAL ADVISOR. . . . . . . . . . . . . . . . . . . . 19
SECTION 4.16. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.17. EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.18. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.19. ANTITAKEOVER STATUTES . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.20. ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.21. INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.22. NON-COMPETITION AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.23. TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . . . 24
SECTION 4.24. POOLING; TAX TREATMENT. . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 5.01. CORPORATE EXISTENCE AND POWER . . . . . . . . . . . . . . . . . . . 25
SECTION 5.02. CORPORATE AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.03. GOVERNMENTAL AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.04. NON-CONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.05. CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.06. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.07. SEC FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.08. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.09. REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS. . . . . . 29
SECTION 5.10. ABSENCE OF CERTAIN CHANGES. . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.11. NO UNDISCLOSED MATERIAL LIABILITIES . . . . . . . . . . . . . . . . 30
SECTION 5.12. COMPLIANCE WITH LAWS AND COURT ORDERS . . . . . . . . . . . . . . . 30
SECTION 5.13. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.14. FINDERS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.15. POOLING; TAX TREATMENT. . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.16. OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES. . . . . . . . . . . . 31
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. CONDUCT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.02. STOCKHOLDER MEETING; BOARD RECOMMENDATION . . . . . . . . . . . . . 32
SECTION 6.03. NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.04. ACCESS TO INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 34
ii
PAGE
----
SECTION 6.05. CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 7
COVENANTS OF PARENT
SECTION 7.01. CONDUCT OF PARENT . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.02. STOCKHOLDER MEETING; BOARD RECOMMENDATION . . . . . . . . . . . . . 35
SECTION 7.03. OBLIGATIONS OF MERGER SUBSIDIARY. . . . . . . . . . . . . . . . . . 35
SECTION 7.04. DIRECTOR AND OFFICER LIABILITY. . . . . . . . . . . . . . . . . . . 35
SECTION 7.05. STOCK EXCHANGE LISTING. . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
SECTION 8.01. REASONABLE EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.02. CERTAIN FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.03. PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.04. FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.05. NOTICES OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.06. TAX-FREE REORGANIZATION; POOLING. . . . . . . . . . . . . . . . . . 40
SECTION 8.07. AFFILIATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.08. SUBSTANTIALLY EQUIVALENT BENEFITS . . . . . . . . . . . . . . . . . 41
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. CONDITIONS TO OBLIGATIONS OF EACH PARTY . . . . . . . . . . . . . . 42
SECTION 9.02. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY . . . 43
SECTION 9.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. . . . . . . . . . . . 43
ARTICLE 10
TERMINATION
SECTION 10.01. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.02. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 47
iii
PAGE
----
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 48
SECTION 11.03. AMENDMENTS; NO WAIVERS . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.04. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.05. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.06. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.07. JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.08. COUNTERPARTS; EFFECTIVENESS. . . . . . . . . . . . . . . . . . . . 50
SECTION 11.09. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.10. CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.11. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.12. SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . 51
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Voting Agreement
Exhibit B . . . . . . . . . . . . . . . . . . . . . Affiliate Pooling Letter (Company)
Exhibit C . . . . . . . . . . . . . . . . . . . . . .Affiliate Pooling Letter (Parent)
Exhibit D . . . . . . . . . . . . . . . . . . . . .Rule 145 Affiliate Letter (Company)
iv
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 27, 1999 among AFC
Cable Systems, Inc., a Delaware corporation (the "COMPANY"), Xxxxxx & Xxxxx
Corporation, a Tennessee corporation ("PARENT"), and TB Acquisition Corp., a
Delaware corporation and a direct wholly-owned subsidiary of Parent ("MERGER
SUBSIDIARY").
WHEREAS, the respective Boards of Directors of Parent and Company have
approved, and deem it advisable and in the best interests of their respective
stockholders to consummate, the acquisition of Company by Parent on the terms
and conditions set forth herein;
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger (as defined below) contemplated by this Agreement qualify as
a "reorganization" within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "CODE"), and the rules and regulations
promulgated thereunder;
WHEREAS, for accounting purposes, it is intended that the Merger be
accounted for as a pooling of interests under United States generally
accepted accounting principles ("GAAP"); and
WHEREAS, as a condition and inducement to Parent entering into this
Agreement and incurring the obligations set forth herein, concurrently with
the execution and delivery of this Agreement, Parent is entering into a
Voting Agreement with Xxxxx X. Xxxxxxx, a stockholder of Company ("SELLING
STOCKHOLDER"), in the form of Exhibit A hereto (the "VOTING AGREEMENT")
pursuant to which, among other things, the Selling Stockholder has agreed to
vote the shares of Company Common Stock owned by such Selling Stockholder in
favor of this Agreement and the Merger provided for herein;
NOW, THEREFORE, in consideration of the promises and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) The following terms, as used herein,
have the following meanings:
"ACQUISITION PROPOSAL" means any offer or proposal for, or any indication
of interest in, a merger, consolidation, share exchange, business combination,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving the Company or any of its Subsidiaries or any proposal or
offer to acquire, directly or indirectly, any equity interest in, any voting
securities of, or a substantial portion of the assets of, the Company or any of
its Subsidiaries, other than the transactions contemplated by this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
The terms "controlling," "controlled by" and "under common control with" means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting shares, by contract or otherwise.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY BALANCE SHEET" means the consolidated balance sheet of the Company
as of December 31, 1997 and the footnotes thereto set forth in the Company 10-K.
"COMPANY BALANCE SHEET DATE" means December 31, 1997.
"COMPANY COMMON STOCK" means the common stock, $0.01 par value, of the
Company.
"COMPANY 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1997.
"DELAWARE LAW" means the General Corporation Law of the State of Delaware.
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority or
other third party, relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities
2
relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any Subsidiary as
currently conducted.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"INTELLECTUAL PROPERTY RIGHT" means any trademark, service xxxx, trade
name, mask work, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property
right.
"JOINT PROXY STATEMENT/PROSPECTUS" means the joint proxy
statement/prospectus included in the Registration Statement relating to the
Company Stockholder Meeting and the Parent Stockholder Meeting, together with
any amendments or supplements thereto.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material
adverse effect on the condition (financial or otherwise), business, assets or
results of operations of such Person and its Subsidiaries, taken as a whole.
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"PARENT BALANCE SHEET" means the consolidated balance sheet of Parent as of
December 28, 1997 and the footnotes therein set forth in the Parent 10-K.
"PARENT BALANCE SHEET DATE" means December 28, 1997.
"PARENT COMMON STOCK" means the common stock, $.10 par value, of Parent.
"PARENT 10-K" means Parent's annual report on Form 10-K for the fiscal year
ended December 31, 1997.
3
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-4
registering under the 1933 Act the Parent Common Stock issuable in connection
with the Merger.
"SEC" means the United States Securities and Exchange Commission.
"SUBSIDIARY" means, with respect to any Person, any 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 are at any time directly or indirectly owned by such Person.
"SUPERIOR PROPOSAL" means any bona fide, unsolicited written Acquisition
Proposal for at least a majority of the outstanding shares of Company Stock
on terms that the Board of Directors of the Company determines in good faith
by a majority vote, on the basis of the written advice of a financial advisor
of nationally recognized reputation and taking into account all the terms and
conditions of the Acquisition Proposal, is more favorable to all the
Company's stockholders than the transactions contemplated hereby (after
giving effect to any revised proposal made by or on behalf of Parent prior to
the end of the 2-day period referred to in SECTION 6.02(b)).
"TENNESSEE LAW" means the Business Corporation Law of the State of
Tennessee.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
---- -------
Affected Employees. . . . . . . . . . . . . . . . . . . . . 8.08
Antitrust Law . . . . . . . . . . . . . . . . . . . . . . . 8.01
Certificates. . . . . . . . . . . . . . . . . . . . . . . . 2.03
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . 2.01
Company Disclosure Schedule . . . . . . . . . . . . . . . . Article 4
4
TERM SECTION
---- -------
Company Employee Plans. . . . . . . . . . . . . . . . . . . 4.17
Company Intellectual Property Right . . . . . . . . . . . . 4.21
Company Recommendation. . . . . . . . . . . . . . . . . . . 6.02
Company SEC Documents . . . . . . . . . . . . . . . . . . . 4.07
Company Stockholder Approval. . . . . . . . . . . . . . . . 4.02
Company Stockholders Meeting. . . . . . . . . . . . . . . . 4.09
Company Stock Options . . . . . . . . . . . . . . . . . . . 2.04
Confidentiality Agreements. . . . . . . . . . . . . . . . . 6.03
DOJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
Effective Time. . . . . . . . . . . . . . . . . . . . . . . 2.01
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.17
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . 4.17
Exchange Agent. . . . . . . . . . . . . . . . . . . . . . . 2.03
FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.08
Governmental Entity . . . . . . . . . . . . . . . . . . . . 8.02
Indemnified Person. . . . . . . . . . . . . . . . . . . . . 7.04
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16
ISO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
Merger Consideration. . . . . . . . . . . . . . . . . . . . 2.02
Parent Recommendation . . . . . . . . . . . . . . . . . . . 7.03
Parent SEC Documents. . . . . . . . . . . . . . . . . . . . 5.07
Parent Stockholder Approval . . . . . . . . . . . . . . . . 5.02
Parent Stockholders Meeting . . . . . . . . . . . . . . . . 4.09
Pooling of Interests. . . . . . . . . . . . . . . . . . . . 4.24
Representatives . . . . . . . . . . . . . . . . . . . . . . 6.03
S&P 400 Index . . . . . . . . . . . . . . . . . . . . . . . 10.01
Significant Subsidiary. . . . . . . . . . . . . . . . . . . 4.06
SRP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.08
Stockholders Meetings . . . . . . . . . . . . . . . . . . . 4.09
Substitute Option . . . . . . . . . . . . . . . . . . . . . 2.04
Superior Proposal . . . . . . . . . . . . . . . . . . . . . 6.02
Surviving Corporation . . . . . . . . . . . . . . . . . . . 2.01
Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . 4.16
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16
Taxing Authority. . . . . . . . . . . . . . . . . . . . . . 4.16
Parent Average Price. . . . . . . . . . . . . . . . . . . . 10.01
Reorganization. . . . . . . . . . . . . . . . . . . . . . . 4.24
5
ARTICLE 2
THE MERGER
SECTION 2.01. THE MERGER. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "MERGER") with and into the Company in accordance with
Delaware Law, whereupon the separate existence of Merger Subsidiary shall
cease, and the Company shall be the surviving corporation (the "SURVIVING
CORPORATION").
(b) Upon the terms and subject to the conditions of this Agreement, the
closing of the Merger (the "CLOSING") shall take place at 10:00 a.m. on a
date (the "CLOSING DATE") which shall be no later than the second business
day after satisfaction or, to the extent permitted hereunder, waiver of the
conditions set forth in Article 9, at the offices of Xxxxx Xxxx & Xxxxxxxx,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time or
place as the parties may agree in writing.
(c) Upon the Closing, (i) the Company and Merger Subsidiary shall file
a certificate of merger with the Delaware Secretary of State and make all
other filings or recordings required by Delaware Law in connection with the
Merger and (ii) Parent shall file an articles of merger with the Tennessee
Secretary of State and make all other filings or recordings required by
Tennessee Law in connection with the Merger. The Merger shall become
effective at such time as the certificate of merger and the articles of
merger are duly filed with the Delaware Secretary of State and the Tennessee
Secretary of State, respectively, or at such later time as may be specified
in the certificate of merger or the articles of merger (the "EFFECTIVE TIME").
(d) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to
all of the obligations, liabilities, restrictions and disabilities of the
Company and Merger Subsidiary, all as provided under Delaware Law.
SECTION 2.02. CONVERSION OF SHARES. At the Effective Time,
(a) except as otherwise provided in Section 2.02(b), each share of Company
Common Stock outstanding immediately prior to the Effective Time shall be
converted into the right to receive 0.83 shares of Parent Common Stock (together
with the cash in lieu of fractional shares of Parent Common Stock as specified
below, the "MERGER CONSIDERATION");
6
(b) each share of Company Common Stock held by the Company as treasury
stock or owned by Parent or any of its Subsidiaries immediately prior to the
Effective Time shall be canceled, and no payment shall be made with respect
thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation.
SECTION 2.03. SURRENDER AND EXCHANGE. (a) Prior to the Effective Time,
Parent shall appoint an agent (the "EXCHANGE AGENT") for the purpose of
exchanging certificates representing shares of Company Common Stock (the
"CERTIFICATES") for the Merger Consideration. Parent will make available to
the Exchange Agent, as needed, the Merger Consideration to be paid in respect
of the shares of Company Common Stock. Promptly after the Effective Time
(but in any event within three business days after the Effective Time),
Parent will send, or will cause the Exchange Agent to send, to each holder of
shares of Company Common Stock at the Effective Time a letter of transmittal
and instructions (which shall specify that the delivery shall be effected,
and risk of loss and title shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of shares of Company Common Stock that have been
converted into the right to receive the Merger Consideration will be entitled
to receive, upon surrender to the Exchange Agent of a Certificate, together
with a properly completed letter of transmittal, the Merger Consideration in
respect of the Company Common Stock represented by such Certificate together
with any dividends or other distributions with a record date after the
Effective Time previously paid or payable with respect to the Parent Common
Stock issued as part of the Merger Consideration, less the amount of any
withholding taxes which may be required thereon and without any interest.
Until so surrendered, each Certificate will be deemed from and after the
Effective Time, for all corporate purposes other than the payment of
dividends and subject to Section 2.03(e) and Section 2.03(f), to evidence the
ownership of the number of full shares of Parent Common Stock into which such
Certificates shall have the right to be converted.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the Certificate is registered, it shall be a
condition to such payment that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
7
taxes required as a result of such payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Company Common Stock. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration provided for, and in
accordance with the procedures set forth, in this Article.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the
holders of shares of Company Common Stock one year after the Effective Time
shall be returned to Parent, upon demand, and any such holder who has not
exchanged shares of Company Common Stock for the Merger Consideration in
accordance with this Section prior to that time shall thereafter look only to
Parent for payment of the Merger Consideration, and any dividends and
distributions with respect thereto, in respect of such shares of Company
Common Stock. Notwithstanding the foregoing, Parent shall not be liable to
any holder of shares of Company Common Stock for any amounts paid to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Any portion of the Merger Consideration, and any dividends and distributions
with respect thereto, remaining unclaimed by holders of shares of Company
Common Stock two years after the Effective Time (or such earlier date,
immediately prior to such time when the amounts would otherwise escheat to or
become property of any governmental authority) shall become, to the extent
permitted by applicable law, the property of Parent free and clear of any
claims or interest of any Person previously entitled thereto.
(f) No dividends or other distributions with respect to securities of
Parent constituting part of the Merger Consideration, and no cash payment in
lieu of fractional shares as provided in Section 2.06, shall be paid to the
holder of any unsurrendered Certificates until such Certificates are
surrendered as provided in this Section. Following such surrender, there
shall be paid, without interest, to the Person in whose name the securities
of Parent have been registered, at the time of such surrender, the amount of
any cash payable in lieu of fractional shares to which such Person is
entitled pursuant to Section 2.06 and the amount of all dividends or other
distributions with a record date after the Effective Time previously paid or
payable on the date of such surrender with respect to such securities, less
the amount of any withholding taxes which may be required thereon.
8
SECTION 2.04. STOCK OPTIONS. (a) At the Effective Time, by virtue of the
Merger and without any further action on the part of the holders thereof, each
outstanding option to purchase shares of Company Common Stock (collectively, the
"COMPANY STOCK OPTIONS") shall be assumed by Parent, and shall constitute an
option (a "SUBSTITUTE OPTION") to acquire, on the same terms and conditions as
were applicable under such Company Stock Option, the number (rounded down to the
nearest whole number) of shares of Parent Common Stock equal to the product of
(i) the number of shares of Company Common Stock issuable upon exercise of such
stock option immediately prior to the Effective Time (not taking into account
whether or not such stock option was in fact vested or exercisable, but
excluding any Company Common Stock issued prior to the Effective Time pursuant
to such Company Stock Option), MULTIPLIED by (ii) 0.83, at a price per share
(rounded up to the next highest cent) equal to (x) the exercise price per share
for the shares of Company Common Stock issuable upon exercise of such Company
Stock Option immediately prior to the Effective Time DIVIDED by (y) 0.83. As
soon as practicable after the Effective Time, Parent shall deliver to each
holder of an outstanding Company Stock Option an appropriate notice setting
forth such holder's rights pursuant thereto, and such Company Stock Option shall
continue in effect on the same terms and conditions. Parent will take such
actions within its control that are reasonably necessary to ensure that Company
Stock Options that qualified as incentive stock options under Section 422 of the
Code (each, an "ISO") prior to the Effective Time will continue to so qualify
thereafter.
(b) Prior to the Effective Time, the Company shall (PROVIDED that such
action will not make the Merger fail to qualify for a Pooling of Interests (as
defined in Section 4.24)) (i) obtain any consents from holders of Company Stock
Options and (ii) make any amendments to the terms of such stock option or
compensation plans or arrangements that are necessary to give effect to the
transactions contemplated by this Section 2.04.
(c) Parent shall take such actions as are necessary for the assumption of
the Company Stock Options pursuant to this Section 2.04, including the
reservation, issuance and listing of Parent Common Stock as necessary to
effectuate the transactions contemplated by this Section 2.04. Parent shall
prepare and file with the SEC a registration statement on an appropriate form,
or a post-effective amendment to a registration statement previously filed under
the 1933 Act, with respect to the shares of Parent Common Stock subject to the
Substitute Options and, where applicable, shall use reasonable efforts to have
such registration statement declared effective as soon as practicable following
the Effective Time and to maintain the effectiveness of such registration
statement covering such Substitute Options (and to maintain the current status
of the prospectus contained therein) for so long as such Substitute Options
remain outstanding. With respect to those individuals, if any, who, subsequent
to the
9
Effective Time, will be subject to the reporting requirements under Section
16(a) of the 1934 Act, Parent shall use reasonable efforts to administer the
Substitute Options and the applicable plan covering such options in a manner
that complies with Rule 16b-3 under the 1934 Act to the extent the plan under
which such Company Stock Options were granted complied with such rule prior
to the Merger.
SECTION 2.05. ADJUSTMENTS. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares
of capital stock of Company or Parent shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date
during such period, the Merger Consideration and any other amounts payable
pursuant to this Agreement shall be appropriately adjusted.
SECTION 2.06. FRACTIONAL SHARES. No fractional shares of Parent Common
Stock shall be issued in the Merger. All fractional shares of Parent Common
Stock that a holder of shares of Company Common Stock would otherwise be
entitled to receive as a result of the Merger shall be aggregated and if a
fractional share results from such aggregation, such holder shall be entitled to
receive, in lieu thereof, an amount in cash determined by multiplying the
closing sale price of a share of Parent Common Stock on the New York Stock
Exchange on the trading day immediately preceding the Effective Time by the
fraction of a share of Parent Common Stock to which such holder would otherwise
have been entitled.
SECTION 2.07. WITHHOLDING RIGHTS. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Article such amounts as it
is required to deduct and withhold with respect to the making of such payment
under any provision of federal, state, local or foreign tax law. If the
Surviving Corporation or Parent, as the case may be, so withholds amounts,
such amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which the Surviving Corporation or Parent, as the case may be, made such
deduction and withholding.
SECTION 2.08. LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation or the Exchange Agent, the posting by such Person of a
bond, in such reasonable amount as the Surviving Corporation or the Exchange
Agent may direct, as indemnity against any claim that may be made against it or
10
them with respect to such Certificate, the Exchange Agent will issue, in
exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration to be paid in respect of the shares of Company Common Stock
represented by such Certificate, as contemplated by this Article.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be
the certificate of incorporation of the Surviving Corporation until amended
in accordance with applicable law, PROVIDED that, at the Effective Time,
Article 1 of such certificate of incorporation shall be amended to read as
follows: "The name of the corporation is AFC Cable Systems, Inc."
SECTION 3.02. BYLAWS. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 3.03. DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation and (ii)
the officers of the Company at the Effective Time shall be the officers of
the Surviving Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that, except as set
forth in the written disclosure schedule delivered on or prior to the date
hereof by the Company to Parent that is arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Article 4 (the
"COMPANY DISCLOSURE SCHEDULE"):
SECTION 4.01. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its
11
business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a Material Adverse Effect on the Company.
The Company is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company has heretofore made available to Parent true and
complete copies of the certificate of incorporation and bylaws of the Company
as currently in effect.
SECTION 4.02. CORPORATE AUTHORIZATION. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for the required approval of the Company's
stockholders in connection with the consummation of the Merger, have been
duly authorized by all necessary corporate action on the part of the Company.
The affirmative vote of the holders of a majority of the outstanding shares
of Company Common Stock approving the adoption of this Agreement and the
transactions contemplated hereby (the "COMPANY STOCKHOLDER APPROVAL") is the
only vote of the holders of any of the Company's capital stock necessary in
connection with the consummation of the Merger. This Agreement constitutes a
valid and binding agreement of the Company.
(b) At a meeting duly called and held, the Company's Board of Directors
has (i) unanimously determined that this Agreement and the transactions
contemplated hereby are fair to and in the best interests of the Company's
stockholders, (ii) unanimously approved and adopted this Agreement and the
transactions contemplated hereby and (iii) unanimously resolved (subject to
Section 6.02(b)) to recommend approval and adoption of this Agreement and the
transactions contemplated hereby by its stockholders.
SECTION 4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority, domestic or foreign, other than (i) the filing of a certificate of
merger with respect to the Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which
Company is qualified to do business, (ii) compliance with any applicable
requirements of the HSR Act, (iii) compliance with any applicable
requirements of the 1933 Act, the 1934 Act, and any applicable state
securities laws, (iv) compliance with the Environmental Law of any state
relating to the transfer of ownership or control of property located in that
state and (v) any actions or filings the absence of which would not be
12
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or materially impair the ability of the Company
to consummate the transactions contemplated by this Agreement.
SECTION 4.04. NON-CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, (ii) assuming compliance with the matters referred to in
Section 4.03, contravene, conflict with or result in a violation or breach of
any provision of any law, rule, regulation, judgment, injunction, order, or
decree applicable to the Company or any of its Subsidiaries, (iii) require
any consent or other action by any Person under, constitute a default under,
or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation or the loss of any benefit to which the
Company or any of its Subsidiaries is entitled under any provision of any
material agreement or instrument binding upon the Company or any of its
Subsidiaries or any material license, franchise, permit, certificate,
approval or other similar authorization affecting, or relating in any way to,
the assets or business of the Company and its Subsidiaries, PROVIDED that,
for purposes of this subsection 4.04(iii), MATERIAL AGREEMENT shall mean any
agreement identified in the Company 10-K or in any of the Company's quarterly
reports on Form 10-Q or any agreement entered into since the date of the
Company's latest quarterly report on Form 10-Q that would be required to be
so identified in the Company's annual report on Form 10-K for the year ended
December 31, 1998 or (iv) result in the creation or imposition of any Lien on
any material asset of the Company or any of its Subsidiaries.
SECTION 4.05. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 1,000,000
shares of Preferred Stock, par value $.01 per share (the "COMPANY PREFERRED
STOCK"). As of January 19, 1999 there were outstanding 12,741,468 shares of
Company Common Stock, 1,173,784 shares of Company Common Stock were reserved
for issuance pursuant to the Company Stock Options and 359,587 shares of
Company Common Stock are reserved for future grants of Company Common Stock
or options to purchase Company Common Stock under the Company's various
benefit plans. There are no outstanding shares of Company Preferred Stock.
All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.
(b) Except as set forth in this Section 4.05 and except for changes
since January 19, 1999 resulting from the issuance of Company Common Stock as
13
permitted under Section 6.01(c), there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company or (iii) options or other rights to acquire
from the Company, or other obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company. There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any of the securities referred to in clauses (i), (ii)
or (iii) above.
SECTION 4.06. SUBSIDIARIES. (a) Each Subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has all corporate powers and
all governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals the absence of
which would not have, individually or in the aggregate, a Material Adverse
Effect on the Company. Each such Subsidiary is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where
such qualification is necessary, except for those jurisdictions where failure
to be so qualified would not have, individually or in the aggregate, a
Material Adverse Effect on the Company. Except as set forth in Schedule
4.06(a), all "SIGNIFICANT SUBSIDIARIES" (as such term is defined under Rule
1-02 of Regulation S-X under the 0000 Xxx) of the Company and their
respective jurisdictions of incorporation are identified in the Company 10-K
or in a quarterly report of the Company on Form 10-Q filed with respect to
any quarter of the 1998 fiscal year.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each Subsidiary of the Company, is
owned by the Company, directly or indirectly, free and clear of any Lien and
free of any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
voting securities or ownership interests). There are no outstanding (i)
securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company or (ii) options or other
rights to acquire from the Company or any of its Subsidiaries, or other
obligation of the Company or any of its Subsidiaries to issue, any capital
stock or other voting securities or ownership interests in, or any securities
convertible into or exchangeable for any capital stock or other voting
securities or ownership interests in, any Subsidiary of the Company. There
are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the securities referred to in
clauses (i) or (ii) above.
14
SECTION 4.07. SEC FILINGS. (a) The Company has filed with the SEC all
reports, schedules, forms, statements and other documents required to be
filed since December 31, 1996 (collectively, the "COMPANY SEC DOCUMENTS").
(b) As of its filing date, each Company SEC Document complied as to
form in all material respects with the applicable requirements of the 1933
Act and the 1934 Act, as the case may be.
(c) As of its filing date, each Company SEC Document filed pursuant to
the 1934 Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 4.08. FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Documents fairly present, in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial
statements).
SECTION 4.09. REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS.
(a) The information to be supplied by the Company for inclusion or
incorporation by reference in the Registration Statement will not at the time
the Registration Statement (including any amendments or supplements thereto)
is declared effective by the SEC 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.
(b) The information to be supplied by the Company for inclusion or
incorporation by reference in the Joint Proxy Statement/Prospectus to be sent
to the stockholders of the Company in connection with the meeting of the
stockholders of the Company to consider the Merger (the "COMPANY STOCKHOLDERS
MEETING") and to be sent to the stockholders of Parent in
15
connection with the meeting of the stockholders of Parent to consider the
Merger (the "PARENT STOCKHOLDERS MEETING," and together with the Company
Stockholder Meeting, the "STOCKHOLDERS MEETINGS"), will not, on the date the
Joint Proxy Statement/Prospectus (or any amendment thereof or supplement
thereto) is first mailed to stockholders, at the time of the Stockholders
Meetings, or at the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or shall omit to state any
material fact necessary in order to make the statements made therein not
false or misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation
of proxies for the Stockholders Meetings which has become false or misleading.
(c) Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent or Merger
Subsidiary which is contained in or furnished in connection with the
preparation of the Registration Statement or the Joint Proxy
Statement/Prospectus.
SECTION 4.10. ABSENCE OF CERTAIN CHANGES. Since the Company Balance
Sheet Date, the business of the Company and its Subsidiaries has been
conducted in the ordinary course consistent with past practice and there has
not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or
any repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities
of, or other ownership interests in, the Company or any of its Subsidiaries;
(c) any amendment of any material term of any outstanding security of
the Company or any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of
its Subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any asset other than in the ordinary course of
business consistent with past practices;
16
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions
to or investments in its wholly-owned Subsidiaries in the ordinary course of
business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
of its Subsidiaries that has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its
assets or business (including the acquisition or disposition of any assets)
or any relinquishment by the Company or any of its Subsidiaries of any
contract or other right, in either case, material to the Company and its
Subsidiaries, taken as a whole, other than transactions and commitments in
the ordinary course of business consistent with past practices and those
contemplated by this Agreement;
(i) any material change in the accounting methods, principles or
practices by the Company or any of its Subsidiaries, except for any such
change required by reason of a concurrent change in GAAP or Regulation S-X
under the 1934 Act;
(j) except as set forth in Schedule 4.10(j), any (i) grant of any
severance or termination pay to any director, officer or employee of the
Company or any of its Subsidiaries, (ii) increase in benefits payable under
any existing severance or termination pay policies or employment agreements,
(iii) entering into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any
director, officer or employee of the Company or any of its Subsidiaries, (iv)
establishment, adoption or amendment (except as required by applicable law)
of any collective bargaining, bonus, profit-sharing, thrift, pension,
retirement, deferred compensation, compensation, stock option, restricted
stock or other benefit plan or arrangement covering any director, officer or
employee of the Company or any of its Subsidiaries or (v) increase in
compensation, bonus or other benefits payable to any director, officer or
employee of the Company or any of its Subsidiaries, other than in the
ordinary course of business consistent with past practice; or
(k) any material labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its Subsidiaries,
which employees were not subject to a collective bargaining agreement at the
Company Balance Sheet
17
Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees.
SECTION 4.11. NO UNDISCLOSED MATERIAL LIABILITIES. (a) There are no
liabilities or obligations of the Company or any of its Subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than:
(i) liabilities or obligations disclosed and provided for in the
Company Balance Sheet or in the notes thereto or in the Company SEC
Documents filed prior to the date hereof;
(ii) liabilities or obligations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on
the Company; and
(iii) liabilities or obligations incurred in connection with this
Agreement.
(b) Schedule 4.11(b) sets forth every obligation of the Company or any
of its Subsidiaries, whether accrued, contingent, absolute, determined,
determinable or otherwise, for payment of additional purchase price or any
other additional or contingent consideration, in connection with any
acquisition by the Company or any of its Subsidiaries.
SECTION 4.12. COMPLIANCE WITH LAWS AND COURT ORDERS. The Company and
each of its Subsidiaries is and at all times since December 31, 1996 has been
in compliance with, and to the knowledge of the Company is not under
investigation with respect to and has not been threatened to be charged with
or given notice of any violation of, any applicable law, rule, regulation,
judgment, injunction, order or decree, except for matters that have not had
and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
SECTION 4.13. LITIGATION. Except as set forth in the Company SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or, to the knowledge of the
Company, threatened against or affecting, the Company, any of its
Subsidiaries, any present or former officer, director or employee of the
Company or any of its Subsidiaries or any Person for whom the Company or any
Subsidiary may be liable or any of their respective properties before any
court or arbitrator or any governmental body, agency or official, domestic or
foreign, that, could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company
18
or that, as of the date hereof, in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the Merger or any of the other transactions
contemplated hereby.
SECTION 4.14. FINDERS' FEES. Except for NationsBanc Xxxxxxxxxx
Securities, a copy of whose engagement agreement has been provided to Parent
and whose fees will be paid by the Company, there is no investment banker,
broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of the Company or any of its Subsidiaries who
might be entitled to any fee or commission from the Company or any of its
Affiliates in connection with the transactions contemplated by this Agreement.
SECTION 4.15. OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of NationsBanc Xxxxxxxxxx Securities, financial advisor to the
Company, to the effect that, as of the date of this Agreement, the Merger
Consideration is fair to the Company's stockholders from a financial point of
view and such opinion has not been withdrawn.
SECTION 4.16. TAXES. Except as set forth in the Company Balance Sheet
(including the notes thereto) or except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company:
(a) all tax returns, statements, reports and forms (collectively, the
"COMPANY RETURNS") required to be filed with any taxing authority by, or with
respect to, the Company and its Subsidiaries have been filed in accordance
with all applicable laws;
(b) the Company and its Subsidiaries have timely paid all taxes (which
for purposes of this Section 4.16 shall include interest, penalties and
additions to tax with respect thereto) shown as due and payable on the
Company Returns that have been so filed, and, as of the time of filing, the
Company Returns correctly reflected the facts regarding the income, business,
assets, operations, activities and the status of the Company and its
Subsidiaries (other than taxes which are being contested in good faith and
for which adequate reserves are reflected on the Company Balance Sheet);
(c) the Company and its Subsidiaries have made provision for all taxes
payable by the Company and its Subsidiaries for which no Company Return has
yet been filed;
(d) the charges, accruals and reserves for taxes with respect to the
Company and its Subsidiaries reflected on the Company Balance Sheet are
19
adequate under GAAP to cover the tax liabilities accruing through the date
thereof;
(e) there is no action, suit, proceeding, audit or claim now proposed
or pending against or with respect to the Company or any of its Subsidiaries
in respect of any tax where there is a reasonable possibility of an adverse
determination;
(f) except as set forth in Schedule 4.16, neither the Company nor any
of its Subsidiaries has been a member of an affiliated, consolidated,
combined or unitary group other than one of which the Company was the common
parent;
(g) the Company and its Subsidiaries have complied with all applicable
laws, rules and regulations relating to the payment and withholding of taxes;
and
(h) except as set forth in Schedule 4.16, neither the Company nor any
of its Subsidiaries is obligated by any contract, agreement or other
arrangement (i) to indemnify any other person with respect to taxes, (ii) to
make any tax payment to or for the account of any other person, (iii) to
afford any other person the benefit of any net operating loss, net capital
loss, investment tax credit, foreign tax credit, charitable deduction or
other credit or tax attribute that could reduce taxes of the Company or any
of its Subsidiaries, or (iv) to permit the transfer or assignment of income,
revenues, receipts or gains to the Company or any of its Subsidiaries from
any other person.
SECTION 4.17. EMPLOYEE BENEFIT PLANS. (a) Schedule 4.17(a) identifies
each material "EMPLOYEE BENEFIT PLAN," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), each employment,
severance or similar contract, plan, arrangement or policy applicable to any
director, former director, employee or former employee of the Company or any
of its Affiliates and each material plan or arrangement (written or oral)
providing for compensation, bonuses, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance benefits) which is maintained, administered
or contributed to by the Company or any of its Affiliates and covers any
employee or director or former employee or director of the Company or any of
its Affiliates, or under which the Company or any of its Affiliates has any
liability. Such plans are referred to collectively herein as the "COMPANY
EMPLOYEE PLANS".
20
(b) Each Company Employee Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, order, rules and regulations (including but not limited to ERISA
and the Code) which are applicable to such Plan, except where failure to so
comply would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(c) Neither the Company nor any ERISA Affiliate has maintained,
contributed to or been required to contribute to any employee benefit plan
subject to Title IV of ERISA during the six year period prior to the Closing.
For purposes of this Agreement the term "ERISA AFFILIATE" shall mean any
entity which, together with the Company, would be treated as a single
employer under Section 414 of the Code. The benefits accrued by each
participant under the AFC Cable Systems, Inc. Selective Retirement Plan (and
any other non-qualified deferred compensation plan of the Company or its
Subsidiaries) as of the date hereof and as of the Closing are fully funded
with cash set aside in a rabbi trust designated for the payment of such
benefits.
(d) Each Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code has been determined to be so qualified by the IRS
and to the knowledge of the Company each such Employee Plan is so qualified
and has been so qualified during the period from its adoption to date, and
each trust forming a part thereof is exempt from tax pursuant to Section
501(a) of the Code.
(e) Except as set forth in Schedule 4.17(e) or as required by law, the
execution and performance of this Agreement will not (i) constitute a stated
triggering event under any Company Employee Plan that would result in any
payment (including severance or otherwise) becoming due to any employee or
former employee of the Company or any of its Subsidiaries or (ii) accelerate
the time of payment or vesting, or increase the amount of compensation due
any employee or former employee of the Company or any of its Subsidiaries.
Without limiting the generality of the foregoing, except as set forth in
Schedule 4.17(e), no amount required to be paid or payable to or with respect
to any director or officer or other employee of the Company or any of its
Subsidiaries under any Employee Plan in connection with the transactions
contemplated hereby (either solely as a result thereof or as a result of such
transactions in conjunction with any other event) will be an "excess
parachute payment" within the meaning of Section 280G of the Code.
(f) Except as set forth in the Company SEC Filings prior to the date
hereof (and to the extent required under Section 601 of ERISA), no Company
Employee Plan provides post-retirement health and medical, life or other
21
insurance benefits for retired employees of the Company or any of its
Subsidiaries.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its Affiliates
relating to, or change in employee participation or coverage under, any
Company Employee Plan which would increase materially the expense of
maintaining such Company Employee Plan above the level of the expense
incurred in respect thereof for the 12 months ended on the Company Balance
Sheet Date.
(h) Schedule 4.17(h) identifies each collective bargaining agreement to
which the Company or any of its Subsidiaries is a party and copies of each
such agreement have been furnished to or made available to Parent. Except as
set forth on Schedule 4.17(h), or except as would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on
Company, (i) there is no labor strike, slowdown or work stoppage or lockout
against Company or any of its Subsidiaries and (ii) there is no unfair labor
practice charge or complaint against or pending before the National Labor
Relations Board. As of the date of this Agreement, there is no representation
claim or petition pending before the National Labor Relations Board and, to
the knowledge of Company, no question concerning representation exists with
respect to the employees of Company or any of its Subsidiaries.
SECTION 4.18. ENVIRONMENTAL MATTERS. (a) Except as set forth in the
Company SEC Documents prior to the date hereof:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company, is
threatened by any governmental entity or other Person relating to or
arising out of any Environmental Law;
(ii) the Company is in compliance in all material respects with
all Environmental Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or
any of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise arising under
or relating to any Environmental Law.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
22
relation to the current or prior business either of the Company or any of its
Subsidiaries or any property or facility now or previously owned or leased by
the Company or any of its Subsidiaries that has not been delivered to Parent.
(c) Except as set forth in Schedule 4.18(c), neither the Company nor
any of its Subsidiaries owns, leases or operates or has owned, leased or
operated any real property, or conducts or has conducted any operations, in
New Jersey or Connecticut.
SECTION 4.19. ANTITAKEOVER STATUTES. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby
and neither Section 203 of Delaware Law nor any other antitakeover or similar
statute or regulation applies or purports to apply to the transactions
contemplated hereby.
SECTION 4.20. ASSETS. The assets, properties, rights and contracts,
including (as applicable), title or leaseholds thereto, of the Company and
its Subsidiaries, taken as a whole, are sufficient to permit the Company and
its Subsidiaries to conduct their business as currently being conducted with
only such exceptions as are not reasonably likely to have a Material Adverse
Effect on the Company. All material real property owned by the Company and
its Subsidiaries is owned free and clear of all Liens, except (A) those
reflected or reserved against in the latest balance sheet (or notes thereto)
of the Company included in the Company SEC Documents filed prior to the date
hereof, (B) taxes and general and special assessments not in default and
payable without penalty or interest, and (C) Liens that do not materially
adversely interfere with any present use, or materially impair the value, of
such property.
SECTION 4.21. INTELLECTUAL PROPERTY. (a) The Company, directly or
indirectly, owns, or is licensed or otherwise possesses legally enforceable
rights to use, all Intellectual Property Rights that are material to the
business of the Company and its Subsidiaries, taken as a whole, as currently
conducted or as proposed to be conducted (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS"), except where the failure to do so would not have a Material Adverse
Effect on the Company.
(b) Except as disclosed on Schedule 4.21(b), no claims have been
asserted to the Company or any Subsidiary in writing or, to the knowledge of
the Company, are threatened by any person nor are there any valid grounds, to
the knowledge of the Company, for any bona fide claims (i) against the use by
the Company or any of its Subsidiaries of the Company Intellectual Property
Rights, or (ii) challenging the ownership by the Company or any of its
Subsidiaries, or the validity or effectiveness of any of the Company
Intellectual Property Rights,
23
except for such claims that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
(c) Neither the Company nor any of its Subsidiaries has any outstanding
claim or suit for, and the Company has no knowledge of, any continuing
infringement by any other Person of any Company Intellectual Property Rights.
No Company Intellectual Property Right is subject to any outstanding
judgment, injunction, order, decree or agreement restricting the use thereof
by the Company or any of its Subsidiaries or restricting the licensing
thereof by the Company or any of its Subsidiaries to any Person.
SECTION 4.22. NON-COMPETITION AGREEMENTS. Neither the Company nor any
of its Subsidiaries is a party to or bound by any non-competition agreement
or any other agreement or obligation which limits or will limit in any
material respect the location or lines of business conducted by the Company
or any of its Subsidiaries (or after the Merger, Parent, any of its
Subsidiaries or any of their respective Affiliates).
SECTION 4.23. TRANSACTIONS WITH AFFILIATES. Except to the extent
disclosed in the Company SEC Documents filed prior to the date hereof, since
the Company Balance Sheet Date there have been no transactions, agreements,
arrangements or understandings between Company or its Subsidiaries, on the
one hand, and Company's Affiliates (other than its wholly-owned Subsidiaries)
or other Persons, on the other hand, that would be required to be disclosed
under Item 404 of Regulation S-K under the 1933 Act.
SECTION 4.24. POOLING; TAX TREATMENT. Neither the Company nor any of
its Affiliates has taken or agreed to take any action or is aware of any fact
or circumstance that would prevent the Merger from qualifying (i) for
"pooling of interests" accounting treatment under the requirements of Opinion
No. 16 (Business Combinations) of the Accounting Principles Board of the
American Institute of Certified Public Accountants, the Financial Accounting
Standards Board, and the rules and regulations of the SEC ("POOLING OF
INTERESTS") or (ii) as a reorganization within the meaning of Section 368(a)
of the Code (a "REORGANIZATION").
24
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
SECTION 5.01. CORPORATE EXISTENCE AND POWER. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals
the absence of which would not have, individually or in the aggregate, a
Material Adverse Effect on Parent. Parent has heretofore made available to
the Company true and complete copies of the charter and bylaws of Parent as
currently in effect.
SECTION 5.02. CORPORATE AUTHORIZATION. (a) The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and,
except for the required approval of Parent's stockholders in connection with
the consummation of the Merger, have been duly authorized by all necessary
corporate action. The affirmative vote of the holders of a majority of the
outstanding shares of Parent Common Stock approving the adoption of this
Agreement and the transactions contemplated hereby, including the issuance of
shares of Parent Common Stock pursuant to this Agreement (the "PARENT
STOCKHOLDER APPROVAL") is the only vote of the holders of any of Parent's
capital stock necessary in connection with the consummation of the Merger.
This Agreement constitutes a valid and binding agreement of each of Parent
and Merger Subsidiary.
(b) At a meeting duly called and held, Parent's Board of Directors has
(i) unanimously determined that this Agreement and the transactions
contemplated hereby are fair to and in the best interests of Parent's
stockholders and (ii) unanimously approved and adopted this Agreement and the
transactions contemplated hereby.
SECTION 5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority, domestic or foreign, other
than (i) the filing of a certificate of merger with respect to the Merger
with the Delaware Secretary of
25
State and appropriate documents with the relevant authorities of other states
in which Parent is qualified to do business, (ii) compliance with any
applicable requirements of the HSR Act (iii) compliance with any applicable
requirements of the 1933 Act, the 1934 Act and any applicable state
securities laws, (iv) compliance with the Environmental Law of any state
relating to the transfer of ownership or control of property located in that
state and (v) any actions or filings the absence of which would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or materially impair the ability of Parent and
Merger Subsidiary to consummate the transactions contemplated by this
Agreement.
SECTION 5.04. NON-CONTRAVENTION. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of incorporation or
bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 5.03, contravene, conflict with or result in a
violation or breach of any provision of any law, rule, regulation, judgment,
injunction, order or decree applicable to Parent or any of its Subsidiaries,
(iii) require any consent or other action by any Person under, constitute a
default under, or cause or permit the termination, cancellation, acceleration
or other change of any right or obligation or the loss of any benefit to
which Parent or any of its Subsidiaries is entitled under any provision of
any material agreement or instrument binding upon Parent or any of its
Subsidiaries or any material license, franchise, permit, certificate,
approval or other similar authorization affecting, or relating in any way to,
the assets or business of the Parent and its Subsidiaries, PROVIDED that, for
purposes of this subsection 5.04(iii), MATERIAL AGREEMENT shall mean any
agreement identified in Parent's 10-K or in any of Parent's quarterly reports
on Form 10-Q or any agreement entered into since the date of Parent's latest
quarterly report on Form 10-Q that would be required to be so identified in
Parent's annual report on Form 10-K for the year ended January 3, 1999 or
(iv) result in the creation or imposition of any Lien on any material asset
of the Parent or any of its Subsidiaries.
SECTION 5.05. CAPITALIZATION. (a) The authorized capital stock of
Parent consists of 250,000,000 shares of Parent Common Stock and 1,000,000
shares of Preferred Stock, $.10 par value ("PARENT PREFERRED STOCK"). As of
January 15, 1999, there were outstanding 56,779,780 shares of Parent Common
Stock and employee stock options to purchase an aggregate of 1,996,622 shares
of Parent Common Stock (of which options to purchase an aggregate of
1,157,007 shares of Parent Common Stock were exercisable). As of January 15,
1999 there were no shares of Parent Preferred Stock outstanding although
300,000 shares of Parent Preferred Stock were reserved in connection with
Parent's Series A Participating
26
Cumulative Preferred Stock Purchase Rights. All outstanding shares of
capital stock of Parent have been duly authorized and validly issued and are
fully paid and nonassessable.
(b) Except as set forth in this Section 5.05 and except for changes
since January 15, 1999 resulting from the exercise of stock options or the
grant of stock based compensation to directors or employees or from the
issuance of stock in connection with a merger or other acquisition or
business combination determined by Parent's Board of Directors to be in the
best interests of Parent and its stockholders, there are no outstanding (i)
shares of capital stock or voting securities of Parent, (ii) securities of
Parent convertible into or exchangeable for shares of capital stock or voting
securities of Parent or (iii) options or other rights to acquire from Parent
or other obligation of Parent to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of Parent. There are no outstanding obligations of Parent or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any of the
securities referred to in clauses (i), (ii) or (iii) above.
(c) The shares of Parent Common Stock to be issued as part of the
Merger Consideration have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will have been validly issued
and will be fully paid and nonassessable and the issuance thereof is not
subject to any preemptive or other similar right.
SECTION 5.06. SUBSIDIARIES. (a) Each Subsidiary of Parent is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has all corporate powers and
all governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals the absence of
which would not have, individually or in the aggregate, a Material Adverse
Effect on Parent. Each Subsidiary of Parent is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where
such qualification is necessary, except for those jurisdictions where failure
to be so qualified would not have, individually or in the aggregate, a
Material Adverse Effect on Parent. Except as set forth in Schedule 5.06(a),
all Significant Subsidiaries of Parent and their respective jurisdictions of
incorporation are identified in the Parent 10-K or in a quarterly report of
Parent filed with respect to any quarter of the 1998 fiscal year.
(b) Except with respect to any Subsidiary of Parent which is not a
Significant Subsidiary of Parent, all of the outstanding capital stock of, or
other voting securities or ownership interests in, each Subsidiary of Parent,
is owned by Parent, directly or indirectly, free and clear of any Lien and
free of any other
27
limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests). Except with respect to any Subsidiary of Parent which
is not a Significant Subsidiary, there are no outstanding (i) securities of
Parent or any of its Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any of
its Subsidiaries or (ii) options or other rights to acquire from Parent or
any of its Subsidiaries, or other obligation of Parent or any of its
Subsidiaries to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable
for any capital stock or other voting securities or ownership interests in,
any Subsidiary of Parent. Except with respect to any Subsidiary of Parent
which is not a Significant Subsidiary, there are no outstanding obligations
of Parent or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any of the securities referred to in clauses (i) or (ii) above.
SECTION 5.07. SEC FILINGS. (a) Parent has filed with the SEC all
reports, schedules, forms, statements and other documents required to be
filed since December 31, 1996 (collectively, the "PARENT SEC DOCUMENTS").
(b) As of its filing date, each Parent SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act and
1934 Act, as the case may be.
(c) As of its filing date, each Parent SEC Document filed pursuant to
the 1934 Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each Parent SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 5.08. FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
included in the Parent SEC Documents fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Parent and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial
statements).
28
SECTION 5.09. REGISTRATION STATEMENT; Joint Proxy Statement/Prospectus.
(a) The information to be supplied by Parent for inclusion or
incorporation by reference in the Registration Statement will not, at the
time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the SEC, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements included therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement (including any
amendments thereto), when filed, will comply as to form in all material
respects with the requirements of the 1933 Act.
(b) The information to be supplied by Parent for inclusion or
incorporation in the Joint Proxy Statement/Prospectus will not, on the date
the Joint Proxy Statement/Prospectus is first mailed to stockholders, at the
time of the Stockholders Meetings and at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which
it shall be made, is false or misleading with respect to any material fact,
or will omit to state any material fact necessary in order to make the
statements therein not false or misleading; or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Stockholders Meetings which
has become false or misleading.
(c) Notwithstanding the foregoing, Parent and Merger Subsidiary make no
representation or warranty with respect to any information supplied by the
Company which is contained in, or furnished in connection with the
preparation of, the Registration Statement or the Joint Proxy
Statement/Prospectus.
SECTION 5.10. ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 5.10, since Parent Balance Sheet Date, the business of Parent and
its Subsidiaries has been conducted in the ordinary course consistent with
past practice and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Parent; or
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Parent other than
Parent's regular quarterly cash dividends, or any repurchase, redemption or
other acquisition by Parent or any of its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests
in, Parent or any of its Subsidiaries (other than direct or indirect
wholly-owned Subsidiaries of Parent).
29
SECTION 5.11. NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities or obligations of Parent or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, other than:
(a) liabilities or obligations disclosed and provided for in the Parent
Balance Sheet or in the notes thereto or in the Parent SEC Documents filed
prior to the date hereof;
(b) liabilities or obligations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent;
and
(c) liabilities or obligations incurred in connection with this
Agreement.
SECTION 5.12. COMPLIANCE WITH LAWS AND COURT ORDERS. Parent and each
of its Subsidiaries is and at all times since December 31, 1996 has been in
compliance with, and to the knowledge of Parent is not under investigation
with respect to and has not been threatened to be charged with or given
notice of any violation of, any applicable law, rule, regulation, judgment,
injunction, order or decree, except for matters that have not had and could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
SECTION 5.13. LITIGATION. Except as set forth in the Parent SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or, to the knowledge of Parent,
threatened against or affecting, Parent, any of its Subsidiaries, any present
or former officer, director or employee of Parent or any of its Subsidiaries
or any other Person for whom Parent or any Subsidiary may be liable or any of
their respective properties before any court or arbitrator or any
governmental body, agency or official, domestic or foreign, that, could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or that, as of the date hereof, in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the Merger
or any of the other transactions contemplated hereby.
SECTION 5.14. FINDERS' FEES. Except for Xxxxxx Xxxxxxx & Co.
Incorporated, a copy of whose engagement agreement has been provided to the
Company, and whose fees will be paid by Parent, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of Parent who might be entitled to any fee or
commission from the Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement.
30
SECTION 5.15. POOLING; TAX TREATMENT. Neither Parent nor any of its
Affiliates has taken or agreed to take any action or is aware of any fact or
circumstance that would prevent the Merger from qualifying for (i) Pooling of
Interests accounting treatment or (ii) as a Reorganization.
SECTION 5.16. OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES. (a) Merger
Subsidiary was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement.
(b) Except for obligations or liabilities incurred by Merger Subsidiary
in connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Merger Subsidiary
has not incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.01. CONDUCT OF THE COMPANY. Except as otherwise contemplated
by this Agreement, from the date hereof until the Effective Time, the Company
and its Subsidiaries shall conduct their business in all material respects in
the ordinary course consistent with past practice and shall use their
reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time without the prior
written consent of Parent.
(a) the Company will not adopt or propose any change to its
certificate of incorporation or bylaws;
(b) the Company will not, and will not permit any of its Subsidiaries
to, merge or consolidate with any other person or acquire a material amount
of stock or assets of any other Person;
(c) the Company will not, and will not permit any of its Subsidiaries
to, issue, sell, transfer, pledge, dispose of or encumber any
31
additional shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class or series of Company or
its Subsidiaries other than issuances of Company Common Stock (i) upon
the exercise of Company Stock Options outstanding as of January 19, 1999
(ii) as required pursuant to purchase price adjustments under the
acquisition agreements set forth in Schedule 6.01(c) or (iii) in
connection with the Company's 1998 Bonus Plan, PROVIDED that issuances
pursuant to clause (iii) above shall not exceed, in the aggregate, 55,000
shares of Company Common Stock and that such shares shall be allocated
among employees of the Company in the ordinary course consistent with
past practice;
(d) the Company will not, and will not permit any of its Subsidiaries
to, sell, lease, license or otherwise dispose of any Significant Subsidiary
or any material amount of assets, securities or property except (i)
pursuant to existing contracts or commitments and (ii) in the ordinary
course consistent with past practice;
(e) the Company will not, and will not permit any of its Subsidiaries
to take any action that would make any representation and warranty of the
Company hereunder inaccurate in any respect at, or as of any time prior to,
the Effective Time; and
(f) the Company will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
SECTION 6.02. STOCKHOLDER MEETING; BOARD RECOMMENDATION. (a) The
Company shall cause the Company Stockholder Meeting to be duly called and
held as soon as reasonably practicable for the purpose of obtaining the
Company Stockholder Approval. In connection with such meeting, the Company
will (i) use its reasonable efforts to obtain the Company Stockholder
Approval and (ii) otherwise comply with all legal requirements applicable to
such meeting.
(b) Except as provided in the next sentence, the Board of Directors of
the Company shall recommend approval and adoption of this Agreement and the
Merger by the Company's stockholders (the "COMPANY RECOMMENDATION"). The
Board of Directors of the Company shall be permitted to withdraw, or modify
in a manner adverse to Parent, the Company Recommendation, but only if and to
the extent that (i) the Company has complied with the terms of Section 6.03,
including, without limitation, the requirement in Section 6.03(b) that it
notify Parent promptly after its receipt of any Acquisition Proposal, (ii) a
Superior Proposal is pending at the time the Board of Directors determines to
take any such
32
action, (iii) the Board of Directors determines in good faith by a majority
vote, on the basis of advice of outside counsel to the Company that it must
take such action to comply with its fiduciary duties under applicable law and
(iv) the Company shall have delivered to Parent at least 2 business days
prior written notice advising Parent that it intends to take such action.
Nothing contained in this Agreement shall prevent the Board of Directors of
the Company from complying with Rule 14e-2 under the 1934 Act with respect to
any Acquisition Proposal.
SECTION 6.03. NO SOLICITATION. (a) From the date hereof until the
termination hereof, the Company will not, and will cause its Subsidiaries and
the officers, directors, employees, investment bankers, attorneys,
accountants, consultants and other agents or advisors ("REPRESENTATIVES") of
the Company and its Subsidiaries not to, directly or indirectly, (i) take any
action to solicit, initiate, facilitate or encourage the submission of any
Acquisition Proposal, (ii) engage in any discussions or negotiations with, or
disclose any nonpublic information relating to the Company or any of its
Subsidiaries or afford access to the properties, books or records of the
Company or any of its Subsidiaries to, any Person who may be considering
making, or has made, an Acquisition Proposal or (iii) grant any waiver or
release under any standstill or similar agreement with respect to any class
of equity securities of the Company, PROVIDED that the Company may negotiate
or otherwise engage in substantive discussions with, and furnish nonpublic
information to, any Person who delivers an Acquisition Proposal if (w) the
Company has complied with the terms of this Section 6.03, including, without
limitation, the requirement in Section 6.03(b) that it notify Parent promptly
after its receipt of any Acquisition Proposal, (x) the Board of Directors of
the Company determines in good faith by a majority vote, on the basis of
advice from outside legal counsel to the Company that it must take such
action to comply with its fiduciary duties under applicable law, (y) such
Person executes a confidentiality agreement with terms no less favorable to
the Company than those contained in the confidentiality agreements each dated
September 13, 1998 between the Company and Parent (collectively, the
"CONFIDENTIALITY AGREEMENTS") and (z) the Company shall have delivered to
Parent a prior written notice advising Parent that it intends to take such
action.
(b) The Company will notify Parent promptly (but in no event later than 24
hours) after receipt by the Company (or any of its advisors) of any Acquisition
Proposal, any indication that a Person is considering making an Acquisition
Proposal or of any request for nonpublic information relating to the Company or
any of its Subsidiaries or for access to the properties, books or records of the
Company or any of its Subsidiaries by any Person that informs the Board of
Directors of the Company that is considering making, or has made, an Acquisition
Proposal. The Company shall provide such notice orally and in writing and shall
identify the material terms and conditions of, any such Acquisition Proposal,
33
indication or request. The Company shall keep Parent fully informed, on a
current basis, of the status and material terms of any such Acquisition
Proposal, indication or request. The Company shall, and shall cause its
Subsidiaries and the Representatives of the Company and its Subsidiaries to,
cease immediately and cause to be terminated all activities, discussions or
negotiations, if any, with any Persons conducted prior to the date hereof
with respect to any Acquisition Proposal.
SECTION 6.04. ACCESS TO INFORMATION. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality
Agreements, the Company shall (i) give to the Parent, its counsel, financial
advisors, auditors and other authorized representatives reasonable access to
the offices, properties, books and records of such party, (ii) furnish to
Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as
such Persons may reasonably request and (iii) instruct its employees,
counsel, financial advisors, auditors and other authorized representatives to
cooperate with Parent in its investigation. Any investigation pursuant to
this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the Company. Unless
otherwise required by law, each of Parent and Merger Subsidiary will hold,
and will cause its respective officers, employees, counsel, financial
advisors, auditors and other authorized representatives to hold, any
nonpublic information obtained in any such investigation in confidence in
accordance with the Confidentiality Agreements. No information or knowledge
obtained in any investigation pursuant to this Section shall affect or be
deemed to modify any representation or warranty made by the Company hereunder.
SECTION 6.05. CONSENTS. The Company shall use all reasonable efforts
to obtain, prior to the Effective Time, the written consent of all third
parties identified in Schedule 6.01(c) to accept, in lieu of any Company
Common Stock that may be required to be issued to such third parties under
the relevant acquisition agreements therein identified, substantially
equivalent cash consideration.
ARTICLE 7
COVENANTS OF PARENT
Parent agrees that:
34
SECTION 7.01. CONDUCT OF PARENT. Except as otherwise contemplated by
this Agreement, from the date hereof until the Effective Time, Parent and its
Subsidiaries shall conduct their business in all material respects in the
ordinary course consistent with past practice and shall use their reasonable
efforts to preserve intact their business organizations and relationships
with third parties and to keep available the services of their present
officers and employees. Without limiting the generality of the foregoing,
from the date hereof until the Effective Time:
(a) Parent will not adopt or propose any change in its charter or
bylaws other than with respect to (i) increasing certain advance notice
requirements from 60 to 120 days, (ii) expanding or clarifying certain
indemnity provisions to cover additional officers or (iii) increasing the
number of officers authorized to execute documents;
(b) Parent will not, and will not permit any of its Subsidiaries to,
take any action that would make any representation and warranty of Parent
hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time; and
(c) Parent will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
SECTION 7.02. STOCKHOLDER MEETING; BOARD RECOMMENDATION. (a) Parent
shall cause the Parent Stockholder Meeting to be duly called and held as soon
as reasonably practicable for the purpose of obtaining the Parent Stockholder
Approval. In connection with such meeting, Parent will (i) use its
reasonable efforts to obtain the Parent Stockholder Approval and (ii)
otherwise comply with all legal requirements applicable to such meeting.
(b) The Board of Directors of Parent shall, subject to its fiduciary
duties, recommend approval and adoption of this Agreement and approval of
the transactions contemplated hereby, including the issuance of shares of
Parent Common Stock pursuant to this Agreement by Parent's stockholders (the
"PARENT RECOMMENDATION").
SECTION 7.03. OBLIGATIONS OF MERGER SUBSIDIARY. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.04. DIRECTOR AND OFFICER LIABILITY. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
35
(a) For six years after the Effective Time, Parent and the Surviving
Corporation shall indemnify and hold harmless the present and former officers
and directors of the Company (each an "INDEMNIFIED PERSON") against all costs
or expenses, including attorneys' fees, judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, (i) arising out of or pertaining to the
transactions contemplated by this Agreement or (ii) in respect of acts or
omissions occurring at or prior to the Effective Time, in each case to the
fullest extent permitted by Delaware Law or any other applicable laws or to
the fullest extent provided under the Company's certificate of incorporation
and bylaws or any applicable contract or agreement as in effect on the date
hereof, PROVIDED that such indemnification shall be subject to any limitation
imposed from time to time under applicable law. In the event of any such
claim, action, suit, proceeding or investigation, whether arising before or
after the Effective Time, (i) after the Effective Time, Parent or the
Surviving Corporation shall pay the reasonable fees and expenses of one
counsel selected by the Indemnified Persons which counsel should be
reasonably satisfactory to the Company, Parent or the Surviving Corporation,
as the case may be, promptly after statements therefor are received, (ii)
Parent and the Surviving Corporation will cooperate in the defense of any
such matter and (iii) in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights
to indemnification in respect of any such claim or claims shall continue
until the disposition of any and all such claims, PROVIDED, that neither
Parent nor the Surviving Corporation shall be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld).
(b) For six years after the Effective Time, Parent and the Surviving
Corporation shall provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering
each such Indemnified Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date
hereof, PROVIDED that, in satisfying its obligation under this Section
7.04(b), the Surviving Corporation shall not be obligated to pay annual
premiums in excess of 200% of the amount per annum the Company paid for the
fiscal year ending December 31, 1998; and PROVIDED FURTHER, that if the
premium for such coverage exceeds such amount, Parent or the Surviving
Corporation shall purchase a policy with the greatest coverage available for
such 200% of the amount per annum spent by the Company for its fiscal year
ending December 31, 1998.
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or
36
(ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
or the Surviving Corporation, as the case may be, shall assume the
obligations set forth in this Section 7.04.
(d) The rights of each Indemnified Person under this Section 7.04 shall
be in addition to any rights such Person may have under the certificate of
incorporation or bylaws of the Company or any of its Subsidiaries, or under
Delaware Law or any other applicable laws. These rights shall survive
consummation of the Merger and are intended to benefit, and shall be
enforceable by, each Indemnified Person and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
SECTION 7.05. STOCK EXCHANGE LISTING. Parent shall use its reasonable
efforts to cause the shares of Parent Common Stock to be issued in connection
with the Merger to be listed on the New York Stock Exchange, subject to
official notice of issuance.
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. REASONABLE EFFORTS. (a) Subject to the terms and
conditions of this Agreement, Company and Parent will use their reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
In furtherance and not in limitation of the foregoing, each of Parent and
Company agrees to make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated
hereby as promptly as practicable and in any event within 20 business days of
the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act.
(b) In connection with the efforts referenced in Section 8.01(a) to
obtain all requisite approvals and authorizations for the transactions
contemplated by this Agreement under the HSR Act or any other Antitrust Law,
each of Parent and Company shall use its reasonable efforts to (i) cooperate
in all respects with each other in connection with any filing or submission
and in connection with any
37
investigation or other inquiry, including any proceeding initiated by a
private party, (ii) keep the other party informed in all material respects of
any material communication received by such party from, or given by such
party to, the Federal Trade Commission (the "FTC"), the Antitrust Division of
the Department of Justice (the "DOJ") or any other governmental authority and
of any material communication received or given in connection with any
proceeding by a private party, in each case regarding any of the transactions
contemplated hereby and (iii) permit the other party to review any material
communication given by it to, and consult with each other in advance of any
meeting or conference with, the FTC, the DOJ or any such other governmental
authority or, in connection with any proceeding by a private party, with any
other Person. For purposes of this Agreement, "ANTITRUST LAW" means the
Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening of competition
through merger or acquisition.
SECTION 8.02. CERTAIN FILINGS. (a) JOINT PROXY STATEMENT PROSPECTUS;
REGISTRATION STATEMENT. As promptly as practicable after the execution of
this Agreement, the Company and Parent shall jointly prepare and file with
the SEC preliminary proxy materials which shall constitute the Joint Proxy
Statement/Prospectus and the Registration Statement of the Parent with
respect to the Parent Common Stock to be issued in connection with the
Merger. As promptly as practicable after comments are received from the SEC
thereon and after the furnishing by the Company and Parent of all information
required to be contained therein, the Company and Parent shall file with the
SEC the Joint Proxy Statement/Prospectus and Registration Statement on Form
S-4 (or on such other form as shall be appropriate) relating to the adoption
of this Agreement and approval of the transactions contemplated hereby by the
stockholders of the Company and by the stockholders of Parent, and shall use
all reasonable efforts to cause the Registration Statement to become
effective, and to mail the Joint Proxy Statement/Prospectus to their
respective stockholders, as soon thereafter as practicable.
(b) No amendment or supplement to the Joint Proxy Statement/Prospectus
will be made by the Company or Parent without the approval of the other
party, which will not be unreasonably withheld or delayed. Each party will
advise the other party, promptly after it receives notice thereof, of the
time when the Registration Statement has become effective or any supplement
or amendment has been filed, the issuance of any stop order, the suspension
of the qualification of the Parent Common Shares issuable in connection with
the
38
Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Joint Proxy Statement/Prospectus or comments thereon and
responses thereto or requests by the SEC for additional information. If at
any time prior to the Effective Time, the Company or Parent discovers any
information relating to either party, or any of their respective Affiliates,
officers or directors, that should be set forth in an amendment or supplement
to the Joint Proxy Statement/Prospectus, so that such document would not
include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party that discovers such
information shall promptly notify the other parties hereto and an appropriate
amendment or supplement describing such information shall be promptly filed
with the SEC and, to the extent required by law or regulation, disseminated
to the stockholders of the Company and Parent.
(c) The Company and Parent shall cooperate with one another (i) in
determining whether any other action by or in respect of, or filing with, any
governmental body, agency, official or authority (each, a "GOVERNMENTAL
ENTITY") is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement,
(ii) in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers and (iii) in setting a mutually
acceptable date for the Company Stockholder Meeting and the Parent
Stockholder Meeting, so as to enable them to occur, to the extent
practicable, on the same date. In connection with the foregoing, each party
shall permit the other party to review any communication given by it to, and
consult with each other in advance of any meeting or conference with, any
Governmental Entity or, in connection with any proceeding by a private party,
with any other Person, and to the extent permitted by the applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences, in each case in
connection with the transactions contemplated hereby.
SECTION 8.03. PUBLIC ANNOUNCEMENTS. Parent and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange, will not issue any such
press release or make any such public statement prior to such consultation.
SECTION 8.04. FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute
39
and deliver, in the name and on behalf of the Company or Merger Subsidiary,
any deeds, bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company or Merger Subsidiary, any other actions
and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
SECTION 8.05. NOTICES OF CERTAIN EVENTS. Each of the Company and
Parent shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or
otherwise affecting the Company, Parent or any of their respective
Subsidiaries, as the case may be, that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Article 4 or Article 5, as the case may be, or that relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 8.06. TAX-FREE REORGANIZATION; POOLING. (a) Prior to and after
the Effective Time, each party shall use its reasonable efforts to cause the
Merger to qualify as a Reorganization, and will not take any action
reasonably likely to cause the Merger not so to qualify.
(b) Prior to and after the Effective Time each Party will use its
reasonable efforts to cause the Merger to qualify for Pooling of Interests
accounting treatment, and will not take any action reasonably likely to cause
the Merger not so to qualify.
(c) Each party shall use its best efforts to obtain the opinions and
advice referred to in Sections 9.01(g) and 9.03(b).
SECTION 8.07. AFFILIATES. (a) Promptly following the date of this
Agreement, the Company shall deliver to Parent a letter identifying all known
Persons who may be deemed affiliates of the Company under Rule 145 of the
40
1933 Act or under applicable SEC accounting releases with respect to pooling
of interests accounting treatment. The Company shall use its reasonable
efforts to obtain a written agreement from each Person who may be so deemed
as soon as practicable and, in any event, at least 30 days prior to the
Effective Time, substantially in the form of Exhibit B hereto.
(b) Promptly following the date of this Agreement, Parent shall deliver
to the Company a letter identifying all known Persons who may be deemed
affiliates of Parent under Rule 145 of the 1933 Act or under applicable SEC
accounting releases with respect to pooling of interests accounting
treatment. Parent shall use its reasonable efforts to obtain a written
agreement from each Person who may be so deemed as soon as practicable and,
in any event, at least 30 days prior to the Effective Time, substantially in
the form of Exhibit C hereto.
(c) Prior to the Closing Date, the Company shall cause to be delivered
to Parent a letter identifying, to the best of the Company's knowledge, all
Persons who are, at the time of the Company Stockholder Meeting deemed to be
affiliates of the Company for purposes of Rule 145 under the 1933 Act. The
Company shall use its reasonable efforts to cause each Person who is so
identified as an affiliate for such purposes to deliver to Parent on or prior
to the Closing Date a letter agreement substantially in the form of Exhibit D
hereto.
SECTION 8.08. SUBSTANTIALLY EQUIVALENT BENEFITS. (a) With respect to
the Company Employee Plans in effect immediately prior to the Effective Time,
Parent shall for a period of no less than one year following the Effective
Time continue to provide or cause to be provided such plans, programs,
agreements or arrangements on behalf of the employees of the Company or its
Subsidiaries (the "AFFECTED EMPLOYEES") so as to provide, in the aggregate,
employee benefits which are at least substantially equivalent to the benefits
provided to such individuals under the Company Employee Plans immediately
prior to the Effective Time; PROVIDED, that Affected Employees who are not
covered by any binding severance arrangements of the Company (including,
without limitation, the Company's Change in Control Severance Benefit Plan
for Key Employees) shall be covered under the severance policy of Parent in
the manner and the extent applicable to similarly situated employees of
Parent, PROVIDED FURTHER, that such Affected Employees shall be entitled to
credit for past service at the Company under the severance policy of Parent.
(b) Parent shall take all actions necessary to cause the Surviving
Corporation to maintain in effect, for a period of at least two years
following the Effective Time, the AFC Cable Systems, Inc. Selective
Retirement Plan, as in effect as of the date hereof (the "SRP"), and to
provide to the employees of the Company who actively participate in the SRP
as of the date hereof an annual
41
benefit contribution during the period that the SRP remains in effect
determined on a basis substantially similar to the benefit contributions made
with respect to such employees for plan years ending prior to the Effective
Time; PROVIDED, that the maximum aggregate annual contribution that shall be
required to be made to the SRP for any plan year ending after the Effective
Time shall not exceed $325,000. Parent and the Company agree that the
consummation of the Merger shall not be treated as a sale of the Company for
purposes of the SRP and shall not result in the accelerated payment of any
benefits or deferrals under the SRP, and Parent and the Company shall cause
to be taken all actions reasonably necessary and appropriate to assure this
result and to prevent any actions to the contrary.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) each of the Company Stockholder Approval and the Parent Stockholder
Approval shall have been obtained;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(d) the Registration Statement shall have been declared effective and
no stop order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the SEC;
(e) the shares of Parent Common Stock to be issued in the Merger shall
have been approved for listing on the New York Stock Exchange, subject to
official notice of issuance;
(f) Parent shall have received a letter from KPMG LLP, in writing and
otherwise in form and substance reasonably satisfactory to Parent dated the
Closing Date, stating that the Merger will qualify for Pooling of Interests
accounting treatment; and
42
(g) the Company shall have received a letter from Ernst & Young, LLP,
in writing and otherwise in form and substance reasonably satisfactory to the
Company dated the Closing Date, stating that it agrees with the Company's
conclusion that the Company is an entity which has met the criteria to
qualify for Pooling of Interests accounting treatment.
SECTION 9.02. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER
SUBSIDIARY. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time, the representations and warranties of the Company contained
in this Agreement shall be true in all material respects at and as of the
Effective Time as if made at and as of such time and Parent shall have
received a certificate signed by an executive officer of the Company to the
foregoing effect;
(b) there shall not be pending any action or proceeding (or any
investigation or other inquiry that might result in such action or
proceeding) or any statute, rule, regulation, injunction, order or decree
proposed, enacted, enforced, promulgated, issued or deemed applicable to the
Merger, by any government or governmental authority or agency, domestic or
foreign, or by any other Person, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the Merger, seeking to
obtain material damages or otherwise directly or indirectly relating to the
transactions contemplated by the Merger or (ii) seeking to restrain or
prohibit Parent's ownership or operation (or that of its respective
Subsidiaries or Affiliates) of all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Parent
and its Subsidiaries, taken as a whole, or to compel Parent or any of its
Subsidiaries or Affiliates to dispose of or hold separate all or any material
portion of the business or assets of the Company and its Subsidiaries, taken
as a whole, or of Parent and its Subsidiaries, taken as a whole.
(c) The Company shall have received all of the consents referred to in
Section 6.05.
SECTION 9.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
43
(a) each of Parent and Merger Subsidiary shall have performed in all
material respects all of its obligations hereunder required to be performed
by it at or prior to the Effective Time, the representations and warranties
of Parent contained in this Agreement shall be true in all material respects
at and as of the Effective Time as if made at and as of such time and the
Company shall have received a certificate signed by an executive officer of
Parent to the foregoing effect; and
(b) The Company shall have received an opinion, dated the Closing Date,
of Ropes & Xxxx in form and substance reasonably satisfactory to the Company,
to the effect that the Merger will be treated for federal income tax purposes
as a reorganization qualifying under the provisions of Section 368(a) of the
Code and that each of Parent, Merger Subsidiary and the Company will be a
party to the reorganization within the meaning of Section 368(b) of the Code.
In rendering such opinion, Ropes & Xxxx shall be entitled to rely on
customary representations of officers of Parent, Merger Subsidiary and the
Company in form and substance reasonably satisfactory to such counsel and
other reasonable assumptions set forth therein.
ARTICLE 10
TERMINATION
SECTION 10.01. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (whether before
or after the Company Stockholder Approval and/or the Parent Stockholder Approval
shall have been obtained):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before June 30,
1999, PROVIDED that the right to terminate this Agreement pursuant to
this Section 10.01(b)(i) shall not be available to any party whose
breach of any provision of this Agreement results in the failure of the
Merger to be consummated by such time;
(ii) there shall be any law or regulation that makes consummation
of the Merger illegal or otherwise prohibited or any judgment,
injunction, order or decree of any court or governmental body having
competent jurisdiction enjoining Company or Parent from
44
consummating the Merger is entered and such judgment, injunction,
judgment or order shall have become final and nonappealable; or
(iii) at the Company Stockholder Meeting (including any adjournment
or postponement thereof), the Company Stockholder Approval shall not
have been obtained;
(iv) at the Parent Stockholder Meeting (including any adjournment
or postponement thereof), the Parent Stockholder Approval shall not have
been obtained.
(c) by Parent, if
(i) (A) the Board of Directors of the Company shall have failed
to recommend or shall have withdrawn, or modified in a manner adverse to
Parent, the Company Recommendation or shall have recommended a Superior
Proposal, or the Company shall have entered into a definitive agreement
with respect to an Acquisition Proposal (or shall have resolved to do
any of the foregoing) or (B) the Company shall have breached any of its
obligations under Sections 6.02 or 6.03;
(ii) any Person or "group" (as defined in Section 13(d)(3) of the
1934 Act), other than Parent or any of its Affiliates, shall have
acquired beneficial ownership of more than 50% of the shares of Company
Common Stock, through the acquisition of stock, the formation of a group
or otherwise, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of such shares;
(iii) any person or group shall have made a tender or exchange offer
for at least 50% of the outstanding shares of Company Common Stock; or
(iv) the Company shall have breached any representation or warranty
made by it in this Agreement and shall have failed to cure such breach
within 30 days after receipt of notice thereof and such breach, if not
cured, would result in the failure of the condition set forth in Section
9.02(a).
(d) by the Company, if
(i) (A) the Board of Directors of the Company shall have
authorized the Company, subject to complying with the terms of this
Agreement, to enter into a definitive agreement with respect to a
Superior
45
Proposal and the Company shall have notified Parent in writing that it
intends to enter into such an agreement, attaching a summary of the
material terms thereof, (B) Parent shall not have made, within 2
business days of receipt of the Company's written notification of its
intention to enter into a definitive agreement with respect to a
Superior Proposal, an offer that the Board of Directors of the Company
determines, in good faith after consultation with its financial
advisors, is at least as favorable, from a financial point of view, to
the shareholders of the Company as the Superior Proposal and (C) the
Company prior to such termination pursuant to this clause (d)(i) shall
have paid to Parent in immediately available funds the fees required to
be paid pursuant to Section 11.04(b);
(ii) (A) the Board of Directors of Parent shall have failed to
recommend or shall have withdrawn, or modified in a manner adverse to
the Company, the Parent Recommendation or (B) Parent shall have breached
any of its obligations under Section 7.02;
(iii) the average of the daily closing sale price per share of
Parent Common Stock on the NYSE for the 10 consecutive trading days
ending on and including the third trading day preceding the Company
Stockholder Meeting (the "PARENT AVERAGE PRICE") shall be less than
$37.20;
(iv) the Parent Average Price shall be less than $41.85, as such
number may be reduced to reflect the percentage decline, if any, in the
S&P Industrials Index (the "S&P 400 INDEX") following the date hereof,
as measured by comparing the average closing S&P 400 Index for the 10
consecutive trading days ending on and including the third trading day
preceding the Company Stockholder Meeting to 1479.02; or
(v) Parent shall have breached any representation or warranty made
by it in this Agreement and shall have failed to cure such breach within
30 days after receipt of notice thereof and such breach, if not cured,
would result in the failure of the condition set forth in Section
9.03(a).
The Company agrees (x) that it will not enter into a definitive
agreement referred to in clause (i) above until at least 2 business days
after it has provided the notice to Parent required thereby and (y) to notify
Parent promptly if its intention to enter into a written agreement referred
to in its notification shall change at any time after giving such
notification;
The party desiring to terminate this Agreement pursuant to this Section 10.01
(other than pursuant to Section 10.01(a)) shall give notice of such termination
to the other party.
46
SECTION 10.02. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other
party hereto, PROVIDED that, if such termination shall result from the
willful (i) failure of either party to fulfill a condition to the performance
of the obligations of the other party, (ii) failure of either party to
perform a covenant hereof or (iii) breach by either party hereto of any
representation or warranty or agreement contained herein, such party shall be
fully liable for any and all liabilities and damages incurred or suffered by
the other party as a result of such failure or breach. The provisions of
Sections 11.04, 11.06 and 11.07 shall survive any termination hereof pursuant
to Section 10.01.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Merger Subsidiary, to:
Xxxxxx & Xxxxx Corporation
0000 X&X Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Vice President - General Counsel and Secretary
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
47
if to the Company, to:
AFC Cable Systems, Inc.
00 Xxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx,
Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Xx.
Fax: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m., and such day is
a business day, in the place of receipt. Otherwise, any such notice, request
or communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
SECTION 11.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or
other writing delivered pursuant hereto shall not survive the Effective Time
or the termination of this Agreement.
SECTION 11.03. AMENDMENTS; NO WAIVERS. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by
each party against whom the waiver is to be effective, PROVIDED that, after
the adoption of this Agreement by the stockholders of the Company and without
their further approval, no such amendment or waiver shall reduce the amount
or change the kind of consideration to be received in exchange for any shares
of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of
48
any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 11.04. EXPENSES. (a) Except as otherwise provided in this
Section, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
(b) If:
(i) (A) Parent or the Company shall terminate this Agreement
pursuant to Section 10.01(b)(iii), (B) on or prior to the Company
Stockholder Meeting an Acquisition Proposal shall have been publicly
proposed or disclosed and (C) concurrently with or within 12 months
after the termination of this Agreement pursuant to Section
10.01(b)(iii), the Company or any of its Subsidiaries shall have
consummated or entered into a definitive agreement with respect to any
transaction that, if such transaction had been proposed prior to the
termination of this Agreement, would have constituted an Acquisition
Proposal;
(ii) Parent shall terminate this Agreement pursuant to clause (i)
or (ii) of Section 10.01(c); or
(iii) the Company shall terminate this Agreement pursuant to Section
10.01(d)(i);
then, in any such case, the Company shall pay to Parent an amount equal to
$16,000,000 by wire transfer of immediately available funds and such funds
shall be paid by the Company (X) in the case of clause (i) above,
concurrently with the earlier of the Company or any of its Subsidiaries
consummating or entering into a definitive agreement with respect to the type
of transaction referred to in clause (i) above, (Y) in the case of clause
(ii) above, promptly, and in any event within two days, following the
termination of this Agreement and (Z) in the case of clause (iii) above,
prior to such termination.
(c) If Parent shall terminate this Agreement pursuant to Section
10.01(c)(iv), the Company shall pay to Parent in reimbursement of its
documented out-of-pocket costs and expenses an amount not to exceed $2
million by wire transfer in immediately available funds promptly, and in any
event within two business days, following the termination of this Agreement.
49
(d) If the Company shall terminate this Agreement pursuant to Section
10.01(d)(v) then Parent shall pay to the Company in reimbursement of its
documented out-of-pocket costs and expenses an amount not to exceed $2
million by wire transfer in immediately available funds promptly, and in any
event within two business days, following the termination of this Agreement.
(e) If the Company or Parent fails promptly to pay any amount due to
the other party pursuant to this Section 11.04, it shall also pay any costs
and expenses incurred by the other party in connection with a legal action to
enforce this Agreement that results in a judgment in favor of the other party
for such amount.
SECTION 11.05. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, PROVIDED that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of each other party hereto, except
that Parent or Merger Subsidiary may transfer or assign, in whole or from
time to time in part, to one or more of their Affiliates, the right to enter
into the transactions contemplated by this Agreement, but any such transfer
or assignment will not relieve Parent or Merger Subsidiary of its obligations
hereunder.
SECTION 11.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 11.07. JURISDICTION. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may
be brought in any federal or state court located in the State of Delaware,
and each of the parties hereby consents to the jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action
or proceeding and irrevocably waives, to the fullest extent permitted by law,
any objection that it may now or hereafter have to the laying of the venue of
any such suit, action or proceeding in any such court or that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 11.01
shall be deemed effective service of process on such party.
SECTION 11.08. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument.
50
This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 7.04, no provision of this Agreement is
intended to confer any rights, benefits, remedies, obligations or liabilities
hereunder upon any Person other than the parties hereto and their respective
successors and assigns.
SECTION 11.09. ENTIRE AGREEMENT. This Agreement, the Confidentiality
Agreements and the Voting Agreement constitute the entire agreement between
the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this Agreement.
SECTION 11.10. CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 11.11. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties
as closely as possible in an acceptable manner so that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
SECTION 11.12. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the performance of the terms and
provisions hereof in any federal court located in the State of Delaware or
any Delaware state court, in addition to any other remedy to which they are
entitled at law or in equity.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
AFC CABLE SYSTEMS
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief
Executive Officer
XXXXXX & XXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief
Executive Officer
TB ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
52
