<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration 33-59787
M/A-COM, INC.
PROXY STATEMENT
FOR A SPECIAL MEETING OF STOCKHOLDERS OF
M/A-COM, INC.
TO BE HELD ON JUNE 30, 1995
----------------
AMP INCORPORATED
PROSPECTUS
----------------
This Proxy Statement-Prospectus is being furnished to stockholders of M/A-
COM, Inc., a Massachusetts corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Company
Board") from the holders of outstanding shares of common stock, par value $1.00
per share, of the Company ("Company Common Stock"), for use at a Special
Meeting of stockholders of the Company to be held on Friday, June 30, 1995 at
10:00 a.m., local time, in the Auditorium located at the Company's facility at
1011 Pawtucket Boulevard, Lowell, Massachusetts (the "Special Meeting"), or at
any adjournments or postponements thereof.
At the Special Meeting, stockholders will be asked to consider and vote upon
a proposal to approve and adopt the Agreement and Plan of Merger, dated March
10, 1995 (the "Merger Agreement"), among AMP Incorporated, a Pennsylvania
corporation ("AMP"), AMP Merger Corp., a Massachusetts corporation and a wholly
owned subsidiary of AMP ("Subsidiary"), and the Company, pursuant to which,
among other things, Subsidiary will merge with and into the Company and the
Company will survive such merger (the "Merger") as a wholly owned subsidiary of
AMP. Pursuant to the Merger Agreement, at the effective time of the Merger (the
"Effective Time"), each outstanding share of Company Common Stock, other than
shares held by the Company as treasury stock or by AMP, Subsidiary or any other
subsidiary of AMP and shares as to which appraisal rights have been duly
asserted and perfected under the Massachusetts Business Corporation Law
("MBCL"), will be converted into the right to receive .28 of one share of
common stock, no par value per share, of AMP ("AMP Common Stock"), together
with any rights attached thereto. Company stockholders will receive cash in
lieu of any fractional shares of AMP Common Stock which would otherwise be
issuable to such stockholders as a result of the Merger. Shares of Company
Common Stock owned at the Effective Time by the Company as treasury stock or by
AMP, Subsidiary or any other subsidiary of AMP will be cancelled pursuant to
the Merger Agreement.
This Proxy Statement-Prospectus also serves as a prospectus of AMP under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to up
to 8,211,204 shares of AMP Common Stock, together with any rights attached
thereto, to be issued in connection with the Merger.
This Proxy Statement-Prospectus and the accompanying form of proxy are first
being sent to stockholders of the Company on or about June 2, 1995.
----------------
THE SECURITIES TO WHICH THIS PROXY STATEMENT-PROSPECTUS RELATES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Proxy Statement-Prospectus is June 2, 1995.
----------------
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROXY STATEMENT-PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY
STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROXY STATEMENT-
PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF
AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES PURSUANT TO
THIS PROXY STATEMENT-PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH OR
INCORPORATED HEREIN BY REFERENCE OR IN THE AFFAIRS OF THE COMPANY OR AMP SINCE
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS. THE INFORMATION CONTAINED HEREIN
WITH RESPECT TO THE COMPANY AND ITS SUBSIDIARIES HAS BEEN PROVIDED BY THE
COMPANY AND THE INFORMATION CONTAINED HEREIN WITH RESPECT TO AMP AND ITS
SUBSIDIARIES HAS BEEN PROVIDED BY AMP.
AVAILABLE INFORMATION
The Company and AMP are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). Copies of such reports,
proxy statements and other information may be inspected and copied at the
public reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
Regional Offices of the SEC: Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such materials can also be obtained at
prescribed rates from the Public Reference Section of the SEC, 450 Fifth
Street, N.W., Washington, D.C. 20549. Company Common Stock and AMP Common Stock
are listed and traded on the New York Stock Exchange, Inc. (the "NYSE").
Reports, proxy statements and other information concerning the Company and AMP
may be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005. Company Common Stock is also listed and traded on the Boston Stock
Exchange, Inc. ("BSE") and AMP Common Stock is also listed on the following
regional stock exchanges: BSE, Cincinnati Stock Exchange, Chicago Stock
Exchange, Inc., Pacific Stock Exchange Incorporated and Philadelphia Stock
Exchange, Inc.
AMP has filed with the SEC a registration statement on Form S-4 (together
with all amendments, supplements and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the AMP Common Stock to be
issued in connection with the Merger. This Proxy Statement-Prospectus also
constitutes the Prospectus of AMP filed as part of the Registration Statement.
The Proxy Statement-Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. The Registration
Statement is available for inspection and copying as set forth above.
INCORPORATION BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE COMPANY AND AMP HEREBY
UNDERTAKE TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON, INCLUDING ANY BENEFICIAL
OWNER OF COMPANY COMMON STOCK, TO WHOM A COPY OF THIS PROXY STATEMENT-
PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS THAT HAVE BEEN INCORPORATED
HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED HEREIN BY REFERENCE. REQUESTS FOR SUCH DOCUMENTS
SHOULD BE DIRECTED TO, IN THE CASE OF DOCUMENTS RELATING TO THE COMPANY,
INVESTOR RELATIONS, M/A-COM, INC., 100 CHELMSFORD STREET, P.O. BOX 3294,
LOWELL, MASSACHUSETTS 01853-3294, TELEPHONE NUMBER (508) 442-5000 AND, IN THE
CASE OF DOCUMENTS RELATING TO AMP, DAVID F. HENSCHEL, CORPORATE SECRETARY, AMP
INCORPORATED, 470 FRIENDSHIP ROAD, MAIL STOP 176-048, HARRISBURG, PENNSYLVANIA
17111, TELEPHONE NUMBER (717) 564-0100. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY JUNE 19, 1995.
2
<PAGE>
The following documents, which have been filed with the SEC, are hereby
incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
October 1, 1994;
(b) the Company's Quarterly Reports on Form 10-Q for the three month periods
ended January 1, 1994, April 2, 1994, December 31, 1994 and April 1, 1995;
(c) the Company's Current Report on Form 8-K filed March 20, 1995;
(d) the description of Company Common Stock set forth in the Company's
Registration Statement on Form S-8, File No. 33-35845, filed July 12, 1990, as
amended by the description of the classification of the Company Board contained
in the Company's Proxy Statement dated January 7, 1991 in connection with the
annual meeting of stockholders of the Company held on February 20, 1991, and
any amendment or report filed for the purpose of updating any such description;
(e) the description of the rights under the Rights Agreement dated as of July
29, 1986, as amended and restated as of May 16, 1990, between the Company and
The First National Bank of Boston set forth in the Company's Registration
Statement on Form S-8, File No. 33-35845, filed July 12, 1990, and any
amendment or report filed for the purpose of updating any such description;
(f) AMP's Annual Report on Form 10-K for the year ended December 31, 1994;
(g) AMP's Quarterly Reports on Form 10-Q for the three month periods ended
March 31, 1994 and March 31, 1995;
(h) AMP's Current Reports on Form 8-K filed January 31, 1995 and March 20,
1995;
(i) the description of AMP Common Stock set forth in AMP's Registration
Statement on Form 8-B, File No. 1-4235, filed April 10, 1989, and any amendment
or report filed for the purpose of updating any such description; and
(j) the description of the rights under the Rights Agreement between AMP and
Chemical Bank, dated as of October 25, 1989, set forth in AMP's Registration
Statement on Form 8-A, File No. 1-4235, filed November 7, 1989, and any
amendment or report filed for the purpose of updating any such description.
All documents filed by the Company or AMP pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date hereof and prior to the date of
the Special Meeting shall be deemed to be incorporated herein by reference and
to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Proxy Statement-Prospectus to the extent that a statement
contained herein or any other subsequently filed document that is deemed to be
incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement-
Prospectus.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION ..................................................... 2
INCORPORATION BY REFERENCE................................................. 2
SUMMARY.................................................................... 5
THE SPECIAL MEETING ....................................................... 12
Date, Time and Place..................................................... 12
Purpose of the Special Meeting........................................... 12
Record Date ............................................................. 12
Required Vote............................................................ 12
Proxies ................................................................. 12
THE MERGER ................................................................ 13
Background of the Merger................................................. 13
The Company's Reasons for the Merger; Recommendation of the Company
Board................................................................... 16
AMP's Reasons for the Merger............................................. 16
Opinion of the Company's Financial Advisor .............................. 16
Closing; Effective Time ................................................. 20
Form of the Merger; Merger Consideration ................................ 20
Exchange of Stock Certificates .......................................... 20
Interests of Certain Persons in the Merger .............................. 21
Certain Federal Income Tax Consequences of the Merger ................... 23
Accounting Treatment .................................................... 24
Regulatory Filings and Approvals ........................................ 25
Restrictions on Sales of Shares by Affiliates ........................... 25
Listing of AMP Common Stock on NYSE ..................................... 26
Appraisal Rights......................................................... 26
Delisting and Deregistration of Company Common Stock After the Merger.... 28
The Merger Agreement .................................................... 28
Operations After the Merger.............................................. 33
INFORMATION CONCERNING THE COMPANY......................................... 34
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 34
INFORMATION CONCERNING AMP................................................. 35
COMPARATIVE PER SHARE MARKET PRICE DATA ................................... 36
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS ............... 38
COMPARISON OF RIGHTS OF HOLDERS OF COMPANY COMMON STOCK AND
AMP COMMON STOCK ......................................................... 43
LEGAL OPINION ............................................................. 55
EXPERTS.................................................................... 55
AMENDMENTS TO THE COMPANY BY-LAWS ......................................... 56
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING OF
COMPANY STOCKHOLDERS ..................................................... 56
</TABLE>
Appendix A--Agreement and Plan of Merger dated March 10, 1995 among AMP
Incorporated, AMP Merger Corp. and M/A-COM, Inc.
Appendix B--Opinion of Lazard Freres & Co. LLC
Appendix C--Excerpt from Massachusetts Business Corporation Law Relating to
Appraisal Rights
4
<PAGE>
SUMMARY
The following summary is not intended to be complete and is qualified in its
entirety by more detailed information appearing elsewhere in this Proxy
Statement-Prospectus, including the Appendices hereto, or in the documents
incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ CAREFULLY THIS
PROXY STATEMENT-PROSPECTUS, INCLUDING THE APPENDICES HERETO, AND THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, IN THEIR ENTIRETY.
THE COMPANIES
M/A-COM, INC.
M/A-COM, Inc., a Massachusetts corporation (the "Company"), is primarily a
supplier to the wireless telecommunications, surveillance and defense-related
industries of radio frequency, microwave and millimeter wave semiconductors,
components and subsystems, utilizing advanced circuit and semiconductor
technologies, for systems applications in wireless communications, sensor
systems, radar, navigation, missile guidance, electronic warfare and
surveillance in air, ground, sea and space environments. The Company's products
are used in a substantial variety of commercial applications and defense
systems. The Company also manufactures surveillance products used in
intelligence collection applications. The mailing address of the Company's
principal executive offices is 100 Chelmsford Street, P.O. Box 3294, Lowell,
Massachusetts 01853-3294, and its telephone number is (508) 442-5000.
AMP INCORPORATED
AMP Incorporated, a Pennsylvania corporation ("AMP"), is a leading producer
of electrical and electronic connection devices. AMP supplies over 100,000
types and sizes of terminals, splices, connectors, cable assemblies, fiber-
optic assemblies, printed circuit board assemblies, sensors, wide and local
area network products and systems, switches, touch screen data entry systems
and related application tooling to more than 30,000 electrical and electronic
equipment manufacturers and tens of thousands of customers who install and
maintain that equipment. The mailing address of AMP's principal executive
offices is 470 Friendship Road, Mail Stop 176-048, Harrisburg, Pennsylvania
17111, and its telephone number is (717) 564-0100.
AMP MERGER CORP.
AMP Merger Corp., a Massachusetts corporation and wholly owned subsidiary of
AMP ("Subsidiary"), was incorporated in February 1995 for purposes of the
Merger. Subsidiary engages in no other business. The mailing address of
Subsidiary's principal executive offices is 470 Friendship Road, Mail Stop 176-
048, Harrisburg, Pennsylvania 17111, and its telephone number is (717) 564-
0100.
THE SPECIAL MEETING
DATE, TIME AND PLACE
The Special Meeting of stockholders of the Company (the "Special Meeting") is
scheduled to be held on Friday, June 30, 1995 at 10:00 a.m., local time, in the
Auditorium located at the Company's facility at 1011 Pawtucket Boulevard,
Lowell, Massachusetts.
PURPOSE
At the Special Meeting, the stockholders of the Company will be asked to
consider and vote upon the proposal to approve and adopt the Agreement and Plan
of Merger, dated March 10, 1995 (the "Merger Agreement"), among AMP, Subsidiary
and the Company, a copy of which is attached as Appendix A to this Proxy
Statement-Prospectus.
RECORD DATE
The Board of Directors of the Company (the "Company Board") has fixed the
close of business on May 19, 1995 as the record date (the "Record Date") for
the determination of stockholders entitled to notice
5
<PAGE>
of and to vote at the Special Meeting. As of the Record Date, there were
26,715,355 shares of common stock, par value $1.00 per share, of the Company
("Company Common Stock") issued and outstanding.
REQUIRED VOTE
The affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of Company Common Stock entitled to vote at the Special
Meeting is required to approve and adopt the Merger Agreement. As of the Record
Date, directors and executive officers of the Company and their affiliates had
the right to vote approximately 1.85% of all issued and outstanding shares of
Company Common Stock entitled to vote at the Special Meeting. See "The Special
Meeting--Required Vote."
PROXIES
Shares of Company Common Stock represented by properly executed proxies
received prior to or at the Special Meeting will, unless such proxies shall
have been revoked, be voted in accordance with the instructions indicated
therein. If no instructions are indicated on a properly executed proxy, the
shares will be voted FOR approval and adoption of the Merger Agreement. See
"The Special Meeting--Proxies."
THE MERGER
CLOSING; EFFECTIVE TIME
The closing of the transaction contemplated by the Merger Agreement (the
"Closing") will take place on the day which is two business days after the
first date on which each of certain conditions to the Merger (as defined below)
set forth in the Merger Agreement is satisfied or waived, or at such other time
as AMP and the Company agree (the "Closing Date"). The Merger will become
effective upon the filing of the Articles of Merger with the Secretary of State
of the Commonwealth of Massachusetts as required by Massachusetts law (the
"Effective Time"). Such filing will be made as soon as practicable on or after
the Closing Date. See "The Merger--Closing; Effective Time" and "The Merger--
The Merger Agreement--Conditions to Consummation of the Merger."
FORM OF THE MERGER; MERGER CONSIDERATION
At the Effective Time, Subsidiary will merge with and into the Company and
the Company will survive such merger (the "Merger") as a wholly owned
subsidiary of AMP.
At the Effective Time, each outstanding share of Company Common Stock, other
than shares held by the Company as treasury stock or by AMP, Subsidiary or any
other subsidiary of AMP and shares as to which appraisal rights have been duly
asserted and perfected under the Massachusetts Business Corporation Law (the
"MBCL"), will be converted into the right to receive .28 of one share of common
stock, no par value per share, of AMP ("AMP Common Stock"), together with any
rights attached thereto. Cash will be paid in lieu of fractional shares of AMP
Common Stock which would otherwise be issuable as a result of the Merger. All
shares of Company Common Stock owned at the Effective Time by the Company as
treasury stock or by AMP, Subsidiary or any other subsidiary of AMP will be
cancelled pursuant to the Merger Agreement. See "The Merger--Form of the
Merger; Merger Consideration" and "The Merger--The Merger Agreement--Conversion
of Shares." As of the date of this Proxy Statement-Prospectus, neither AMP nor
any subsidiary of AMP (including Subsidiary) owns any Company Common Stock.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Time, The First National Bank of
Boston (the "Exchange Agent") will mail transmittal instructions and a form of
letter of transmittal to each person who was, at the Effective Time, a holder
of record of Company Common Stock. The transmittal instructions will describe
the
6
<PAGE>
procedures for surrendering certificates that prior to the Merger represented
Company Common Stock ("Company Certificates") in exchange for certificates
representing AMP Common Stock. COMPANY STOCKHOLDERS SHOULD NOT SUBMIT THEIR
COMPANY CERTIFICATES FOR EXCHANGE UNLESS AND UNTIL THEY HAVE RECEIVED THE
TRANSMITTAL INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL FROM THE EXCHANGE
AGENT. See "The Merger--Exchange of Stock Certificates" and "The Merger--The
Merger Agreement--Conversion of Shares."
CONDITIONS TO THE MERGER
The respective obligations of the Company, AMP and Subsidiary to consummate
the Merger are subject to the fulfillment or waiver (where permissible) of
certain conditions set forth in the Merger Agreement. See "The Merger--The
Merger Agreement--Conditions to Consummation of the Merger."
TERMINATION
The Merger Agreement is subject to termination at the option of either the
Company or AMP if the Effective Time has not occurred at or before 11:59 p.m.
Boston time on September 1, 1995, and prior to such time upon the occurrence of
certain events. The Company is required to pay AMP a fee in the amount of $11
million if it terminates the Merger Agreement under certain circumstances. See
"The Merger--The Merger Agreement--Termination and Termination Fee."
RECOMMENDATION OF THE COMPANY BOARD
The Company Board has approved the Merger Agreement and unanimously
recommends that stockholders of the Company vote FOR approval and adoption of
the Merger Agreement. The Company Board's recommendation is based upon a number
of factors described in this Proxy Statement-Prospectus. See "The Merger--The
Company's Reasons for the Merger; Recommendation of the Company Board."
OPINION OF THE FINANCIAL ADVISOR TO THE COMPANY BOARD
Lazard Freres & Co. LLC, the Company's financial advisor ("Lazard Freres"),
has delivered written opinions to the Company Board to the effect that, based
upon and subject to the matters set forth in its opinions, as of March 10, 1995
and the date of this Proxy Statement-Prospectus, the consideration to be paid
to holders of Company Common Stock in connection with the Merger is fair to
such stockholders from a financial point of view. The full text of the Lazard
Freres opinion dated the date of this Proxy Statement-Prospectus, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken, is attached as Appendix B to this Proxy Statement-Prospectus.
Company stockholders are urged to read the Lazard Freres opinion in its
entirety. See "The Merger--Opinion of the Company's Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Company Board with respect to the
Merger Agreement, stockholders should be aware that certain members of Company
management and the Company Board have certain interests in the Merger that are
in addition to the interests of stockholders of the Company generally. See "The
Merger--Interests of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned upon the Company's receipt of an
opinion of Skadden, Arps, Slate, Meagher & Flom, counsel to the Company (the
"Skadden Opinion"), to the effect that, among other things, on the basis of
facts, representations and qualifications set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, for federal
income tax purposes the Merger will constitute a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended, and that no
gain or loss will be recognized by Company stockholders upon the conversion of
their Company Common Stock into AMP Common Stock by reason of the Merger
(except with respect to cash
7
<PAGE>
received in lieu of a fractional share interest). Company stockholders are
urged to consult their tax advisor as to the specific tax consequences to them
of the Merger. See "The Merger--Certain Federal Income Tax Consequences of the
Merger" and "The Merger--The Merger Agreement--Pooling and Reorganization
Treatment." The discussion set forth in the Skadden Opinion may not be
applicable to persons who acquired Company Common Stock pursuant to the
exercise of employee stock options or rights or otherwise as compensation, nor
will the discussion set forth in that opinion address the federal income tax
consequences arising from the transactions described in the section of the
Proxy Statement-Prospectus entitled "The Merger-- Interests of Certain Persons
in the Merger."
ACCOUNTING TREATMENT
AMP intends to treat the Merger as a "pooling of interests" for accounting
and financial reporting purposes. The Company's obligation to consummate the
Merger is subject to the condition that the Company shall have received a
"pooling letter" from Price Waterhouse LLP, the Company's independent
accountants, dated not earlier than five days prior to the Closing Date, to the
effect that, subject to customary qualifications, no event has occurred with
respect to the Company which would preclude the Merger from being treated as a
pooling of interests for accounting purposes. In addition, AMP's obligation to
consummate the Merger is subject to the condition that AMP shall have received
a "pooling letter" from Arthur Andersen LLP, AMP's independent accountants,
dated not earlier than five days prior to the Closing Date, to the effect that,
subject to customary qualifications, the Merger will be treated as a pooling of
interests for accounting purposes. See "The Merger--Accounting Treatment" and
"The Merger--The Merger Agreement--Pooling and Reorganization Treatment."
CERTAIN REGULATORY MATTERS
Certain federal, state and foreign regulatory requirements must be complied
with before the Merger is consummated.
The Company and AMP's request for early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder, was granted and became
effective on April 21, 1995. However, at any time before or after the Effective
Time, the Federal Trade Commission or the Antitrust Division of the Department
of Justice or a private person or entity could seek under the antitrust laws,
among other things, to enjoin the Merger. There can be no assurance that a
challenge to the Merger will not be made or that, if such a challenge is made,
the Company and AMP will prevail. The parties believe that all filings and
approvals required by certain foreign jurisdictions with respect to the Merger
in advance of the consummation thereof have been made or obtained. See "The
Merger--Regulatory Filings and Approvals."
RESALE RESTRICTIONS
All shares of AMP Common Stock received in connection with the Merger by
stockholders of the Company will be freely transferable, except that shares of
AMP Common Stock received by persons who are deemed to be "affiliates" (as such
term is defined for purposes of Rule 145 under the Securities Act of 1933, as
amended) of the Company at the time of the Special Meeting may be resold by
such persons only in certain permitted circumstances. See "The Merger--
Restrictions on Sales of Shares by Affiliates."
APPRAISAL RIGHTS
Under the MBCL, each holder of shares of Company Common Stock will be
entitled to object to the Merger and demand payment for such holder's shares of
Company Common Stock. See "The Merger--Appraisal Rights" and Appendix C hereto.
8
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth consolidated selected financial data of the
Company for each of the five fiscal years in the period ended October 1, 1994
and for the six month periods ended April 1, 1995 and April 2, 1994, and
consolidated selected financial data of AMP for each of the five years in the
period ended December 31, 1994 and for the three month periods ended March 31,
1995 and March 31, 1994. The consolidated selected financial data for the
annual periods shown below have been extracted from and should be read in
conjunction with the audited consolidated financial statements of the Company
and AMP, including the notes thereto, which are included in documents
incorporated by reference in this Proxy Statement-Prospectus. The consolidated
selected financial data for the interim periods shown below have been extracted
from and should be read in conjunction with the unaudited quarterly financial
statements of the Company and AMP including the notes thereto, which are
included in documents incorporated by reference in this Proxy Statement-
Prospectus. See "Incorporation By Reference." Such interim financial statements
reflect all adjustments (consisting only of normal recurring adjustments) which
the managements of the Company and AMP, respectively, consider necessary to
present fairly the financial information for such periods.
<TABLE>
<CAPTION>
AS OF OR FOR THE
MOST RECENT AND
CORRESPONDING PRIOR
YEAR INTERIM PERIOD AS OF OR FOR THE FISCAL YEAR ENDED
--------------------- ---------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- --------- -------- -------- -------- -------- --------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
THE COMPANY (1)
Net sales............. $ 174.6 $ 163.0 $ 341.6 $ 339.9 $ 387.8 $ 391.4 $ 390.5
Income (loss) from
continuing
operations........... (4.6) 1.2 3.4 (22.5) 8.9 10.2 (33.1)
Income (loss) from
continuing operations
per share............ (.17) .05 .13 (.92) .37 .41 (1.36)
Cash dividends per
share................ -- -- -- -- -- -- --
Total assets.......... 306.1 320.2 308.6 314.7 327.3 357.3 364.9
Long-term debt........ 67.2 68.0 67.6 68.4 69.1 82.4 88.9
Stockholders' equity.. 120.0 115.8 121.3 107.9 127.9 116.2 89.1
Stockholders' equity
per share............ 4.53 -- 4.69 -- -- -- --
AMP (2)
Net sales............. $1,202.8 $ 906.1 $4,027.5 $3,450.6 $3,337.1 $3,095.0 $3,043.6
Net income............ 104.8 79.6 369.4 296.6 290.3 259.7 287.1
Net income per share.. .50 .38 1.76 1.41 1.38 1.23 1.35
Cash dividends per
share................ .23 .21 .84 .80 .76 .72 .68
Total assets.......... 4,058.0 3,297.5 3,770.9 3,117.9 3,005.1 3,006.9 2,928.6
Long-term debt........ 232.7 176.1 211.2 131.0 42.9 53.0 61.1
Shareholders' equity.. 2,444.8 2,128.6 2,334.4 2,056.4 1,943.3 1,913.0 1,792.8
Shareholders' equity
per share............ 11.66 -- 11.14 -- -- -- --
</TABLE>
- --------
(1) The Company's data is for the six month periods ended April 1, 1995 and
April 2, 1994 and the fiscal years ended October 1, 1994, October 2, 1993,
October 3, 1992, September 28, 1991 and September 29, 1990. The
consolidated selected financial data of the Company should be read in
conjunction with Item 1 of the Company's Annual Report on Form 10-K for the
year ended October 1, 1994 (the "Company 10-K"), which is incorporated by
reference in this Proxy Statement-Prospectus, and Notes 1, 2, 3, 5 and 7 to
the Company's consolidated financial statements included in the Company 10-
K. See "Incorporation By Reference."
(2) AMP's data is for the three month periods ended March 31, 1995 and 1994 and
the fiscal years ended December 31, 1994, 1993, 1992, 1991 and 1990. The
per share data of AMP has been adjusted for AMP's 2-for-1 stock split that
was effected on March 2, 1995.
9
<PAGE>
SELECTED COMPARATIVE PER SHARE DATA AND UNAUDITED PRO FORMA COMBINED FINANCIAL
DATA
The following table sets forth selected historical comparative per share data
of the Company and AMP and certain unaudited pro forma combined financial data
and the Company equivalent unaudited pro forma combined per share data, at the
dates and for the periods indicated. The unaudited pro forma combined financial
data give effect to the Merger under the pooling of interests method of
accounting. The unaudited pro forma combined financial data and the Company
equivalent unaudited pro forma combined per share data are presented for
illustrative purposes only and do not purport to be indicative of the operating
results or financial position that would have been achieved had the Merger been
effected for the periods presented or the results or financial position which
may be obtained in the future. The following financial data should be read in
conjunction with the historical consolidated financial statements, including
the notes thereto, of the Company and AMP included in documents incorporated by
reference in this Proxy Statement-Prospectus and the Unaudited Pro Forma
Combined Condensed Financial Statements appearing elsewhere in this Proxy
Statement-Prospectus. See "Incorporation By Reference" and "Unaudited Pro Forma
Combined Condensed Financial Statements."
<TABLE>
<CAPTION>
AS OF OR FOR
THE MOST
RECENT THREE
MONTH INTERIM AS OF OR FOR THE FISCAL
PERIOD YEAR ENDED
------------- ----------------------------
1995 1994 1993 1992
------------- -------- -------- ---------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
THE COMPANY--HISTORICAL PER COMPANY
COMMON SHARE(1):
Income (loss) from continuing
operations...................... $ .02 $ .13 $ (.92) $ .37
Cash dividends................... -- -- -- --
Stockholders' equity............. 4.53 4.69 -- --
AMP--HISTORICAL PER AMP COMMON
SHARE(2):
Net income....................... $ .50 $ 1.76 $ 1.41 $ 1.38
Cash dividends................... .23 .84 .80 .76
Shareholders' equity............. 11.66 11.14 -- --
UNAUDITED PRO FORMA COMBINED
FINANCIAL DATA(3):
Net sales........................ $1,295.8 $4,369.1 $3,790.5 $3,725.0
Income from continuing
operations...................... 105.3 373.8 281.1 299.3
Income from continuing operations
per share....................... .48 1.72 1.30 1.37
Cash dividends per share......... .22 .81 .77 .74
Total assets..................... $4,377.1 $4,092.5 $3,445.6 $ 3,332.4
Long-term debt................... 299.9 278.8 199.4 112.0
Shareholders' equity............. 2,604.8 2,495.7 -- --
Shareholders' equity per share... 12.00 11.51 -- --
THE COMPANY EQUIVALENT UNAUDITED
PRO FORMA COMBINED PER SHARE
DATA(4):
Income from continuing
operations...................... $ .13 $ .48 $ .36 $ .38
Cash dividends................... .06 .23 .22 .21
Stockholders' equity............. 3.36 3.22 -- --
</TABLE>
- --------
(1) The Company's historical per share data is for the three months ended April
1, 1995 and the fiscal years ended October 1, 1994, October 2, 1993 and
October 3, 1992.
(2) AMP's historical per share data is for the three months ended March 31,
1995 and the fiscal years ended December 31, 1994, 1993 and 1992. The per
share data of AMP has been adjusted for AMP's 2-for-1 stock split that was
effected on March 2, 1995.
(3) The unaudited pro forma combined financial data combine the historical
results of operations and financial position of the Company for the three
months ended April 1, 1995 and the fiscal years ended October 1, 1994,
October 2, 1993 and October 3, 1992 with the historical results of
operations and financial position of AMP for the three months ended March
31, 1995 and the fiscal years ended December 31, 1994, 1993 and 1992,
respectively. The per share data of AMP included in the unaudited pro forma
combined financial data has been adjusted for AMP's 2-for-1 stock split
that was effected on March 2, 1995.
(4) The Company equivalent unaudited pro forma combined per share amounts are
calculated by multiplying the unaudited pro forma combined per share
amounts by the exchange rate of .28.
10
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE DATA
Company Common Stock is traded on the New York Stock Exchange, Inc. ("NYSE")
and the Boston Stock Exchange Inc. ("BSE") under the symbol "MAI." AMP Common
Stock is traded on the NYSE under the symbol "AMP" and is also listed under the
symbol "AMP" on the following regional stock exchanges: BSE, Cincinnati Stock
Exchange, Chicago Stock Exchange, Inc., Pacific Stock Exchange Incorporated and
Philadelphia Stock Exchange, Inc.
The following table sets forth the closing price per share of Company Common
Stock and AMP Common Stock as reported on the NYSE Composite Transaction
Reporting System and the equivalent per share price (as explained below) of
Company Common Stock on March 9, 1995, the business day preceding public
announcement of the Merger, and on May 30, 1995:
<TABLE>
<CAPTION>
COMPANY COMMON AMP COMMON EQUIVALENT PER
STOCK STOCK SHARE PRICE
-------------- ---------- --------------
<S> <C> <C> <C>
March 9, 1995.......................... $ 7.00 $ 38.00 $ 10.64
May 30, 1995........................... $11.25 $41.125 $11.515
</TABLE>
The equivalent per share price of a share of Company Common Stock represents
the closing price of a share of AMP Common Stock on such date multiplied by the
exchange rate of .28 of one share of AMP Common Stock for each outstanding
share of Company Common Stock.
BECAUSE THE MARKET PRICE OF AMP COMMON STOCK THAT HOLDERS OF COMPANY COMMON
STOCK WILL RECEIVE IN THE MERGER MAY INCREASE OR DECREASE PRIOR TO THE MERGER,
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS.
11
<PAGE>
THE SPECIAL MEETING
DATE, TIME AND PLACE
The Special Meeting is scheduled to be held on Friday, June 30, 1995 at 10:00
a.m., local time, in the Auditorium located at the Company's facility at 1011
Pawtucket Boulevard, Lowell, Massachusetts.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, the holders of Company Common Stock will be asked to
consider and vote upon a proposal to approve and adopt the Merger Agreement,
pursuant to which, among other things, Subsidiary will merge with and into the
Company and the Company will survive the Merger as a wholly owned subsidiary of
AMP. Pursuant to the Merger Agreement, at the Effective Time, each outstanding
share of Company Common Stock (other than shares held by the Company as
treasury stock or by AMP, Subsidiary or any other subsidiary of AMP and shares
as to which appraisal rights have been duly asserted and perfected under the
MBCL) will be converted into the right to receive .28 of one share of AMP
Common Stock, together with any rights attached thereto. Company stockholders
will receive cash in lieu of any fractional shares of AMP Common Stock which
would otherwise be issuable as a result of the Merger. Shares of Company Common
Stock held by the Company as treasury stock or by AMP, Subsidiary or any other
subsidiary of AMP at the Effective Time will be cancelled pursuant to the
Merger Agreement. As of the date of this Proxy Statement-Prospectus, neither
AMP nor any subsidiary of AMP (including Subsidiary) owns any Company Common
Stock.
RECORD DATE
The Company Board has fixed the close of business on May 19, 1995 as the
record date (the "Record Date") for the determination of holders of Company
Common Stock entitled to notice of and to vote at the Special Meeting. On the
Record Date, there were 26,715,355 shares of Company Common Stock issued and
outstanding and held by approximately 6,896 holders of record.
REQUIRED VOTE
A majority of the outstanding shares of Company Common Stock entitled to vote
at the Special Meeting must be present, either in person or by proxy, to
constitute a quorum at the Special Meeting. Under the MBCL, the affirmative
vote of at least two-thirds of the shares of Company Common Stock issued and
outstanding and entitled to vote at the Special Meeting is required to approve
and adopt the Merger Agreement. As of the Record Date, directors and executive
officers of the Company and their affiliates had the right to vote
approximately 1.85% of all issued and outstanding shares of Company Common
Stock entitled to vote at the Special Meeting. Such persons have indicated to
the Company that they intend to vote all of such shares in favor of approval
and adoption of the Merger Agreement. Holders of record of Company Common Stock
on the Record Date are entitled to one vote per share on each proposal to be
presented to stockholders at the Special Meeting.
PROXIES
All shares of Company Common Stock represented by properly executed proxies
received prior to or at the Special Meeting and not revoked will be voted in
accordance with the instructions indicated in such proxies. Properly executed
proxies which do not contain voting instructions will be voted FOR approval and
adoption of the Merger Agreement. Stockholders are urged to mark the box on the
proxy to indicate how their shares are to be voted.
If an executed proxy is returned and the stockholder has abstained from
voting on approval and adoption of the Merger Agreement, the shares represented
by such proxy will be considered present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote, but will not be
considered to have been voted in favor of approval and adoption of the Merger
Agreement. If an executed proxy is returned
12
<PAGE>
by a broker holding shares of Company Common Stock in street name which
indicates that the broker does not have discretionary authority as to certain
shares to vote on any matter (a so-called "broker non-vote"), such shares will
be considered present at the meeting for purposes of determining the presence
of a quorum and of calculating the vote, but will not be considered to have
been voted in favor of approval and adoption of the Merger Agreement. Because
the Merger requires the affirmative vote of at least two-thirds of the shares
of Company Common Stock issued and outstanding and entitled to vote at the
Special Meeting, abstentions and broker non-votes will have the same effect as
a vote against approval and adoption of the Merger Agreement.
It is not expected that any matter other than those referred to herein will
be brought before the Special Meeting. If, however, other matters are properly
presented, the persons named as proxies will vote in accordance with their
judgment with respect to such matters, unless authority to do so is withheld in
the proxy.
Any Company stockholder who executes and returns a proxy may revoke such
proxy at any time before it is voted by (i) notifying in writing the Secretary
of the Company at 100 Chelmsford Street, P.O. Box 3294, Lowell, Massachusetts
01853-3294, (ii) granting a subsequent proxy or (iii) appearing in person and
voting at the Special Meeting. Attendance at the Special Meeting will not in
and of itself constitute revocation of a proxy.
The expenses incurred in connection with the printing and mailing of this
Proxy Statement-Prospectus will be shared equally by the Company and AMP. The
Company has retained Corporate Investor Communications, Inc. at an estimated
cost of $6,500.00 plus reimbursement of expenses, to assist in the solicitation
of proxies by telephone. The Company and Corporate Investor Communications,
Inc. will also request banks, brokers, and other intermediaries holding shares
beneficially owned by others to send this Proxy Statement-Prospectus to and
obtain proxies from such beneficial owners and will reimburse such holders for
their reasonable expenses in so doing.
STOCKHOLDERS SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH THEIR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
COMPANY COMMON STOCK WILL BE MAILED AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
TIME OF THE MERGER.
THE MERGER
THIS SECTION OF THE PROXY STATEMENT-PROSPECTUS DESCRIBES CERTAIN ASPECTS OF
THE PROPOSED MERGER, INCLUDING THE MERGER AGREEMENT. TO THE EXTENT THAT IT
RELATES TO THE MERGER AGREEMENT, THE FOLLOWING DESCRIPTION DOES NOT PURPORT TO
BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER
AGREEMENT, WHICH IS ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT-PROSPECTUS
AND IS INCORPORATED HEREIN BY REFERENCE. WHILE THE COMPANY BELIEVES THAT SUCH
DESCRIPTION COVERS THE MATERIAL TERMS OF THE MERGER AGREEMENT, ALL STOCKHOLDERS
ARE URGED TO READ THE MERGER AGREEMENT IN ITS ENTIRETY.
BACKGROUND OF THE MERGER
On January 11, 1995, Harold McInnes, retired Chairman and Chief Executive
Officer of AMP and a member of AMP's Board of Directors, contacted Dr. Thomas
A. Vanderslice, Chairman of the Board, President and Chief Executive Officer of
the Company, to inquire whether Dr. Vanderslice would be interested in meeting
with senior members of AMP's management to discuss AMP's interest in exploring
the possibility of a mutually acceptable business combination transaction
between the companies.
On January 17, 1995, Dr. Vanderslice and Larry L. Mihalchik, Senior Vice
President and Chief Financial Officer of the Company, met with Mr. McInnes and
William J. Hudson, Chief Executive Officer and President of AMP. After Mr.
Hudson, on the one hand, and Dr. Vanderslice and Mr. Mihalchik, on the other
hand, had given brief presentations about their respective companies, Mr.
Hudson indicated that a
13
<PAGE>
strategic alliance of some sort with the Company appeared to be attractive to
AMP. Dr. Vanderslice stated that while the Company was not for sale at that
time, he would be willing to afford AMP an opportunity to conduct certain due
diligence with respect to the Company, subject to appropriate non-disclosure
and standstill arrangements, if that process was likely to result in AMP being
prepared to submit a proposal for the consideration of the Company's management
and the Company Board that reflected the long-term prospects of the Company and
was in the best interests of the Company and its stockholders.
Over the next several days, representatives of the Company and AMP discussed
the mechanics of AMP's proposed due diligence process. On January 23, 1995, the
Company and AMP entered into a letter agreement which provides, among other
things, that each party will maintain the confidentiality of any non-public
information obtained from the other party for a period of three years from the
date of the agreement, and that, for a period of eighteen months from the date
of the agreement, AMP will not purchase, or propose any transaction involving,
any securities of the Company, or assist or encourage any third party in doing
the same, without the prior consent of the Company.
Beginning on January 30, 1995, representatives of AMP began their due
diligence review of the Company, which involved reviewing written material
provided by the Company, including financial forecasts for the Company, touring
certain of the Company's facilities and meeting with various members of the
Company's management.
On February 6, 1995, representatives of AMP and the Company discussed the
circumstances under which AMP would be willing to submit a definitive proposal
to the Company's management for its consideration on February 10, 1995, even
though its due diligence review would not be completed by that date. On
February 7, 1995, the Company Board held a telephonic meeting at which Dr.
Vanderslice and Mr. Mihalchik summarized the discussions with AMP to date. The
Company Board concluded at that meeting that while the Company was not for sale
at that time, the Company Board would be willing to invite AMP to submit a
proposal for its consideration that reflected the long-term prospects of the
Company (which the Company Board viewed as involving the continued
transformation of the Company from one dependent on defense business to one
serving the commercial markets which continued transformation, along with
operational improvements, would result in higher levels of sales and earnings)
and that did not subject the Company to any significant risk of non-completion.
The Company Board then instructed management to continue discussions with AMP,
with a view to determining whether AMP would be prepared to submit a proposal
satisfying those criteria for the Company Board's consideration later in the
week.
On February 7, 1995, representatives of the Company contacted representatives
of Lazard Freres & Co. LLC ("Lazard Freres") to inquire whether Lazard Freres
would be available to advise the Company Board in connection with its
evaluation of any proposal that AMP might submit.
As a result of further discussions between representatives of the Company and
AMP on February 8 and 9, 1995, the parties agreed that AMP would not be in a
position to submit a proposal to the Company which met the Company Board's
criteria described above until it had completed its due diligence process. On
February 9, 1995, the Company Board held a telephonic meeting at which Dr.
Vanderslice and Mr. Mihalchik informed the Company Board that AMP was not
prepared to submit a proposal for its consideration at that time. They reported
that representatives of AMP had indicated a continuing interest in exploring
the possibility of a mutually acceptable transaction with the Company, and the
Company Board agreed to continuing discussions with AMP to that end.
The Company Board met again informally on February 14, 1995 to discuss the
status of the discussions with AMP. Members of the Board reiterated their
concern that any proposal that might be submitted by AMP should reflect the
long-term prospects of the Company and should not subject the Company to any
significant risk of non-completion.
On February 15, 1995, representatives of AMP communicated to representatives
of the Company their additional due diligence concerns and their plan for
investigating those matters.
On February 16, 1995, representatives of the Company met with representatives
of Lazard Freres to confirm the engagement of Lazard Freres to advise the
Company Board in connection with its evaluation of any proposal that might be
submitted by AMP.
14
<PAGE>
AMP's due diligence activities resumed on February 20, 1995 and continued
through March 8, 1995. These activities included AMP's review of additional
written material provided by the Company, presentations by representatives of
the Company to representatives of AMP, their independent accountants and
investment bankers, interviews with other members of the Company's management
and additional tours of various Company facilities.
On March 2, 1995, representatives of Lazard Freres met with representatives
of AMP and its investment bankers to conduct certain due diligence with respect
to AMP and its business.
On March 3, 1995, the Company Board held a telephonic meeting at which Dr.
Vanderslice and Mr. Mihalchik summarized the status of AMP's continuing due
diligence efforts. Dr. Vanderslice advised the Company Board that
representatives of AMP had indicated earlier that day that AMP would be
prepared, subject to completion of its due diligence efforts, to submit a
transaction proposal to the Company's management on March 8, 1995. He stated
that AMP's preference, in this regard, would be for the two parties to have
arrived at a tentative resolution of all potential non-price issues prior to
that date, allowing the parties to focus on arriving at a mutually agreeable
price and conclude negotiations in a timely manner. The Company Board concurred
with the proposed schedule and authorized the Company's representatives to
proceed on the basis outlined by AMP's representatives.
On March 4, 1995, the Company's legal representatives submitted to AMP and
its legal representatives the Company's comments on the initial draft of the
Merger Agreement previously circulated by AMP's legal representatives. On March
6, 1995, AMP's legal representatives circulated a revised draft of the Merger
Agreement. In this revised draft AMP accepted certain of the Company's comments
but rejected others, reflecting continuing disagreement between the parties on
certain issues, including the Company's ability to respond to unsolicited third
party proposals, the conditions to closing of the transaction and AMP's
entitlement to payments in the event of the termination of the agreement under
certain circumstances.
On March 8, 1995, a representative of AMP informed Mr. Mihalchik that AMP
would be interested in submitting a proposal to acquire the Company in a stock-
for-stock transaction in which the Company's stockholders would receive shares
of AMP Common Stock having a value of $10.00 per share of Company Common Stock.
Discussions between the parties and between their respective financial advisors
concerning AMP's proposal continued throughout the day. In the evening of March
8, Dr. Vanderslice and Mr. Mihalchik conducted a telephonic meeting with Mr.
Hudson, James E. Marley, Chairman of the Board of AMP, and Robert Ripp, Vice
President and Chief Financial Officer of AMP, to discuss AMP's proposal. In the
course of those discussions, the participants negotiated and agreed to a fixed
ratio of .28 of one share of AMP Common Stock for each share of Company Common
Stock. It was understood that reaching a definitive Merger Agreement containing
the agreed-upon exchange ratio was contingent upon the resolution of certain
other issues reflected in the revised draft of the Merger Agreement.
On March 9, 1995, the parties entered into negotiations with respect to the
remaining issues. A meeting of the Company Board was convened during the
afternoon of March 9, 1995, at which the Board was informed of AMP's proposal.
In the course of its discussions, the Board received presentations from Lazard
Freres with respect to its financial analysis of the proposal and from the
Company's independent accountants regarding the impact of certain events with
respect to the Company on the pooling of interests method of accounting for the
Merger, and was briefed by the Company's legal representatives with respect to
the terms of the draft Merger Agreement and the remaining unresolved issues
relating to the Company's ability to respond to unsolicited third party
proposals and the conditions to closing the transaction. The Company Board
indicated that it was not prepared to approve the transaction until those
issues were resolved to its satisfaction, and the Company Board adjourned that
evening without having taken any formal action on AMP's proposal.
Representatives of the Company and AMP then resumed continuous negotiations
which resulted in an agreement in principle as to all remaining issues in the
early morning of March 10, 1995. At 6:00 a.m. on
15
<PAGE>
March 10, 1995, the meeting of the Company Board was reconvened (with two
directors absent). The Board was briefed by its legal representatives on the
resolution of all open issues and, by the unanimous vote of the directors
present at the meeting, the Company Board approved the terms of the Merger
Agreement.
THE COMPANY'S REASONS FOR THE MERGER; RECOMMENDATION OF THE COMPANY BOARD
The Company Board has determined the Merger to be fair to and in the best
interests of the Company and its stockholders. Accordingly, the Company Board
has approved the Merger Agreement and unanimously recommends that the
stockholders of the Company vote for approval and adoption of the Merger
Agreement.
In reaching this determination, the Company Board considered, without
assigning relative weights to, a variety of factors, including, among other
things: (i) information relating to the business, assets, management,
competitive position and prospects of the Company and AMP, including the
prospects of the Company if it were to continue as an independent company; (ii)
recent market prices of Company Common Stock as well as market prices of
Company Common Stock during the past several years; (iii) the net book value
per share of Company Common Stock from time to time; (iv) the going concern
value of the Company; (v) dividend payment histories with respect to AMP Common
Stock and Company Common Stock; (vi) the increased need of the Company for
capital resources to remain competitive and the improved access to capital
markets which will result from the Merger and enable those needs to be met;
(vii) the terms of the Merger Agreement; (viii) the opinion of Lazard Freres
that the consideration to be paid to the Company's common stockholders pursuant
to the Merger is fair to such stockholders from a financial point of view; (ix)
the structure of the Merger which generally will permit holders of Company
Common Stock to have their shares converted into AMP Common Stock on a "tax-
free" basis; and (x) significant enhancement of the strategic and market
position of the combined companies beyond that achievable by the Company alone.
THE COMPANY BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
AMP'S REASONS FOR THE MERGER
AMP believes that the Merger will enhance AMP's strategic presence in the
market for advanced wireless components by providing it with access to a broad
range of wireless products, as well as manufacturing and engineering
capabilities in this field. In addition, the Company's radio frequency
connectors and antenna and cable products will broaden AMP's terminal and
connector business. These additional product offerings will enable AMP to offer
a broader range of product solutions to the combined customer base of AMP and
the Company.
OPINION OF THE COMPANY'S FINANCIAL ADVISOR
Lazard Freres has delivered written opinions to the Company Board to the
effect that, based upon and subject to the matters set forth in its opinions,
as of March 10, 1995 and the date of this Proxy Statement-Prospectus, the
consideration to be paid to the Company's common stockholders in connection
with the proposed Merger is fair to such stockholders from a financial point of
view.
THE FULL TEXT OF THE OPINION OF LAZARD FRERES DATED AS OF THE DATE OF THIS
PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE
OPINION, IS ATTACHED AS APPENDIX B TO THIS PROXY STATEMENT-PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. COMPANY STOCKHOLDERS ARE URGED TO READ SUCH
OPINION IN ITS ENTIRETY. While the Company believes that the summary of the
opinion of Lazard Freres set forth in this Proxy Statement-Prospectus covers
the material terms of the opinion of Lazard Freres, such summary does not
purport to be complete and is qualified in its entirety by reference to the
full text of such opinion. The opinion of Lazard Freres is not intended to be,
and does not constitute, a recommendation to any stockholder of the Company as
to how such stockholder should vote at the Special Meeting.
16
<PAGE>
In rendering its opinion to the Company Board, Lazard Freres, among other
things: (i) reviewed and analyzed the financial terms of the Merger Agreement;
(ii) reviewed certain publicly available business and financial information
relating to the Company and AMP; (iii) reviewed certain other information,
including financial forecasts and other data provided to Lazard Freres by the
Company, relating to businesses of the Company; (iv) held discussions with
members of the senior managements of the Company and AMP with respect to the
businesses and prospects of the Company and AMP, respectively, the strategic
objectives of each, and possible benefits which might be realized following the
Merger; (v) reviewed the pro forma impact of the Merger on AMP's financial
results and financial condition; (vi) considered certain financial and stock
market data for the Company and AMP, and compared that data with similar data
for other publicly held companies in lines of businesses believed by Lazard
Freres to be generally comparable to those of the Company and AMP,
respectively; (vii) considered the financial terms of certain business
combinations involving companies in lines of businesses believed by Lazard
Freres to be generally comparable to those of the Company and AMP,
respectively; (viii) reviewed the historical stock prices and trading volumes
of Company Common Stock and AMP Common Stock; and (ix) conducted such other
financial studies, analyses and investigations as Lazard Freres deemed
appropriate.
In connection with its review, Lazard Freres relied upon the accuracy and
completeness of the financial and other information reviewed by it and did not
assume any responsibility for any independent verification of such information
or any independent valuation or appraisal of any of the assets or liabilities
of the Company or AMP. With respect to the financial forecasts provided to it
by the Company, Lazard Freres assumed that such financial forecasts were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of Company management as to the future financial performance of
the Company on a stand-alone basis and after giving effect to the Merger. In
rendering its opinion, Lazard Freres assumed no responsibility for and
expressed no view as to such forecasts or the assumptions on which they were
based. Lazard Freres noted that, although it had had discussions with the
senior management of AMP with respect to the businesses and prospects of AMP
including with respect to revenue and net income growth for five years, Lazard
Freres had not been furnished with written financial forecasts of AMP. However,
Lazard Freres believed that, notwithstanding the absence of written financial
forecasts of AMP, in the course of its review Lazard Freres obtained sufficient
information regarding the business and prospects of AMP for the purpose of
rendering its opinion. Lazard Freres' opinion was based on economic, monetary,
market and other conditions as in effect on, and the information made available
to Lazard Freres on, the date of its opinion.
In rendering its opinion, Lazard Freres assumed that the transaction
contemplated by the Merger Agreement will be consummated on the terms described
in the Merger Agreement, without any waiver of or modification to any of the
material terms or conditions thereof by the Company, and that obtaining any
necessary regulatory approvals for the transaction will not have an adverse
effect on the Company or AMP. Lazard Freres noted that it had not been
requested to contact, and had not contacted, any third parties concerning their
potential interest in the Company and, accordingly, Lazard Freres' opinion was
not based on the results of any such effort.
The following is a summary of the presentation made by Lazard Freres at a
meeting of the Company Board on March 9, 1995 in connection with providing its
opinion to the Company Board.
Lazard Freres summarized the proposed transaction, whereby each outstanding
share of Company Common Stock would be converted into .28 of one share of AMP
Common Stock (which translated into $10.54 per share of Company Common Stock
based on the previous day's closing price of $37.625 per share of AMP Common
Stock), noting that the exchange ratio is fixed. Therefore, the value of the
consideration will change as the per share price of AMP Common Stock changes.
Next, Lazard Freres briefly summarized the financial terms of the draft
Merger Agreement and provided a business and financial overview of AMP. Lazard
Freres then described the financial analyses it performed in reaching its
opinion, a summary of which is set forth below.
Company Trading Analysis. Lazard Freres reviewed and compared certain actual
and estimated financial, operating and stock market information for the
Company, AMP and companies in lines of business believed
17
<PAGE>
by Lazard Freres to be generally comparable to those of the Company. Lazard
Freres stated that the Company's market capitalization of $233 million (based
on the previous day's closing price of $7.00 per share of Company Common Stock
and taking into account the Company's outstanding debt net of cash) represented
0.68x 1994 sales, 0.64x estimated 1995 sales, 6.2x 1994 earnings before
interest, taxes, depreciation and amortization ("EBITDA") and 6.1x estimated
1995 EBITDA, while the Company Common Stock was trading at 10.1x estimated 1996
earnings per share. Lazard Freres did not utilize estimated 1995 earnings per
share in this review because the Company's estimated 1995 net income was
approximately break-even.
Based on the March 8, 1995 closing price of $37.625 per share of AMP Common
Stock and taking into account AMP's outstanding debt net of cash, Lazard Freres
calculated AMP's market capitalization at $8.2 billion, which represented 2.1x
1994 sales, 1.8x estimated 1995 sales, 8.9x 1994 EBITDA and 7.8x estimated 1995
EBITDA. Lazard Freres also indicated that AMP Common Stock was trading at 18.2x
estimated 1995 earnings per share and 16.3x estimated 1996 earnings per share.
Lazard Freres believed that, although there were no public companies with
precisely the same mix of businesses and financial condition as the Company,
the most relevant comparable companies to the Company were: Advanced Micro
Devices, Alpha Industries, Inc., Analog Devices, Inc. and National
Semiconductor Corporation ("Semiconductor Companies") in the semiconductor and
integrated circuit lines of business and Amphenol Corporation, Augat Inc.,
Hubbell Incorporated, Molex Incorporated and Thomas & Betts Corporation
("Electronic Components Companies") in the connector and electronic component
line of business. Lazard Freres' analysis indicated that (i) the market
capitalization of the Semiconductor Companies as a multiple of 1994 sales
ranged from .80x to 2.5x, as a multiple of estimated 1995 sales ranged from
.78x to 1.3x, as a multiple of 1994 EBITDA ranged from 3.9x to 11.7x and as a
multiple of estimated 1995 EBITDA ranged from 3.7x to 8.9x, and (ii) the public
trading market price per share of the Semiconductor Companies as a multiple of
1994 earnings per share ranged from 9.0x to 26.6x, as a multiple of estimated
1995 earnings per share ranged from 8.5x to 17.8x and as a multiple of
estimated 1996 earnings per share ranged from 7.0x to 15.9x. In the case of the
Electronic Component Companies, (i) market capitalization as a multiple of 1994
sales ranged from 0.69x to 2.7x, as a multiple of estimated 1995 sales ranged
from 0.66x to 2.4x, as a multiple of 1994 EBITDA ranged from 5.9x to 12.2x and
as a multiple of estimated 1995 EBITDA ranged from 5.4x to 11.6x and (ii) the
public trading market price per share of the Electronic Components Companies as
a multiple of 1994 earnings per share ranged from 12.6x to 33.1x, as a multiple
of estimated 1995 earnings per share ranged from 11.5x to 29.8x and as a
multiple of estimated 1996 earnings per share ranged from 10.3x to 23.7x.
Lazard Freres indicated that, based on the proposed exchange ratio of .28
(which translated into $10.54 per share of Company Common Stock based on the
closing price of $37.625 per share of AMP Common Stock on March 8, 1995, the
day immediately preceding the Company Board meeting), AMP was paying a total
value of $363 million for the Company which represented 1.1x 1994 sales, 9.6x
1994 EBITDA and 27.7x 1994 earnings before interest and taxes, and noted that
$10.54 was also 15.7x the Company's estimated 1996 earnings per share.
Selected Transactions Analysis. Lazard Freres reviewed certain publicly
available information on announced sale transactions of electronic components
and equipment businesses since April 1987 and reviewed in particular certain
publicly available information on eight transactions. However, Lazard Freres
noted that the reasons for, and circumstances surrounding, each of the
transactions analyzed were diverse and the characteristics of the companies
involved were not particularly comparable to those of the Merger.
This analysis showed that the aggregate consideration paid in the eight
transactions reviewed represented a multiple of between 0.8x and 1.7x latest
twelve months net sales of the acquired business and a multiple of between 9.9x
and 18.5x latest twelve months earnings before interest and taxes. Lazard
Freres indicated that the total value of $363 million for the Company being
paid by AMP (based on the proposed exchange rate as outlined above) represented
1.1x latest twelve months sales and 49.1x latest twelve months earnings before
interest and taxes.
Discounted Cash Flow Analysis. Based upon forecasts prepared by the
management of the Company, Lazard Freres performed an analysis of the net
present value of the future cash flows of the Company's
18
<PAGE>
businesses. In conducting this analysis, Lazard Freres assumed discount rates
ranging from 15.0% to 20.0% and terminal value multiples ranging from 7x to 9x
EBITDA. Lazard Freres indicated that it believed that a new equity investor in
the Company would probably require an annual return of 20% or more. This
analysis indicated, based upon management estimates and using the discount
rates and terminal values noted above, a discounted cash flow valuation of
between $9.73 and $15.34 per share of Company Common Stock.
Pro Forma Merger Analysis. Lazard Freres analyzed the pro forma impact of the
consummation of the Merger on the earnings per share and financial condition of
AMP, and compared such results to earnings per share and balance sheet ratios
on a stand-alone basis for AMP. Such analyses estimated that, with an exchange
rate of .28, holders of AMP Common Stock would incur no dilution of earnings
per share in 1996.
Hypothetical Break-Up Analysis. Lazard Freres performed an analysis of the
hypothetical, pre-tax break-up value per share of Company Common Stock by
valuing each of the Company's business units at multiples it deemed appropriate
using historical financial information and the forecasts provided by the
Company. Lazard Freres added to this estimated value of the Company's total
operations the estimated value of the Company's other assets and subtracted the
estimated value of the Company's liabilities. This resulted in a pre-tax value
per share of Company Common Stock of $9.27 to $12.01. Lazard Freres noted that
this valuation was before the impact of taxes on any asset sales.
Other Analyses. Lazard Freres indicated that AMP was paying a 51% premium
over the closing price per share of Company Common Stock on March 8, 1995, the
day immediately preceding the Company Board meeting. In addition, Lazard Freres
stated that, although the Company does not currently pay a dividend, based on
the exchange rate of .28 and AMP's indicated annual dividend of $0.92, each
share of Company Common Stock converted into AMP Common Stock would receive a
$0.26 annual dividend.
Special Considerations. The preparation of a fairness opinion is a complex
process and is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the summary set forth
above without considering the analyses as a whole could create an incomplete or
misleading view of the process underlying the opinion of Lazard Freres. No
company or transaction used in the above analysis as a comparison is identical
to the Company or AMP or the transaction contemplated by the Merger Agreement.
The analyses were prepared solely for purposes of Lazard Freres providing its
opinion as to the fairness of the Merger consideration to the stockholders of
the Company from a financial point of view and do not purport to be appraisals
or necessarily reflect the prices at which businesses or securities actually
may be sold, which may be significantly more or less favorable than as set
forth in these analyses. Similarly, any estimate of values or forecast of
future results contained in the analyses is not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than those suggested by such analyses.
In performing its analyses, Lazard Freres made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters. Such analyses are inherently subject to uncertainty, being based
upon numerous factors or events beyond the control of the parties or their
respective advisors. Future results or actual values may be materially
different from those forecasts or estimates contained in the analyses. As
described above, Lazard Freres' opinion was one of several factors taken into
consideration by the Company Board in making its determination to approve the
Merger Agreement. While the Company believes that the foregoing summary covers
the material aspects of the analyses performed by Lazard Freres, the foregoing
summary does not purport to be a complete description of such analyses and is
qualified in its entirety by reference to the written opinion of Lazard Freres
set forth in Appendix B.
Lazard Freres is an internationally recognized investment banking firm and is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements, leveraged
buyouts,
19
<PAGE>
and valuations for estate, corporate and other purposes. The Company Board
selected Lazard Freres to act as its financial advisor on the basis of Lazard
Freres' expertise and its reputation in investment banking and mergers and
acquisitions.
In connection with Lazard Freres' services as financial advisor to the
Company, the Company has paid Lazard Freres a fee of $500,000 and has agreed to
pay Lazard Freres an additional $1,750,000 upon consummation of the Merger. The
Company has also agreed to reimburse Lazard Freres for its reasonable out-of-
pocket expenses, including, but not limited to, fees and expenses of its
counsel, such out-of-pocket expenses not to exceed $50,000. The Company has
agreed to indemnify Lazard Freres and certain related parties against certain
liabilities, including liabilities arising under the federal securities laws.
CLOSING; EFFECTIVE TIME
The closing of the transaction contemplated by the Merger Agreement (the
"Closing") will take place on the day which is two business days after the
first date on which each of certain conditions to Closing set forth in the
Merger Agreement is satisfied or waived, or at such other time as the Company
and AMP agree (the "Closing Date"). The Merger will become effective, and the
Effective Time will occur, upon the filing of the Articles of Merger with the
Secretary of State of the Commonwealth of Massachusetts as required by
Massachusetts law. Such filing will be made as soon as practicable on or after
the Closing Date.
FORM OF THE MERGER; MERGER CONSIDERATION
At the Effective Time, Subsidiary will merge with and into the Company, and
Subsidiary will cease to exist as a separate corporation. The Company will be
the surviving corporation in the Merger and will continue as a wholly owned
subsidiary of AMP.
At the Effective Time, each outstanding share of Company Common Stock, other
than shares of Company Common Stock owned at the Effective Time by the Company
as treasury stock or by AMP, Subsidiary or any other subsidiary of AMP and
shares as to which appraisal rights have been duly asserted and perfected under
the MBCL, will be converted into the right to receive .28 (the "Exchange Rate")
of one share of AMP Common Stock. No certificates for fractional shares of AMP
Common Stock will be issued in the Merger. Each holder of Company Common Stock
who would otherwise have been entitled to a fraction of a share of AMP Common
Stock upon surrender for exchange of certificates that prior to the Merger
represented Company Common Stock ("Company Certificates") will, upon surrender
of Company Certificates, be entitled to receive a cash payment in lieu of such
fractional share of AMP Common Stock in an amount equal to such fraction
multiplied by the average of the per share closing prices on the NYSE of AMP
Common Stock as reported in the NYSE Composite Transactions for the twenty
consecutive trading days ending on the fifth business day prior to the Closing
Date as reported in the Wall Street Journal. All shares of Company Common Stock
owned at the Effective Time by the Company as treasury stock or by AMP,
Subsidiary or any other subsidiary of AMP will not be so converted and will be
cancelled pursuant to the Merger Agreement. As of the date of this Proxy
Statement-Prospectus, neither AMP nor any subsidiary of AMP (including
Subsidiary) owns any Company Common Stock.
A description of the relative rights, privileges and preferences of the AMP
Common Stock, including certain material differences between the rights of
holders of Company Common Stock and AMP Common Stock, is set forth under
"Comparison of Rights of Holders of Company Common Stock and AMP Common Stock".
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Time, The First National Bank of
Boston (the "Exchange Agent") will mail transmittal instructions and a form of
letter of transmittal to each person who was, at the Effective Time, a holder
of record of Company Common Stock. The transmittal instructions will describe
the
20
<PAGE>
procedures for surrendering Company Certificates in exchange for certificates
representing AMP Common Stock ("AMP Certificates"). STOCKHOLDERS SHOULD NOT
SUBMIT THEIR COMPANY CERTIFICATES FOR EXCHANGE UNLESS AND UNTIL THEY HAVE
RECEIVED THE TRANSMITTAL INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL FROM
THE EXCHANGE AGENT.
When a holder of Company Common Stock delivers his or her Company
Certificates to the Exchange Agent along with a properly executed letter of
transmittal and any other required documents, such Company Certificates will be
cancelled and the stockholder will receive AMP Certificates representing the
number of full shares of AMP Common Stock to which such holder is entitled
under the Merger Agreement and payment in cash in lieu of any fractional shares
of AMP Common Stock which would have been otherwise issuable to such
stockholder as a result of the Merger. If any AMP Certificate is to be issued
in a name other than that in which the corresponding Company Certificate is
registered, it is a condition to the exchange of the Company Certificate that
the holder of such certificate comply with applicable transfer requirements and
pay any applicable transfer or other taxes.
HOLDERS OF COMPANY COMMON STOCK WILL NOT BE ENTITLED TO RECEIVE ANY DIVIDENDS
OR OTHER DISTRIBUTIONS ON THE AMP COMMON STOCK UNTIL THE MERGER HAS BEEN
CONSUMMATED AND THEY HAVE SURRENDERED THEIR COMPANY CERTIFICATES IN EXCHANGE
FOR AMP CERTIFICATES. Subject to applicable laws, such dividends and
distributions, if any, which have a record date on or after the Effective Time
and a payment date prior to surrender will be paid upon surrender of the
stockholder's Company Certificates, and such dividends and distributions, if
any, which have a record date on or after the Effective Time and a payment date
subsequent to such surrender will be paid at the appropriate payment date
following surrender of the stockholder's Company Certificates.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Company Board with respect to the
Merger Agreement and the transaction contemplated thereby, stockholders should
be aware that certain members of the Company's management and the Company Board
have certain interests in the Merger that are in addition to the interests of
stockholders of the Company generally. The Company Board was aware of these
interests and considered them, among other matters, in approving the Merger
Agreement and the transaction contemplated thereby. As of the date of this
Proxy Statement-Prospectus, the Company's executive officers are as follows:
Robert H. Glaudel (Senior Vice President, Human Resources), Charles D. Kissner
(Vice President and General Manager, Microelectronics Division), Peter L. Manno
(Vice President, Sales and Marketing), Mr. Mihalchik, Peter J. Rice (Vice
President, Chief Accounting Officer and Controller) and Dr. Vanderslice.
Restricted Shares. The Company has outstanding shares of Company Common Stock
that are subject to restrictions on transfer and risk of forfeiture
("Restricted Shares") which were previously granted to certain employees under
the M/A-COM, Inc. Long Term Incentive Plan (as amended, the "LTIP") and the
M/A-COM, Inc. 1990 Restricted Treasury Stock Plan (the "RTSP"). In addition,
the Company has outstanding unawarded share allocations of Company Common Stock
that were granted to certain employees under the RTSP ("Unawarded Shares").
Pursuant to "change in control" or similar provisions in such plans (which will
be triggered by the Merger), simultaneously at the Effective Time, (i) all
unvested Restricted Shares and Unawarded Shares will automatically vest and all
restrictions thereon will lapse and (ii) all such Restricted Shares and
Unawarded Shares will be converted into the right to receive a number of shares
of AMP Common Stock determined by multiplying the number of such Restricted
Shares and Unawarded Shares by the Exchange Rate. See "The Merger--The Merger
Agreement--Conversion of Shares." As of May 19, 1995, Messrs. Glaudel, Kissner,
Manno and Rice and Dr. Vanderslice held 25,000, 15,000, 50,000, 12,500 and
241,834 Restricted Shares, respectively. As of such date, Messrs. Kissner,
Manno, Mihalchik, and Rice and Dr. Vanderslice held 85,000, 50,000, 100,000,
12,500 and 125,000 Unawarded Shares, respectively.
Stock Options. The Company maintains a number of stock option plans. Pursuant
to "equitable adjustment" and "Change of Control" provisions contained in such
plans (which will be triggered by the Merger), at the Effective Time, each
option to purchase one share of Company Common Stock (a "Company
21
<PAGE>
Option") then outstanding (i) will be converted into an option to acquire .28
of one share of AMP Common Stock at an exercise price per share determined by
dividing the exercise price of the Company Option by .28 and (ii) to the extent
not then exercisable, will become fully vested and exercisable for the 30-day
period immediately following the Effective Time (after which period such
Company Option will revert to its prior status with respect to vesting). All
Company Options will, in all other respects, remain outstanding pursuant to
their terms and conditions as in effect at the Effective Time. See "The
Merger--The Merger Agreement--Conversion of Shares" and "The Merger--The Merger
Agreement--Certain Benefits." As of May 19, 1995, 1,145,995 fully vested
Company Options were held by the directors and executive officers of the
Company, of which 69,995, 15,000 and 1,000,000 Company Options were held by
Messrs. Glaudel and Rice and Dr. Vanderslice, respectively. As of such date,
the average exercise price of the options held by Messrs. Glaudel and Rice and
Dr. Vanderslice was $5.69, $4.81 and $5.69 per share of Company Common Stock,
respectively.
Severance Agreements. The Company has entered into severance agreements with
Messrs. Glaudel, Kissner and Mihalchik and Dr. Vanderslice which provide that
upon, among other things, a "Change of Control" (which, as defined in such
agreements, includes the Merger), the executive has the option, exercisable for
a period of one year from the date of the Change of Control, to terminate the
agreement and receive from the Company compensation equal to such executive's
annual base salary then in effect. Assuming all such executive officers
exercise their option to terminate employment in a manner resulting in payment
of benefits under such agreements as of the Effective Time, approximately
$149,000, $200,000, $210,000 and $485,000 would be payable to Messrs. Glaudel,
Kissner and Mihalchik and Dr. Vanderslice, respectively.
Retirement Benefits. The M/A-COM, Inc. Retirement Plan for Directors (as
amended, the "Retirement Plan") provides for the payment to retiring non-
employee directors of the Company of an annual lifetime retirement benefit
equal to the director's annual retainer fee (or a portion thereof for directors
who retire prior to age 65 without having actively served as a director for at
least five years). Benefits provided to directors under the Retirement Plan
become fully vested upon the earliest of (i) completion of five years of
service as a director of the Company, (ii) death or total disability while
serving as a director of the Company, (iii) attainment of the age of 65 or (iv)
the occurence of a "Change in Control" (which, as defined in the Retirement
Plan, includes the Merger). Pursuant to the Retirement Plan, if a participant's
service as a director of the Company terminates within three years following a
Change in Control, at the participant's option the present value of the
participant's retirement benefits under the Retirement Plan will be paid in a
lump sum as soon as practicable following such termination. Assuming
consummation of the Merger and termination of service of the members of the
Company Board on June 30, 1995, Directors Fink, La Blanc, Meindl, Morton,
Pettit, Pounds and Tsongas would become entitled to receive lump sum payments
equal to approximately $149,658, $115,694, $125,976, $149,320, $163,260,
$155,016, and $62,766, respectively.
Under the M/A-COM, Inc. 1992 Supplemental Executive Retirement Plan (the
"SERP"), participants are generally eligible to receive, if retirement occurs
at age 65, an annual benefit on a straight life annuity basis equal to 70% of
their average annual cash compensation for the three highest of their last ten
years of employment with the Company, offset by 100% of any retirement benefits
provided by certain other sources, including, among others, Social Security,
prior employers and certain other Company plans. Upon occurrence of a "Change
of Control" (which, as defined in the SERP, includes the Merger) the benefits
under the SERP become fully vested. Assuming consummation of the Merger on June
30, 1995, such vesting would provide each of Messrs. Glaudel, Kissner, Manno,
Mihalchik and Rice with an incremental benefit having an aggregate net present
value equal to approximately $181,118, $161,502, $188,832, $213,999, and
$47,861, respectively.
The Company has entered into deferment agreements ("Deferment Agreements")
with two Company directors, E. James Morton and Paul E. Tsongas. Pursuant to
the Deferment Agreements, the directors may elect to defer all or part of the
compensation earned by them, including annual retainer fees, committee chairman
fees and fees for attending meetings of the Company Board and committees
thereof. The Company maintains a deferment account with respect to each such
director, and credits such account with the amount of deferred compensation and
an earnings factor. The deferment account with respect to each director
22
<PAGE>
matures on the earliest of (i) December 31 of the year in which the director
turns age 65 (or, at the director's option, December 31 of the year in which
the director retires from the Company Board, if later), (ii) December 31 of the
year in which the director dies or (iii) the date of adoption by the Company's
stockholders of a resolution calling for the dissolution, liquidation or
winding up of the affairs of the Company or for the sale or transfer of all or
substantially all of the Company's assets. The deferment account is paid out to
the director in four annual installments following maturity of the account.
Pursuant to the terms of the Retirement Plan, the SERP and the Deferment
Agreements, upon the occurrence of certain events, including the Merger, the
Company may be required to contribute sufficient assets to a trust established
for the benefit of such participant or party to pay the benefits provided under
the respective plan or agreement to such participant or party. Amounts
deposited in such trusts would, at all times, remain subject to the claims of
the general creditors of the Company. Assuming the Effective Time occurs on
June 30, 1995, the maximum amount to be contributed to such trust or trusts on
behalf of the directors and executive officers of the Company would be
approximately $3,963,672. This amount includes, among other things, the lump
sum payments under the Retirement Plan and the benefits under the SERP.
Indemnification and Insurance. The Merger Agreement provides for
indemnification of, and maintenance of liability insurance for, officers and
directors of the Company and its subsidiaries after consummation of the Merger.
See "The Merger--The Merger Agreement--Indemnification and Insurance." The
Company and certain of its subsidiaries have entered into indemnification
agreements with certain of their respective directors and executive officers
providing for, among other things, indemnification for certain liabilities and
expenses arising out of actions or omissions of a director or officer while
serving in such capacity. Following a "Change of Control" (which, as defined in
the indemnification agreements, includes the Merger), the determination as to
whether a director or officer claiming indemnification is entitled to such
indemnification (which, prior to the Merger, would normally be made by the
Company Board), will be made by independent counsel, unless such director or
officer requests that such determination be made by the Company Board.
Continuation of Certain Benefits. Pursuant to the Merger Agreement, AMP and
Subsidiary have agreed to, among other things, continue to provide, until at
least December 31, 1996, certain benefit levels to employees of the Company and
its subsidiaries. See "The Merger--The Merger Agreement--Certain Benefits" and
"The Merger--Operations After the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the principal federal income tax
consequences of the Merger to the stockholders of the Company. The discussion
is based on currently existing provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Regulations thereunder, current
administrative rulings and court decisions. All of the foregoing are subject to
change and any such change could affect the continuing validity of this
discussion. The federal income tax discussion set forth below may not be
applicable to certain classes of taxpayers, including insurance companies,
securities dealers, financial institutions, foreign persons and persons who
acquired shares of Company Common Stock pursuant to the exercise of employee
stock options or rights or otherwise as compensation (as in the case of, for
example, Restricted Shares). Company stockholders are urged to consult their
tax advisors as to their respective personal tax situations including the
applicability and effect of state, local and other tax laws.
Consummation of the Merger is conditioned upon receipt by the Company of an
opinion of Skadden, Arps, Slate, Meagher & Flom, counsel to the Company (the
"Skadden Opinion") and receipt by AMP of an opinion of Altheimer & Gray,
counsel to AMP (the "Altheimer Opinion"), each dated as of the Closing Date.
The Skadden Opinion will be substantially to the effect that, on the basis of
facts (which are consistent with the facts existing at the Effective Time),
representations and assumptions set forth or referred to therein, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section
23
<PAGE>
368(a) of the Code and that accordingly: (i) no gain or loss will be recognized
by the Company, AMP or Subsidiary as a result of the Merger; (ii) no gain or
loss will be recognized by the Company stockholders who exchange their shares
of Company Common Stock solely for shares of AMP Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest); (iii) the tax basis of AMP Common Stock received by Company
stockholders who exchange all of their shares of Company Common Stock solely
for shares of AMP Common Stock in the Merger will be the same as the tax basis
of the shares of Company Common Stock surrendered in exchange therefor (reduced
by any amount allocable to a fractional share interest for which cash is
received); and (iv) the holding period of AMP Common Stock (including the
holding period of any fractional share interest) in the hands of the Company
stockholders will include the holding period of their Company Common Stock
exchanged therefor. In rendering such opinion, Skadden, Arps, Slate, Meagher &
Flom may require and rely upon representations contained in certificates of
officers of the Company, AMP, Subsidiary and others.
The Altheimer Opinion will be substantially to the effect that, on the basis
of facts (which are consistent with the facts existing at the Effective Time),
representations and assumptions set forth or referred to therein, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, and the Company and AMP will each be a
party to that reorganization within the meaning of Section 368(b) of the Code.
In rendering such opinion, Altheimer & Gray may require and rely upon
representations contained in certificates of officers of the Company, AMP,
Subsidiary and others.
Any cash received by the holders of Company Common Stock in lieu of a
fractional share of AMP Common Stock will be treated as having been received in
redemption of the share(s) and/or the fractional share interest so cashed out,
and will result in taxable gain or loss. The receipt of such cash generally
should result in gain or loss in an amount equal to the difference between the
amount of cash received and the basis of the share(s) and/or the fractional
share interest surrendered in exchange therefor. Such gain or loss will be
capital gain or loss if the share(s) and/or the fractional share interest so
cashed out was held as a capital asset at the Effective Time, and such capital
gain or loss will be long-term capital gain or loss if the holding period for
such share(s) and/or the fractional share interest was greater than one year.
Neither the Skadden Opinion nor the Altheimer Opinion will address the
federal income tax consequences of any of the transactions described in the
section of the Proxy Statement-Prospectus entitled "The Merger--Interests of
Certain Persons in the Merger."
ACCOUNTING TREATMENT
AMP intends to treat the Merger as a "pooling of interests" for accounting
and financial reporting purposes. Under this method of accounting, the
historical accounting bases of the assets and liabilities of the Company and
AMP will be combined and carried forward at their recorded amounts; income of
the combined corporation will include income of the Company and AMP for the
entire fiscal year in which the combination occurs; and the reported income of
the separate corporations for prior periods will be combined and restated as
income of the combined company. The Company's obligation to consummate the
Merger is subject to the condition that the Company shall have received a
"pooling letter" from Price Waterhouse LLP, the Company's independent
accountants, dated not earlier than five days prior to the Closing Date to the
effect that, subject to customary qualifications, no event has occurred with
respect to the Company which would preclude the Merger from being treated as a
pooling of interests for accounting purposes. In addition, AMP's obligation to
consummate the Merger is subject to the condition that AMP shall have received
a "pooling letter" from Arthur Andersen LLP, AMP's independent accountants,
dated not earlier than five days prior to the Closing Date, to the effect that,
subject to customary qualifications, the Merger will be treated as a pooling of
interests for accounting purposes. One of the qualifications to which the
"pooling letter" of Arthur Andersen LLP will be subject is that the aggregate
number of shares of Company Common Stock represented by fractional shares and
shares held by stockholders who have properly asserted appraisal rights, for
which cash will be paid, together with tainted treasury shares of Company
Common Stock, if any, not exceed 10% of the shares of Company Common Stock
issued and outstanding on the date of the Closing. See "Summary--Unaudited
Selected Comparative Per Share Data and Pro Forma Combined Financial Data,"
"Unaudited Pro Forma Combined Condensed Financial Statements" and "The Merger--
Appraisal Rights."
24
<PAGE>
REGULATORY FILINGS AND APPROVALS
Certain federal, state and foreign regulatory requirements must be complied
with before the Merger is consummated.
The Merger is subject to the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules and
regulations thereunder, which provide that certain transactions may not be
consummated until required information and materials have been furnished to the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the Federal Trade Commission (the "FTC") and certain waiting periods have
expired or been terminated. The Company and AMP filed the required information
and materials with the Antitrust Division and the FTC on April 11 and 12, 1995,
respectively. On April 21, 1995, early termination of the waiting period was
received. The requirements of the HSR Act will be satisfied if the Merger is
consummated within one year from the termination of the waiting period.
However, the Antitrust Division and the FTC may challenge the Merger on
antitrust grounds either before or after expiration of the waiting period.
Accordingly, at any time before or after the Effective Time, either the
Antitrust Division or the FTC could take such action under the antitrust laws
as it deems necessary or desirable in the public interest, or certain other
persons could take action under the antitrust laws, including seeking to enjoin
the Merger. There can be no assurance that a challenge to the Merger will not
be made or that, if such a challenge is made, the Company and AMP will prevail.
The Merger requires antitrust and other filings and approvals in certain
foreign jurisdictions. The parties believe that all such filings and approvals
required to be made or obtained in advance of consummation of the Merger have
been made or obtained.
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES
The shares of AMP Common Stock to be issued in connection with the Merger
will have been registered under the Securities Act. Such shares will be freely
transferable under the Securities Act, except for shares issued to any person
who is deemed to be an affiliate (as such term is defined for purposes of Rule
145 under the Securities Act, an "Affiliate") of the Company at the time of the
Special Meeting. Persons who may be deemed to be Affiliates of the Company
include individuals or entities that control, are controlled by, or are under
common control with the Company and may include certain officers and directors
of the Company as well as principal stockholders of the Company. Affiliates may
not sell their shares of AMP Common Stock acquired in connection with the
Merger except pursuant to (i) an effective registration statement under the
Securities Act covering such shares, (ii) paragraph (d) of Rule 145 under the
Securities Act or (iii) any other applicable exemption under the Securities
Act.
SEC guidelines indicate further that the pooling of interests method of
accounting generally will not be challenged on the basis of sales of shares by
Affiliates of the acquiring or acquired company if the Affiliates do not
dispose of any of the shares of the acquiring or acquired company that the
Affiliates own or shares of a corporation they receive in connection with a
merger during the period beginning 30 days before the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined enterprise have been published.
Pursuant to the Merger Agreement, the Company has agreed that at least 20
days prior to the Closing, the Company will deliver to AMP a letter identifying
all persons who are or will be, at the time of the Record Date, Affiliates of
the Company. The Company is obligated under the Merger Agreement to use
reasonable efforts to procure written agreements ("Affiliate Agreements") from
such persons containing appropriate representations and covenants intended to
ensure compliance with the Securities Act and to preserve the ability to
account for the Merger as a pooling of interests. AMP's obligations under the
Merger Agreement to effect the Merger are conditioned upon the receipt of an
Affiliate Agreement from each Affiliate so identified by the Company.
25
<PAGE>
LISTING OF AMP COMMON STOCK ON NYSE
AMP has agreed to use its best efforts to list on the NYSE the shares of AMP
Common Stock to be issued in connection with the Merger.
APPRAISAL RIGHTS
Holders of shares of Company Common Stock are entitled to appraisal rights
under Sections 85 through 98, inclusive, of the MBCL (the full text of which is
reprinted in its entirety as Appendix C to this Proxy Statement-Prospectus).
Pursuant to such sections of the MBCL, any stockholder of the Company who files
a written objection to the Merger prior to the taking of the vote to approve
and adopt the Merger Agreement at the Special Meeting stating that he intends
to demand payment for his shares if the Merger Agreement is approved and
adopted by the stockholders of the Company, and who does not vote in favor of
such approval and adoption, is entitled to demand in writing that the Company
pay to such stockholder in cash the fair value of the shares of Company Common
Stock held by such stockholder (exclusive of any element of value arising from
the expectation or accomplishment of the Merger).
Any stockholder who wishes to make a demand for appraisal is urged to review
carefully the provisions of Sections 85 through 98 of the MBCL, inclusive,
particularly the provisions setting forth the procedural steps required to
perfect the appraisal rights provided for therein. Appraisal rights will be
lost if such procedural requirements are not fully satisfied.
Holders of Company Common Stock wishing to exercise appraisal rights should
bear in mind that the fair value of their shares of Company Common Stock
determined under the MBCL could be more than, the same as or less than the
value of the consideration they will be entitled to receive under the Merger
Agreement if they do not seek to exercise their appraisal rights. Stockholders
should also bear in mind that opinions of investment banking firms as to
fairness from a financial point of view are not necessarily opinions as to fair
value under the MBCL.
SET FORTH BELOW IS A SUMMARY OF THE PROCEDURES RELATING TO THE EXERCISE OF
APPRAISAL RIGHTS. THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE PROVISIONS
OF SECTIONS 85 THROUGH 98, INCLUSIVE, OF THE MBCL WHICH, TOGETHER WITH ANY
AMENDMENTS TO SUCH SECTIONS AS MAY BE ADOPTED AFTER THE DATE OF THIS PROXY
STATEMENT-PROSPECTUS, ARE INCORPORATED HEREIN BY REFERENCE. A COPY OF SUCH
SECTIONS IS ATTACHED AS APPENDIX C TO THIS PROXY STATEMENT-PROSPECTUS.
Before the stockholders' vote is taken on the proposal to approve and adopt
the Merger Agreement, a stockholder who intends to exercise appraisal rights
must deliver to the Company a written objection to the proposed Merger, stating
that such stockholder intends to demand payment for the shares of Company
Common Stock held by the stockholder if the Merger is consummated. Such written
objection should be addressed to M/A-COM, Inc., 100 Chelmsford Street, P.O. Box
3294, Lowell, Massachusetts 01853-3294, Attn.: Secretary. The written objection
to the Merger must be in addition to and separate from any proxy or vote
against the Merger. Neither voting against, nor failure to vote for, the Merger
will constitute the written objection required to be filed by an objecting
stockholder. A stockholder voting for the Merger will be deemed to have waived
his rights to an appraisal under Massachusetts law. A signed proxy that is
returned but which does not contain any instructions as to how it should be
voted will be voted in favor of approval and adoption of the Merger Agreement
and will be deemed a waiver of the right to an appraisal under Massachusetts
law. Failure to vote against the Merger, however, will not constitute a waiver
of appraisal rights.
If the Merger Agreement is approved and adopted at the Special Meeting and
the Merger becomes effective, the Company will, within ten days after the
Effective Time, notify each holder of shares of Company Common Stock who has
filed a written objection meeting the requirements of Section 86 of the MBCL,
and whose shares of Company Common Stock were not voted in favor of the
proposal to approve and adopt the Merger Agreement, that the Merger has become
effective. The giving of such notice will not be deemed to
26
<PAGE>
create any rights in the stockholder receiving such notice to demand payment
for such stockholder's shares of Company Common Stock. The notice will be sent
by registered or certified mail, addressed to the stockholder at such
stockholder's last known address as it appears on the records of the Company
immediately prior to the Effective Time.
Within 20 days after the mailing by the Company of the notice described
above, any stockholder to whom the Company was required to give such notice may
demand in writing from the Company payment for the fair value of all of such
holder's shares of Company Common Stock. Such written demand should be
addressed to M/A-COM, Inc., 100 Chelmsford Street, P.O. Box 3294, Lowell,
Massachusetts 01853-3294, Attn.: Secretary. If the Company and such stockholder
shall have agreed as to the fair market value of such shares of Company Common
Stock, the Company, as the surviving corporation, will pay to such stockholder
the agreed value of such stockholder's shares of Company Common Stock within 30
days after the expiration of the 20-day period during which such written demand
may be made. The MBCL provides that any stockholder who has demanded payment
for his stock under the MBCL shall not thereafter be entitled to notice of any
meeting of stockholders, to vote such stock for any purpose or to payment of
dividends or other distributions on such stock (except dividend and
distributions payable at a date prior to the date of the vote of the proposed
corporate action) unless (i) a bill (as described below) is not filed during
the 30-day period referred to herein; (ii) a bill, if filed, is dismissed as to
such stockholder; or (iii) such stockholder, with the written approval of the
corporation (or surviving corporation in the case of a merger), delivers to the
corporation a written withdrawal of his objection to and an acceptance of such
corporate action.
If the Company and any stockholder seeking appraisal have not agreed on the
fair value of such stockholder's shares of Company Common Stock within such 30-
day period, any such stockholder who has complied with Section 86 of the MBCL,
or the Company, may, by filing a bill in equity with the Massachusetts Superior
Court in Middlesex County, Massachusetts (the "Court") within four months after
the expiration of such 30-day period, demand a determination of the fair value
of the shares of Company Common Stock of all such stockholders seeking such an
appraisal. If no such bill is filed within such four-month period, no holder of
shares of Company Common Stock will be entitled to such an appraisal. If a bill
is filed by the Company, all stockholders seeking appraisal, other than those
who have reached agreement with the Company as to the value of their shares of
Company Common Stock, must be named as parties to such proceeding. If a bill is
filed by a stockholder seeking appraisal, service of the bill must be made upon
the Company by subpoena with a copy of the bill annexed. The Company must file
with its answer a duly verified list of all stockholders seeking appraisal who
have not reached agreement with the Company as to the value of their shares of
Company Common Stock, and such stockholders will thereupon be deemed to have
been added as parties to the bill. The Company must give notice, in such form
and returnable on such date as the Court shall order, to each stockholder
seeking appraisal which is party to the bill by registered or certified mail,
addressed to the last known address of such stockholder as shown in the records
of the Company, and the Court may order such additional notice by publication
or otherwise as it deems advisable. Each stockholder seeking appraisal who
makes a written demand for payment of his shares of Company Common Stock as
provided above will be deemed to have consented to the giving of notice in such
manner, and the giving of notice to any such stockholder in compliance with the
order of the Court will be sufficient service on him. Failure to give notice to
any stockholder seeking appraisal will not invalidate the proceedings as to
other stockholders seeking appraisal to whom notice was properly given, and the
Court may at any time before the entry of a final decree make supplementary
orders of notice.
After a hearing on such a bill, the Court will enter a decree determining the
fair value of the shares of Company Common Stock of those stockholders who have
become entitled to the valuation thereof and payment therefor. The full value
of such shares of Company Common Stock will be determined as of the day
preceding the date of the vote to approve and adopt the Merger Agreement and
shall be exclusive of any element of value arising from the accomplishment or
expectation of the Merger. When the value is so determined, the Court will
order the payment by the Company of such value, with interest thereon, if any,
as provided below, to the stockholders entitled to receive the same upon
surrender to the Company by such stockholders of their Company Certificates.
27
<PAGE>
The costs of such a bill, including the reasonable compensation and expenses
of any master appointed by the Court, but exclusive of fees of counsel or of
experts retained by any party, will be determined by the Court and assessed
against the parties to the bill, or any of them, in such manner as appears to
the Court to be equitable, except that all costs of giving notice to
stockholders must be paid by the Company. Interest shall be paid upon any
award from the date of the Special Meeting, and the Court may, upon
application of any interested party, determine the amount of interest to be
paid in the case of any stockholder.
The MBCL provides that the enforcement by a stockholder of appraisal rights
pursuant to the procedures set forth above is such stockholder's exclusive
remedy except for the right of such stockholder to bring an appropriate
proceeding to obtain relief on the ground that such corporate action will be
or is illegal or fraudulent as to such stockholder.
ANY COMPANY STOCKHOLDER WHO DESIRES TO EXERCISE APPRAISAL RIGHTS SHOULD
CAREFULLY REVIEW THE MBCL AND IS ADVISED TO CONSULT HIS OR HER LEGAL ADVISOR
BEFORE EXERCISING OR ATTEMPTING TO EXERCISE SUCH RIGHTS.
DELISTING AND DEREGISTRATION OF COMPANY COMMON STOCK AFTER THE MERGER
If the Merger is consummated, the Company Common Stock will be delisted from
the NYSE and the BSE and will be deregistered under the Exchange Act. After
such delisting and deregistration, the Company will continue to be subject to
certain reporting obligations under the Exchange Act so long as any of the
Company's debt securities as to which registration statements have been filed
pursuant to the Securities Act remain outstanding and so long as any of such
debt securities are held by at least 300 holders of record on a national
securities exchange.
THE MERGER AGREEMENT
The Merger Agreement provides that Subsidiary will merge with and into the
Company, with the Company continuing as the surviving corporation (the
"Surviving Corporation"), subject to the requisite approval and adoption by
the Company's stockholders of the Merger Agreement and the satisfaction or
waiver (where permissible) of other conditions to the consummation of the
Merger.
Conversion of Shares. The Merger Agreement provides that, as of the
Effective Time, each outstanding share of Company Common Stock (including
Restricted Shares and Unawarded Shares), other than shares held by the Company
as treasury stock or by AMP, Subsidiary or any other subsidiary of AMP and
shares as to which appraisal rights have been duly asserted and perfected,
will be converted into the right to receive .28 of one share of AMP Common
Stock, together with any rights attached thereto. Company stockholders will
receive cash in lieu of any fractional shares of AMP Common Stock which would
otherwise be issuable to such stockholders as a result of the Merger. See "The
Merger--Form of the Merger; Merger Consideration." All shares of Company
Common Stock owned immediately prior to the Effective Time by the Company as
treasury stock or by AMP, Subsidiary or any other subsidiary of AMP will be
cancelled, and no AMP Common Stock or other consideration will be delivered in
exchange therefor. Shares of Company Common Stock held by stockholders who
have asserted and perfected appraisal rights will not be converted. See "The
Merger--Appraisal Rights." The Merger Agreement further provides that, as of
the Effective Time, each outstanding share of common stock, par value $1.00
per share, of Subsidiary will be converted into one share of Company Common
Stock.
As soon as practicable after the Effective Time, the Exchange Agent will
mail transmittal instructions and a form of letter of transmittal to each
Company stockholder to be used in forwarding his or her Company Certificates
for surrender and exchange for an AMP Certificate or AMP Certificates and, if
applicable, cash in lieu of fractional shares of AMP Common Stock. After
receipt of such transmittal instructions and form of transmittal letter, each
Company stockholder who surrenders his or her Company Certificates to the
Exchange Agent in accordance with the transmittal instructions will receive in
exchange therefor an AMP Certificate or AMP Certificates representing shares
of AMP Common Stock and any cash that may be payable in lieu of fractional
shares of AMP Common Stock. See "The Merger--Exchange of Stock Certificates."
28
<PAGE>
All Company Options outstanding at the Effective Time under the M/A-COM 1980
Stock Option and Performance Incentive Stock Option Plan, the M/A-COM 1981
Stock Option and Performance Incentive Stock Option Plan, the M/A-COM 1983
Stock Option and Performance Incentive Stock Option Plan, the M/A-COM Long Term
Incentive Plan and the Stock Option Plan and Agreement with Dr. Vanderslice, as
corrected and restated as of September 11, 1991 (all as amended through the
Effective Time and collectively, the "Company Stock Option Plans") shall remain
outstanding following the Effective Time for the remainder of their terms and
in accordance with the terms of the respective Company Stock Option Plans. At
the Effective Time, such Company Options (as amended or adjusted as a result of
the Merger in accordance with the applicable Company Stock Option Plan) shall,
in accordance with the terms of such plans and as a result of the Merger and
without any further action on the part of the Company or the holder of any such
Company Options, become fully vested and exercisable (to the extent not already
fully vested and exercisable) pursuant to (and only pursuant to) their terms
and in accordance with the terms of the respective Company Stock Option Plans,
and shall be assumed by AMP. See "The Merger--Interests of Certain Persons in
the Merger--Stock Options." From and after the Effective Time, each Company
Option assumed by AMP shall be exercisable (i) for that whole number of shares
of AMP Common Stock (rounded up to the nearest whole share) into which the
number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time would be converted in the Merger (ii)
at an option price per share of AMP Common Stock equal to the option price per
share of Company Common Stock subject to such Company Option in effect
immediately prior to the Effective Time divided by the Exchange Rate (the
option price per share, as so determined, being rounded upward to the nearest
full cent). The effect of the Merger Agreement provisions described above is
that, at the Effective Time, each Company Option to purchase one share of
Company Common Stock then outstanding (i) will be converted into an option to
acquire .28 of one share of AMP Common Stock at an exercise price per share
determined by dividing the exercise price of the Company Option by .28 and (ii)
to the extent not then exercisable, will become fully vested and exercisable
for the 30-day period immediately following the Effective Time (after which
period such Company Option will revert to its prior status with respect to
vesting). All Company Options will, in all other respects, remain outstanding
pursuant to their terms and conditions as in effect at the Effective Time.
Representations and Warranties. The Merger Agreement contains various
representations and warranties by the Company, AMP and Subsidiary relating to,
among other things, (i) each of the Company's and AMP's and certain of their
respective subsidiaries' organization and similar corporate matters, (ii) the
authorization, execution, delivery, performance and enforceability of the
Merger Agreement and related matters, (iii) conflicts under articles of
incorporation or by-laws, required consents or approvals and violations of any
instruments or laws, (iv) each of the Company's and AMP's capital structure and
the ownership of Subsidiary by AMP, (v) the respective documents and reports
filed by the Company and AMP with the SEC, and the accuracy of the information
contained therein, (vi) the absence of material undisclosed liabilities, (vii)
the absence of certain events or changes, (viii) taxes, (ix) retirement and
other employee plans and matters relating to the Employee Retirement Income
Security Act of 1974, as amended, (x) litigation, (xi) compliance with laws and
the absence of investigations or reviews by governmental entities (xii)
environmental matters and (xiii) obligations to brokers and finders.
The Merger Agreement contains additional representations and warranties made
by the Company relating to (i) actions taken by the Company in connection with
the execution and delivery of the Merger Agreement with respect to the Rights
Agreement, dated as of July 29, 1986, as amended and restated as of May 16,
1990 (the "Rights Agreement") between the Company and The First National Bank
of Boston, (ii) intellectual property matters and (iii) the opinion of the
Company's financial advisor. AMP and Subsidiary also made representations and
warranties with respect to the absence or extent of beneficial ownership by
them of shares of Company Common Stock.
Conduct of Business Prior to the Effective Time. Pursuant to the Merger
Agreement, the Company, AMP and Subsidiary have agreed to cooperate, make all
filings, registrations and submissions, and use reasonable best efforts to
consummate the Merger. The Company, AMP and Subsidiary have agreed that
(subject to certain qualifications), during the period from the date of the
Merger Agreement until the Effective Time, (i)
29
<PAGE>
each party will notify the other of any condition or event which would make
any representation or warranty contained in the Merger Agreement untrue, (ii)
subject to the fiduciary duties of directors under applicable law, no party
will perform an act or omit to perform an act which would prevent or excuse
the performance of the Merger Agreement, (iii) the Company and AMP shall each
give the other party's representatives reasonable access to its books, records
and documents, and (iv) the Company and AMP will each conduct (and will cause
each of its subsidiaries to conduct) its business in the usual and ordinary
course of business consistent with past practice and will not pay or declare
any extraordinary dividend on its securities, nor change its method of
accounting except as required by changes in generally accepted accounting
principles. The Company has agreed additionally that it will not, among other
things, (i) amend its articles of organization or by-laws, (ii) make any
change in its authorized capital stock (iii) sell, transfer, or otherwise
dispose of its material assets without fair consideration and (iv) make any
material investments in, or acquisitions from, any entity other than a
subsidiary of the Company.
The Company and AMP have agreed to cooperate in the preparation of certain
required registrations and filings with the SEC and AMP has agreed to file the
Registration Statement and take appropriate steps to have the Registration
Statement be declared effective by the SEC and to obtain all necessary state
securities laws or "blue sky" permits. The Company has also agreed that, prior
to the Closing Date, the Company will deliver to AMP a letter which identifies
all Affiliates of the Company, and will use reasonable efforts to cause each
named Affiliate to execute the Affiliates Agreement. See "The Merger--
Restrictions on Sales of Shares by Affiliates."
No Solicitation of Alternative Proposals. The Company has agreed that
neither it nor any of its subsidiaries will (i) initiate, solicit or encourage
any inquiries or any proposal for a merger, acquisition, consolidation or
similar transaction involving the sale of all or substantially all of the
Company's assets or equity securities (such proposal hereinafter referred to
as an "Alternative Proposal"), or (ii) negotiate with, enter into any
agreement with, provide any confidential information or data to, or have any
discussions with, any person relating to an Alternative Proposal, or otherwise
facilitate any effort or attempt to make or implement an Alternative Proposal.
Pursuant to the Merger Agreement and subject to certain qualifications, the
Company is obligated to notify AMP as promptly as practicable if any
Alternative Proposals are received by the Company, any confidential
information relating to an Alternative Proposal is requested of the Company or
any negotiations or discussions relating to an Alternative Proposal are sought
to be initiated or continued with the Company. In the Merger Agreement, the
Company agreed to cease and terminate any discussions or negotiations existing
as of the date of the Merger Agreement concerning any such Alternative
Proposals.
Notwithstanding the foregoing, the Company Board is not prohibited from (i)
after notice to AMP, furnishing information to, or entering into negotiations
or discussions with, any person or entity that makes an unsolicited bona fide
Alternative Proposal if the Company Board determines in good faith, after
consultation with counsel, that the failure to do so could reasonably be
deemed a breach of its fiduciary duties under applicable law, (ii)
withdrawing, modifying or changing the recommendation to the Company's
stockholders regarding the Merger Agreement contained in this Proxy Statement-
Prospectus if the Company Board determines in good faith, after consultation
with counsel, that the failure to withdraw, modify or change such
recommendation, could reasonably be deemed a breach of its fiduciary duties
under applicable law, (iii) recommending to the stockholders of the Company an
Alternative Proposal that the Company Board determines in good faith, after
consultation with its financial advisor, is likely to be more favorable, from
a financial point of view, to the stockholders of the Company than the Merger
or (iv) to the extent applicable, complying with Rule 14e-2 promulgated under
the Exchange Act with regard to an Alternative Proposal.
Indemnification and Insurance. The Merger Agreement provides that AMP and
the Surviving Corporation shall indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of the Merger
Agreement or who becomes prior to the Effective Time, a director, officer,
employee or agent of the Company or any subsidiary of the Company or a
director, officer, employee, agent
30
<PAGE>
or trustee of any employee benefit plan for employees of the Company or any
subsidiary of the Company and certain others (collectively, "Indemnified
Persons") against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments arising out of or relating to, or amounts that are
paid in settlement of, or in connection with, any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole
or in part out of the fact that such person is or was a director, officer,
employee or agent of the Company or any subsidiary of the Company or a
director, officer, employee, agent or trustee of any employee benefit plan for
employees of the Company or any subsidiary of the Company whether pertaining
to any matter existing or occurring at or prior to the Effective Time and
whether asserted or claimed prior to or at or after, the Effective Time
("Indemnifiable Claims") and (ii) all Indemnifiable Claims based on or
pertaining to the Merger Agreement or the Merger to the full extent a
corporation is permitted under the MBCL to indemnify its own directors,
officers, employees and agents.
The Merger Agreement further provides that AMP and Subsidiary agree (i) that
all existing rights to indemnification provided for in the Company's or any of
its subsidiaries' Articles of Organization or By-laws (or similar
organizational documents) shall survive the Merger and shall continue in full
force and effect for a period of not less than six years from the Effective
Time, (ii) to maintain liability insurance covering Indemnified Persons on
terms no less favorable than such insurance maintained in effect by the
Company on the date of the Merger Agreement for a period of six years after
the Effective Time, to the extent such liability insurance can be maintained
at an annual cost not greater than 150 percent of the Company's fiscal 1995
annual premium for its directors' and officers' liability insurance, and (iii)
that the obligations to indemnify the Indemnified Persons to the extent
provided in the Merger Agreement are binding on all successors and assigns of
AMP or the Surviving Corporation.
Certain Benefits. In the Merger Agreement, the parties acknowledge that the
consummation of the Merger will be a triggering event with respect to the
operation of certain provisions in the employee benefit, deferred
compensation, severance and other plans maintained, administered or
contributed to by the Company or any of its subsidiaries for the benefit of
employees or former employees of the Company relating to the occurrence of a
change in the ownership or control of the Company, and that from and after the
Effective Time, (i) AMP will cause the Surviving Corporation to honor in
accordance with their terms all agreements, employee benefit plans, programs
or policies or certain other arrangements between the Company or any of its
subsidiaries and any current or former officer, director, or employee of the
Company or any of its subsidiaries in effect prior to the Effective Time
(including those terms relating to the occurrence of a change in the ownership
or control of the Company), provided that nothing in the Merger Agreement
shall limit any changes made on a prospective basis that are permitted under
the Merger Agreement, (ii) until at least December 31, 1996, the Surviving
Corporation and its subsidiaries will provide benefit plans to employees
employed by the Company or any of its subsidiaries as of the Effective Time
which will, in the aggregate, be no less favorable than those provided by the
Company and its subsidiaries to their employees prior to the Effective Time,
and thereafter will provide benefits no less favorable than those provided by
AMP and any of its subsidiaries to their employees in comparable positions
and, to the extent any salaried employee of the Company or any of its
subsidiaries becomes a participant in any employee benefit plan of AMP, such
employee will be given service credit under such plan for all service with the
Company prior to the Effective Time for purposes of determining eligibility
and vesting and (iii) in the event that the Surviving Corporation shall cease
to exist as a result of a business combination or similar transaction, or
conveys all or substantially all of its assets, proper provision will be made
so that the successors and assigns of the Surviving Corporation assume the
foregoing obligations.
Pooling and Reorganization Treatment. Pursuant to the Merger Agreement, from
the date of the Merger Agreement and until the Effective Time, the Company and
AMP have agreed not to knowingly take any action, or knowingly fail to take
any action, that would be reasonably likely to (i) jeopardize the treatment of
the Merger as a pooling of interests for accounting purposes or (ii)
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
Rights Agreement. The Company has agreed to take all action necessary to
redeem the rights (the "Company Rights") under the Rights Agreement as of the
Effective Time. So long as the Merger Agreement
31
<PAGE>
shall not have been terminated, the Company has agreed that it will not amend
the Rights Agreement, redeem the Company Rights with respect to an Alternative
Proposal or take any action to make the Rights Agreement or the Company Rights
inapplicable with respect to any Alternative Proposal. For a description of the
Company Rights, see "Comparison of Rights of Holders of Company Common Stock
and AMP Common Stock--Common Stock Purchase Rights."
Conditions to Consummation of the Merger. The Merger Agreement provides that
the respective obligations of the Company and AMP to effect the Merger are
subject to a number of conditions, including among others, that (i) the Merger
Agreement and the Merger shall have been approved and adopted by the requisite
vote of the stockholders of the Company; (ii) all approvals required by any
governmental entity shall have any been obtained, and any applicable waiting
periods related to any such approvals shall have expired; (iii) the
Registration Statement shall have become effective and shall not be the subject
of any stop order or proceeding seeking a stop order, and all necessary state
securities or "blue sky" authorizations shall have been received; (iv) the
shares of AMP Common Stock issuable in the Merger shall have been authorized
for listing on the NYSE upon official notice of issuance; and (v) no
preliminary or permanent injunction or other order by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
The Merger Agreement further provides that the Company's obligation to effect
the Merger is subject to certain additional conditions, including that (i) AMP
and Subsidiary shall have performed in all material respects their respective
agreements, (ii) all of AMP's and Subsidiary's respective representations and
warranties contained in the Merger Agreement shall be true and correct in all
material respects, subject to certain qualifications, and (iii) AMP shall not
have suffered any change resulting in a materially adverse effect on the
business, results of operation, financial condition, properties or assets of
AMP and its subsidiaries, taken as a whole.
The Merger Agreement further provides that AMP's obligation to effect the
Merger is subject to certain additional conditions, including that (i) the
Company shall have performed in all material respects its agreements, (ii) all
of the Company's representations and warranties contained in the Merger
Agreement shall be true and correct in all material respects, subject to
certain qualifications, and (iii) the Company shall not have suffered any
change resulting in a materially adverse effect on the business, results of
operation, financial condition, properties or assets of the Company and its
subsidiaries, taken as a whole. The Merger Agreement provides that (a) any
changes or developments with respect to certain environmental, health and
safety matters disclosed by the Company to AMP prior to execution of the Merger
Agreement will be disregarded for purposes of determining whether the
conditions in (ii) and (iii) are satisfied and (b) if the probable aggregate
adverse effect thereof (determined in accordance with the Merger Agreement) on
the financial condition of the Company and its subsidiaries, taken as a whole,
is less than or equal to $25,000,000, any changes or developments with respect
to certain other matters also disclosed by the Company to AMP prior to
execution of the Merger Agreement will also be disregarded for purposes of
determining whether the conditions in (ii) and (iii) are satisfied.
The Merger Agreement further provides as conditions to the fulfillment of
each party's obligations, that each of the Company and AMP shall have received
from its legal advisor a "tax opinion" with respect to the "tax-free" status of
the Merger and shall have received from its independent accountant a "pooling
letter" which, in the case of the Company is with respect to the Company's
impact on the accounting treatment of the Merger and, in the case of AMP is
with respect to the accounting treatment of the Merger. An additional condition
to the Company's obligations is the receipt by the Company of a written opinion
from its financial advisor, dated as of the date of this Proxy Statement-
Prospectus, to the effect that as of the date of the Proxy Statement-
Prospectus, the consideration to be received by the Company stockholders is
fair, from a financial point of view, to such stockholders. An additional
condition to the obligations of AMP to effect the Merger is that AMP shall have
received an Affiliate Agreement from each Affiliate of the Company as
contemplated by the Merger Agreement. See "The Merger--Restrictions on Sales of
Shares by Affiliates."
32
<PAGE>
Termination and Termination Fee. The Merger Agreement provides that at any
time prior to the Effective Time, the Merger Agreement may be terminated: (i)
by mutual written consent of the Company, AMP and Subsidiary; (ii) by the
Company or by AMP (with the approval of such terminating party's Board of
Directors) if (a) any governmental entity whose approval is required for
consummation of the Merger has denied approval of the Merger and such denial
has become final and non-appealable or (b) the Effective Time shall not have
occurred at or before 11:59 p.m. Boston time on September 1, 1995 (the
"Termination Date"), provided that the right to terminate will not be available
to any party whose failure to fulfill any of its obligations under the Merger
Agreement is the cause of or resulted in either of the foregoing events; (iii)
by AMP if there has been a material breach on the part of the Company of any
material representation, warranty, covenant or agreement set forth in the
Merger Agreement such that, in the reasonable opinion of AMP, certain
conditions to its obligation to effect the Merger could not be expected to be
satisfied by the Termination Date; or (iv) by the Company if (a) there has been
a material breach on the part of AMP or Subsidiary of any material
representation, warranty, covenant or agreement set forth in the Merger
Agreement such that, in the reasonable opinion of the Company, certain
conditions to its obligation to effect the Merger could not be expected to be
satisfied by the Termination Date, (b) the Company's stockholders do not
approve and adopt the Merger Agreement at the Special Meeting, (c) the Company
Board withdraws, or modifies or changes its recommendation regarding the Merger
Agreement contained in this Proxy Statement-Prospectus based on the Company
Board's good faith determination, after consultation with counsel, that the
failure to withdraw, modify or change such recommendation could reasonably be
deemed a breach of its fiduciary duties under applicable law, or (d) the
Company Board recommends to the stockholders of the Company an Alternative
Proposal that the Company Board determines in good faith, after consultation
with its financial advisor, is likely to be more favorable, from a financial
point of view, to the stockholders of the Company than the Merger.
In the event of termination of the Merger Agreement as described above, the
Merger Agreement shall become void and there will be no liability or obligation
on the part of the Company, AMP or Subsidiary or any of their respective
affiliates, officers or directors, and all rights and obligations under the
Merger Agreement will cease, provided that no termination shall relieve any
party from liability for the willful breach of the Merger Agreement prior to
such termination.
The Merger Agreement provides that, so long as AMP and Subsidiary shall not
have breached their obligations under the Merger Agreement, if the Company
terminates the Merger Agreement in connection with the Company Board's
recommendation of an Alternative Proposal, the Company will pay AMP $11,000,000
as a termination fee.
Extension, Waiver, and Amendment. At any time prior to the Effective Time,
the Company and AMP may (i) extend the time for the performance of any of the
obligations or other acts to be performed by the other party, (ii) waive any
inaccuracies in the representations and warranties by the other party contained
in the Merger Agreement or in any document delivered pursuant to Merger
Agreement, and (iii) waive compliance with any of the agreements of the other
party or conditions contained in the Merger Agreement. The Merger Agreement may
be amended by the parties to the Merger Agreement with the approval of their
respective Boards of Directors at any time prior to the Effective Time. No
amendments to the Merger Agreement will be made after the approval and adoption
thereof by the affirmative vote of at least two-thirds of the shares held by
the stockholders of the Company without further approval of such stockholders,
if such amendments would violate applicable provisions under the MBCL.
OPERATIONS AFTER THE MERGER
Upon consummation of the Merger, the Board of Directors of Subsidiary will be
the Board of Directors of the Surviving Corporation and it is anticipated that
the current executive officers of the Company will continue in their present
positions, except that Dr. Vanderslice will resign from his positions as
Chairman of the Company Board, President and Chief Executive Officer, and his
duties in such capacities will be assumed
33
<PAGE>
by a general manager to be appointed by the Board of Directors of the
Surviving Corporation. It is currently anticipated that certain executive
officers of the Company will enter into employment or consulting agreements
with the Surviving Corporation after the Merger.
INFORMATION CONCERNING THE COMPANY
The Company is primarily a supplier to the wireless telecommunications,
surveillance and defense-related industries of radio frequency, microwave and
millimeter wave semiconductors, components and subsystems, utilizing advanced
circuit and semiconductor technologies, for systems applications in wireless
communications, sensor systems, radar, navigation, missile guidance,
electronic warfare and surveillance in air, ground, sea and space
environments. The Company's products are used in a substantial variety of
commercial applications and defense systems. The Company also manufactures
surveillance products used in intelligence collection applications. The
mailing address of the Company's principal executive offices is 100 Chelmsford
Street, P.O. Box 3294, Lowell, Massachusetts 01853-3294, and its telephone
number is (508) 442-5000.
On February 14, 1995, Charles D. Kissner (Vice President and General
Manager, Microeletronics Division) and Peter L. Manno (Vice President, Sales
and Marketing) were named executive officers of the Company. George N. Hutton,
Jr., a director of the Company, retired from the Company Board effective
April 1, 1995.
Additional information concerning the Company and its subsidiaries is
contained in the Company 10-K, its Quarterly Reports on Form 10-Q for the
periods ended January 1, 1994, April 2, 1994, December 31, 1994 and April 1,
1995, its Proxy Statement dated December 23, 1994 in connection with the
annual meeting of Company stockholders held on February 15, 1995, its Current
Report on Form 8-K dated March 20, 1995 and its other public filings. See
"Available Information" and "Incorporation By Reference."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and related footnotes show information regarding
beneficial ownership of shares of Company Common Stock furnished by the
respective directors or executive officers of the Company, or by the Company,
as of May 19, 1995.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF OWNERSHIP PERCENT
NAME OF BENEFICIAL OWNER (1)(2)(3)(4)(5) OF CLASS
- ------------------------ ----------------- --------
<S> <C> <C>
Daniel J. Fink...................................... 10,000 0.04
Robert H. Glaudel................................... 147,594 0.55
Charles D. Kissner.................................. 15,221(6) 0.06
Robert E. La Blanc.................................. 16,741(7) 0.06
Peter L. Manno...................................... 51,388 0.19
James D. Meindl..................................... 11,000 0.04
Larry L. Mihalchik.................................. 474 *
E. James Morton..................................... 10,100 0.04
Raymond F. Pettit................................... 32,500 0.12
William F. Pounds................................... 11,200 0.04
Peter J. Rice....................................... 29,571 0.11
Paul E. Tsongas..................................... 10,217 0.04
Thomas A. Vanderslice............................... 1,295,091(8) 4.67
All directors and executive officers as a group (15
persons)........................................... 1,762,699(9) 6.31
</TABLE>
- --------
* Not Meaningful.
(1) All information set forth in the table and these notes concerning
directors and executive officers as a group includes information with
respect to two former executive officers of the Company.
34
<PAGE>
(2) Unless otherwise indicated, the shares shown in the table are those as to
which the beneficial owner has sole voting and investment power.
(3) Includes Restricted Shares allocated to participants pursuant to the RTSP
which have been awarded but are held subject to restrictions in accordance
with the terms of the RTSP, as to which the beneficial owner has sole
voting power but no investment power, as follows: Mr. Glaudel, 25,000
shares; Mr. Kissner, 15,000 shares; Mr. Manno, 50,000 shares; Mr. Rice,
12,500 shares; Dr. Vanderslice, 208,334 shares; and all executive officers
as a group, 344,167 shares.
(4) Includes shares of Company Common Stock subject to Company Options
exercisable within sixty days of May 19, 1995 as follows: Mr. Fink, 9,000
shares; Mr. Glaudel, 69,995 shares; Mr. La Blanc, 10,000 shares; Dr.
Meindl, 8,000 shares; Mr. Morton, 4,000 shares; Mr. Pettit, 10,000 shares;
Dr. Pounds, 10,000 shares; Mr. Rice, 15,000 shares; Mr. Tsongas, 10,000
shares; Dr. Vanderslice, 1,000,000 shares; and all directors and executive
officers as a group, 1,195,995 shares. For purposes of calculating the
"percent of class" with respect to each individual and the group, the
shares subject to such Company Options have been treated as if they were
issued and outstanding.
(5) Includes shares allocated to participants pursuant to the Company's
Employee Stock Ownership Plan, as to which the beneficial owner has no
investment power and shared voting power, as follows: Mr. Glaudel, 48
shares; Mr. Rice, 5 shares; Dr. Vanderslice, 16 shares; and all executive
officers as a group, 84 shares.
(6) Excludes 200 shares held by Mr. Kissner's wife as custodian for their
children, as to which Mr. Kissner disclaims beneficial ownership.
(7) Includes $100,000 face amount of the Company's 9 1/4% Convertible
Subordinated Debentures, convertible into 2,741 shares of Company Common
Stock. Does not include $10,000 face amount of the Company's 9 1/4%
Convertible Subordinated Debentures, convertible into 274 shares of Company
Common Stock, owned by Mr. La Blanc's wife as custodian for their children
and 4,000 shares owned by Mr. La Blanc's wife directly, as to which
debentures and shares Mr. La Blanc disclaims any beneficial interest.
(8) Includes 33,500 Restricted Shares granted to Dr. Vanderslice pursuant to
the LTIP which are held subject to restrictions in accordance with the
terms of the LTIP.
(9) Does not include an aggregate of 16,960 shares owned by wives or on behalf
of children of certain executive officers and directors, as to which shares
such executive officers and directors disclaim any beneficial interest.
No one was known by the Company to own beneficially more than 5% of the
outstanding Company Common Stock on May 19, 1995, except as shown in the
following table. The information appearing in the table regarding beneficial
ownership of shares of Company Common Stock has been obtained from filings with
the SEC made by the stockholder named below.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OWNED OF SHARES
- ---------------- ------------------ ----------
<S> <C> <C>
Kopp Investment Advisors, Inc.(1)................. 2,417,325 9.4%
6600 France Avenue S., Suite 672
Edina, Minnesota 55435
</TABLE>
- --------
(1) As reported in, and based solely upon, Amendment No. 1 to Schedule 13G with
respect to shares of Company Common Stock, filed with the SEC jointly by
Kopp Investment Advisors, Inc. ("KIA"), LeRoy C. Kopp, 100% owner of KIA,
and the Kopp Investment Advisors, Inc. Profit Sharing Plan on or about
February 10, 1995. Mr. Kopp has sole dispositive power and sole voting
power with respect to 12,000 of the shares of Company Common Stock
beneficially owned by KIA, and shares with KIA dispositive power with
respect to 2,405,325 of such shares beneficially owned by KIA.
INFORMATION CONCERNING AMP
AMP is a leading producer of electrical and electronic connection devices.
AMP supplies over 100,000 types and sizes of terminals, splices, connectors,
cable assemblies, fiber-optic assemblies, printed circuit board
35
<PAGE>
assemblies, sensors, wide and local area network products and systems,
switches, touch screen data entry systems and related application tooling to
more than 30,000 electrical and electronic equipment manufacturers and tens of
thousands of customers who install and maintain that equipment. The mailing
address of AMP's principal executive offices is 470 Friendship Road, Mail Stop
176-048, Harrisburg, Pennsylvania 17111, and its telephone number is (717) 564-
0100.
Additional information concerning AMP and its subsidiaries is contained in
the AMP 10-K, its Quarterly Reports on Form 10-Q for the periods ended March
31, 1994 and March 31, 1995, its Proxy Statement dated March 24, 1995 in
connection with the annual meeting of AMP stockholders held on April 26, 1995,
its Current Reports on Form 8-K dated January 31, 1995 and March 20, 1995 and
its other public filings. See "Available Information" and "Incorporation By
Reference."
COMPARATIVE PER SHARE MARKET PRICE DATA
Company Common Stock is listed and traded on the NYSE and the BSE under the
symbol "MAI." AMP Common Stock is listed and traded on the NYSE under the
symbol "AMP" and is also listed under the symbol "AMP" on the following
regional stock exchanges: BSE, Cincinnati Stock Exchange, Midwest Stock
Exchange, Inc., Pacific Stock Exchange, Incorporated and Philadelphia Stock
Exchange, Inc.
The following table sets forth, for the calendar quarters indicated, the high
and low sales prices per share of Company Common Stock and AMP Common Stock as
reported on the NYSE Composite Transaction Reporting System.
<TABLE>
<CAPTION>
COMPANY AMP COMMON
COMMON STOCK STOCK(1)
-------------- ---------------------------
CASH
HIGH LOW HIGH LOW DIVIDENDS(2)
------- ------ ------- ------- -----------
<S> <C> <C> <C> <C> <C>
1992:
First Quarter..................... $ 7.875 $5.750 $34.375 $28.000 $.19
Second Quarter.................... 6.625 4.750 31.750 26.750 .19
Third Quarter..................... 5.250 4.625 30.875 26.313 .19
Fourth Quarter.................... 4.875 4.000 32.938 27.313 .19
1993:
First Quarter..................... 6.250 4.625 30.688 27.313 .20
Second Quarter.................... 9.375 6.000 31.938 29.563 .20
Third Quarter..................... 10.375 8.000 33.625 29.875 .20
Fourth Quarter.................... 9.375 7.375 33.188 28.500 .20
1994:
First Quarter..................... 9.250 5.875 32.750 29.625 .21
Second Quarter.................... 8.625 4.875 34.750 28.813 .21
Third Quarter..................... 8.875 7.000 39.125 34.375 .21
Fourth Quarter.................... 7.750 6.000 39.688 33.688 .21
1995:
First Quarter..................... 10.125 6.375 38.188 35.063 .23
Second Quarter (through May 30)... 12.125 9.750 43.375 35.875 .23
</TABLE>
- --------
(1) AMP's stock prices and dividend information have been adjusted for the 2-
for-1 stock split which was effected on March 2, 1995.
(2) On January 25, 1995, AMP declared a regular quarterly dividend of $.23 per
share (an indicated annual rate of $.92 per share).
36
<PAGE>
The following table sets forth the closing price per share of Company Common
Stock and AMP Common Stock as reported on the NYSE Composite Transaction
Reporting System and the equivalent per share price (as explained below) of
Company Common Stock on March 9, 1995, the business day preceding public
announcement of the Merger, and on May 30, 1995:
<TABLE>
<CAPTION>
COMPANY COMMON AMP COMMON EQUIVALENT PER
STOCK STOCK SHARE PRICE
-------------- ---------- --------------
<S> <C> <C> <C>
March 9, 1995.......................... $ 7.00 $ 38.00 $ 10.64
May 30, 1995........................... $11.25 $41.125 $11.515
</TABLE>
The equivalent per share price of a share of Company Common Stock represents
the closing price of a share of AMP Common Stock on such date multiplied by the
Exchange Rate.
BECAUSE THE MARKET PRICE OF AMP COMMON STOCK THAT HOLDERS OF COMPANY COMMON
STOCK WILL RECEIVE IN THE MERGER MAY INCREASE OR DECREASE PRIOR TO THE MERGER,
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS.
37
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the Merger under the pooling of interests method of accounting.
The unaudited pro forma combined condensed statements of income combine the
historical results of the Company for the three months ended April 1, 1995 and
the fiscal years ended October 1, 1994, October 2, 1993 and October 3, 1992
with the historical results of AMP for the three months ended March 31, 1995
and the fiscal years ended December 31, 1994, 1993 and 1992, respectively. The
unaudited pro forma combined condensed balance sheet combines the Company's
April 1, 1995 consolidated balance sheet with AMP's March 31, 1995 consolidated
balance sheet.
The unaudited pro forma combined condensed financial statements do not
reflect cost savings and synergies which might be achieved from the Merger and
the integration expenses to be incurred in connection with the Merger, which
are not currently determinable and which will be charged to current operations
when incurred. The unaudited pro forma combined condensed financial statements
do not purport to be indicative of the operating results or financial position
that would have been achieved had the Merger been effected for the periods
indicated or the results or financial position which may be obtained in the
future.
These pro forma statements are based on and should be read in conjunction
with the audited consolidated financial statements, including the notes
thereto, of the Company and AMP which are included in documents incorporated by
reference in this Proxy Statement-Prospectus. See "Incorporation By Reference."
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------------------------------
COMPANY AMP
APRIL 1, MARCH 31, PRO FORMA PRO FORMA
1995 1995 ADJUSTMENTS COMBINED
----------- ------------ ----------- ------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................... $ 92,969 $ 1,202,800 $ -- $ 1,295,769
Cost of sales............... 62,141 812,716 -- 874,857
----------- ------------ ------- ------------
Gross income.............. 30,828 390,084 -- 420,912
----------- ------------ ------- ------------
Selling, general and
administrative expenses.... 27,728 200,484 -- 228,212
----------- ------------ ------- ------------
Income from operations.... 3,100 189,600 -- 192,700
Interest expense............ 2,307 6,764 -- 9,071
Other deductions (income),
net........................ (195) 14,332 -- 14,137
----------- ------------ ------- ------------
Income before income
taxes.................... 988 168,504 -- 169,492
----------- ------------ ------- ------------
Provision for income taxes.. 477 63,700 -- 64,177
----------- ------------ ------- ------------
Income from continuing
operations................. $ 511 $ 104,804 $ -- $ 105,315
=========== ============ ======= ============
Income from continuing
operations per share....... $ .02 $ .50 $ .48
=========== ============ ============
Shares used to compute
income from continuing
operations per share..... 26,845,000 209,653,300 217,169,900
=========== ============ ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
38
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
--------------------------------------------------
COMPANY AMP
OCTOBER 1, DECEMBER 31, PRO FORMA PRO FORMA
1994 1994 ADJUSTMENTS COMBINED
----------- ------------ ----------- ------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................... $ 341,596 $ 4,027,471 $ -- $ 4,369,067
Cost of sales............... 224,895 2,659,290 -- 2,884,185
----------- ------------ ------- ------------
Gross income.............. 116,701 1,368,181 -- 1,484,882
----------- ------------ ------- ------------
Selling, general and
administrative expenses.... 103,581 721,364 -- 824,945
----------- ------------ ------- ------------
Income from operations.... 13,120 646,817 -- 659,937
Interest expense............ 9,159 19,994 -- 29,153
Other deductions (income),
net........................ (563) 32,535 -- 31,972
----------- ------------ ------- ------------
Income before income
taxes.................... 4,524 594,288 -- 598,812
----------- ------------ ------- ------------
Provision for income taxes.. 1,132 224,890 (1,000) 225,022
----------- ------------ ------- ------------
Income from continuing
operations................. $ 3,392 $ 369,398 $ 1,000 $ 373,790
=========== ============ ======= ============
Income from continuing
operations per share....... $ .13 $ 1.76 $ 1.72
=========== ============ ============
Shares used to compute
income from continuing
operations per share..... 25,986,000 209,736,506 217,012,586
=========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
--------------------------------------------------
COMPANY AMP
OCTOBER 2, DECEMBER 31, PRO FORMA PRO FORMA
1993 1993 ADJUSTMENTS COMBINED
----------- ------------ ----------- ------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................... $ 339,890 $ 3,450,586 $ -- $ 3,790,476
Cost of sales............... 232,545 2,309,256 -- 2,541,801
----------- ------------ ------- ------------
Gross income.............. 107,345 1,141,330 -- 1,248,675
----------- ------------ ------- ------------
Selling, general and
administrative expenses.... 127,563 616,568 -- 744,131
----------- ------------ ------- ------------
Income (loss) from
operations............... (20,218) 524,762 -- 504,544
Interest expense............ 8,412 19,549 -- 27,961
Other deductions (income),
net........................ (3,917) 19,277 -- 15,360
----------- ------------ ------- ------------
Income (loss) before
income taxes............. (24,713) 485,936 -- 461,223
----------- ------------ ------- ------------
Provision (benefit) for
income taxes............... (2,206) 189,280 (7,000) 180,074
----------- ------------ ------- ------------
Income (loss) from
continuing operations...... $ (22,507) $ 296,656 $ 7,000 $ 281,149
=========== ============ ======= ============
Income (loss) from
continuing operations per
share...................... $ (.92) $ 1.41 $ 1.30
=========== ============ ============
Shares used to compute
income (loss) from
continuing operations per
share.................... 24,401,000 209,796,245 216,951,772
=========== ============ ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
39
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
--------------------------------------------------
COMPANY AMP
OCTOBER 3, DECEMBER 31, PRO FORMA PRO FORMA
1992 1992 ADJUSTMENTS COMBINED
----------- ------------ ----------- ------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................... $ 387,818 $ 3,337,145 $ -- $ 3,724,963
Cost of sales............... 261,907 2,218,898 -- 2,480,805
----------- ------------ ------- ------------
Gross income.............. 125,911 1,118,247 -- 1,244,158
----------- ------------ ------- ------------
Selling, general and
administrative expenses.... 107,172 584,913 -- 692,085
----------- ------------ ------- ------------
Income from operations.... 18,739 533,334 -- 552,073
Interest expense............ 10,024 29,489 -- 39,513
Other deductions (income),
net........................ (2,851) 24,737 -- 21,886
----------- ------------ ------- ------------
Income before income
taxes.................... 11,566 479,108 -- 490,674
----------- ------------ ------- ------------
Provision for income taxes.. 2,633 188,770 -- 191,403
----------- ------------ ------- ------------
Income from continuing
operations................. $ 8,933 $ 290,338 $ -- $ 299,271
=========== ============ ======= ============
Income from continuing
operations per share....... $ .37 $ 1.38 $ 1.37
=========== ============ ============
Shares used to compute
income from continuing
operations per share....... 24,114,000 210,992,183 217,744,103
=========== ============ ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
40
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
COMPANY AMP
APRIL 1, MARCH 31, PRO FORMA PRO FORMA
1995 1995 ADJUSTMENTS COMBINED
ASSETS -------- ---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents..... $ 7,061 $ 234,953 $ -- $ 242,014
Securities available for sale. -- 144,931 -- 144,931
Accounts receivable, net...... 69,398 953,707 -- 1,023,105
Inventories................... 63,233 621,566 -- 684,799
Other current assets.......... 13,829 227,962 13,000 254,791
-------- ---------- -------- ----------
Total current assets........ 153,521 2,183,119 13,000 2,349,640
-------- ---------- -------- ----------
Property, plant and equipment... 270,152 3,698,084 -- 3,968,236
Less: Accumulated depreciation.. 169,702 2,114,255 -- 2,283,957
-------- ---------- -------- ----------
Property, plant and equipment,
net.......................... 100,450 1,583,829 -- 1,684,279
-------- ---------- -------- ----------
Investments and other assets.... 52,140 291,011 -- 343,151
-------- ---------- -------- ----------
Total Assets.................... $306,111 $4,057,959 $ 13,000 $4,377,070
======== ========== ======== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Current liabilities:
Short-term debt............... $ 10,676 $ 237,045 $ -- $ 247,721
Accounts payable, trade and
other........................ 14,529 424,309 -- 438,838
Other accrued liabilities..... 70,618 489,408 -- 560,026
-------- ---------- -------- ----------
Total current liabilities... 95,823 1,150,762 -- 1,246,585
Long-term debt.................. 67,217 232,686 -- 299,903
Other liabilities............... 23,097 229,684 (27,000) 225,781
-------- ---------- -------- ----------
Total liabilities........... 186,137 1,613,132 (27,000) 1,772,269
-------- ---------- -------- ----------
Stockholders' equity............ 119,974 2,444,827 40,000 2,604,801
-------- ---------- -------- ----------
Total Liabilities and
Stockholders' Equity........... $306,111 $4,057,959 $ 13,000 $4,377,070
======== ========== ======== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
41
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. The unaudited pro forma combined condensed financial statements reflect
the issuance of .28 of one share of AMP Common Stock for each share of Company
Common Stock used to compute income from continuing operations per share as
reflected on such statements. The actual number of shares of AMP Common Stock
to be issued in the Merger will be determined based on the Exchange Rate and
the number of shares of Company Common Stock outstanding at the Effective Time,
less those shares as to which appraisal rights have been duly asserted and
perfected under the MBCL. The per share data for AMP and aggregate number of
shares of AMP Common Stock used to compute income from continuing operations
per share has been adjusted for AMP's 2-for-1 stock split effected on March 2,
1995.
2. The Company's fiscal year ends on the Saturday closest to September 30. In
the accompanying unaudited pro forma combined condensed statements of income,
the results of the Company for the fiscal years ended October 1, 1994, October
2, 1993 and October 3, 1992 and the three months ended April 1, 1995 have been
combined with the results of AMP for the fiscal years ended December 31, 1994,
1993 and 1992 and the three months ended March 31, 1995, respectively. The
accompanying unaudited pro forma combined condensed statements of income do not
include the results of the Company for the three months ended December 31,
1994. In the three months ended December 31, 1994 and January 1, 1994, the
Company's net sales were $81.6 million and $79.1 million, income (loss) from
continuing operations was $(5.1) million and $.8 million and income (loss) from
continuing operations per share was $(.19) and $.03, respectively.
3. The unaudited pro forma combined condensed statements of income reflect
the Company's income (loss) from continuing operations. In 1994, the Company
recorded income of $3.3 million from the cumulative effect of a change in
accounting principle. In 1993 and 1992, the Company recorded income from
discontinued operations of $1 million and $3.1 million, respectively.
4. The number of shares of Company Common Stock used to compute loss per
share from continuing operations for the year ended October 2, 1993 of
24,401,000 does not include the effect of incremental shares to reflect the
effect of the Company's stock option and deferred compensation plans since this
effect is antidilutive. In calculating the shares used to compute pro forma
combined income from continuing operations for the fiscal year ended 1993 the
effect of incremental shares to reflect the effect of the Company's stock
option and deferred compensation plans was included since, on a pro forma
basis, the effect is dilutive. This resulted in the Company's equivalent number
of shares used in the pro forma combined condensed statement of income to be
323,247 greater than the equivalent shares used on a separate Company basis.
5. The pro forma adjustments relate to the reduction of the valuation
allowance for deferred tax assets of the Company that were not expected to be
realized by the Company operating separately. The effect of this adjustment is
reflected as income from the cumulative effect of a change in accounting
principle in 1993 of $32 million and as a $7 million reduction of the tax
provision in 1993 and a $1 million reduction in 1994. The effect on income from
continuing operations was not significant for all other periods presented.
6. AMP expects to incur charges to operations currently estimated to be
between $12 million and $16 million, in the quarter in which the Merger is
expected to be consummated primarily representing transaction fees and costs
incident to the Merger. This range is a preliminary estimate only and is
therefore subject to change. This estimate does not reflect one time charges
for integration expenses that might result from the combination of the
operations of the two companies which are not currently determinable. None of
the above charges have been reflected in the unaudited pro forma combined
condensed financial statements.
7. Certain amounts have been reclassified to conform to the pro forma
presentation.
8. There were no material differences between the accounting policies of the
Company and AMP.
42
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF
COMPANY COMMON STOCK AND AMP COMMON STOCK
If the Merger is consummated, holders of Company Common Stock will become
holders of AMP Common Stock. Upon consummation of the Merger, the rights of the
former Company stockholders will be governed by the laws of the Commonwealth of
Pennsylvania, including the Pennsylvania Business Corporation Law of 1988, as
amended (the "PBCL"), and will also be governed by the AMP Restated Articles of
Incorporation (the "AMP Articles") and the AMP By-laws, as amended (the "AMP
By-laws"). Certain provisions of the PBCL apply only to "registered"
Pennsylvania business corporations. "Registered" corporations include
corporations such as AMP, which have a class or series of voting shares
registered under the Exchange Act. The rights of AMP shareholders under the AMP
Articles, the AMP By-laws and the PBCL differ in certain respects from the
rights of Company stockholders under the Company's Restated Articles of
Organization (the "Company Articles"), the Company's By-laws (the "Company By-
laws") and the MBCL. Certain differences between the rights of AMP shareholders
and Company stockholders are summarized below. While the Company believes that
this summary covers the material aspects of the information summarized therein,
this summary does not purport to be complete and is qualified in its entirety
by reference to the full text of such documents and the relevant statutory
provisions. For information as to how such documents may be obtained, see
"Incorporation By Reference."
STOCKHOLDER ACTION
Under the MBCL, any action required or permitted to be taken at any meeting
of the stockholders may be taken without a meeting if all stockholders entitled
to vote on the matter consent to the action in writing.
Under the PBCL, an action may be authorized by the shareholders of a
registered corporation without a meeting by less than unanimous written consent
only if permitted by the corporation's articles of incorporation. The AMP
Articles provide that any action that may be taken at a meeting of shareholders
may be taken without a meeting upon the written consent of shareholders who
would have been entitled to cast the minimum number of votes that would be
necessary to authorize the action at a meeting at which all shareholders
entitled to vote thereon were present and voting.
The AMP By-laws provide that a shareholder who wishes to bring matters before
AMP's annual meeting of shareholders must, in addition to any other applicable
requirements, give timely written notice of such matters to AMP's Secretary
(generally, not less than 30 nor more than 60 days prior to such meeting). The
Company By-laws do not contain a comparable provision.
FUNDAMENTAL TRANSACTIONS
The MBCL generally requires approval of mergers and consolidations and sales,
mortgages, leases or exchanges of all or substantially all of a corporation's
property by a vote of two-thirds of the shares of each class of stock
outstanding and entitled to vote thereon, except that (i) the articles of
organization may provide (which the Company Articles do not) for a vote of a
lesser proportion but not less than a majority of each such class and (ii)
unless required by the corporation's articles of organization (which the
Company Articles do not), the agreement providing for a merger need not be
submitted to the stockholders of a corporation surviving the merger but may be
approved by vote of its directors if (x) the agreement of merger does not
change the name, the amount of shares authorized of any class of stock or other
provisions of the articles of organization of such corporation, (y) the
authorized unissued shares or shares held in the treasury of such corporation
of any class of stock of such corporation to be issued or delivered pursuant to
the agreement of merger do not exceed fifteen percent of the shares of such
corporation of the same class outstanding immediately prior to the effective
date of the merger, and (z) the issue by vote of the directors of any unissued
stock to be issued pursuant to the agreement of merger has been authorized in
accordance with the provision of the MBCL governing issue of authorized but
unissued capital stock.
43
<PAGE>
The PBCL generally requires approval of mergers and consolidations by a
majority of the votes cast by all shareholders entitled to vote, provided that,
unless otherwise required by the by-laws (which the AMP By-laws do not),
shareholder approval is not required under certain circumstances, including
certain situations where the shareholders of the corporations will hold at
least a majority of the voting power of the surviving corporation immediately
after the effective time of the merger. The PBCL generally requires approval of
share exchanges, divisions, dissolutions and dispositions of all or
substantially all of a corporation's assets (other than in the usual and
regular course of business) by a majority of the votes cast by all shareholders
entitled to vote.
The AMP Articles provide that the following corporate actions (and any
agreement, plan or resolution providing therefor) shall not be valid or binding
upon AMP unless such corporate action shall have been approved in compliance
with all applicable provisions of the PBCL and the AMP Articles and shall have
been authorized by the affirmative vote of at least sixty-six and two-thirds
percent of the votes cast by all shareholders entitled to vote thereon: (i) any
merger, consolidation or share exchange to which AMP is a party, (ii) any sale,
lease, exchange or other disposition of all or substantially all of AMP's
properties or assets, (iii) any voluntary dissolution of AMP or (iv) any
amendment to the AMP Articles. The AMP Articles, as permitted by the PBCL,
except from the foregoing voting requirement any such transaction if (i) the
PBCL permits corporate action with respect thereto to be taken by the Board of
Directors of AMP (the "AMP Board"), or any committee thereof, and does not
require a vote of shareholders or (ii) the transaction is a "business
combination" (as defined in the PBCL) and is subject to a vote of shareholders
in the manner prescribed by the PBCL.
SPECIAL MEETINGS
The Company By-laws provide, as permitted by the MBCL, that special meetings
of stockholders may be called by the Chairman of the Company Board or the
Company's Chief Executive Officer or President or by the Directors and must be
called by the Company's Clerk (or, in certain circumstances, any other officer)
upon written application of one or more stockholders who hold at least forty
percent in interest of the capital stock entitled to vote at such meeting.
Under the PBCL, the shareholders of a registered corporation are not entitled
by statute to call a special meeting of shareholders, except that this rule
does not apply to the call of a special meeting by an interested shareholder
for the purpose of approving a business combination under Pennsylvania's
Business Combination Statute. The AMP By-laws provide, as permitted by the
PBCL, that special meetings of the shareholders of AMP may be called by the
Chairman of the AMP Board, the Chief Executive Officer or by resolution of the
AMP Board.
DURATION OF PROXIES
Under the MBCL, no proxy dated more than six months before the meeting named
therein shall be valid and no proxy shall be valid after the final adjournment
of such meeting; provided, however, that a proxy coupled with an interest
sufficient in law to support an irrevocable power, including, without
limitation, an interest in the shares or in the corporation generally, may be
made irrevocable if it so provides, need not specify the meeting to which it
relates and shall be valid and enforceable until the interest terminates or for
such shorter period as may be specified in the proxy.
Under the PBCL, a proxy, unless coupled with an interest (the definition of
which is similar to that under the MBCL), is revocable at will. An unrevoked
proxy will not be valid after three years from the date of its execution unless
a longer time is expressly provided in the proxy. The PBCL provides that a
proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of the
death or incapacity is given to the secretary of the corporation.
44
<PAGE>
RIGHT OF STOCKHOLDERS TO INSPECT RECORDS
The MBCL requires that every domestic corporation maintain in Massachusetts,
and make available for inspection by its stockholders, the original, or
attested copies of, the corporation's articles of organization, by-laws,
records of all meetings of incorporators and stockholders, and the stock and
transfer records listing the names of all stockholders and their record address
and the amount of stock held by each. The MBCL further provides that if any
officer or agent of a corporation having charge of such corporate records (or
copies thereof) refuses or neglects to exhibit them in legible form or to
produce for examination a list of stockholders with the record address and
amount of stock held by each, such officer or agent or the corporation will be
liable to any stockholder for actual damages sustained by reason of such
refusal or neglect. However, in an action for damages or a proceeding in equity
under the foregoing provision by reason of the refusal or neglect to permit
inspection, it is a defense to such action that the actual purpose and reason
for the inspection being sought is to secure a list of stockholders or other
information for the purpose of selling the list or other information or of
using them for purposes other than in the interest of the person seeking them,
as a stockholder, relative to the affairs of the corporation. The foregoing
rights relating to inspection are deemed to include the right to copy materials
and to be represented by agent or counsel in exercising these rights. In
addition to the rights of inspection provided by the MBCL, a stockholder of a
Massachusetts corporation has a common law right to inspect additional
documents which, if such request is refused by the corporation, may be obtained
by petitioning a court for the appropriate order. In petitioning for such an
order, the granting of which is discretionary, the stockholder has the burden
of demonstrating (a) that he is acting in good faith and for the purposes of
advancing the interests of the corporation and protecting his own interest as a
stockholder and (b) that the requested documents are relevant to those
purposes. The Company By-laws provide for shareholder inspection rights
consistent with the MBCL.
Under the PBCL, every shareholder has a right to examine, in person or by
agent or attorney, during the usual hours of business for any proper purpose,
the share register (listing the names and addresses of all shareholders and the
number and class of shares held by each), books and records of account, and the
records of the proceedings of the incorporators, shareholders and directors and
to make copies of such materials. In order to exercise the foregoing right, the
shareholder must submit a written verified demand to the corporation stating
the purpose for which examination of the corporate books and records is being
sought. For the purposes of this provision of the PBCL, a "proper purpose" is
one that is reasonably related to the interest of the person making the demand
as a shareholder. Upon refusal of the corporation (or its agent or an officer
of the corporation) to permit the inspection demanded by a shareholder, or of a
failure to reply to the shareholder's request within five business days after
the demand has been made, the shareholder may apply to a court to compel the
inspection. In addition to the inspection rights granted under the PBCL (which
may not be limited by a provision in the corporation's articles of
incorporation), under the common law and subject to the corporation's articles
of incorporation, a shareholder has the right to inspect corporate books and
papers for a proper purpose.
PREEMPTIVE RIGHTS
Under the MBCL, no stockholder of a corporation has any preemptive right to
acquire stock of a corporation except to the extent provided in such
corporation's articles of organization or in a by-law adopted by and subject to
amendment only by its stockholders. Neither the Company Articles nor the
Company By-laws provide for such a preemptive right.
Under the PBCL, preemptive rights can only be granted by a provision in the
corporation's articles of incorporation. The AMP Articles do not provide for
preemptive rights and no holder of any share of AMP Common Stock has any
preemptive rights to purchase any additional stock or other securities issued
by AMP.
DIVIDENDS AND DISTRIBUTIONS
Both the MBCL and the PBCL provide that dividends may be paid in cash,
property or shares of the corporation's capital stock.
45
<PAGE>
Under the MBCL, the directors of a corporation will be jointly and severally
liable if a payment of dividends or a repurchase of a corporation's stock is
(i) made when the corporation is insolvent, (ii) renders the corporation
insolvent or (iii) violates the corporation's articles of organization.
Stockholders to whom a corporation makes any distribution (except a
distribution of stock of the corporation) if the corporation is, or is thereby
rendered, insolvent, are liable to the corporation for the amount of such
distribution made, or for the amount of such distribution which exceeds that
which could have been made without rendering the corporation insolvent, but in
either event only to the extent of the amount paid or distributed to them,
respectively. In such event, a stockholder who pays more than his proportionate
share of such distribution or excess shall have a claim for contribution
against the other stockholders.
Under the PBCL and subject to the corporation's by-laws, the directors of a
corporation may be jointly and severally liable to the corporation for a
corporate distribution (including a distribution made in connection with the
repurchase or redemption of shares of stock) if and to the extent that, after
giving effect to such distribution, (i) the corporation would be unable to pay
its debts as they become due in the usual course of business or (ii) the total
assets of the corporation would be less than the sum of its total liabilities
plus the aggregate dissolution rights of all shareholders whose rights are
superior to the class receiving the distribution. Any director held liable in
this regard is entitled to contribution from all other liable directors and
from any shareholder who accepted the distribution knowing it was in excess of
legal limits, in proportion to the amounts received by such shareholder. The
Board of Directors may base its determination of total assets and total
liabilities on any factors it considers relevant, including the book values of
the corporation's assets and liabilities as reflected on its books and records,
unrealized appreciation and depreciation of the corporation's assets or the
current value of the corporation's assets and liabilities, either valued
separately or valued in segments or in an entirety as a going concern.
COMMON STOCK PURCHASE RIGHTS
The Company Rights are currently attached to and trade with the Company
Common Stock. The Company Rights were issued to help ensure that all
stockholders receive fair and equal treatment in the event of any proposal to
acquire control of the Company. Each Company Right entitles the holder to
purchase eight-tenths of one share of Company Common Stock at an exercise price
of $60 per share, subject to adjustment. The Company Rights will trade
separately and become exercisable only if a person or group (a "Company
Acquiring Person") acquires or announces an offer to acquire 10% or more of the
outstanding Company Common Stock, subject to certain exceptions. Thereafter, if
such an acquisition is made, each holder of a Company Right, with certain
exceptions, would be entitled upon exercise of such Company Right to receive
such number of shares of Company Common Stock having a market value equal to
1.6 times the exercise price of the Company Right. In addition, if, after such
time as an acquiror of shares of Company Common Stock becomes a Company
Acquiring Person, (i) the Company consolidates with, or merges with and into,
another entity, (ii) any entity consolidates with the Company, or merges with
and into the Company and the Company is the surviving corporation in such
merger but all or part of the Company Common Stock is changed into or exchanged
for securities of the other person or other property or (iii) the Company sells
or transfers 50% or more of its assets, cash flow or earning power, each holder
of a Company Right, with certain exceptions, would be entitled upon exercise of
such Company Right to receive such number of shares of common stock of the
acquiror having a value equal to 1.6 times the exercise price of the Company
Right. The Company may lower the 10% threshold, exempt certain acquisitions, or
redeem the Company Rights at $.01 per Company Right under certain
circumstances. The rights will expire on August 7, 1996. The Company has agreed
to redeem the Company Rights as of the Effective Time. See "The Merger--The
Merger Agreement--Rights Agreement."
In 1989, AMP adopted a Shareholder Rights Plan (the "AMP Shareholder Rights
Plan") and distributed to its shareholders, with respect to each outstanding
share of AMP Common Stock held, one right (an "AMP Right") to purchase one
share of AMP Common Stock at a purchase price of $175, subject to adjustment.
The purchase price was adjusted to $87.50 to reflect AMP's 2-for-1 stock split
which was effected on March 2, 1995. The AMP Rights will remain attached to the
AMP Common Stock and are not exercisable except
46
<PAGE>
under the limited circumstances set forth in the AMP Shareholder Rights Plan
and relating generally to the acquisition of, or tender for, 20% or more of the
outstanding AMP Common Stock. If such circumstances occur, the AMP Rights will
separate from the AMP Common Stock and become exercisable. If, subsequently, a
person actually acquires beneficial ownership of 20% or more of the AMP Common
Stock (an "Acquiring Person"), except pursuant to an offer for all outstanding
shares of AMP Common Stock which the independent directors of AMP determine,
after receiving advice from one or more investment banking firms, to be fair to
and otherwise in the best interests of AMP and its shareholders (a "Qualifying
Offer"), each AMP Right (except those held by such Acquiring Person) will
become exercisable for such number of shares of AMP Common Stock (or, in
certain circumstances, a reasonable substitute therefor) having a market value
equal to twice the exercise price of the AMP Right. In addition, if, after such
time as an acquiror of shares of AMP Common Stock becomes an Acquiring Person,
(i) AMP is acquired in a merger or other business combination transaction in
which AMP is not the surviving corporation (other than a merger which follows a
Qualifying Offer and satisfies certain other requirements), (ii) AMP is
acquired in a merger or other business combination transaction in which AMP is
the surviving corporation but all or part of the AMP Common Stock is changed
into or exchanged for securities of the other person or other property, or
(iii) 50% or more of AMP's assets, cash flow or earning power is sold or
transferred, each AMP Right will become exercisable for such number of shares
of common stock of the acquiror having a value equal to twice the exercise
price of the AMP Right. The AMP Rights expire on November 6, 1999 unless
earlier redeemed by AMP for $.005 per AMP Right. AMP may redeem the AMP Rights
at any time until 10 business days after a person has become an Acquiring
Person. Until the AMP Rights separate from the AMP Common Stock, each new share
of AMP Common Stock issued will have an AMP Right attached. The AMP Rights do
not have voting or dividend rights and, until they become exercisable, have no
dilutive effect on the earnings of AMP.
LOANS TO DIRECTORS
The MBCL provides that directors who vote for, and the officers who knowingly
participate in, any loan of any assets of a corporation to any of its officers
or directors are jointly and severally liable to the corporation for any
portion of such loan which is not repaid, unless a majority of the directors
who are not direct or indirect recipients of such loan or the holders of a
majority of the shares entitled to vote for directors (which holders are not
direct or indirect recipients of such loan) shall have approved or ratified the
making of such loan as one which in the judgment of such directors or such
holders may reasonably be expected to benefit the corporation. The PBCL permits
loans, guarantees or other obligations by a corporation to its directors,
officers or employees but the PBCL does not contain a provision similar to the
foregoing MBCL provision.
CLASSIFICATION OF THE BOARD OF DIRECTORS
The MBCL requires classification of a public corporation's board of directors
into three classes (each having a three year term) and imposes certain other
obligations, unless the directors of such public corporation elect by vote to
be exempt from such requirement or stockholders of such public corporation at a
meeting duly called for such purpose elect to be exempt from such requirement
by a vote of two-thirds of each class of stock outstanding. Neither the
stockholders nor the directors of the Company have elected that the Company be
exempt from such requirement.
Although the PBCL permits classification of a board of directors if the
articles of incorporation or by-laws so provide, neither the AMP Articles nor
the AMP By-laws provide for a classified board, and all members of the AMP
Board stand for election each year.
NUMBER OF DIRECTORS
The MBCL provides that the number of members of a classified board of
directors shall be fixed only by a vote of the board of directors. The Company
By-laws provide that the number of directors of the Company shall be not less
than three nor more than 17. The Company Board currently consists of eight
directors, with one vacancy resulting from the retirement of a director
effective April 1, 1995.
47
<PAGE>
The PBCL provides that the board of directors shall consist of one or more
members, and that the number of directors shall be fixed by, or in the manner
provided in, the by-laws. If the number of directors is not so fixed, the
number of directors shall be the same as that stated in the articles of
incorporation, or three if no number is so stated. The AMP Articles provide
that the number of directors shall be not less than three as may be fixed from
time to time by the AMP By-laws or in the manner prescribed therein. The AMP
By-laws provide that the number of directors shall be not less than three, with
the actual number of directors to be determined from time to time by the AMP
Board. The AMP Board currently consists of 11 directors.
CUMULATIVE VOTING
None of the MBCL, the Company Articles or the Company By-laws provides for
cumulative voting for the election of directors.
Under the PBCL, shareholders have a right to cumulate their votes in the
election of directors unless the articles of incorporation provide otherwise.
The AMP Articles provide that the shareholders of AMP are not entitled to
cumulative voting in the election of directors.
DUTIES OF DIRECTORS
Both the MBCL and the PBCL specifically permit a board of directors to
consider constituencies other than the holders of a corporation's capital stock
when taking any action.
The MBCL states that, in determining what a director reasonably believes to
be in the best interest of the corporation, a director may consider the
interests of the corporation's employees, suppliers, creditors and customers,
the economy of the state, region and nation, community and societal
considerations, and the long-term and short-term interests of the corporation
and its stockholders, including the possibility that these interests may be
best served by the continued independence of the corporation.
Under the PBCL, in discharging the duties of their respective positions, the
board of directors, committees of the board and individual directors of a
corporation may, in considering the best interests of the corporation, consider
to the extent they deem appropriate: (i) the effects of any action upon any or
all groups affected by such action, including shareholders, employees,
suppliers, customers and creditors of the corporation, and upon communities in
which offices or other establishments of the corporation are located, (ii) the
short-term and long-term interests of the corporation, including benefits that
may accrue to the corporation from its long-term plans and the possibility that
these interests may be best served by the continued independence of the
corporation, (iii) the resources, intent and conduct (past, stated and
potential) of any person seeking to acquire control of the corporation and (iv)
all other pertinent factors. The PBCL does not require the board of directors,
committees of the board and individual directors, in considering the best
interests of the corporation or the effects of any action, to regard any
corporate interest or the interests of any particular group affected by such
action as a dominant or controlling interest or factor.
INTERESTED DIRECTOR OR OFFICER TRANSACTIONS
The PBCL provides that no transaction between a corporation and one or more
of its directors or officers, or an entity in which one or more of its
directors or officers are directors or officers or have a financial or other
interest, shall be void or voidable solely for that reason, nor will such a
transaction be void or voidable solely because the director or officer is
present at or votes at the meeting of the board of directors or committee which
authorizes the transaction, provided that (i) the material facts as to the
relationship or interest and as to the transaction are disclosed or are known
to the board of directors and the board authorizes the transaction by the
affirmative vote of a majority of the disinterested directors even though the
disinterested directors are less than a quorum, (ii) the material facts as to
the interested director's or officer's relationship or interest and as to the
transaction are disclosed or are known to the shareholders entitled to vote
thereon and the transaction is specifically approved in good faith by vote of
those shareholders or (iii) the transaction
48
<PAGE>
is fair as to the corporation as of the time it is authorized, approved or
ratified by the board of directors or the shareholders. The PBCL permits common
or interested directors to be counted in determining the presence of a quorum
at a meeting of the board that authorizes an interested director or officer
transaction.
The MBCL does not contain a provision comparable to the PBCL statute, but the
Company By-laws provide generally that (i) no director or officer of the
Company shall be liable to the Company by reason of any transaction entered
into by the Company in which such director or officer has a conflict of
interest or by reason of such director's or officer's failure to disclose such
conflict, nor shall any such director or officer be obligated to disclose any
such conflict; (ii) no director or officer of the Company shall be disqualified
from participating in any transactions entered into by the Company, and no such
transaction shall be affected or invalidated by reason of such director's or
officer's conflict of interest or failure to disclose such conflict; and (iii)
no transaction entered into by the Company in which a director or officer of
the Company has a conflict of interest, and no conduct by a director or officer
of the Company, shall result in liability of such director or officer to the
Company or be void or voidable if such transaction shall have been authorized,
or shall be or have been at any time ratified or approved, by an affirmative
vote of the holders of record (not excluding any such director or officer or
any holder with which such director or officer is affiliated) of not less than
the proportion of the voting stock of the Company as is required to effect
action by the stockholders at any annual or special meeting. For the purposes
of the foregoing provisions of the Company By-laws, the term "officer"
includes, in addition to the officers of the Company enumerated in the Company
By-laws, all other persons elected or appointed to serve in similar and certain
other capacities.
LIMITATIONS ON DIRECTORS' LIABILITY
Both the MBCL and the PBCL permit a corporation to limit or eliminate a
director's personal liability to the corporation or the holders of its capital
stock for breach of duty. In Massachusetts, this limitation may be provided for
in a corporation's articles of organization. However, under the MBCL, this
limitation is generally unavailable for acts or omissions by a director which
(i) were in violation of such director's duty of loyalty, (ii) were in bad
faith or which involved intentional misconduct or a knowing violation of law or
(iii) involved a financial profit or other advantage to which the director was
not legally entitled. The MBCL also prohibits the elimination or limitation of
director liability for unauthorized loans to insiders or distributions which
occur when a corporation is, or which render a corporation, insolvent.
The PBCL permits a corporation to provide in a by-law adopted by its
shareholders that a director shall not be personally liable for monetary
damages for any action taken (subject to certain exceptions) unless the
director has breached or failed to perform the duties of his or her office
under the PBCL and the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
The Company Articles and the AMP By-laws provide for limitations on
directors' liability as permitted by the MBCL and the PBCL, respectively.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under both the MBCL and the PBCL, corporations are authorized to indemnify
directors, officers, employees and certain others within prescribed limits.
Under the MBCL, indemnification of directors and officers may be provided by
a corporation to whatever extent shall be specified in or authorized by (i) the
articles of organization, (ii) a by-law adopted by the stockholders or (iii) a
vote adopted by a majority of the shares of stock entitled to vote on the
election of directors. However, the MBCL does not permit indemnification with
respect to any matter as to which the director or officer has been adjudicated
not to have acted in good faith in the reasonable belief that his action was in
the best interest of the corporation. The MBCL does not prohibit or limit
indemnification for judgments in actions by or in the right of the corporation.
49
<PAGE>
Under the PBCL and subject to a corporation's by-laws, a corporation may
indemnify any person acting as a representative of the corporation against
liabilities and expenses incurred in such capacity (except in the case of an
action by or in the right of the corporation) provided certain standards are
met, including good faith and the belief that the particular action or failure
to take action is in, or not opposed to, the best interests of the corporation
and, with respect to a criminal proceeding, that such person had no reasonable
cause to believe that his or her conduct was unlawful. In the case of actions
against any person by or in the right of the corporation, indemnification is
available only for expenses incurred; however, such indemnification is not
available if the person otherwise entitled to indemnification shall have been
adjudged to be liable to the corporation, unless a court determines that
despite the adjudication of liability but in view of all the circumstances of
the case, the person is fairly and reasonably entitled to indemnity for
expenses that the court deems proper. A corporation is required to indemnify
representatives of the corporation against expenses they may incur defending
actions against them in such capacities if they are successful on the merits or
otherwise in defense of such actions. In all other cases, if a representative
of the corporation acted, or failed to act, in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of the
corporation, indemnification is discretionary, except as may be otherwise
provided by a corporation's by-laws, vote of shareholders or of disinterested
directors. Indemnification so otherwise provided may not, however, be made if
the act or failure to act giving rise to the claim for indemnification is
determined by a court to have constituted willful misconduct or recklessness.
Both the MBCL and the PBCL permit expenses (including attorney's fees)
incurred in defending any such action to be paid by the corporation in advance
of the final disposition of the action upon receipt of an undertaking by the
person seeking indemnification to repay the amount if it is ultimately
determined that he or she is not entitled to be indemnified by the corporation.
In addition, in both states, the statutory provisions for indemnification and
advancement of expenses are not exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled
independently of the applicable statutory provisions, and corporations may,
among other things, procure insurance for indemnified persons.
Both the Company By-laws and the AMP By-laws currently provide for mandatory
indemnification of directors and officers and advancement of indemnified
expenses to the extent permitted by the MBCL and the PBCL, respectively. The
AMP By-laws also permit indemnification of its employees and agents and
expressly empower the AMP Board to authorize AMP to purchase and maintain
insurance or similar protection on behalf of any person who is or was a
director, officer, employee or agent of AMP against any liability asserted
against such person arising out of such person's status as such, whether or not
AMP would have the power to indemnify such person against liability under
applicable law. The AMP By-laws also empower the AMP Board to authorize AMP to
enter into indemnification agreements with its directors, officers, employees
and agents and to give other indemnification to the extent not prohibited by
applicable law. The Company By-laws permit indemnification of any employee or
agent of the Company to the extent authorized from time to time by a majority
of its disinterested directors.
NOMINATION OF DIRECTORS
The AMP By-laws provide that a shareholder who wishes to nominate a person
for election to the AMP Board at the annual meeting of shareholders must give
timely written notice of such nomination to AMP's Secretary (generally, at
least 60 days in advance of such annual meeting). In the case of a nomination
relating to an election to be held at a special meeting of stockholders, in
order to be timely, such written notice must be given by the close of business
on the tenth day following the day on which notice of the date of such special
meeting was mailed to shareholders of AMP or public disclosure was made,
whichever occurs first. The Company By-laws do not contain comparable
provisions.
REMOVAL OF DIRECTORS
Under the MBCL, in the case of a public company such as the Company which has
not elected to be exempt from the provision of the MBCL that requires a
classified board, directors may be removed by the
50
<PAGE>
stockholders only for cause by the affirmative vote of a majority of the shares
entitled to vote in the election of directors. In addition, the Company
Articles, as permitted by the MBCL, provide that directors may be removed by
the Company Board only for cause by the affirmative vote of a majority of the
directors then in office. A director may be removed for cause only after a
reasonable notice and opportunity to be heard before the body proposing to
remove him.
The PBCL provides that the board of directors may be removed with or without
cause by the unanimous vote or consent of the shareholders entitled to vote
thereon and that, unless a by-law adopted by the shareholders requires
otherwise, the entire board of directors, or any class of directors, in the
case of a classified board, or any individual director, may be removed, with or
without cause, by the affirmative vote of a majority of the votes cast by such
shareholders. As permitted by the PBCL, the AMP By-laws provide that removal of
a director by shareholders may only be for cause, except that the entire Board
may be removed at any time, with or without cause, by the unanimous vote or
consent of the AMP shareholders. The AMP By-laws also provide that, as
permitted by the PBCL, the AMP Board may remove a director for cause or if,
within sixty days after notice of a director's election, such director does not
accept such office in writing or by attending a meeting of the board of
directors and fulfill such other requirements of qualification as the AMP By-
laws may specify.
VACANCIES
Under the MBCL, in the case of a classified board (such as the Company's),
any vacancy in the board of directors, including a vacancy resulting from the
enlargement of the board of directors, shall be filled solely by the
affirmative vote of a majority of the directors then in office, even though
less than a quorum of directors.
Under the PBCL, except as otherwise provided in the by-laws (which the AMP
By-laws do not), (i) vacancies in the board of directors, including vacancies
resulting from an increase in the number of directors, may be filled by a
majority vote of the remaining directors though less than a quorum of
directors, or by a sole remaining director, and (ii) when one or more directors
resign from the board of directors effective at a future date, the directors
then in office, including those who have so resigned, shall have power by the
applicable vote to fill the vacancies, the vote thereon to take effect when the
resignations become effective.
AMENDMENTS TO BY-LAWS
The MBCL provides that by-laws may be made, amended or repealed by
stockholders, provided that, if authorized by the articles of organization, the
by-laws may provide that the directors may also make, amend or repeal the by-
laws in whole or in part, except with respect to any provision thereof which by
law, or in accordance with the articles of organization or the by-laws,
requires action by the stockholders. The Company Articles provide that the
directors may make, amend or repeal the Company By-laws in whole or in part
except with respect to any provision of the Company By-laws which by law or the
Company By-laws requires action by the stockholders. The Company By-laws
provide that any such action with respect to the Company By-laws may be taken
by a two-thirds vote of the directors. Under the MBCL and the Company By-laws,
any by-law adopted by the directors may be amended or repealed by the
stockholders.
Under the PBCL, shareholders generally (by a majority of the votes cast by
shareholders entitled to vote) and, where provided in the articles of
incorporation or by-laws and subject to certain limitations, the directors of
the corporation, have the power to adopt, amend and repeal the by-laws. The AMP
By-laws provide that any by-law in the AMP By-laws may be altered or repealed
by the AMP Board and that the shareholders or the AMP Board may adopt new by-
laws, except that the board of directors may not adopt, alter or repeal by-laws
that the PBCL specifies may be adopted only by shareholders, and the board of
directors may not alter or repeal any by-law adopted by shareholders which
prescribes that such by-law shall not be altered or repealed by the AMP Board.
51
<PAGE>
AMENDMENTS TO CHARTER
Under the MBCL, a majority vote of each class of stock outstanding and
entitled to vote thereon is required to authorize an amendment of the articles
of organization effecting one or more of the following: (i) an increase or
reduction of capital stock of any authorized class, (ii) a change in the par
value of authorized shares with par value, or any class thereof, (iii) a change
of authorized shares (or any class thereof) from shares with par value to
shares without par value, or from shares without par value to shares with par
value, (iv) certain changes in the number of authorized shares (or any class
thereof) or (v) a corporate name change. Subject to certain conditions, a two-
thirds vote of each class of stock outstanding and entitled to vote thereon is
required to authorize any other amendment of the articles of organization, or,
if the articles of organization so provide (and the Company Articles do not), a
vote of a lesser proportion but not less than a majority of each class of stock
outstanding and entitled to vote thereon may be sufficient. If any amendment
requiring a two-thirds vote would adversely affect the rights of any class or
series of stock, a two-thirds vote of such class voting separately, or a two-
thirds vote of such series, voting together with any other series of the same
class adversely affected in the same manner, is also necessary to authorize
such amendment.
To amend a Pennsylvania corporation's articles of incorporation, the PBCL
requires the affirmative vote of a majority of the votes cast by all
shareholders entitled to vote thereon and, if any class or series of shares is
entitled to vote thereon as a class, the affirmative vote of a majority of the
votes cast in each such class, unless a greater vote is otherwise specified in
such corporation's articles of incorporation or the PBCL. Under the PBCL, the
shareholders of a registered corporation are not entitled to propose an
amendment to the corporation's articles of incorporation. The AMP Articles
provide that any amendment thereto must be authorized by the affirmative vote
of at least sixty-six and two-thirds percent of the votes cast by all
shareholders entitled to vote thereon.
DISSENTERS' RIGHTS OF APPRAISAL
Both the MBCL and the PBCL grant appraisal rights to shareholders in the case
of, among other things, a merger or consolidation or a sale of all or
substantially all of the corporation's assets. The MBCL also provides appraisal
rights in the event of certain amendments to the articles of organization to
shareholders whose rights are adversely affected thereby. See "The Merger--
Appraisal Rights." Under the PBCL, however, unless the corporation's board of
directors or by-laws provide otherwise, the holders of a class or series of
shares that are listed on a national securities exchange or held of record by
more than 2,000 shareholders do not have appraisal rights in a transaction in
which such shares are converted solely into shares of the acquiring, surviving,
new or other corporation or solely into such shares and money in lieu of
fractional shares, except that shares of a preferred or special class will have
appraisal rights unless such class is given a class vote on the transaction.
Under the PBCL, among other procedural requirements, a shareholder's written
notice of his intention to demand appraisal must be received by the corporation
before the taking of the vote on the matter giving rise to appraisal rights and
such holder must refrain from voting his shares in approval of the matter
giving rise to appraisal rights. The procedural requirements under the MBCL are
similar, except that the notice of intention to demand appraisal must be
coupled with a written objection to the proposed action. See "The Merger--
Appraisal Rights."
BUSINESS COMBINATION STATUTES
Under the Massachusetts statute on Business Combinations with Interested
Shareholders, a corporation is prohibited from engaging in certain business
combinations (as defined by the statute to include certain mergers and
consolidations, dispositions of assets and issuances of securities, as well as
certain other transactions) with an interested stockholder (as defined by the
statute generally to include holders of five percent or more of the outstanding
stock of the corporation) for a period of three years following the date that
such stockholder became an interested stockholder, except under certain
circumstances, which include
52
<PAGE>
prior approval by the board of directors of the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder (as occurred in connection with the Merger), or subsequent approval
of the business combination by the board of directors and by a vote of at least
two-thirds of the outstanding voting stock which is not owned by the interested
stockholder. The Massachusetts statute includes an exception to the
prohibitions of the statute if, upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the stockholder
owned 90% or more of the voting stock of the corporation.
Under the Massachusetts statute, the restrictions of the statute will not
apply to any corporation which, by action of its stockholders, adopts an
amendment to its articles of organization or by-laws expressly electing not to
be governed by such statute. However, such amendment will not be effective
until 12 months after its adoption and will not apply to any business
combination between such corporation and any person who became an interested
stockholder of such corporation on or prior to such adoption. The Company has
not adopted such an amendment to the Company Articles or the Company By-laws.
Subject to certain qualifications and limitations, the PBCL provides that any
person who acquires directly or indirectly beneficial ownership of 20% or more
of a registered corporation's voting stock (thereby becoming an "interested
shareholder") may not engage in a wide range of business combinations (the
definition of which is similar to that under the Massachusetts statute) with
the corporation unless (i) prior to the date on which the person becomes an
interested shareholder, the board of directors approves the business
combination or the purchase of shares that caused the person to become an
interested shareholder, (ii) the business combination is approved by the
affirmative vote of all of the holders of all outstanding common shares, (iii)
the business combination is approved by the affirmative vote of the holders of
a majority of all shares entitled to vote in an election of directors of the
corporation, but excluding all shares beneficially held by the interested
shareholder and its affiliates and associates, at a meeting called at least
five years after the date the person becomes an interested shareholder, (iv)
the interested shareholder holds 80% or more of the votes that all shareholders
would be entitled to cast in an election of directors of the corporation and
the business combination is approved by the affirmative vote of the holders of
a majority of all shares entitled to vote in an election of directors of the
corporation, but excluding all shares beneficially held by the interested
shareholder and its affiliates and associates, at a meeting held at least three
months after the interested shareholder acquired such 80% interest, provided
that the fair price and procedural requirements set forth in the PBCL are
satisfied or (v) the business combination is approved by the shareholders at a
meeting called at least five years after the date the person becomes an
interested shareholder, provided that the fair price and procedural
requirements set forth in PBCL are satisfied. Under the Pennsylvania statute,
the restrictions of the statute will not apply to any corporation which, by
action of its stockholders, adopts an amendment to its articles of
incorporation expressly electing not to be governed by such statute. However,
such amendment will not be effective until 18 months after its adoption and
will not apply to any business combination between such corporation and any
person who became an interested shareholder of such corporation on or prior to
such adoption. AMP has not adopted such an amendment to the AMP Articles.
The PBCL contains an additional provision governing transactions between an
interested shareholder and a registered corporation, except that, for the
purposes of this additional provision, an "interested shareholder" is generally
defined as a shareholder (and its affiliates) who is a party to the transaction
or who is treated differently from other shareholders. This provision of the
PBCL provides that, subject to certain limitations and qualifications, certain
transactions between a registered corporation and an interested shareholder
(including a merger, consolidation, share exchange, asset sale, division,
certain dissolutions and certain reclassifications of securities) shall require
the affirmative vote of a majority of the votes that all shareholders other
than the interested shareholder are entitled to cast with respect to the
transaction, unless (i) such transaction has been approved by a majority vote
of the board of directors (excluding certain directors related to the
interested shareholder or nominated for election as a director by the
interested shareholder and first elected as a director within 24 months of the
proposed transaction), (ii) the consideration to be received by the
shareholders for shares of any class of which shares are owned by the
interested shareholder is not less
53
<PAGE>
than the highest amount paid by the interested shareholder in acquiring shares
of such class or (iii) in the case of a merger or consolidation, is pursuant
to a plan adopted by the corporation's board of directors and immediately
prior to such adoption and at all times thereafter prior to the transaction's
effective date, another corporation that is a party to the merger or
consolidation owns 80% or more of the outstanding shares of each class of the
other corporation that is a party to the merger or consolidation.
DISGORGEMENT OF PROFITS BY CERTAIN SHAREHOLDERS
Under the PBCL, subject to a corporation's by-laws or articles of
incorporation and to certain qualifications and limitations, any profits
realized by any "controlling person" from the disposition of any equity
security of a registered corporation belong to, and are recoverable by, the
corporation if the profit is realized from the disposition of the equity
security within 18 months after the person obtained the status of a
controlling person and the equity security had been acquired by the
controlling person within 24 months prior to or 18 months subsequent to the
obtaining by the person of the status of a controlling person. For this
purpose, a "controlling person" is generally a person who has (i) acquired,
offered to acquire or, directly or indirectly, publicly disclosed or caused to
be disclosed the intention of acquiring, at least 20% of the voting power of
the corporation, or (ii) publicly disclosed or caused to be disclosed that
such person may seek to acquire control of the corporation. Neither the AMP
By-laws nor the AMP Articles contain a provision limiting the application of
the "disgorgement" provisions of the PBCL to AMP. The MBCL does not have a
comparable provision.
CONTROL SHARE ACQUISITION STATUTE
Under the Massachusetts control share acquisition statute for Massachusetts
corporations, a person who acquires beneficial ownership of shares of stock of
a corporation in a threshold amount equal to or greater than one-fifth, one-
third, or a majority of the voting stock of the corporation (a "control share
acquisition") must obtain the approval of a majority of shares entitled to
vote generally in the election of directors (excluding (i) any shares owned by
such person acquiring or proposing to acquire beneficial ownership of shares
in a control share acquisition, (ii) any shares owned by any officer of the
corporation and (iii) any shares owned by any employee of the corporation who
is also a director of the corporation) in order to vote the shares that such
person acquires in crossing the foregoing thresholds. The statute does not
require that such person consummate the purchase before the stockholder vote
is taken.
Similarly, under the PBCL, subject to certain qualifications and
limitations, a person who engages or proposes to engage in a control share
acquisition (the definition of which is similar to that under the
Massachusetts statute) of shares of a registered corporation is denied the
right to vote shares acquired in the control share acquisition as well as
certain other shares beneficially owned by such person unless a resolution
granting such voting rights is approved at a meeting of shareholders by the
affirmative vote of a majority of (i) all "disinterested shares" of the
corporation and (ii) all voting shares of the corporation. "Disinterested
shares" are generally those shares beneficially held for certain specified
periods (prior to the record date for the meeting called to vote on the
restoration of voting rights) by persons other than (i) a person who makes or
proposes to make a control share acquisition, (ii) executive officers or
directors who are also officers of the corporation and (iii) certain specified
employee stock plans of the corporation.
Under the PBCL, a registered corporation may, under certain circumstances
(and unless prohibited by such corporation's articles of incorporation) and
within 24 months after the date of the control share acquisition or 24 months
after the date that a shareholder vote regarding the restoration of voting
rights of such shares (i) denies such voting rights or (ii) grants such voting
rights and such rights lapse in accordance with the PBCL, redeem all shares
acquired by an acquiring person in a control share acquisition and certain
other shares beneficially owned by such person at the price at which the
shares traded on a national securities exchange.
The MBCL permits, to the extent authorized by a corporation's articles of
organization or by-laws, redemption of all shares acquired by an acquiring
person in a control share acquisition for fair value (which
54
<PAGE>
is to be determined in accordance with procedures adopted by the corporation)
if (i) no control acquisition statement is delivered by the acquiring person or
(ii) a control share acquisition statement has been delivered and voting rights
were not authorized for such shares by the stockholders in accordance with
applicable law.
The Massachusetts control share acquisition statute permits a Massachusetts
corporation to elect not to be governed by the statute's provisions by
including a provision in the corporation's articles of organization or by-laws
pursuant to which the corporation opts out of the statute. The Company By-laws
contain an opt out provision, which was adopted in connection with the adoption
by the Company Board of the Merger Agreement. AMP has not taken any corporate
action to opt out of the provisions of the PBCL governing control share
acquisitions.
CONTROL TRANSACTION
The Massachusetts statute governing control share acquisitions provides that,
unless otherwise expressly provided in a corporation's articles of organization
or by-laws, if voting rights are authorized for shares acquired in a control
share acquisition and, as a result of such acquisition, the person making such
acquisition has acquired beneficial ownership of shares that, when added to all
other shares of the corporation beneficially owned by such person, entitle such
person to vote (or direct the voting of) shares of such corporation having a
majority or more of all voting power in the election of directors, then each
stockholder of the corporation (other than the person making the control share
acquisition) who has not voted in favor of authorizing the foregoing voting
rights may demand appraisal rights pursuant to the MBCL. See "The Merger--
Appraisal Rights." As indicated above, as permitted by the Massachusetts
control share acquisition statute, the Company has opted out of the provisions
of such statute.
The PBCL provides that any holder of voting shares of a registered
corporation who objects to a "control transaction" will be entitled to make a
written demand on the "controlling person" for payment of the fair value of the
voting shares of the corporation held by the shareholder as determined pursuant
to the PBCL and such controlling person shall be required to pay that amount in
cash to such shareholder. A "control transaction" is defined as the acquisition
by a person of the status of a "controlling person." For this purpose, a
"controlling person" is generally defined as a person who has voting power over
voting shares of the registered corporation that would entitle the holder
thereof to cast at least 20% of the votes that all shareholders would be
entitled to cast in an election of directors of the corporation. AMP has not
taken any corporate action to opt out of the foregoing provision of the PBCL.
LEGAL OPINION
The validity of the shares of AMP Common Stock offered by this Proxy
Statement-Prospectus will be passed upon for AMP by Charles W. Goonrey, Vice
President, General Legal Counsel of AMP.
As of May 19, 1995, Mr. Goonrey owned (i) 5,085 shares of AMP Common Stock,
(ii) options to purchase an additional 12,000 shares of AMP Common Stock and
(iii) 4,100 stock appreciation rights entitling Mr. Goonrey to benefit from an
increase in the per share price of AMP Common Stock.
EXPERTS
The consolidated financial statements and related schedules of the Company
incorporated in this Proxy Statement-Prospectus by reference to the Company 10-
K have been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
With respect to the unaudited consolidated financial information of the
Company for the three month periods ended January 1, 1994, April 2, 1994,
December 31, 1994 and April 1, 1995 incorporated by reference
55
<PAGE>
in this Proxy Statement-Prospectus, Price Waterhouse LLP reported that they
have applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports dated February 4,
1994, April 25, 1994, February 27, 1995 and April 27, 1995 incorporated by
reference herein, state that they did not audit and they do not express an
opinion on that unaudited consolidated financial information. Price Waterhouse
LLP has not carried out any significant or additional audit tests beyond those
which would have been necessary if their reports had not been included.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Price Waterhouse LLP is not subject to the liability provisions of section 11
of the Securities Act for their reports on the unaudited consolidated financial
information because those reports are not "reports" or "parts" of the
registration statement prepared or certified by Price Waterhouse LLP within the
meaning of sections 7 and 11 of the Securities Act.
Representatives of Price Waterhouse LLP are expected to be present at the
Special Meeting, where they will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
The consolidated financial statements of AMP included in AMP's Annual Report
on Form 10-K for its fiscal year ended December 31, 1994, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
and in giving such reports.
AMENDMENTS TO THE COMPANY BY-LAWS
On March 10, 1995, the Company Board amended Article Fourth of the Company
By-laws to make the Massachusetts control share acquisition statute of the
Massachusetts General Laws ("Chapter 110D") inapplicable to the Company by
deleting Section 5 of Article Fourth of the Company By-laws in its entirety and
inserting in lieu thereof the following new Section 5 of Article Fourth:
"Section 5. Massachusetts Chapter 110D. Until such time as this Section 5
of Article Fourth shall be repealed or these By-Laws shall be amended in
accordance with Article Twelfth hereof to provide otherwise, the provisions
of Chapter 110D of the Massachusetts General Laws shall not apply to
"control share acquisitions" of the Corporation within the meaning of said
Chapter 110D."
Chapter 110D provides that a person who makes a bona fide offer to acquire, or
acquires, shares of stock of a corporation in an amount equal to or greater
than certain specified thresholds must obtain the approval of a majority of
shares held by all stockholders. See "Comparison of Rights of Holders of
Company Common Stock and AMP Common Stock--Control Share Acquisition Statute"
and "Comparison of Rights of Holders of Company Common Stock and AMP Common
Stock--Control Transactions."
In addition, on February 14, 1995, the Company Board amended Article First,
Section 1 of the Company By-laws by adding the following text at the end of the
first sentence of Article First, Section 1: "or such other date as shall be
determined from time to time by the Board of Directors." This amendment allows
the annual meeting of stockholders to be held, in addition to the date
specified in the Company By-laws as in effect prior to such amendment, on such
other date as shall be determined from time to time by the Company Board.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
OF COMPANY STOCKHOLDERS
If the Merger is not consummated, it is currently anticipated that the 1996
Annual Meeting of Stockholders of the Company will be held on or about February
21, 1996. If such meeting is held, stockholder proposals intended to be
presented at such meeting must by received by the Company not later than August
25, 1995 for inclusion in the proxy materials for such meeting.
56
<PAGE>
APPENDIX A
CONFORMED
AGREEMENT AND PLAN OF MERGER
DATED MARCH 10, 1995
AMONG
AMP INCORPORATED
AMP MERGER CORP.
AND
M/A-COM, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I THE MERGER................................................. A-1
1.1 The Merger................................................. A-1
1.2 Consummation of the Merger................................. A-1
1.3 Effects of the Merger...................................... A-1
1.4 Articles of Organization; Bylaws........................... A-2
1.5 Directors and Officers..................................... A-2
1.6 Time and Place of Closing.................................. A-2
ARTICLE II CONVERSION AND EXCHANGE OF SHARES.......................... A-2
2.1 Conversion of Shares....................................... A-2
2.2 Exchange Procedures........................................ A-3
2.3 Dividends and Distributions................................ A-4
2.4 No Fractional Securities................................... A-5
2.5 Adjustment of Exchange Rate................................ A-5
2.6 Transfers Following the Effective Time..................... A-5
ARTICLE III REPRESENTATIONS AND WARRANTIES............................. A-5
3.1 General Statement.......................................... A-5
3.2 Representations and Warranties of Parent and Merger Sub.... A-5
3.3 Representations and Warranties of the Company.............. A-9
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER..................... A-14
4.1 Obligations of Each of the Parties......................... A-14
4.2 The Company's Obligations.................................. A-14
4.3 Parent's Obligations....................................... A-16
ARTICLE V ADDITIONAL AGREEMENTS...................................... A-17
5.1 Registration Statement; Proxy Statement; Auditors' Letters;
Other Regulatory Matters................................ A-17
5.2 Alternative Proposals...................................... A-18
5.3 Indemnification and Insurance.............................. A-19
5.4 Certain Benefits........................................... A-20
5.5 Pooling; Reorganization.................................... A-21
5.6 Rights Agreement........................................... A-21
ARTICLE VI CONDITIONS TO CLOSING; CLOSING DELIVERIES.................. A-22
6.1 Conditions to Each Party's Obligations..................... A-22
6.2 Conditions to the Company's Obligations.................... A-22
6.3 Conditions to Parent's Obligations......................... A-23
6.4 Closing Deliveries......................................... A-24
ARTICLE VII TERMINATION/EFFECT OF TERMINATION.......................... A-25
7.1 Right to Terminate......................................... A-25
7.2 Certain Effects of Termination............................. A-25
ARTICLE VIII MISCELLANEOUS.............................................. A-26
8.1 Non Survival of Representations, Warranties and Agreements. A-26
8.2 Amendment.................................................. A-26
8.3 Publicity.................................................. A-26
8.4 Notices.................................................... A-26
8.5 Expenses; Transfer Taxes; Certain Payments................. A-27
8.6 Entire Agreement; Representations and Warranties........... A-28
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
8.7 Extension; Waiver................................................ A-28
8.8 Counterparts..................................................... A-28
8.9 Severability..................................................... A-28
8.10 Applicable Law................................................... A-28
8.11 Binding Effect; Benefit.......................................... A-28
8.12 Assignability.................................................... A-28
8.13 Governmental Reporting........................................... A-28
8.14 Consent to Jurisdiction.......................................... A-28
8.15 Definitions...................................................... A-29
8.16 Headings......................................................... A-30
8.17 Interpretation................................................... A-30
</TABLE>
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into on
March 10, 1995 among AMP INCORPORATED, a Pennsylvania corporation ("Parent"),
AMP MERGER CORP., a Massachusetts corporation and a wholly-owned subsidiary of
Parent ("Merger Sub"), and M/A-COM, INC., a Massachusetts corporation (the
"Company").
RECITALS
A. The Company and its subsidiaries are a supplier to the wireless
telecommunications, surveillance and the defense-related industries of radio
frequency, microwave and millimeter wave semiconductors, components and
subsystems, utilizing advanced circuit and semiconductor technologies, for
systems applications in wireless communications, sensor systems, radar,
navigation, missile guidance, electronic warfare and surveillance in air,
ground, sea and space environments.
B. The respective boards of directors of Parent, Merger Sub and the Company,
and Parent as the sole stockholder of Merger Sub, have approved the merger of
Merger Sub with and into the Company (the "Merger") on the terms and subject to
the conditions set forth in this Agreement and in accordance with the
Massachusetts Business Corporation Law (the "MBCL").
C. Merger Sub and the Company intend that the Merger will be treated as a tax
free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), that this Agreement shall
constitute a plan of reorganization for the purposes of Section 368 of the Code
and that the Merger will be treated as a pooling of interests in accordance
with Accounting Principles Board Opinion No. 16.
D. It is the understanding of all the parties hereto that Parent seeks, as a
result of the Merger, to acquire the Company, its subsidiaries and all of their
respective assets and liabilities, subject to the terms and conditions of this
Agreement.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
The Merger
1.1 The Merger. On the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as herein defined), in accordance with this
Agreement and the MBCL, Merger Sub shall merge with and into the Company, the
separate existence of Merger Sub shall cease and the Company shall continue as
the surviving corporation. The Company, in its capacity as the corporation
surviving the Merger, is sometimes referred to herein as the "Surviving
Corporation".
1.2 Consummation of the Merger. In order to effectuate the Merger, on the
Closing Date (as herein defined), the parties hereto shall cause articles of
merger (the "Articles of Merger") to be filed with the Secretary of State of
the Commonwealth of Massachusetts, in such form as required by, and executed in
accordance with, Section 78 of the MBCL. The Merger shall be effective as of
the time of filing of the Articles of Merger (the "Effective Time").
1.3 Effects of the Merger. At and after the Effective Time, the Merger shall
have the effects provided for in this Agreement and as set forth in Section 80
of the MBCL.
<PAGE>
1.4 Articles of Organization; Bylaws. Without limiting the obligations of
Parent or the Surviving Corporation under Section 5.3 hereof, at and after the
Effective Time, the Articles of Organization and By-Laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Articles of
Organization and By-Laws of the Surviving Corporation, and shall thereafter
continue in effect until amended as provided therein and in accordance with the
MBCL.
1.5 Directors and Officers. At and after the Effective Time, the directors
and officers of Merger Sub holding office immediately prior to the Effective
Time shall be the directors and officers of the Surviving Corporation, until
their respective successors shall have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Articles of Organization and By-Laws of the Surviving Corporation.
1.6 Time and Place of Closing. Subject to the provisions of Articles VI and
VII hereof, the transaction contemplated by this Agreement shall be consummated
(the "Closing") at 10:00 a.m., prevailing business time, at the offices of
Skadden, Arps, Slate, Meagher & Flom, One Beacon Street, Boston, Massachusetts
02108, on the day which is two (2) business days after the first date on which
each of the conditions to Closing set forth in Section 6.1 hereof shall have
been satisfied or waived, or on such other date, or at such other place, as
shall be agreed upon by the parties hereto. The date on which the Closing shall
occur in accordance with the preceding sentence is referred to in this
Agreement as the "Closing Date".
ARTICLE II
Conversion and Exchange of Shares
2.1 Conversion of Shares. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of common stock,
par value $1.00 per share, of the Company (the "Company Common") or the holder
of any shares of common stock, par value $1.00 per share, of Merger Sub
("Merger Sub Common"):
(a) each share of Merger Sub Common issued and outstanding immediately
prior to the Effective Time shall be converted into one (1) share of
Company Common;
(b) all shares of Company Common that are owned by the Company as
treasury stock and any shares of Company Common owned by Parent, Merger Sub
or any other subsidiary of Parent shall be cancelled and retired and shall
cease to exist and no stock of Parent or other consideration shall be
delivered in exchange therefor;
(c) subject to the provisions of Sections 2.4 and 2.5 hereof, each share
of Company Common issued and outstanding immediately prior to the Effective
Time (including, without limitation, shares of restricted stock issued to
employees and former employees of the Company and the Company Subsidiaries,
as defined herein) shall be converted into the right to receive (together
with any dividends and other distributions payable as provided in Section
2.3 hereof) twenty-eight one hundredths (0.28) of one (1) share (the
"Exchange Rate") of fully paid and nonassessable shares of common stock, no
par value per share, of Parent ("Parent Common"), together with any Parent
Rights (as defined herein) attached thereto (together with the Parent
Common, the "Merger Consideration"). All such shares of Company Common,
when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Parent
Common and any cash in lieu of fractional shares as provided in Section 2.4
hereof, together with any dividends and other distributions payable as
provided in Section 2.3 hereof, all to be issued or paid in consideration
for such certificate upon the surrender thereof in accordance with Section
2.2. "Parent Rights" means (i) the rights attached to each share of Parent
Common pursuant to the Shareholder Rights Plan adopted by Parent's Board of
Directors on October 25, 1989, and the Amendment Rights Agreement dated
September 4, 1992, between Parent and Chemical Bank and (ii) any other
rights which may become attached to shares of Parent Common on the date
hereof or subsequent hereto;
A-2
<PAGE>
(d) notwithstanding Section 2.1(c), each share of Company Common
outstanding immediately prior to the Effective Time and which is held by
stockholders who have complied with the procedure for appraisal set forth
in the MBCL ("Dissenting Stock") shall not be converted into or represent a
right to receive the Merger Consideration in respect of such shares unless
and until the holder thereof shall have failed to perfect, or shall have
lost, his or her right to, or withdrawn his or her demand for, appraisal of
and payment for his or her shares of Company Common under the MBCL, at
which time his or her shares of Company Common shall be converted into the
right to receive the Merger Consideration in respect of such shares. The
Company shall give Parent prompt notice upon receipt by the Company of any
written demands for appraisal rights, withdrawal of such demands, and any
other written communications delivered to the Company pursuant to the MBCL;
and
(e) all options (individually, a "Company Option" and collectively, the
"Company Options") outstanding at the Effective Time under the M/A-COM Long
Term Incentive Plan, the M/A-COM 1983 Stock Option and Performance
Incentive Stock Option Plan, the M/A-COM 1981 Stock Option and Performance
Incentive Stock Option Plan, the M/A-COM 1980 Stock Option and Performance
Incentive Stock Option Plan and the Stock Option Plan and Agreement with
Thomas A. Vanderslice, as corrected and restated as of September 11, 1991
(all as amended through the Effective Time and collectively, the "Company
Stock Option Plans") shall remain outstanding following the Effective Time
for the remainder of their terms and in accordance with the terms of the
respective Company Stock Option Plans. At the Effective Time, such Company
Options (as amended or adjusted as a result of the Merger in accordance
with the applicable Company Stock Option Plan) shall, by virtue of the
Merger and without any further action on the part of Company or the holder
of any such Company Options, become fully vested and exercisable (to the
extent not already fully vested and exercisable) pursuant to (and only
pursuant to) their terms and in accordance with the terms of the respective
Company Stock Option Plans and shall be assumed by Parent. From and after
the Effective Time, each Company Option assumed by Parent shall be
exercisable (i) for that whole number of shares of Parent Common (rounded
up to the nearest whole share) into which the number of shares of Company
Common subject to such Company Option immediately prior to the Effective
Time would be converted under this Section 2.1 and (ii) at an option price
per share of Parent Common equal to the option price per share of Company
Common subject to such Company Option in effect immediately prior to the
Effective Time divided by the Exchange Rate (the option price per share, as
so determined, being rounded upward to the nearest full cent). From and
after the date of this Agreement, no additional options shall be granted by
the Company or the Company Subsidiaries under the Company Stock Option
Plans or otherwise.
2.2 Exchange Procedures.
(a) Immediately prior to the Effective Time, Parent shall deposit with an
exchange agent (the "Exchange Agent"), to be mutually acceptable to Parent
and the Company, in trust for the holders of record of Company Common
immediately prior to the Effective Time (the "Company Stockholders")
certificates representing the aggregate shares of Parent Common issuable
pursuant to Section 2.1(a) hereof in exchange for the total outstanding
shares of Company Common immediately prior to the Effective Time. From time
to time Parent shall make available to the Exchange Agent sufficient cash
to make all cash payments in lieu of fractional shares pursuant to Section
2.4 hereof. All deposits with the Exchange Agent pursuant to this Section
2.2 together with any dividends or distributions with respect to shares of
Parent Common as contemplated by Section 2.3 are referred to as the
"Exchange Fund". The Exchange Fund shall not be used for any purpose except
as provided in this Agreement.
(b) As soon as practicable after the Effective Time, Parent and the
Surviving Corporation shall cause the Exchange Agent to mail to each
Company Stockholder a letter of transmittal and instructions for use in
effecting the surrender of certificates representing shares of Company
Common outstanding immediately prior to the Effective Time ("Certificates")
in appropriate and customary form with such provisions as the Company and
Parent may reasonably specify. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of
transmittal, duly and properly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate
representing
A-3
<PAGE>
that number of whole shares of Parent Common (together with any Parent
Rights attached thereto) which such holder has a right to receive pursuant
to the provisions of this Article II, together with any dividends and other
distributions payable as provided in Section 2.3 hereof, but subject to the
payment of cash in lieu of fractional shares as provided in Section 2.4
hereof, and the Certificate so surrendered shall be cancelled. Until
surrendered as contemplated by this Section 2.2, each Certificate shall, at
and after the Effective Time, be deemed to represent only the right to
receive, upon surrender of such Certificate, the Merger Consideration with
respect to the shares of Company Common represented thereby, together with
any dividends and other distributions payable as provided in Section 2.3
hereof, but subject to the payment of cash in lieu of fractional shares as
provided in Section 2.4 hereof. Shares of Parent Common issued in the
Merger shall be issued as of and be deemed to be outstanding as of the
Effective Time. Parent shall cause all such shares of Parent Common issued
pursuant to the Merger to be duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights.
(c) If any certificate representing shares of Parent Common is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered or any payment in lieu of fractional shares
pursuant to Section 2.4 hereof is to be paid other than to the registered
holder of the Certificate so surrendered, it shall be a condition of such
exchange and/or payment, as the case may be, that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange and/or payment, as
the case may be, shall pay any transfer or other taxes required by reason
of the issuance of certificates for such shares of Parent Common in a name
other than that of, and/or payment to a person other than, as the case may
be, the registered holder of the Certificate so surrendered.
(d) In the event 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 upon the
posting by such person of a bond in such amount as Parent or the Surviving
Corporation may reasonably direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent
will issue in respect of such lost, stolen or destroyed Certificate the
Merger Consideration with respect to the shares of Company Common
represented thereby (subject to the payment of cash in lieu of fractional
shares in accordance with Section 2.4 hereof) and such person shall be
entitled to the dividend and other distribution rights provided in Section
2.3 hereof.
(e) Any portion of the Exchange Fund which remains unclaimed by the
Company Stockholders for one (1) year after the Effective Time shall be
delivered to Parent, upon demand of Parent, and the Company Stockholders
shall thereafter look only to Parent for payment of their claim for the
Merger Consideration in respect of their shares of Company Common (and cash
in lieu of fractional shares and dividends or distributions with respect to
Parent Common as contemplated by Section 2.3). Neither the Company nor
Parent shall be liable to any Company Stockholder for any such Merger
Consideration or cash properly delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(f) Parent or the Exchange Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of a Certificate surrendered for the Merger Consideration (and cash
in lieu of fractional shares and dividends or distributions with respect to
Parent Common as contemplated by Section 2.3) such amount as Parent or the
Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of any state, local
or foreign tax law. To the extent that amounts are so deducted and
withheld, such amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of such Certificate.
2.3 Dividends and Distributions. No dividends or other distributions declared
or made with respect to Parent Common with a record date on or after the date
of the Effective Time will be paid to the holder of a Certificate entitled by
reason of the Merger to receive certificates representing Parent Common until
such holder surrenders such Certificate as provided in Section 2.2 hereof,
provided that there shall be paid forthwith by Parent to the person in whose
name certificates representing shares of Parent Common shall be
A-4
<PAGE>
issued pursuant to the terms of this Article II (a) at the time of surrender of
such Certificate, the amount of any dividends and other distributions
theretofore paid with respect to that number of whole shares of such Parent
Common represented by such surrendered Certificate pursuant to the terms of
this Article II, which dividends or other distributions had a record date on or
after the date of Effective Time and a payment date prior to such surrender and
(b) at the appropriate payment date, the amount of dividends and other
distributions payable with respect to that number of whole shares of Parent
Common represented by such surrendered Certificate pursuant to the terms of
this Article II, which dividends or other distributions have a record date on
or after the date of Effective Time and a payment date subsequent to such
surrender.
2.4 No Fractional Securities. Notwithstanding any other provision of this
Agreement to the contrary, no certificates or scrip representing fractional
shares of Parent Common shall be issued upon the surrender for exchange of a
Certificate pursuant to Section 2.2 hereof and no Parent dividend or other
distribution or stock split shall relate to any fractional shares of Parent
Common, and such fractional interests shall not entitle the owner thereof to
vote or to any rights of a stockholder of Parent. In lieu of any such
fractional shares, each holder of a Certificate who would otherwise have been
entitled to a fraction of a share of Parent Common upon surrender of such
Certificates for exchange pursuant to Section 2.2 hereof will be paid an amount
in cash (without interest) equal to such fraction of a share multiplied by the
Final Parent Stock Price (as herein defined). For the purposes of the preceding
sentence, the "Final Parent Stock Price" shall mean the average of the per
share closing prices on the NYSE (as herein defined) of Parent Common as
reported in the NYSE Composite Transactions during the twenty consecutive
trading days ending on the fifth business day prior to the Closing Date as
reported in the Wall Street Journal.
2.5 Adjustment of Exchange Rate. In the event of any reclassification, stock
split (including a reverse split), stock dividend or other general distribution
of securities, cash or other property (other than a cash dividend at an annual
rate not to exceed $.92 per share) with respect to Parent Common (or if a
record date with respect to any of the foregoing should occur) on or after the
date of this Agreement and on or prior to the date of the Effective Time,
appropriate and equitable adjustments, if any, shall be made to the Exchange
Rate.
2.6 Transfers Following the Effective Time. The stock transfer books of the
Company shall be closed as of the Effective Time, and thereafter there shall be
no further registrations of transfers of shares of Company Common that were
outstanding prior to the Effective Time.
ARTICLE III
Representation and Warranties
3.1 General Statement. The parties make the representations and warranties to
each other which are set forth in this Article III. None of such
representations and warranties shall survive the Effective Time. All
representations and warranties of the Company are made subject to the
exceptions noted in the schedule delivered by the Company to Parent
concurrently herewith and identified by the parties as the "Company Disclosure
Schedule".
3.2 Representations and Warranties of Parent and Merger Sub. Parent and
Merger Sub jointly and severally represent and warrant to the Company that:
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. Merger Sub is
a wholly-owned subsidiary of Parent and a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(b) Parent (i) has all requisite corporate power and authority to own,
lease and operate its properties and carry on its business as now being
conducted and (ii) is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the nature or
location of its assets
A-5
<PAGE>
require such qualification and where the failure to be so qualified and in
good standing would have a Material Adverse Effect on Parent. For purposes
of this Agreement, "Material Adverse Effect" means, with respect to Parent,
a materially adverse effect on the business, results of operation,
financial condition, properties or assets of Parent and its subsidiaries
(including Merger Sub) (each such corporation, partnership or other entity
being referred to herein individually as a "Parent Subsidiary" and
collectively, as the "Parent Subsidiaries"), taken as a whole. Merger Sub
was formed solely for the purpose of engaging in the transaction
contemplated by this Agreement and has not engaged in any activities other
than in connection with or as contemplated by this Agreement.
(c) Each of Parent and Merger Sub has all necessary corporate power and
authority to enter into this Agreement and to consummate the transaction
contemplated hereby. The execution and delivery of this Agreement by Parent
and Merger Sub and the performance by Parent and Merger Sub of their
respective obligations hereunder have been duly authorized and approved by
all requisite corporate action and no other corporate proceedings on the
part of Parent or Merger Sub are necessary to authorize this Agreement or
for Parent and Merger Sub to consummate the Merger. This Agreement has been
duly executed and delivered by duly authorized officers of Parent and
Merger Sub and constitutes a valid and binding obligation of each of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms.
(d) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality, (each of the foregoing
being a "Governmental Entity"), is required by or with respect to Parent or
Merger Sub in connection with the execution and delivery of this Agreement
by Parent or Merger Sub or the consummation by Parent or Merger Sub of the
transaction contemplated hereby, except for (i) the filing of the Articles
of Merger with the Secretary of State of the Commonwealth of Massachusetts
and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) notices under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration (or earlier termination) of all applicable
waiting periods thereunder, (iii) consents of foreign governments having
jurisdiction, (iv) the filing with the Securities and Exchange Commission
(the "SEC") of a registration statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Parent Common to be offered to the Company
Stockholders and the declaration of effectiveness of the Registration
Statement and (v) the filings necessary to obtain all state securities law
or "Blue Sky" permits or approvals required to carry out the transaction
contemplated by this Agreement (collectively, the "Regulatory Approvals").
(e) Neither the execution and delivery of this Agreement by Parent and
Merger Sub, nor the consummation by Parent and Merger Sub of the
transaction contemplated hereby, will (i) conflict with or result in a
breach of any of the terms or provisions of Parent's or Merger Sub's
Articles of Incorporation or Organization or By-Laws, (ii) violate any
statute or administrative regulation, or any order, writ, injunction,
judgment or decree of any court or governmental authority or any
arbitration award to which Parent or Merger Sub is a party or by which
Parent or Merger Sub is bound, or (iii) violate, conflict with, breach,
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in the creation of any
lien or other encumbrance upon any of the properties or assets of Parent or
Merger Sub under, any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Parent
or Merger Sub is a party or to which they or any of their respective
properties or assets are subject, except in the case of clauses (ii) and
(iii) for such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens or other encumbrances that do not and
will not, individually or in the aggregate, (x) have a Material Adverse
Effect on Parent or (y) materially impair the ability of Parent or Merger
Sub to perform their respective obligations under this Agreement.
(f) As of the date hereof, the authorized capital stock of Parent
consists solely of Parent Common. As of March 1, 1995, 700,000,000 shares
of Parent Common were authorized, 209,650,332 shares of
A-6
<PAGE>
Parent Common were issued and outstanding and 14,989,668 shares of Parent
Common were issued but not outstanding and held in Parent's treasury. As of
the date hereof, the authorized capital stock of Merger Sub consists of
10,000 shares of Merger Sub Common. As of March 8, 1995, there were 1,000
shares of Merger Sub Common issued and outstanding. There are no other
shares of capital stock of Parent or Merger Sub authorized, issued or
outstanding. All of the issued and outstanding shares of Parent Common and
Merger Sub Common have been duly authorized, validly issued and are fully
paid and nonassessable. Except as disclosed in Parent's SEC Documents (as
herein defined), there are no subscriptions, options, warrants, rights
(including preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of either Parent or Merger Sub
obligating Parent or Merger Sub, as the case may be, to issue any
securities of any kind.
(g) Parent has timely filed (and has delivered to the Company a true and
complete copy of) each report, schedule, registration statement and
definitive proxy statement required to be filed by Parent with the SEC
since January 1, 1993 (such documents are referred to herein as "Parent's
SEC Documents"). As of their respective dates, Parent's SEC Documents
comply in all material respects with the requirements of the Securities Act
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
the case may be, and the applicable rules and regulations of the SEC
thereunder, and none of Parent's SEC Documents, as of their respective
dates, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Parent included in
Parent's SEC Documents comply, as of their respective dates, in all
material respects with all applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) and fairly present in all material respects the consolidated
financial position of Parent as at the dates thereof and the consolidated
results of its operations, cash flows and changes in financial position for
the periods indicated therein.
(h) Except as disclosed in Parent's SEC Documents filed prior to the date
of this Agreement and furnished to the Company, Parent and the Parent
Subsidiaries do not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) other than liabilities
or obligations (i) which were incurred after September 30, 1994 in the
ordinary course of business or (ii) which would not, individually or in the
aggregate, have a Material Adverse Effect on Parent.
(i) Except as disclosed in Parent's SEC Documents filed prior to the date
of this Agreement and furnished to the Company, since September 30, 1994:
(i) Parent has not suffered or, to Parent's knowledge, been threatened with
any change (other than changes generally affecting the industries in which
Parent or any Parent Subsidiary operates or changes relating to the
transactions contemplated by this Agreement) having a Material Adverse
Effect; and (ii) Parent and the Parent Subsidiaries have operated only in
the ordinary course of business consistent with past practice.
(j) (i) As used in this Agreement, the term (A) "Taxes" means all
federal, state, local, foreign and other income, sales, use, ad
valorem, transfer, franchise, withholding, payroll, employment, gross
receipts, property, severance, duties, net worth, excise or other
taxes, charges, levies or like assessments of any kind, together with
any interest, penalties and additions with respect thereto, and the
term "Tax" means any one of the foregoing Taxes, and (B) "Returns"
means all returns, declarations, reports, statements and other
documents required to be filed in respect of Taxes, and the term
"Return" means any one of the foregoing Returns.
(ii) There have been properly completed and filed on a timely basis
all Returns required to be filed by Parent or a Parent Subsidiary in
each case where the failure to properly complete or file any Return
would have a Material Adverse Effect on Parent. As of the time of
filing, the foregoing Returns correctly reflected the facts regarding
the income, business, assets, operations, activities, status or other
matters of Parent or, as applicable, a Parent Subsidiary or any other
information
A-7
<PAGE>
required to be shown thereon, in each case where the failure to do so
would have a Material Adverse Effect on Parent.
(iii) With respect to all amounts in respect of Taxes imposed upon
Parent or any Parent Subsidiary, or for which Parent or any Parent
Subsidiary is liable to taxing authorities, with respect to all taxable
periods or portions of periods ending on or before the date hereof, all
applicable Tax laws have been complied with where the failure to comply
with such laws would have a Material Adverse Effect on Parent, and all
amounts that are required to have been paid by Parent to taxing
authorities on or before the date hereof have been paid where the
failure to pay such amounts would have a Material Adverse Effect on
Parent.
(iv) No issues have been raised or are currently pending by any tax
authority in connection with any of the Returns which, if resolved
adversely to Parent and the Parent Subsidiaries, would have a Material
Adverse Effect on Parent. There are no material outstanding waivers of
the applicable statutes of limitation with respect to Tax liabilities
of Parent or any Parent Subsidiary.
(v) The unpaid Taxes of Parent and the Parent Subsidiaries do not
exceed the reserve for tax liability (excluding any reserve for
deferred Taxes) included in the financial statements included in the
Form 10-Q of Parent dated September 30, 1994 by an amount which would
have a Material Adverse Effect on Parent.
(k) Since the last filing of Parent's SEC Documents, there have been no
changes to, including termination of, the employee benefit plans (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) Parent and the Parent Subsidiaries maintain,
administer or contribute to for the benefit of employees or former
employees of Parent and the Parent Subsidiaries which changes would have a
Material Adverse Effect on Parent.
(l) There is no litigation or proceeding, in law or in equity, and there
are no proceedings or governmental investigations before any commission or
other administrative authority, pending or, to Parent's knowledge,
threatened against Parent or any Parent Subsidiary with respect to or
affecting Parent's or any Parent Subsidiary's operations, business or
financial condition which has a reasonable probability of being decided
adversely to Parent or any Parent Subsidiary and which, if so decided
adversely would have a Material Adverse Effect on Parent.
(m) Neither Parent nor any Parent Subsidiary is a party to, or bound by,
any judgment, writ, injunction, decree, order or arbitration award (or
agreement entered into in any administrative, judicial or arbitration
proceeding with any governmental authority) with respect to or affecting
the properties, assets, personnel or business activities of Parent or any
subsidiary of Parent, the enforcement or operation of which or compliance
with which would have a Material Adverse Effect on Parent.
(n) Except with respect to Environmental Laws (as defined and which are
addressed in Section 3.2(o)), neither Parent nor any Parent Subsidiary is
in violation of, noncompliance with, or delinquent in respect to, any
judgment, writ, injunction, decree, order or arbitration award or law,
statute, or regulation of or agreement with, or any permit from, any
Governmental Entity to which the property, assets, personnel or business
activities of Parent or any Parent Subsidiary are subject, which violation,
noncompliance or delinquency would have a Material Adverse Effect on
Parent.
(o) (i) Except for noncompliances or liabilities that would not have
a Material Adverse Effect on Parent, Parent, the Parent Subsidiaries
and their respective assets and business are in compliance with, and
not otherwise subject to liability under, any Environmental Laws (as
herein defined) or any Environmental Permits (as herein defined). Every
written notice, citation, or complaint which Parent or any Parent
Subsidiary has received in the past five (5) years of any alleged
violation of, or liability under, any Environmental Law or
Environmental Permit has been corrected where the failure to do so
would have a Material Adverse Effect on Parent. Parent and the Parent
Subsidiaries possess all Environmental Permits which are required by
them for the operation of their business where the failure to do so
would have a Material Adverse Effect on Parent.
A-8
<PAGE>
(ii) For purposes of this Agreement (A) "Environmental Laws" means
all applicable federal, state, local and foreign statutes, regulations,
ordinances, rules, regulations, and all applicable court orders and
decrees and arbitration awards, which pertain to environmental matters
or contamination of any type whatsoever. "Environmental Laws" include,
without limitation, those relating to: manufacture, processing, use,
distribution, treatment, storage, disposal, generation or
transportation of Hazardous Materials (as herein defined); air, soil,
surface or ground water or noise pollution; Releases (as herein
defined); protection of wildlife, endangered species, wetlands or
natural resources; above-ground and underground storage tanks, vessels
and related equipment and containers; health and safety of employees
and other persons; the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) 9601, et seq., as amended
and reauthorized ("CERCLA"); and notification requirements relating to
the foregoing; (B) "Environmental Permits" means licenses, permits,
registrations, governmental approvals, agreements and consents which
are required under or are issued pursuant to Environmental Laws; (C)
"Hazardous Materials" means pollutants, contaminants, pesticides,
petroleum and petroleum products, radioactive substances, solid wastes
or hazardous or extremely hazardous, special, dangerous or toxic
wastes, substances, chemicals or materials within the meaning of any
Environmental Law, including, without limitation, any (x) "hazardous
substance" as defined in CERCLA, and (y) any "hazardous waste" as
defined in the Resource Conservation and Recovery Act, 42 U.S.C., (S)
6902 et seq., as amended and reauthorized; and (D) "Release" means any
spill, discharge, leak, emission, escape, injection, dumping, or other
release or threatened release of any Hazardous Materials into the
environment, whether or not notification or reporting to any
governmental agency was or is, required, including, without limitation,
any release which is subject to CERCLA.
(p) Neither Parent nor any Parent Subsidiary has taken any action which
would (i) violate any requirement, including the continuity-of-business-
enterprise requirement of 26 C.F.R. (S)1.368-1(d), for tax-free
reorganization status under Section 368(a) of the Code with respect to the
Merger or (ii) prevent the accounting for the Merger as a pooling of
interests in accordance with Accounting Principles Board Opinion No. 16,
the interpretative releases pursuant thereto and the pronouncements of the
SEC.
(q) No broker, finder or investment banker (other than Lehman Brothers,
Inc., whose brokerage, finder's, or other fee will be paid by Parent) is
entitled to any brokerage, finder's or other fee or commission in
connection with the transaction contemplated hereby based upon arrangements
made by or on behalf of Parent.
(r) As of the Closing Date, neither Parent nor any Parent Subsidiary will
beneficially own any shares of Company Common. Parent does not "own" and
has not within the past three years "owned" (as such terms are defined in
Section 3 of Chapter 110F of the MGL) and does not "beneficially own" (as
such term is defined in the Rights Agreement (as defined in Section 3.3(c))
ten percent (10%) or more of the outstanding shares of Company Common.
3.3 Representations and Warranties of the Company. The Company represents and
warrants to Parent and Merger Sub that, except as set forth in the Company
Disclosure Schedule:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts. The
Company Disclosure Schedule contains a list of the name and jurisdiction of
organization of each subsidiary of the Company (each such corporation,
partnership or other entity being referred to herein individually as a
"Company Subsidiary" and collectively, as the "Company Subsidiaries"). Each
Company Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its place of incorporation.
(b) The Company and each Company Subsidiary (i) has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted and (ii) is duly qualified
and in good standing in each jurisdiction in which the nature of its
business or the nature or location of its assets require such qualification
and where the failure to be so qualified and in good standing would have a
Material Adverse Effect on the Company. For the purposes of this Agreement,
A-9
<PAGE>
"Material Adverse Effect" means, with respect to the Company, a materially
adverse effect on the business, results of operation, financial condition,
properties or assets of the Company and the Company Subsidiaries, taken as
a whole.
(c) The Company has all necessary corporate power and authority to enter
into this Agreement and, subject to approval and adoption of this Agreement
by the holders of two-thirds of the outstanding shares of Company Common,
to consummate the transaction contemplated hereby. The execution and
delivery of this Agreement by the Company and, subject to approval and
adoption of this Agreement by the stockholders of the Company, the
performance by the Company of its obligations hereunder have been duly
authorized by all requisite corporate action and, except for actions
required by Section 5.6, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or for the Company to
consummate the Merger. This Agreement has been duly executed and delivered
by duly authorized officers of the Company and constitutes a valid and
binding obligation of the Company enforceable against it in accordance with
its terms. The Company has taken all action necessary to ensure that so
long as this Agreement shall not have been terminated pursuant to Article
VII hereof, (i) neither Parent or Merger Sub shall, by virtue of the
execution and delivery of this Agreement, be deemed to be an "Acquiring
Person" (as that term is defined in that certain Rights Agreement dated as
of July 29, 1986, as amended and restated effective May 16, 1990 (the
"Rights Agreement"), between the Company and The First National Bank of
Boston) and (ii) that no "Rights" (as that term is defined in the Rights
Agreement) are issued or required to be issued to the stockholders of the
Company by virtue of the execution and delivery of this Agreement. As of
the date of this Agreement, the Company has not amended the Rights
Agreement, redeemed the Rights thereunder or taken any other action to make
the Rights Agreement or the Rights thereunder inapplicable, in each case,
with respect to (i) any person or entity other than Parent and Merger Sub
or (ii) any Alternative Proposal (as defined in Section 5.2) (or any other
substantially similar proposal).
(d) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to the Company or any Company Subsidiary in connection with the
execution and delivery of this Agreement by the Company or the consummation
by the Company of the transaction contemplated hereby, except for (i) the
filing of the Articles of Merger with the Secretary of State of the
Commonwealth of Massachusetts and the filing of appropriate documents with
the relevant authorities of other states in which the Company is qualified
to do business, (ii) notices under the HSR Act and the expiration (or
earlier termination) of all applicable waiting periods thereunder, (iii)
consents of foreign governments having jurisdiction, (iv) the filing with
the SEC of the Proxy Statement--Prospectus (as herein defined) and (v)
filings, consents or approvals which may be required in connection with
activities of the Company requiring the receipt of security clearance from
various Federal governmental departments and agencies.
(e) Neither the execution and delivery of this Agreement by the Company,
nor the consummation by the Company of the transaction contemplated hereby,
will (i) conflict with or result in a breach of any of the terms or
provisions of the Company's Articles of Organization or By-Laws, (ii)
violate any statute or administrative regulation, or any order, writ,
injunction, judgment or decree of any court or governmental authority or
any arbitration award to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary is bound, or (iii)
violate, conflict with, breach, constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any lien or other encumbrance upon any of the
properties or assets of the Company or any Company Subsidiary under, any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which the Company or any Company
Subsidiary is a party or to which they or any of their respective
properties or assets are subject, except in the case of clauses (ii) and
(iii) for such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens or other encumbrances that do not and
will not, individually or in the aggregate, (x) have a Material Adverse
Effect on the Company or (y) materially impair the Company's ability to
perform its obligations
A-10
<PAGE>
under this Agreement. Assuming the accuracy of the representation contained
in Section 3.2(r) hereof, the Company's Board of Directors has taken and
will continue to take any action necessary such that the provisions of (i)
Chapter 110C of the MGL, (ii) Chapter 110D of the MGL and (iii) Chapter
110F of the MGL will not apply to the Merger.
(f) As of the date hereof, the authorized capital stock of the Company
consists solely of Company Common. As of March 9, 1995, 100,000,000 shares
of Company Common were authorized, 26,262,451 shares of Company Common were
issued and outstanding and 17,743,258 shares of Company Common were issued
but not outstanding and held in the treasury of the Company. There are no
other shares of capital stock of the Company authorized, issued or
outstanding. All of the issued and outstanding shares of Company Common
have been validly issued and are fully paid and nonassessable. There are no
outstanding subscriptions, options, warrants, rights (including preemptive
rights), calls, convertible securities or other agreements or commitments
of any character relating to the issued or unissued capital stock or other
securities of the Company obligating the Company to issue any securities of
any kind.
(g) All of the outstanding shares of capital stock of, and all other
ownership interests in, each Company Subsidiary (i) are validly issued,
fully paid and nonassessable and free of any preemptive rights, and (ii)
other than director qualifying shares, are owned of record and beneficially
by the Company, a Company Subsidiary or a nominee of the Company, free and
clear of all liens, claims, pledges, agreements, voting or other
restrictions, charges or other encumbrances. There are no outstanding
subscriptions, options, warrants, rights (including preemptive rights),
calls, convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or other
securities (other than investment securities) of any Company Subsidiary
obligating such Company Subsidiary to issue any securities of any kind.
(h) The Company has timely filed (and has delivered to Parent a true and
complete copy of) each report, schedule, registration statement and
definitive proxy statement required to be filed by the Company with the SEC
since October 2, 1993 (such documents are referred to herein as the
"Company's SEC Documents"). As of their respective dates, the Company's SEC
Documents comply in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder, and none of the Company's SEC
Documents, as of their respective dates, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company's SEC Documents comply,
as of their respective dates, in all material respects with all applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly present in all material respects the consolidated financial
position of the Company as at the dates thereof and the consolidated
results of its operations, cash flows and changes in financial position for
the periods indicated therein.
(i) Except as disclosed in the Company's SEC Documents filed prior to the
date of this Agreement and furnished to the Company, the Company and the
Company Subsidiaries do not have any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities or obligations (i) which were incurred after October 1, 1994 in
the ordinary course of business or (ii) which would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
(j) Except as disclosed in the Company's SEC Documents filed prior to the
date of this Agreement and furnished to the Company, since October 1, 1994:
(i) the Company has not suffered or, to the Company's knowledge, been
threatened with any change (other than changes generally affecting the
industries in which the Company or any Company Subsidiary operates or
changes relating to the transactions contemplated by this Agreement) having
a Material Adverse Effect on the Company; and (ii) the Company and the
Company Subsidiaries have operated only in the ordinary course of business
consistent with past practice.
A-11
<PAGE>
(k) (i) There have been properly completed and filed on a timely basis
all Returns required to be filed by the Company or a Company Subsidiary in
each case where the failure to properly complete or file any Return would
have a Material Adverse Effect on the Company. As of the time of filing,
the foregoing Returns correctly reflected the facts regarding the income,
business, assets, operations, activities, status or other matters of the
Company or, as applicable, a Company Subsidiary or any other information
required to be shown thereon, in each case where the failure to do so would
have a Material Adverse Effect on the Company.
(ii) With respect to all amounts in respect of Taxes imposed upon the
Company or any Company Subsidiary, or for which the Company or any
Company Subsidiary is liable to taxing authorities, with respect to all
taxable periods or portions of periods ending on or before the date
hereof, all applicable Tax laws have been complied with where the
failure to comply with such laws would have a Material Adverse Effect
on the Company, and all amounts that are required to have been paid by
the Company to taxing authorities on or before the date hereof have
been paid where the failure to pay such amounts would have a Material
Adverse Effect on the Company.
(iii) No issues have been raised or are currently pending by any tax
authority in connection with any of the Returns which, if decided
adversely to the Company or any Company Subsidiary would have a
Material Adverse Effect on the Company. There are no material
outstanding waivers of the applicable statutes of limitation with
respect to Tax liabilities of the Company or any Company Subsidiary.
(iv) The Company has not agreed to make, nor is it required to make,
any adjustment under section 481(a) of the Code by reason of a change
in accounting method or otherwise.
(v) Neither the Company nor any Company Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of section 280G of the Code.
(vi) The unpaid Taxes of the Company and the Company Subsidiaries do
not exceed the reserve for tax liability (excluding any reserve for
deferred Taxes) included in the financial statements included in the
Form 10-K of the Company dated October 1, 1994 by an amount that would
have a Material Adverse Effect on the Company.
(l) (i) The Company and the Company Subsidiaries maintain, administer or
contribute to only those employee benefit plans (as defined in Section 3(3)
of ERISA, whether or not excluded from coverage under specific Titles or
Subtitles of ERISA), or deferred compensation, severance, vacation, sick
leave, fringe benefit, stock purchase, stock option, stock-related plan,
incentive, insurance or similar contract, policy, arrangement or
commitment, for the benefit of employees or former employees of the Company
and the Company Subsidiaries which are described in the Company Disclosure
Schedule (the "Company Plans").
(ii) All Company Plans comply with and are and have been operated in
accordance with each applicable provision of ERISA, the Code
(including, without limitation, the requirements of Code section 401(a)
to the extent any Company Plan is intended to conform to that section,
subject to any pending application to the Internal Revenue Service for
a "determination letter" to such effect), other Federal statutes, state
law (including, without limitation, state insurance law) and the
regulations and rules promulgated pursuant thereto or in connection
therewith, except in any case where the failure to so comply or so be
operated would not have a Material Adverse Effect on the Company.
(iii) Neither the Company nor any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (a "Company ERISA
Affiliate") has failed to make any contributions or to pay any amounts
due as required by the terms of any Company Plan or ERISA or any other
applicable law. All contributions and payments with respect to Company
Plans that are required to be made by the
A-12
<PAGE>
Company or any Company ERISA Affiliate have been made or will be
accrued on the financial statements filed with, or incorporated by
reference in, the Company's SEC Documents.
(iv) Neither the Company nor any Company ERISA Affiliate has incurred
any liability to the Pension Benefit Guaranty Corporation as a result
of the voluntary or involuntary termination of any pension plan subject
to Title IV of ERISA (other than liabilities paid in full); and neither
the Company nor any Company ERISA Affiliate has made a complete or
partial withdrawal from a multiemployer plan, as such term is defined
in Section 3(37) of ERISA, resulting in withdrawal liability, as such
term is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208
of ERISA) (other than liabilities paid in full).
(m) There is no litigation or proceeding, in law or in equity, and there
are no proceedings or governmental investigations before any commission or
other administrative authority, pending or, to the Company's knowledge,
threatened against the Company or any Company Subsidiary with respect to or
affecting the Company's or any Company Subsidiary's operations, business or
financial condition which has a reasonable probability of being decided
adversely to the Company or any Company Subsidiary and which, if so decided
adversely, would have a Material Adverse Effect on the Company.
(n) Neither the Company nor any Company Subsidiary is a party to, or
bound by, any judgment, writ, injunction, decree, order or arbitration
award (or agreement entered into in any administrative, judicial or
arbitration proceeding with any governmental authority) with respect to or
affecting the properties, assets, personnel or business activities of the
Company or any Company Subsidiary, the enforcement or operation of which or
compliance with which would have a Material Adverse Effect on the Company.
(o) Except with respect to Environmental Laws (which are addressed in
Section 3.3(p)), neither the Company nor any Company Subsidiary is in
violation of, noncompliance with, or delinquent in respect to, any
judgment, writ, injunction, decree, order or arbitration award or law,
statute, or regulation of or agreement with, or any permit from, any
Governmental Entity, to which the property, assets, personnel or business
activities of the Company or any Company Subsidiary are subject, which
violation, noncompliance or delinquency would have a Material Adverse
Effect on the Company.
(p) Except for non-compliance or liabilities that would not have a
Material Adverse Effect on the Company, the Company, the Company
Subsidiaries and their respective assets and business are in compliance
with, and not otherwise subject to liability under, any Environmental Laws
or any Environmental Permits. Every written notice, citation or complaint
which the Company or any Company Subsidiary has received in the past five
(5) years of any alleged violation of, or liability under, any
Environmental Law or Environmental Permit has been corrected where the
failure to do so would have a Material Adverse Effect on the Company. The
Company and the Company Subsidiaries possess all Environmental Permits
which are required by them for the operation of their business where the
failure to do so would have a Material Adverse Effect on the Company.
(q) Each of the Company and the Company Subsidiaries owns, licenses or
otherwise has the right to use all patents, copyrights, trademarks, trade
names and rights in respect of the foregoing, adequate for the conduct of
its business substantially as now conducted without any known conflict with
any rights of others, which conflict, if decided adversely to the Company
or any Company Subsidiary, would have a Material Adverse Effect on the
Company.
(r) The Company has not taken any action which would (i) violate any
requirement, including the continuity-of-business-enterprise requirement of
26 C.F.R. (S)1.368-1(d), for tax-free reorganization status under Section
368(a) of the Code with respect to the Merger or (ii) prevent the
accounting for the Merger as a pooling of interests in accordance with
Accounting Principles Board Opinion No. 16, the interpretative releases
pursuant thereto and the pronouncements of the SEC.
(s) No broker, finder or investment banker (other than Lazard Freres &
Co., whose brokerage, finder's, or other fee will be paid by the Company)
is entitled to any brokerage, finder's or other fee or
A-13
<PAGE>
commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of the Company.
(t) The Company has received the written opinion of Lazard Freres & Co.
(the "Fairness Opinion") on the date of this Agreement to the effect that,
as of the date of this Agreement, the consideration to be received in the
Merger by the Company Stockholders is fair, from a financial point of view,
to the Company Stockholders. The Company has provided a true and correct
copy of the Fairness Opinion to Parent.
ARTICLE IV
Conduct of Business Pending the Merger
4.1 Obligations of Each of the Parties. From and after the date hereof and
until and including the Effective Time, the following shall apply with equal
force to the Company, on the one hand, and Parent and Merger Sub, on the other
hand:
(a) Each party shall promptly give the other party written notice of the
existence or occurrence of any event or condition which would make any
representation or warranty herein contained of either party untrue or which
might reasonably be expected to prevent the consummation of the transaction
contemplated hereby.
(b) Subject to the fiduciary duties of directors under applicable law, no
party shall intentionally perform any act which, if performed, or omit to
perform any act which, if omitted to be performed, would prevent or excuse
the performance of this Agreement by any party hereto.
(c) Subject to the terms and conditions of this Agreement and the
fiduciary duties of directors under applicable law, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transaction
contemplated by this Agreement as expeditiously as reasonably practicable.
(d) Parent and the Company shall confer on a regular and frequent basis
with respect to Regulatory Approvals and operational and transitional
matters.
(e) The Company and Parent shall file on a timely basis all reports,
schedules and statements required to be filed by it with the SEC between
the date hereof and the Effective Time and shall provide to the other party
copies of all such reports promptly after the same are filed. As of their
respective dates, each such report, schedule and statement shall be true
and correct in all material respects and comply in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the applicable rules and regulations of the SEC
thereunder.
4.2 The Company's Obligations. From and after the date hereof and until and
including the Effective Time, the following are the Company's obligations:
(a) The Company, acting through its Board of Directors, shall: (i)
subject to the fiduciary duties of directors under applicable law, call a
meeting of its stockholders for the purpose of voting on the approval and
adoption of the Agreement (the "Meeting") so that the Meeting shall be held
as promptly as practicable after the effectiveness of the Registration
Statement and in accordance with applicable law (but in any event use its
best efforts to so call and hold the Meeting prior to the date referenced
in Section 7.1(b)(ii) hereof); and (ii) recommend to the stockholders of
the Company the approval and adoption of this Agreement, provided, however,
that the Board of Directors of the Company may fail to make such
recommendation, or withdraw, modify or change such recommendation, if the
Board of Directors of the Company determines in good faith, after
consultation with counsel, that the failure to do any of the above could
reasonably be deemed a breach of its fiduciary duties under applicable law.
A-14
<PAGE>
(b) Subject to any restrictions under applicable law, any confidentiality
requirements of any agreement to which the Company or any Company
Subsidiary is a party or any confidentiality privileges applicable to
communications between the Company or any Company Subsidiary and its
attorneys or accountants, the Company shall continue to give to Parent's
officers, employees, agents, attorneys, consultants and accountants
reasonable access for reasonable purposes in light of the transaction
contemplated by this Agreement during normal business hours to all of the
properties, books, contracts, documents, present and expired insurance
policies, records and personnel of or with respect to the Company and each
Company Subsidiary and shall furnish to Parent and such persons as Parent
shall designate to the Company such information as Parent or such persons
may at any time and from time to time reasonably request; provided, that
all such access and furnishing of information shall be coordinated by
Parent with a designee of the Company and shall be conducted in such a
manner so as not to unreasonably interfere with the normal business
operations of the Company or any Company Subsidiary. To the extent the
Company or a Company Subsidiary is precluded from furnishing information by
virtue of a confidentiality agreement with a third party, if Parent shall
so request the Company shall use commercially reasonable efforts to obtain
a waiver of the provisions of such agreement in order to permit disclosure
of such information to Parent. It is expressly understood and agreed that
all information obtained pursuant to this subsection (b) is subject to the
terms and conditions of that certain Confidentiality Agreement dated
January 23, 1995 (the "Confidentiality Agreement") between Parent and the
Company, and Parent expressly reaffirms its obligations thereunder.
(c) The Company shall, and shall cause each Company Subsidiary to, carry
on its business in the usual and ordinary course of business, consistent
with past practices and use reasonable best efforts to preserve intact its
business organization, employees and advantageous business relationships.
Without the prior written consent of Parent (such consent not to be
unreasonably withheld), and without limiting the generality of any other
provision of this Agreement, except as set forth in the Company Disclosure
Schedule or pursuant to obligations in effect on the date hereof (and
identified in the Company Disclosure Schedule or the Company SEC Documents)
or as contemplated by this Agreement, the Company shall not, and shall not
permit any Company Subsidiary to:
(i) amend its Articles of Organization or By-Laws;
(ii) make any change in its authorized capital stock; adjust, split,
combine or reclassify any capital stock; or, except pursuant to the
terms of the Company Plans, issue any shares of stock of any class or
issue or become a party to any subscription, warrant, rights, options,
convertible securities or other agreements or commitments of any
character relating to its issued or unissued capital stock, or other
equity securities, or grant any stock appreciation or similar rights;
(iii) other than in the ordinary course of business consistent with
past practice, (A) incur any indebtedness for borrowed money or (B)
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity;
(iv) sell, transfer, mortgage, encumber or otherwise dispose of,
without fair consideration therefor, any of its material properties or
assets to any individual, corporation or other entity other than the
Company or a Company Subsidiary, or cancel, release or assign, without
fair consideration therefor, any material indebtedness of any such
person or cancel, release or compromise, without fair consideration
therefor, any material claims against any such person (provided that
nothing in this Section 4.2(c) shall prevent or prohibit (i) the merger
of any Company Subsidiary into the Company or (ii) mergers (or other
business combinations) among Company Subsidiaries);
(v) make any material (x) investments, either by purchase of stock or
securities, in (y) contributions to capital to, or (z) purchases of any
property or assets from, any other individual, corporation or other
entity other than the Company or a Company Subsidiary;
(vi) except in the ordinary course of business consistent with past
practice, enter into or terminate any material contract or agreement,
or make any change in any of its material leases or
A-15
<PAGE>
contracts, it being understood that it shall not be a breach of this
covenant for the Company or any Company Subsidiary to renew any
contracts or leases without material adverse changes of terms;
(vii) change its method of accounting in effect at October 1, 1994,
except as may be required by changes in GAAP upon the advice of its
independent accountants;
(viii) except in the ordinary course of business consistent with past
practice, (x) increase the compensation payable to any director,
officer, employee or consultant or (y) enter into or make any change to
any new or existing employment, employment related, employee benefit,
severance or other similar agreement, arrangement or plan with, or for
the benefit of, new or existing directors, officers, employees or
consultants; and
(ix) pay or declare any dividend or make any distribution on its
securities of any class or purchase or redeem any of its securities of
any class.
(d) At least twenty (20) days prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who are or will
be, at the time of the record date for the Meeting, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company
shall use reasonable efforts to cause each person named in the letter
delivered by it to deliver to Parent prior to the Closing Date a written
"Affiliates" agreement, in customary form. Such "Affiliates" agreement
shall provide, among other things, the following:
(i) that such person shall not take any action which could jeopardize
the treatment of the Merger as a pooling of interests for accounting
purposes (including, without limitation, that (A) such person has not
or, as applicable, shall not sell, transfer or otherwise dispose of any
shares of Company Common or any other shares of capital stock of the
Company at any time during the thirty (30) day period on or prior to
the Closing Date and (B) such person shall not sell, transfer or
otherwise dispose of any shares of Parent Common (whether or not
received in the Merger) or any other shares of capital stock of Parent
until after such time as results covering at least thirty (30) days of
the combined operations of Parent and the Company have been published
by Parent, in the form of a quarterly earnings report, an effective
registration statement filed with the SEC, a report to the SEC on Form
10-K, 10-Q or 8-K, or any other public filing or announcement which
includes such combined results of operations); and
(ii) that such person shall dispose of Parent Common to be received
by such person in the Merger only pursuant to an effective registration
statement under the Securities Act or in accordance with the provisions
of paragraph (d) of Rule 145 thereunder, if applicable, or pursuant to
an available exemption from registration under the Securities Act.
4.3 Parent's Obligations. From and after the date hereof and until and
including the Effective Time, the following are Parent's obligations:
(a) Subject to any restrictions under applicable law, any confidentiality
requirements of any agreement to which Parent or any Parent Subsidiary is a
party or any confidentiality privileges applicable to communications
between Parent or any Parent Subsidiary and its attorneys or accountants,
Parent shall continue to give to the Company's officers, employees, agents,
attorneys, consultants and accountants reasonable access for reasonable
purposes in light of the transaction contemplated by this Agreement during
normal business hours to all of the properties, books, contracts,
documents, present and expired insurance policies, records and personnel of
or with respect to Parent and each subsidiary of Parent and shall furnish
to the Company and such persons as the Company shall designate to Parent
such information as the Company or such persons may at any time and from
time to time reasonably request; provided, that all such access and
furnishing of information shall be coordinated by the Company with a
designee of Parent and shall be conducted in such a manner so as not to
unreasonably interfere with the normal business operations of Parent or any
Parent Subsidiary. To the extent Parent or a Parent Subsidiary is precluded
from furnishing information by virtue of a confidentiality agreement with a
third party, if the Company shall so request Parent shall use commercially
reasonable efforts to obtain a waiver
A-16
<PAGE>
of the provisions of such agreement in order to permit disclosure of such
information to the Company; provided, however, that this sentence shall not
apply with respect to confidentiality agreements with vendors or customers
of Parent or any Parent Subsidiary. It is expressly understood and agreed
that all information obtained pursuant to this Section 4.3 is subject to
the terms and provisions of the Confidentiality Agreement, and the Company
expressly reaffirms its obligations thereunder.
(b) Parent shall, and shall cause each Parent Subsidiary to, carry on its
business in the usual and ordinary course of business, consistent with past
practices and use reasonable best efforts to preserve intact its business
organization, employees and advantageous business relationships. Without
the prior written consent of the Company, and without limiting the
generality of any other provision of this Agreement, Parent shall not, and
shall not permit any Parent Subsidiary to, except pursuant to obligations
in effect on the date hereof and except as contemplated by this Agreement:
(i) change its method of accounting in effect at December 31, 1994,
except as may be required by changes in GAAP upon the advice of its
independent accountants; or
(ii) pay or declare any extraordinary dividend or make any
extraordinary distribution on its securities of any class.
ARTICLE V
Additional Agreements
5.1 Registration Statement; Proxy Statement; Auditors' Letters; Other
Regulatory Matters.
(a) As promptly as practicable after the execution of this Agreement,
Parent and the Company shall cooperate and promptly prepare and the Company
shall file with the SEC a proxy statement (the "Proxy Statement--
Prospectus") with respect to the Meeting in connection with the Merger. At
an appropriate time mutually determined by Parent and the Company prior to
the clearance of the Proxy Statement--Prospectus, Parent and the Company
shall cooperate and promptly prepare and Parent shall file with the SEC the
Registration Statement, with respect to the Parent Common issuable in the
Merger (and with respect to the outstanding Company Options or Company
restricted stock, unit, PCDU or any similar executive compensation awards,
following the Merger), in which Registration Statement the Proxy
Statement--Prospectus shall be included as a prospectus with respect to
such shares of Parent Common. The respective parties shall cause the Proxy
Statement--Prospectus and the Registration Statement to comply as to form
in all material respects with the applicable provisions of the Securities
Act, the Exchange Act and the rules and regulations thereunder. Parent
shall use all reasonable efforts, and Company will cooperate with Parent,
to have the Registration Statement declared effective by the SEC as
promptly as practicable. Parent shall use its best efforts to obtain, prior
to the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transaction contemplated by this Agreement and will pay all expenses
incident thereto. Parent agrees that the Proxy Statement--Prospectus and
each amendment or supplement thereto at the time of mailing thereof and at
the time of the Meeting, or, in the case of the Registration Statement and
each amendment or supplement thereto, at the time it is filed or becomes
effective, shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission
to state a material fact was made by Parent in reliance upon and in
conformity with written information concerning the Company furnished to
Parent by the Company specifically for use in the Proxy Statement--
Prospectus. The Company agrees that the written information concerning the
Company provided by it for inclusion in the Proxy Statement--Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at
the time of the Meeting, or, in the case of written information concerning
the Company provided by the Company for inclusion in the Registration
Statement or any amendment or supplement thereto, at the time it is filed
A-17
<PAGE>
or becomes effective, shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except as otherwise required by
law, no amendment or supplement to the Proxy Statement--Prospectus shall be
made by Parent or the Company without the approval of the other party.
Parent shall advise the Company, promptly after it receives notice thereof,
of the time when the Registration Statement shall 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 issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by
the SEC for amendment of the Proxy Statement--Prospectus or the
Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(b) The Company shall use its reasonable best efforts to cause to be
delivered to Parent a letter of Price Waterhouse LLP, the Company's
independent auditors, dated a date within two business days before the date
on which the Registration Statement shall become effective and addressed to
the Company, customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
(c) Parent shall use its reasonable best efforts to cause to be delivered
to the Company a letter of Arthur Andersen & Co., Parent's independent
auditors, dated a date within two business days before the date on which
the Registration Statement shall become effective and addressed to Parent,
customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to
the Registration Statement.
(d) Parent shall use its best efforts to have authorized, as soon as
practicable, for listing on the New York Stock Exchange ("NYSE"), upon
official notice of issuance, the shares of Parent Common to be issued in
the Merger (or with respect to the outstanding Company Options or Company
restricted stock, unit, PCDU or any similar executive compensation awards,
following the Merger).
5.2 Alternative Proposals. Subject to the proviso of this Section 5.2, prior
to the Effective Time, the Company agrees that (a) neither it nor any of the
Company Subsidiaries shall, and it shall use reasonable efforts to cause its
officers, directors, employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
of the Company Subsidiaries) not to, initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company or any Company Subsidiary (any
such proposal or offer being hereinafter referred to as an "Alternative
Proposal") or engage in any negotiations or enter into any agreement
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Alternative Proposal, or otherwise
facilitate any effort or attempt to make or implement an Alternative Proposal,
(b) it shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and it shall take the necessary steps to
inform the individuals or entities referred to above of the obligations
undertaken in this Section 5.2, and (c) it shall notify Parent as promptly as
practicable if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it; provided, however, that nothing
contained in this Section 5.2 shall prohibit the Board of Directors of the
Company from (w) after notice to Parent, furnishing information to, or entering
into negotiations or discussions with, any person or entity that makes an
unsolicited bona fide Alternative Proposal if the Board of Directors of the
Company determines in good faith, after consultation with counsel, that the
failure to do so could reasonably be deemed a breach of its fiduciary duties
under applicable law, (x) failing to make, withdrawing, modifying or changing
the recommendation referred to in Section 4.2(a)(ii) if the Board of Directors
of the Company determines in good faith, after consultation with counsel, that
making such recommendation, or the failure to withdraw, modify or change such
recommendation, could reasonably be deemed a breach of its fiduciary duties
under applicable law, (y) recommending to the stockholders of the Company an
Alternative Proposal that the Board of
A-18
<PAGE>
Directors of the Company determines in good faith, after consultation with its
financial advisor, is likely to be more favorable, from a financial point of
view, to the stockholders of the Company than the Merger or (z) to the extent
applicable, complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Alternative Proposal.
5.3 Indemnification and Insurance.
(a) Parent and the Surviving Corporation hereby jointly and severally
agree that from and after the Effective Time, Parent and the Surviving
Corporation shall indemnify, defend and hold harmless each person who is
now, or has been at any time prior to the date of this Agreement or who
becomes prior to the Effective Time, a director, officer, employee or agent
of the Company or any Company Subsidiary or a director, officer, employee,
agent or trustee of any employee benefit plan for employees of the Company
or any Company Subsidiary (or any person who now serves, or has served at
any time prior to the date of this Agreement or who serves prior to the
Effective Time, any other corporation or entity in any such capacity at the
request of the Company) (individually, an "Indemnified Person", and
collectively, the "Indemnified Persons") against (i) all losses, claims,
damages, costs, expenses, liabilities or judgments arising out of or
relating to, or amounts that are paid in settlement (with the approval of
the indemnifying party, which approval shall not be unreasonably withheld)
of, or in connection with, any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part
out of the fact that such person is or was a director, officer, employee or
agent of the Company or any Company Subsidiary or a director, officer,
employee, agent or trustee of any employee benefit plan for employees of
the Company or any Company Subsidiary (or is serving or served any other
corporation or entity in any such capacity at the request of the Company),
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to or at or after, the
Effective Time ("Indemnifiable Claims") and (ii) all Indemnifiable Claims
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement, the Merger or any other transaction
contemplated hereby or thereby, in each case to the full extent a
corporation is permitted under the MBCL (notwithstanding the By-Laws of the
Company, the Surviving Corporation or Parent) to indemnify its own
directors, officers, employees and agents, as the case may be (and Parent
and the Surviving Corporation, as the case may be, will pay expenses in
advance of the final disposition of any such claim, action, suit,
proceeding or investigation to each Indemnified Person to the full extent
permitted by law, subject to receipt of a written undertaking from such
Indemnified Person to repay all amounts advanced in the event a final and
non-appealable judicial determination is made that such person was not
entitled to indemnification under the MBCL). Without limiting the
foregoing, in the event any Indemnifiable Claim is brought against any
Indemnified Person (whether arising before or after the Effective Time),
(i) such Indemnified Person shall promptly provide notice to Parent and the
Surviving Corporation in accordance with subsection (g) hereof, (ii) if
Parent and/or the Surviving Corporation elects to defend such Indemnifiable
Claim (provided, that Parent and/or the Surviving Corporation shall not
have the right to elect to defend or defend any Indemnifiable Claim (x)
referred to in clause (ii) of the first sentence of this Section 5.3(a) or
(y) any Indemnifiable Claim referred to in clause (i) of the first sentence
of this Section 5.3(a) which is first asserted before the second
anniversary of the Effective Time), Parent and/or the Surviving Corporation
shall defend the Indemnified Person at their expense, (iii) if Parent
and/or the Surviving Corporation does not (or does not have the right to)
elect to defend such Indemnifiable Claim pursuant to clause (ii) of this
sentence, such Indemnified Person may retain counsel to defend such claim
satisfactory to him or her with the consent of Parent and the Surviving
Corporation, which consent may not be unreasonably withheld, and Parent and
the Surviving Corporation, as the case may be, shall pay all reasonable
fees and expenses of such counsel for such Indemnified Person promptly as
statements therefor are received, and (iv) regardless of whether Parent
and/or the Surviving Corporation shall have elected to defend such
Indemnifiable Claim pursuant to clause (ii) of this sentence, Parent and
the Surviving Corporation will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that neither Parent nor the
Surviving Corporation shall be liable for any settlement of any claim
effected without their written consent, which consent shall
A-19
<PAGE>
not be unreasonably withheld. Notwithstanding anything herein to the
contrary, in any case in which Parent and/or the Surviving Corporation
elect to defend an Indemnifiable Claim pursuant to clause (ii) of the
preceding sentence, neither Parent nor the Surviving Corporation may settle
any such Indemnifiable Claim without the prior written consent of the
Indemnified Person to which such Indemnifiable Claim relates, unless such
settlement (x) provides for a dismissal with prejudice of such
Indemnifiable Claim, (y) provides for an unconditional release with respect
to such Indemnifiable Claim or (z) does not contain any admission or
acknowledgment of liability or responsibility of the Indemnified Person
with respect to the Indemnifiable Claim.
(b) Notwithstanding anything to the contrary in Section 1.4 or this
Section 5.3, Parent and Merger Sub agree that all rights to indemnification
existing in favor, and all limitations on the personal liability of, the
Indemnified Persons provided for in the Company's Articles of Organization
or By-Laws or the charters or by-laws or similar organizational documents
of any Company Subsidiary as in effect on the date of this Agreement with
respect to matters occurring prior to the Effective Time shall survive the
Merger and shall continue in full force and effect for a period of not less
than six (6) years from the Effective Time; provided, however, that all
rights to indemnification in respect of any Indemnifiable Claim asserted or
made within such period shall continue until the final disposition of such
claim.
(c) For a period of six (6) years after the Effective Time, Parent and
the Surviving Corporation shall cause to be maintained in effect directors'
and officers' liability insurance covering each Indemnified Person who is
currently covered by the Company's directors' and officers' insurance with
respect to claims arising from facts or events which occurred at or prior
to the Effective Time, which insurance shall be no less favorable than such
insurance maintained in effect by the Company on the date hereof in terms
of coverage and amounts, to the extent such liability insurance can be
maintained at an annual cost not greater than 150 percent of the Company's
fiscal 1995 annual premium for its directors' and officers' liability
insurance (it being understood that in any such case Parent shall purchase
or cause the Surviving Corporation to purchase as much coverage as possible
for such 150 percent premium amount).
(d) With respect to each Indemnified Person who is party to, or the
beneficiary of, an agreement with the Company or any Company Subsidiary
providing for the indemnification of such person by the Company or any
Company Subsidiary in effect on the date hereof, Parent and the Surviving
Corporation hereby jointly and severally agree to be bound, and perform all
obligations required to be performed, by the Company or any Company
Subsidiary under any such agreement.
(e) The provisions of this Section 5.3 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Person, his or her heirs
and representatives.
(f) In the event Parent or the Surviving Corporation or any of the
successors or assigns of either of them (i) consolidates with or merges
into any other person or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, proper provision
shall be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, assume the obligations set forth in this
Section 5.3.
(g) Any Indemnified Person wishing to claim indemnification under this
Section 5.3, upon learning of any Indemnifiable Claim, shall notify Parent
and the Surviving Corporation thereof, provided their failure to provide
any such notice shall not relieve either Parent or the Surviving
Corporation of their obligations under this Section 5.3, except to the
extent Parent or the Surviving Corporation is actually and materially
prejudiced by such lack of notice.
5.4 Certain Benefits.
(a) Each of Parent and Merger Sub acknowledges that consummation of the
transactions contemplated by this Agreement will constitute a
"Transaction," "Corporate Transaction," "Reorganization," "Sale of
Business," "change in control," "Change in Control," "merger" or
"acquisition by an entity or Person of beneficial ownership of more than
40%" of the Company Common or voting power of the Company (to the extent
any such concept is applicable) for the purposes of the
A-20
<PAGE>
Company Plans. From and after the Effective Time, Parent will cause the
Surviving Corporation to honor in accordance with their terms (including,
without limitation, terms providing for equitable adjustment and trust
funding) all agreements, employee benefit plans, programs or policies or
other arrangements described in the Company's SEC Documents or previously
disclosed in writing by the Company to Parent between the Company or any of
its subsidiaries and any current or former officer, director, or employee
of the Company or any Company Subsidiary in effect prior to the Effective
Time; provided, however, that nothing herein shall preclude any changes
effected on a prospective basis to any employee benefit plan that are
permitted under this Section 5.4.
(b) Parent and Merger Sub agree that, from the Effective Time and until
at least December 31, 1996, subject to applicable law, the Surviving
Corporation and its subsidiaries will provide benefit plans to employees
employed by the Company or any Company Subsidiary as of the Effective Time
which will, in the aggregate, be no less favorable than those provided by
the Company and the Company Subsidiaries to their employees prior to the
Effective Time, and thereafter will provide benefits no less favorable than
those provided by Parent and the Parent Subsidiaries to their employees in
comparable positions. Without limiting the generality of the foregoing,
each of Parent and Merger Sub agrees that awards granted to and contingent
payments promised to current and former employees of the Company or any
Company Subsidiary under each of the FY 1995 Field Sales Engineer Incentive
Compensation Plan, the FY 1995 Variable Pay for Performance Plan and the FY
1995 Incentive Plan for Executive Officers, in respect of each performance
period or cycle in effect as of the Effective Time shall not be terminated
or amended and shall be fully honored pursuant to the terms of each
respective plan.
(c) If any salaried employee of the Company or any Company Subsidiary
becomes a participant in any employee benefit plan, practice or policy of
Parent, any of its affiliates or the Surviving Corporation, such employee
shall, to the extent permitted by applicable law, be given credit under
such plan for all service prior to the Effective Time with the Company or
any Company Subsidiary, or any predecessor employer (to the extent such
credit was given by the Company or any Company Subsidiary) and prior to the
time such employee becomes such a participant, for purposes of eligibility
and vesting and for determining vacation benefits but not for purposes of
any other benefit accrual.
(d) This Section 5.4 is intended for the irrevocable benefit of, and to
grant third party rights to, the employees of the Company or any Company
Subsidiary, employed as of the Effective Time, and shall be binding on all
successors and assigns of Parent, the Company and the Surviving
Corporation. Each of the employees of the Company or any Company Subsidiary
employed as of the Effective Time shall be entitled to enforce the
covenants contained in this Section 5.4.
(e) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person or entity, then, in each
such case, proper provision shall be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in
this Section 5.4.
5.5 Pooling; Reorganization. From and after the date hereof and until the
Effective Time, neither Parent nor the Company shall (a) knowingly take any
action, or knowingly fail to take any action, that would be reasonably likely
to jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes, (b) knowingly take any action, or knowingly fail to take
any action, that would be reasonably likely to jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code or
(c) enter into any contract, agreement, commitment or arrangement with respect
to either of the foregoing. Following the Effective time, Parent shall use its
best efforts to conduct its business in a manner that would not jeopardize the
characterization of the Merger as a pooling of interests for accounting
purposes and as a reorganization within the meaning of Section 368(a) of the
Code.
5.6 Rights Agreement. The Company shall take all action necessary to redeem
the Rights as of the Effective Time. So long as this Agreement shall have not
been terminated pursuant to Article VII hereof, the Company shall not amend the
Rights Agreement, redeem the Rights with respect to an Alternative Proposal
A-21
<PAGE>
or take any action to make the Rights Agreement or the Rights thereunder
inapplicable with respect to any Alternative Proposal.
ARTICLE VI
Conditions to Closing; Closing Deliveries
6.1 Conditions to Each Party's Obligations. The respective obligations of
each party to effect the transaction contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) This Agreement and the Merger shall have been approved by the
requisite vote of the stockholders of the Company.
(b) This Agreement and the Merger shall have been approved by each
Governmental Entity whose approval is required for the consummation of the
Merger and the transaction contemplated hereby, such approvals shall remain
in full force and effect and all waiting periods relating to such approvals
shall have expired and the waiting period applicable to the transaction
contemplated hereby under the HSR Act shall have expired or been earlier
terminated.
(c) The Registration Statement shall have become effective in accordance
with the provisions of the Securities Act. No stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
SEC and remain in effect. All necessary state securities or "Blue Sky"
authorizations shall have been received.
(d) Parent Common issuable in the Merger (or with respect to the
outstanding Company Options or Company restricted stock, unit, PCDU or any
similar executive compensation awards, following the Merger) shall have
been authorized for listing on the NYSE, upon official notice of issuance.
(e) No Governmental Entity or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the Merger or the transaction contemplated hereby
illegal (each party agreeing to use all reasonable best efforts to have any
such judgment, decree, injunction or other order to be vacated or lifted).
6.2 Conditions to the Company's Obligations. The obligations of the Company
to consummate the Merger are subject to the fulfillment (or waiver) of all of
the following conditions on or prior to the Closing Date:
(a) Each and every representation and warranty made by Parent or Merger
Sub shall be true and correct in all material respects when made and,
except to the extent such representations and warranties speak as of an
earlier date, as of the Closing Date as though made on and as of the
Closing Date, except (i) for changes specifically permitted by this
Agreement and (ii) for such failures of representations and warranties not
otherwise qualified by Material Adverse Effect to be true and correct which
would not have a Material Adverse Effect on Parent.
(b) All obligations of Parent and Merger Sub to be performed hereunder
through, and including on, the Closing Date (including, without limitation,
all obligations which Parent and Merger Sub would be required to perform at
the Closing if the transaction contemplated hereby was consummated) shall
have been performed in all material respects.
(c) The Company shall have received an opinion of Skadden, Arps, Slate,
Meagher & Flom, counsel to the Company, in form and substance reasonably
satisfactory to the Company, dated as of the Effective Time, substantially
to the effect that, on the basis of facts, representations and assumptions
set forth in such opinion which are consistent with the state of facts
existing at the Effective Time, the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of
A-22
<PAGE>
the Code and that accordingly: (i) no gain or loss will be recognized by
Parent, Merger Sub or the Company as a result of the Merger; (ii) no gain
or loss will be recognized by the Company Stockholders who exchange their
shares of Company Common solely for shares of Parent Common pursuant to the
Merger (except with respect to cash received in lieu of fractional shares
as contemplated by Section 2.4 hereof); (iii) the tax basis of the Parent
Common received by Company Stockholders who exchange all of their shares of
Company Common solely for shares of Parent Common in the Merger will be the
same as the tax basis of the shares of Company Common surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received as contemplated by Section 2.4 hereof);
and (iv) the holding period of Parent Common (including the holding period
of any fractional share interest) in the hands of the Company Stockholders
will include the holding period of their Company Common exchanged therefor.
In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom may require
and rely upon representations contained in certificates of officers of
Parent, Merger Sub, the Company and others.
(d) Since the date hereof, Parent and the Parent Subsidiaries shall not
have suffered any change resulting in a Material Adverse Effect on Parent.
(e) The Company shall have received a "pooling letter" from Price
Waterhouse LLP, the Company's independent auditors, dated not earlier than
five (5) days prior to the Closing Date, to the effect that, subject to
customary qualifications no event has occurred with respect to the Company
which would preclude the Merger from being treated as a pooling of
interests for accounting purposes.
(f) The Company shall have received the written opinion of Lazard Freres
& Co., financial adviser to the Company, dated as of the date of the Proxy
Statement--Prospectus, to the effect that, as of the date of the Proxy
Statement--Prospectus, the consideration to be received by the Company
Stockholders is fair, from a financial point of view, to the Company
Stockholders.
6.3 Conditions to Parent's Obligations. The obligations of Parent and Merger
Sub to consummate the Merger are subject to the fulfillment (or waiver) of all
of the following conditions on or prior to the Closing Date:
(a) Each and every representation and warranty made by the Company shall
be true and correct in all material respects when made and, except to the
extent such representations and warranties speak as of an earlier date, as
of the Closing Date as though made on and as of the Closing Date, except
(i) for changes specifically permitted by this Agreement, (ii) for such
failures of representations and warranties not otherwise qualified by
Material Adverse Effect to be true and correct which would not have a
Material Adverse Effect on the Company, (iii) that any changes or
developments with respect to any item or matter disclosed in Part V of the
Company Disclosure Schedule (and any adverse change resulting therefrom in,
or adverse effect thereof on, the business, results of operation, financial
condition, properties or assets of the Company or any Company Subsidiary)
shall be disregarded for purposes of determining whether each and every
such representation and warranty is true and correct as of the Closing Date
and (iv) that any changes or developments with respect to any item or
matter disclosed in the Company Disclosure Schedule (other than in Part
V)(and any adverse change resulting therefrom in, or adverse effect thereof
on, the business, results of operation, financial condition, properties or
assets of the Company or any Company Subsidiary) shall be disregarded for
purposes of determining whether each and every such representation and
warranty is true and correct as of the Closing Date if the probable
aggregate adverse change resulting therefrom (determined in accordance with
this Section 6.3(a)) in, or the probable aggregate adverse effect thereof
(determined in accordance with this Section 6.3(a)) on, the financial
condition of the Company and the Company Subsidiaries taken as whole is
less than or equal to $25,000,000. Any determination by Parent or Merger
Sub regarding the probable adverse change resulting from, or the probable
adverse effect of, any change or development referred to in clause (iv) of
this Section 6.3(a) or clause (ii) of Section 6.3(d) shall be made by the
Board of Directors of Parent, in good faith, after consultation with its
advisors expert in the area of such item or matter, after consultation with
the Company and its advisors expert in the area of such item or matter and
after consideration of all reasonable strategies identified by the Company
or such experts for mitigating such
A-23
<PAGE>
change or effect and the generally accepted accounting principles
applicable to the determination of whether a change or effect is probable.
(b) All obligations of the Company to be performed hereunder through, and
including on, the Closing Date (including, without limitation, all
obligations which the Company would be required to perform at the Closing
if the transaction contemplated hereby was consummated) shall have been
performed in all material respects.
(c) Parent shall have received the opinion of Altheimer & Gray, counsel
for Parent, dated as of the Closing Date, to the effect that the Merger
shall be treated for Federal income tax purposes as a reorganization with
the meaning of Section 368(a) of the Code, and that Parent and the Company
shall each be a party to that reorganization with the meaning of Section
368(a) of the Code.
(d) Since the date hereof, the Company and the Company Subsidiaries shall
not have suffered any change resulting in a Material Adverse Effect on the
Company, except (i) that any changes or developments with respect to any
matter disclosed in Part V of the Company Disclosure Schedule (and any
adverse change resulting therefrom in, or adverse effect thereof on, the
business, results of operation, financial condition, properties or assets
of the Company or any Company Subsidiary) shall be disregarded for purposes
of determining whether the Company has suffered any such change and (ii)
that any changes or developments with respect to any item or matter
disclosed in the Company Disclosure Schedule (other than in Part V) (and
any adverse change resulting therefrom in, or adverse effect thereof on,
the business, results of operation, financial condition, properties or
assets of the Company or any Company Subsidiary) shall be disregarded for
purposes of determining whether the Company has suffered any such change if
the probable aggregate adverse change resulting therefrom (determined in
accordance with Section 6.3(a)) in, or the probable aggregate adverse
effect thereof (determined in accordance with Section 6.3(a)) on, the
financial condition of the Company and the Company Subsidiaries taken as a
whole is less than or equal to $25,000,000.
(e) Parent shall have received a "pooling letter" from Arthur Andersen &
Co., Parent's independent auditors, dated not earlier than five (5) days
prior to the Closing Date to the effect that, subject to customary
qualifications and in reliance on the "pooling letter" of Price Waterhouse
LLP contemplated by Section 6.2(e), the Merger will be treated as a pooling
of interests for accounting purposes.
(f) Parent shall have received an "Affiliates" agreement contemplated by
Section 4.2(d) from each person named in the letter delivered to Parent by
the Company pursuant to Section 4.2(d).
6.4 Closing Deliveries.
(a) At the Closing, the Company shall cause to be delivered to Parent and
Merger Sub all of the following:
(i) a closing certificate dated the Closing Date and executed on
behalf of the Company by a duly authorized officer of the Company to
the effect set forth in Sections 6.3(a) and (b) hereof; and
(ii) certified copies of such corporate records of the Company and
the Company Subsidiaries and copies of such other documents as Parent
or its counsel may reasonably have requested in connection with the
consummation of the transaction contemplated hereby.
(b) At the Closing, Parent shall cause to be delivered to the Company all
of the following:
(i) a closing certificate dated the Closing Date and executed on
behalf of Parent by a duly authorized officer of Parent to the effect
set forth in Sections 6.2(a) and (b) hereof; and
(ii) certified copies of such corporate records of Parent and Merger
Sub and copies of such other documents as the Company or its counsel
may reasonably have requested in connection with the consummation of
the transaction contemplated hereby.
A-24
<PAGE>
ARTICLE VII
Termination/Effect of Termination
7.1 Right to Terminate. Anything to the contrary herein notwithstanding, this
Agreement and the transaction contemplated hereby may be terminated at any time
prior to the Effective Time by prompt notice given in accordance with Section
8.4:
(a) by the mutual written consent of Parent, Merger Sub and the Company
(with the approval of their respective Boards of Directors);
(b) by Parent (with the approval of its Board of Directors) or the
Company (with the approval of its Board of Directors) if:
(i) any Governmental Entity whose approval is required for
consummation of the Merger has denied approval of the Merger and such
denial has become final and nonappealable (each party agreeing to use
all reasonable best efforts to obtain such approval); or
(ii) the Effective Time shall not have occurred at or before 11:59
p.m. Boston time on September 1, 1995;
provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure to fulfill
any of its obligations under this Agreement has been the cause of or
resulted in the occurrence of any of the events in clauses (i) or (ii)
above;
(c) by Parent (with the approval of its Board of Directors), by giving
written notice of such termination to the Company, if (i) there has been a
material breach of any material agreement of the Company herein, such that
in the reasonable opinion of Parent, the condition to closing in Section
6.3(b) could not be expected to be satisfied by the termination date
contemplated by Section 7.1(b)(ii) or (ii) there has been a material breach
of any material representation or warranty of the Company herein such that,
in the reasonable opinion of Parent, the condition to closing in Section
6.3(a) could not be expected to be satisfied by the termination date
contemplated by Section 7.1(b)(ii); or
(d) by the Company (with the approval of its Board of Directors), by
giving written notice of such termination to Parent, if (i) there has been
a material breach of any agreement of Parent or Merger Sub herein, such
that in the reasonable opinion of the Company, the condition to closing in
Section 6.2(b) could not be expected to be satisfied by the termination
date contemplated by Section 7.1(b)(ii), (ii) there has been a material
breach of any material representation or warranty of Parent or Merger Sub
herein, such that in the reasonable opinion of the Company, the condition
to closing in Section 6.2(a) could not be expected to be satisfied by the
termination date contemplated by Section 7.1(b)(ii), (iii) the Company's
stockholders do not approve and adopt this Agreement at the Meeting, (iv)
the Board of Directors of the Company fails to make, withdraws, or modifies
or changes the recommendation referred to in Section 4.2(a)(ii) based on
its good faith determination, after consultation with counsel, that making
such recommendation, or the failure to withdraw, modify or change such
recommendation, could reasonably be deemed a breach of its fiduciary duties
under applicable law or (v) the Board of Directors of the Company
recommends to the stockholders of the Company an Alternative Proposal that
the Board of Directors of the Company determines in good faith, after
consultation with its financial advisor, is likely to be more favorable,
from a financial point of view, to the stockholders of the Company than the
Merger.
7.2 Certain Effects of Termination. In the event of the termination of this
Agreement as provided in Section 7.1 hereof:
(a) except as provided in Section 8.5 hereof and subsections (b) and (c)
of this Section 7.2, this Agreement shall forthwith become void, there
shall be no liability on the part of Parent, Merger Sub or the Company or
any of their respective affiliates, officers or directors and all rights
and obligations of any party hereto shall cease; provided, however, that
nothing herein shall relieve any party from liability for the willful
breach of any of its representations, warranties, covenants or agreements
set forth in this Agreement, prior to such termination;
A-25
<PAGE>
(b) each party, if so requested by the other party, will return promptly
every document furnished to it by or on behalf of the other party in
connection with the transaction contemplated hereby, whether so obtained
before or after the execution of this Agreement, and any copies thereof
(except for copies of documents publicly available) which may have been
made, and will use reasonable efforts to cause its representatives and any
representatives of financial institutions and investors and others to whom
such documents were furnished promptly to return such documents and any
copies thereof any of them may have made; and
(c) each party hereto shall continue to abide by the terms of the
Confidentiality Agreement notwithstanding any termination of this
Agreement.
This Section 7.2 shall survive any termination of this Agreement.
ARTICLE VIII
Miscellaneous
8.1 Non Survival of Representations, Warranties and Agreements. The
agreements contained in Articles I and II hereof, Sections 4.2(b) and 4.3(a)
hereof, Article V hereof, Section 7.2 hereof and this Article VIII, and,
without limitation, by the specific enumeration of the foregoing, each other
agreement contained in this Agreement or in any certificate or other document
delivered pursuant to this Agreement and which contemplates performance at any
time after the Effective Time, shall survive the Merger. None of the
representations, warranties or agreements (other than those agreements referred
to in the previous sentence of this Section 8.1) contained in this Agreement or
in any certificate or other document delivered pursuant to this Agreement shall
survive the Merger.
8.2 Amendment. This Agreement may be amended by the parties hereto, with the
approval of their respective Boards of Directors, at any time prior to the
Effective Time, whether before or after approval hereof by the stockholders of
the Company, but, after such approval by the stockholders of the Company, no
amendment shall be made without the further approval of such stockholders if
such amendment would violate Section 78 of the MBCL. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.3 Publicity. Except as otherwise required by law or applicable stock
exchange rules, press releases and other publicity concerning the transaction
contemplated by this Agreement shall be made only with the prior agreement of
the Company and Parent. Notwithstanding the foregoing, Parent and the Company
shall use their reasonable efforts to consult with each other with respect to,
and agree upon, the text of any press release or other public statement, before
issuing any such press release or otherwise making public statements with
respect to the transaction contemplated hereby and in making any filings with
any federal or state governmental or regulatory agency or with any national
securities exchange with respect thereto.
8.4 Notices. All notices required or permitted to be given hereunder shall be
in writing and may be delivered by hand, by facsimile, by nationally recognized
private courier, or by United States mail. Notices delivered by mail shall be
deemed given three (3) business days after being deposited in the United States
mail, postage prepaid, registered or certified mail, return receipt requested.
Notices delivered by hand by facsimile, or by nationally recognized private
courier shall be deemed given on the day of receipt (if such day is a business
day or, if such day is not a business day, the next succeeding business day);
provided, however, that a notice delivered by facsimile shall only be effective
if and when confirmation is received of receipt of the facsimile at the number
provided in this Section 8.4. All notices shall be addressed as follows:
If to the Company:
100 Chelmsford Street
Lowell, Massachusetts 01853-3294
Attention: Chairman and Chief Executive Officer
Fax: (508) 656-2555
A-26
<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
One Beacon Street
Boston, Massachusetts 01208
Attention: David T. Brewster, Esq.
Fax: (617) 573-4822
If to Parent or Merger Sub:
470 Friendship Road, M/S 176-34
Harrisburg, Pennsylvania 17111
Attention: Corporate Development
Fax: (717) 780-4433
with a copy to:
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: David W. Schoenberg, Esq.
Fax: (312) 715-4800
and/or to such other respective addresses and/or addressees as may be
designated by notice given in accordance with the provisions of this Section
8.4.
8.5 Expenses; Transfer Taxes; Certain Payments.
(a) Each party hereto shall bear all fees and expenses incurred by such
party in connection with, relating to or arising out of the negotiation,
preparation, execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated hereby, including, without
limitation, financial advisors', attorneys', accountants' and other
professional fees and expenses, except that (a) the filing fee in
connection with the filing of the Registration Statement or the Proxy
Statement--Prospectus with the SEC (other than the portion of such filing
fee allocable to the shares of Parent Common to be issued following the
Merger with respect to the outstanding Company Options or Company
restricted stock, unit, PCDU or any similar executive compensation awards
which portion shall be borne by Parent) and (b) the expenses incurred in
connection with the printing and mailing of the Registration Statement and
the Proxy Statement--Prospectus shall be shared equally by the Company and
Parent.
(b) So long as Parent and Merger Sub shall have not breached their
obligations hereunder, if this Agreement is terminated by the Company
pursuant to clause (v) of Section 7.1(d) hereof (it being hereby agreed
that, if the Board of Directors of the Company recommends to the
stockholders of the Company an Alternative Proposal that the Board of
Directors of the Company determines in good faith, after consultation with
its financial advisor, is likely to be more favorable, from a financial
point of view, to the stockholders of the Company than the Merger, this
Agreement shall be deemed to have been terminated by the Company pursuant
to clause (v) of 7.1(d) hereof effective as of the date of such
recommendation without any further action by the Company), the Company
shall promptly, but in no event later than two (2) business days after such
termination, pay Parent a fee of $11,000,000, which amount shall be payable
by wire transfer of same day funds. If the Company fails to promptly pay
the amount due pursuant to this Section 8.5(b), and, in order to obtain
such payment, Parent or Merger Sub commences a suit which results in a
judgment against the Company for all or a substantial portion of the fee
set forth in this Section 8.5(b), the Company shall pay to Parent and
Merger Sub their costs and expenses (including reasonable attorneys' fees)
in connection with such suit.
A-27
<PAGE>
8.6 Entire Agreement; Representations and Warranties. This Agreement and the
instruments to be delivered by the parties pursuant to the provisions hereof
constitute the entire agreement between the parties and shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns. Each Exhibit, schedule and
the Company Disclosure Schedule, shall be considered incorporated into this
Agreement. The parties make no representations or warranties to each other,
except as contained in this Agreement, and any and all prior representations
and warranties made by any party or its representatives, whether verbally or in
writing, are deemed to have been merged into this Agreement, it being intended
that no such prior representations or warranties shall survive the execution
and delivery of this Agreement.
8.7 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by the respective Boards of Directors,
may to the extent legally allowed, (i) extend the time for performance of any
of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
documents delivered pursuant hereto and (iii) waive compliance with any the
terms, covenants or conditions contained herein. Notwithstanding anything
herein to the contrary, the failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or
waiver had occurred. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.
8.8 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original, and all such counterparts
shall constitute but one instrument.
8.9 Severability. The invalidity or unenforceability of any provision of this
Agreement or portion of a provision shall not affect the validity or
enforceability of any other provision of this Agreement or the remaining
portion of the applicable provision.
8.10 Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the Commonwealth of Massachusetts applicable
to contracts made in that Commonwealth.
8.11 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their successors and permitted
assigns. Except as expressly provided herein (including, without limitation, in
Article II hereof and Sections 5.3 and 5.4 hereof), nothing in this Agreement,
express or implied, shall confer on any person other than the parties hereto,
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, including,
without limitation, third party beneficiary rights.
8.12 Assignability. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either party without the prior
written consent of the other party.
8.13 Governmental Reporting. Notwithstanding anything in this Agreement to
the contrary, nothing in this Agreement shall be construed to mean that a party
hereto or other person must make or file, or cooperate in the making or filing
of, any return or report to any Governmental Entity in any manner that such
person or such party reasonably believes or reasonably is advised is not in
accordance with law.
8.14 Consent to Jurisdiction. This Agreement has been executed and delivered
in and shall be deemed to have been made in the Commonwealth of Massachusetts.
The Company, Parent and Merger Sub each agree to the exclusive jurisdiction of
any state or Federal court within the City of Boston, Massachusetts, having
subject matter jurisdiction, with respect to any claim or cause of action
arising under or relating to
A-28
<PAGE>
this Agreement, and waives personal service of any and all process upon it, and
consents that all services of process be made by registered mail, directed to
it at its address as set forth in Section 8.4 hereof, and service so made shall
be deemed to be completed when received. The Company, Parent and Merger Sub
each waive any objection based on forum non conveniens and waive any objection
to venue of any action instituted hereunder. Nothing in this Section 8.14 shall
affect the right of the Company or Parent to serve legal process in any other
manner permitted by law.
8.15 Definitions. The following terms are defined in the following sections
of this Agreement:
<TABLE>
<CAPTION>
DEFINED TERM WHERE FOUND
- ------------ -----------
<S> <C>
Agreement..................................................... Preamble
Alternative Proposal.......................................... 5.2
Articles of Merger............................................ 1.2
CERCLA........................................................ 3.2(o)(ii)
Certificates.................................................. 2.2(b)
Closing....................................................... 1.6
Closing Date.................................................. 1.6
Code.......................................................... Recitals
Company....................................................... Preamble
Company Common................................................ 2.1
Company Disclosure Schedule................................... 3.1
Company ERISA Affiliate....................................... 3.3(l)(iii)
Company Option................................................ 2.1(e)
Company Plans................................................. 3.3(l)(i)
Company Stockholders.......................................... 2.2(a)
Company Stock Option Plans.................................... 2.1(e)
Company Subsidiary............................................ 3.3(a)
Company's SEC Documents....................................... 3.3(h)
Confidentiality Agreement..................................... 4.2(b)
Dissenting Stock.............................................. 2.1(d)
Effective Time................................................ 1.2
Environmental Laws............................................ 3.2(n)(ii)
Environmental Permits......................................... 3.2(n)(ii)
ERISA......................................................... 3.2(k)
Exchange Act.................................................. 3.2(g)
Exchange Agent................................................ 2.2(a)
Exchange Fund................................................. 2.2(a)
Fairness Opinion.............................................. 3.3(t)
Final Parent Stock Price...................................... 2.4
GAAP.......................................................... 3.2(g)
Governmental Entity........................................... 3.2(d)
Hazardous Materials........................................... 3.2(o)(ii)
HSR Act....................................................... 3.2(d)
Indemnifiable Claim........................................... 5.3(a)
Indemnified Person(s)......................................... 5.3(a)
Material Adverse Effect....................................... 3.2(b) and 3.3(b)
MBCL.......................................................... Recitals
Meeting....................................................... 2.1(d)
Merger........................................................ Recitals
Merger Consideration.......................................... 2.1(c)
Merger Sub.................................................... Preamble
NYSE.......................................................... 5.1(b)
</TABLE>
A-29
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERM WHERE FOUND
- ------------ -----------
<S> <C>
Parent.............................................................. Preamble
Parent Common....................................................... 2.1(c)
Parent Disclosure Schedule.......................................... 3.1
Parent's SEC Documents.............................................. 3.2(g)
Proxy Statement--Prospectus......................................... 5.1(a)
Registration Statement.............................................. 3.2(d)
Regulatory Approvals................................................ 3.2(d)
Release............................................................. 3.2(o)(ii)
Return(s)........................................................... 3.2(j)(i)
Rights.............................................................. 3.3(c)
Rights Agreement.................................................... 3.3(c)
SEC................................................................. 3.2(d)
Securities Act...................................................... 3.2(d)
Stock Option Agreement.............................................. 3.3(c)(i)
Surviving Corporation............................................... 1.1
Tax(es)............................................................. 3.2(j)(i)
</TABLE>
8.16 Headings. The headings contained in this Agreement are for convenience
of reference only and shall not affect the meaning or interpretation of this
Agreement.
8.17 Interpretation. Whenever the term "including" is used in this Agreement
it shall mean "including, without limitation," (whether or not such language is
specifically set forth) and shall not be deemed to limit the range of
possibilities to those items specifically enumerated. All joint obligations
herein shall be deemed to be joint and several whether specifically so
specified.
A-30
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
Parent
AMP Incorporated
/s/ William J. Hudson
By___________________________________
William J. Hudson
Chief Executive Officer and
President
ATTEST:
[seal]
/s/ David F. Henschel
By___________________________________
David F. Henschel
Secretary
Merger Sub
AMP Merger Corp.
/s/ Howard S. Harris
By___________________________________
Howard S. Harris
President
ATTEST:
[seal]
/s/ David W. Schoenberg
By___________________________________
David W. Schoenberg
Clerk and Assistant Treasurer
The Company
M/A-COM, Inc.
/s/ Thomas A. Vanderslice
By___________________________________
Thomas A. Vanderslice
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
[seal]
/s/ Stephen P. Zezima
By___________________________________
Stephen P. Zezima
Assistant Treasurer
A-31
<PAGE>
APPENDIX B
[ART]
June 2, 1995
Board of Directors
M/A-COM, Inc.
100 Chelmsford Street
Lowell, Massachusetts 01853-3294
Dear Members of the Board:
We understand that M/A-COM, Inc. ("M/A-COM") and AMP Incorporated ("AMP")
have entered into an Agreement and Plan of Merger dated March 10, 1995 (the
"Agreement"), pursuant to which M/A-COM will merge with and into AMP (the
"Merger"). Under the terms of the Agreement, each outstanding share of M/A-COM
common stock, par value $1.00 per share ("M/A-COM Common Stock"), shall be
converted into the right to receive (together with any dividends and
distributions payable) .28 of one share of AMP common stock, without par value
("AMP Common Stock"), together with any AMP Rights (as defined in the
Agreement) attached thereto (together with the AMP Common Stock, the "Merger
Consideration").
You have requested that we confirm our opinion of March 10, 1995 as to the
fairness, from a financial point of view, to the holders of M/A-COM Common
Stock (the "M/A-COM Common Shareholders") of the Merger Consideration to be
paid to the M/A-COM Common Shareholders. In connection with this opinion, we
have:
(i) Reviewed and analyzed the financial terms of the Agreement;
(ii) Reviewed certain publicly available business and financial information
relating to M/A-COM and AMP;
(iii) Reviewed certain other information, including financial forecasts and
other data provided to us by the management of M/A-COM relating to
its businesses;
(iv) Held discussions with members of the senior managements of M/A-COM and
AMP with respect to the businesses and prospects of M/A-COM and AMP,
respectively, the strategic objectives of each, and possible benefits
which might be realized following the Merger;
(v) Reviewed the pro forma impact of the Merger on AMP's financial results
and financial condition;
(vi) Considered certain financial and stock market data for M/A-COM and AMP
and compared that data with similar data for other publicly held
companies in lines of businesses we believe to be generally comparable
to those of M/A-COM and AMP;
(vii) Considered the financial terms of certain business combinations
involving companies in lines of businesses we believe to be generally
comparable to those of M/A-COM and AMP;
(viii) Reviewed the historical stock prices and trading volumes of the M/A-
COM Common Stock and the AMP Common Stock; and
(ix) Conducted such other financial studies, analyses and investigations as
we deemed appropriate.
In connection with our review, we have relied upon the accuracy and
completeness of the financial and other information reviewed by us, and have
not assumed any responsibility for any independent verification
<PAGE>
of such information or any independent valuation or appraisal of any of the
assets or liabilities of M/A-COM or AMP. With respect to the financial
forecasts, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of M/A-COM as to the future financial performance of M/A-COM on a
stand-alone basis and after giving effect to the Merger contemplated by the
Agreement. We assume no responsibility for and express no view as to such
forecasts or the assumptions on which they are based. We note that although we
have had discussions with the senior management of AMP with respect to the
businesses and prospects of AMP including with respect to revenue and net
income growth for five years, we have not been furnished with detailed written
financial forecasts of AMP. Further, our opinion is based on economic,
monetary, market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
In rendering our opinion, we have assumed that the Merger will be consummated
on the terms described in the Agreement, without any waiver of or modification
to any material terms or conditions thereof by M/A-COM, and that obtaining any
necessary regulatory approvals for the Merger will not have an adverse effect
on M/A-COM or AMP.
We have acted as financial advisor to M/A-COM in connection with the Merger
and will receive a fee for our services, a substantial portion of which is
contingent upon the completion of the Merger. We also note that we have not
been requested to contact, and have not contacted, any third parties concerning
their potential interest in M/A-COM, and, accordingly, our opinion is not based
on the results of any such effort.
It is understood that this opinion may not be summarized, excerpted from or
otherwise publicly referred to without our prior written consent, which will
not unreasonably be withheld, except as may otherwise be required by law or by
a court of competent jurisdiction. In addition, we may not be otherwise
publicly referred to without our prior consent, which will not unreasonably be
withheld.
Based on and subject to the foregoing, we are of the opinion that as of the
date of this opinion the Merger Consideration to be paid to M/A-COM's Common
Shareholders is fair to them from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
B-2
<PAGE>
APPENDIX C
SECTIONS 85 THROUGH 98
INCLUSIVE
OF THE
MASSACHUSETTS BUSINESS CORPORATION LAW
SECTION 85. DISSENTING STOCKHOLDER; RIGHT TO DEMAND PAYMENT FOR STOCK;
EXCEPTION
A stockholder in any corporation organized under the laws of Massachusetts
which shall have duly voted to consolidate or merge with another corporation or
corporations under the provisions of sections seventy-eight or seventy-nine who
objects to such consolidation or merger may demand payment for his stock from
the resulting or surviving corporation and an appraisal in accordance with the
provisions of sections eighty-six to ninety-eight, inclusive, and such
stockholder and the resulting or surviving corporation shall have the rights
and duties and follow the procedure set forth in those sections. This section
shall not apply to the holders of any shares of stock of a constituent
corporation surviving a merger if, as permitted by subsection (c) of section
seventy-eight, the merger did not require for its approval a vote of the
stockholders of the surviving corporation.
SECTION 86. SELECTIONS APPLICABLE TO APPRAISAL; PREREQUISITES
If a corporation proposes to take a corporate action as to which any section
of this chapter provides that a stockholder who objects to such action shall
have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, no stockholder shall have
such right unless (1) he files with the corporation before the taking of the
vote of the shareholders on such corporate action, written objection to the
proposed action stating that he intends to demand payment for his shares if the
action is taken and (2) his shares are not voted in favor of the proposed
action.
SECTION 87. STATEMENT OF RIGHTS OF OBJECTING STOCKHOLDERS IN NOTICE OF
MEETING; FORM
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of
notice shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or
surviving corporation shall be inserted), within twenty days after the date of
mailing to him of notice in writing that the corporate action has become
effective, payment for his shares and an appraisal of the value thereof. Such
corporation and any such stockholder shall in such cases have the rights and
duties and shall follow the procedure set forth in sections 88 to 98,
inclusive, of chapter 156B of the General Laws of Massachusetts."
SECTION 88. NOTICE OF EFFECTIVENESS OF ACTION OBJECTED TO
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
<PAGE>
stockholder who filed a written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified
mail, addressed to the stockholder at his last know address as it appears in
the records of the corporation.
SECTION 89. DEMAND FOR PAYMENT; TIME FOR PAYMENT
If within twenty days after the date of mailing of a notice under subsection
(e) of section eighty-two, subsection (f) of section eighty-three, or section
eighty-eight any stockholder to whom the corporation was required to give such
notice shall demand in writing from the corporation taking such action, or in
the case of a consolidation or merger from the resulting or surviving
corporation, payment for his stock, the corporation upon which such demand is
made shall pay to him the fair value of his stock within thirty days after the
expiration of the period during which such demand may be made.
SECTION 90. DEMAND FOR DETERMINATION OF VALUE; BILL IN EQUITY; VENUE
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county
where the corporation in which such objecting stockholder held stock had or has
its principal office in the commonwealth.
SECTION 91. PARTIES TO SUIT TO DETERMINE VALUE
If the bill is filed by the corporation, it shall name as parties respondent
all stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to
each stockholder party to the bill by registered or certified mail, addressed
to the last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
SECTION 92. DECREE DETERMINING VALUE AND ORDERING PAYMENT; VALUATION DATE
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of
and payment for their shares, and shall order the corporation to make payment
of such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action and
shall be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
C-2
<PAGE>
SECTION 93. REFERENCE TO SPECIAL MASTER
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report
the same to the court, all in accordance with the usual practice in suits in
equity in the superior court.
SECTION 94. NOTATION ON STOCK CERTIFICATES OF PENDENCY OF BILL
On motion the court may order stockholder parties to the bill to submit their
certificates of stock to the corporation for the notation thereon of the
pendency of the bill, and may order the corporation to note such pendency in
its records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
SECTION 95. COSTS; INTEREST
The costs of the bill, including the reasonable compensation and expenses of
any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided
in this chapter shall be paid by the corporation. Interest shall be paid upon
any award from the date of the vote approving the proposed corporate action,
and the court may on application of any interested party determine the amount
of interest to be paid in the case of any stockholder.
SECTION 96. DIVIDENDS AND VOTING RIGHTS AFTER DEMAND FOR PAYMENT
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends
or other distributions payable to stockholders of record at a date which is
prior to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation,
or in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
SECTION 97. STATUS OF SHARES PAID FOR
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
SECTION 98. EXCLUSIVE REMEDY; EXCEPTION
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
C-3
