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REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMPHENOL CORPORATION
(Exact name of Registrant as specified in its charter)
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DELAWARE 3678 22-2785165
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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358 HALL AVENUE
WALLINGFORD, CONNECTICUT 06492
(203) 265-8900
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
------------------------------
EDWARD C. WETMORE, ESQ.
AMPHENOL CORPORATION
358 HALL AVENUE
WALLINGFORD, CONNECTICUT 06492
(203) 265-8900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
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CHARLES I. COGUT, ESQ. DAVID P. FALCK, ESQ.
SIMPSON THACHER & BARTLETT WINTHROP, STIMSON, PUTNAM & ROBERTS
425 LEXINGTON AVENUE ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10017 NEW YORK, NY 10004
(212) 455-2000 (212) 858-1000
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------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF OFFERING AGGREGATE AMOUNT OF
SECURITIES TO AMOUNT TO PRICE OFFERING REGISTRATION
BE REGISTERED(1) BE REGISTERED PER SHARE(1) PRICE(2) FEE(3)
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Class A common stock, $.001 par
value per share................................ 4,400,000 shares $26.00 $114,400,000 $22,880.00
</TABLE>
(1) This Registration Statement relates to Class A common stock of the
registrant to be retained by holders of the Registrant's Class A common
stock in the proposed merger of NXS Acquisition Corp. with and into the
registrant, with the registrant continuing as the surviving corporation in
the merger.
(2) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457 under the Securities Act of 1933, based upon the
proposed offering price to existing security holders.
(3) Pursuant to Rule 457(b), the required fee of $22,880.00 is reduced by the
fee of $232,545.50 previously paid at the time of filing of preliminary
proxy materials in connection with this transaction on February 19, 1997,
resulting in a net payment of $0.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
AMPHENOL CORPORATION
358 HALL AVENUE
WALLINGFORD, CONNECTICUT 06492
(203) 265-8900
APRIL 15, 1997
Dear Stockholder:
You are cordially invited to a Special Meeting in lieu of the 1997 Annual
Meeting (the "Special Meeting") of the stockholders of Amphenol Corporation
("Amphenol"), which will be held at Amphenol's headquarters, 358 Hall Avenue,
Wallingford, Connecticut 06492 on May 14, 1997, at 10:00 a.m. local time.
At the Special Meeting, the stockholders of Amphenol will be asked to
consider and vote on, among other things, a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of January 23, 1997 and as amended as of
April 9, 1997 (the "Merger Agreement"), between Amphenol and NXS Acquisition
Corp. ("Newco"), a Delaware corporation, and as of the date hereof a wholly
owned subsidiary of KKR 1996 Fund L.P. (the "Partnership"), a limited
partnership organized at the direction of Kohlberg Kravis Roberts & Co. L.P. On
the terms and subject to the conditions of the Merger Agreement, if the
stockholders of Amphenol approve and adopt the Merger Agreement, Newco will be
merged with and into Amphenol (the "Merger"), with approximately 90% of the
presently issued and outstanding shares of Amphenol Class A common stock, par
value $.001 per share ("Amphenol Common Stock"), being converted into $26.00 per
share in cash and approximately 10% of the presently issued and outstanding
shares being retained by stockholders. Detailed information concerning the
Merger is set forth in the accompanying Proxy Statement, which you are urged to
read carefully. A copy of the Merger Agreement is attached as Annex I to the
Proxy Statement.
Approval and adoption of the Merger Agreement requires the affirmative vote
of a majority of the outstanding shares of Amphenol Common Stock held by
stockholders of record on March 24, 1997 (the "Record Date"). Lawrence J.
DeGeorge, Florence A. DeGeorge, Lawrence F. DeGeorge and the Lawrence J. and
Florence A. DeGeorge Charitable Trust, a charitable trust founded by Lawrence J.
DeGeorge and Florence A. DeGeorge (collectively, the "DeGeorge Stockholders")
owned, beneficially and/or of record, an aggregate of 13,487,453 shares of
Amphenol Common Stock on March 24, 1997, constituting approximately 30.2% of the
outstanding shares of Amphenol Common Stock entitled to vote at the Special
Meeting. Pursuant to a Stockholders Agreement, dated as of January 23, 1997, by
and among NXS I, L.L.C., a Delaware limited liability company, which as of the
date hereof is a wholly owned subsidiary of the Partnership, and the DeGeorge
Stockholders (the "Stockholders Agreement"), the DeGeorge Stockholders, in their
capacity as such, have agreed, among other things, to vote their shares in favor
of the Merger and the adoption of the Merger Agreement. A copy of the
Stockholders Agreement is attached as Annex II to the accompanying Proxy
Statement.
Holders of Amphenol Common Stock will be entitled to dissenters' rights
under Delaware law in connection with the Merger as described in the
accompanying Proxy Statement.
In addition to the foregoing matters, at the Special Meeting, the
stockholders of Amphenol will be asked to consider and vote on proposals (i) to
elect two directors to serve either until their terms expire at the 2000 Annual
Meeting of stockholders or until their respective successors are duly elected or
appointed (as the case may be) and qualified; provided, that if the Merger
Agreement is approved and adopted by the Amphenol stockholders, the directors of
Amphenol immediately after the effective time of the Merger will be Martin H.
Loeffler and the then current directors of Newco and (ii) to ratify the
selection of Price Waterhouse LLP as independent auditors of Amphenol.
Your Board of Directors, after careful consideration, has unanimously
approved the Merger Agreement and determined that the Merger is fair to and in
the best interests of Amphenol and its stockholders,
<PAGE>
and recommends that you vote FOR approval and adoption of the Merger Agreement
and the transactions contemplated thereby. In reaching its determination, your
Board of Directors considered, among other things, the opinion of Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as to the fairness of the
consideration to be received by the holders of Amphenol Common Stock in the
Merger from a financial point of view. Merrill Lynch's opinion is included as
Annex III to the accompanying Proxy Statement. You are urged to read the opinion
in its entirety for further information with respect to the assumptions made,
matters considered and limits of the reviews undertaken by Merrill Lynch.
IT IS VERY IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING,
WHETHER OR NOT YOU PLAN TO ATTEND PERSONALLY. THEREFORE, YOU SHOULD COMPLETE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. THIS WILL ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE
SPECIAL MEETING.
Yours very truly,
/s/ LAWRENCE J. DEGEORGE
LAWRENCE J. DEGEORGE
CHAIRMAN OF THE BOARD
2
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AMPHENOL CORPORATION
358 Hall Avenue
Wallingford, Connecticut 06492
(203) 265-8900
------------------------
NOTICE OF SPECIAL MEETING IN LIEU OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1997
------------------------
To the Stockholders of
AMPHENOL CORPORATION
NOTICE IS HEREBY GIVEN that a Special Meeting in lieu of the 1997 Annual
Meeting of the stockholders (including any adjournments or postponements
thereof, the "Special Meeting") of Amphenol Corporation, a Delaware corporation
("Amphenol"), will be held at Amphenol's headquarters, 358 Hall Avenue,
Wallingford, Connecticut 06492, on May 14, 1997, at 10:00 a.m., local time, for
the following purposes, all of which are more fully described in the
accompanying Proxy Statement:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of January 23, 1997 and as amended as of April 9,
1997 (the "Merger Agreement"), between Amphenol and NXS Acquisition Corp., a
Delaware corporation ("Newco"), which as of the date hereof is a wholly owned
subsidiary of KKR 1996 Fund L.P. (the "Partnership"), a limited partnership
formed at the direction of Kohlberg Kravis Roberts & Co. L.P. The Merger
Agreement provides, among other things, for the merger of Newco with and into
Amphenol (the "Merger") pursuant to which each share of Amphenol's Class A
common stock, $.001 par value per share ("Amphenol Common Stock"), issued and
outstanding immediately prior to the effective time of the Merger (other than
shares of Amphenol Common Stock held by Amphenol, any subsidiary of Amphenol,
the Partnership, Newco or any subsidiary of the Partnership, which will be
cancelled and retired, and fractional shares and shares of Amphenol Common Stock
subject to dissenters' rights) will be converted, at the election of the holder,
into either (a) the right to receive $26.00 in cash or (b) the right to retain
one share of Amphenol Common Stock. Because 4,400,000 shares of Amphenol Common
Stock must be retained by existing Amphenol stockholders either through election
or proration, the right to receive $26.00 in cash for each share of Amphenol
Common Stock or to retain that share of Amphenol Common Stock is subject to
proration, as set forth in the Merger Agreement and described in the
accompanying Proxy Statement. A conformed copy of the Merger Agreement
(including the principal exhibits thereto) is attached as Annex I to the
accompanying Proxy Statement and is incorporated herein by reference.
2. To elect two directors to serve either until their terms expire at the
2000 Annual Meeting of stockholders or until their respective successors are
duly elected or appointed (as the case may be) and qualified; provided, that if
the Merger Agreement is approved and adopted by the Amphenol stockholders, the
directors of Amphenol immediately after the effective time of the Merger will be
Martin H. Loeffler and the then current directors of Newco.
3. To ratify the selection of Price Waterhouse LLP as independent auditors
of Amphenol.
4. To transact such other business as may properly come before the Special
Meeting.
Approval and adoption of the Merger Agreement requires the affirmative vote
of a majority of the outstanding shares of Amphenol Common Stock held by
stockholders of record on March 24, 1997 (the "Record Date"). Lawrence J.
DeGeorge, Florence A. DeGeorge, Lawrence F. DeGeorge and the Lawrence J. and
Florence A. DeGeorge Charitable Trust (collectively, the "DeGeorge
Stockholders") owned, beneficially and/or of record, an aggregate of 13,487,453
shares of Amphenol Common Stock on March 24, 1997, constituting approximately
30.2% of the outstanding shares of Amphenol Common Stock entitled to vote at the
Special Meeting. Pursuant to a Stockholders Agreement among NXS I, L.L.C., a
Delaware limited liability company, which as of the date hereof is a wholly
owned subsidiary of the
<PAGE>
Partnership, and the DeGeorge Stockholders, dated as of January 23, 1997 (the
"Stockholders Agreement"), the DeGeorge Stockholders, in their capacity as such,
have agreed, among other things, to vote their shares in favor of the Merger and
the adoption of the Merger Agreement.
Only holders of record of shares of Amphenol Common Stock at the close of
business on the Record Date are entitled to notice of, and to vote at, the
Special Meeting. A complete list of stockholders entitled to vote at the Special
Meeting will be available for examination, for proper purposes, during ordinary
business hours at Amphenol's corporate offices, 358 Hall Avenue, Wallingford,
Connecticut 06492 during the 10 days prior to the Special Meeting.
In connection with the proposed Merger, appraisal rights will be available
to those stockholders of Amphenol who meet and comply with the requirements of
Section 262 of the Delaware General Corporation Law (the "DGCL"), a copy of
which is included as Annex IV to the accompanying Proxy Statement. Reference is
made to the section entitled "DISSENTING STOCKHOLDERS' RIGHTS" in the
accompanying Proxy Statement for a discussion of the procedures to be followed
in asserting appraisal rights under Section 262 of the DGCL in connection with
the proposed Merger.
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF HOW MANY SHARES OF AMPHENOL COMMON
STOCK YOU OWN. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU
ARE REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
ITS EXERCISE BY (1) ATTENDING AND VOTING IN PERSON AT THE SPECIAL MEETING, (2)
GIVING NOTICE OF REVOCATION OF THE PROXY AT THE SPECIAL MEETING OR (3)
DELIVERING TO THE SECRETARY OF AMPHENOL (A) A WRITTEN NOTICE OF REVOCATION OR
(B) A DULY EXECUTED PROXY RELATING TO THE SAME SHARES AND MATTERS TO BE
CONSIDERED AT THE SPECIAL MEETING, BEARING A DATE LATER THAN THE PROXY
PREVIOUSLY EXECUTED.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARTIN H. LOEFFLER
MARTIN H. LOEFFLER
PRESIDENT
APRIL 15, 1997
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
STOCKHOLDERS ELECTING TO RETAIN AMPHENOL COMMON STOCK SHOULD RETURN THE
ENCLOSED FORM OF NON-CASH ELECTION TOGETHER WITH DULY ENDORSED AMPHENOL STOCK
CERTIFICATES AS INSTRUCTED IN THE PROXY STATEMENT. SEE "THE MERGER--NON-CASH
ELECTION" FOR INSTRUCTIONS FOR STOCKHOLDERS ELECTING TO RETAIN SHARES.
OTHERWISE, STOCK CERTIFICATES SHOULD BE RETAINED UNTIL LETTERS OF TRANSMITTAL
ARE RECEIVED AFTER THE EFFECTIVE TIME OF THE MERGER. SEE "THE
MERGER--CONVERSION/RETENTION OF SHARES; PROCEDURES FOR EXCHANGE OF
CERTIFICATES."
IF YOU HAVE ANY QUESTIONS OR REQUIRE ADDITIONAL MATERIAL, PLEASE CONTACT
MACKENZIE PARTNERS, INC. AT (800) 322-2885 (TOLL FREE) OR (212) 929-5500
(COLLECT).
ii
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AMPHENOL CORPORATION
------------------------
PROXY STATEMENT/PROSPECTUS
------------------------
SPECIAL MEETING IN LIEU OF THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1997
This Proxy Statement (the "Proxy Statement") is being furnished to
stockholders of Amphenol Corporation, a Delaware corporation (together with its
subsidiaries, except where the context otherwise requires, "Amphenol" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board of Directors" or the "Board") for use at a
Special Meeting in lieu of the 1997 Annual Meeting of stockholders, which will
be held at Amphenol's headquarters, 358 Hall Avenue, Wallingford, Connecticut
06492, on May 14, 1997, at 10:00 a.m., local time, and at any adjournments or
postponements thereof (the "Special Meeting"). This Proxy Statement relates to,
among other things, the proposed merger (the "Merger") of NXS Acquisition Corp.,
a Delaware corporation ("Newco") and as of the date hereof a wholly owned
subsidiary of KKR 1996 Fund L.P. (the "Partnership"), a limited partnership
organized at the direction of Kohlberg Kravis Roberts & Co. L.P. ("KKR"), with
and into the Company pursuant to the Agreement and Plan of Merger, dated as of
January 23, 1997 (the "Original Merger Agreement"), as amended as of April 9,
1997 (the "Merger Agreement Amendment," and together with the Original Merger
Agreement, the "Merger Agreement"), between Newco and the Company, and the
transactions contemplated thereby.
Pursuant to the Merger, each share of Amphenol's Class A common stock, par
value $.001 per share ("Amphenol Common Stock"), issued and outstanding
immediately prior to the effective time of the Merger (the "Effective Time")
(other than shares of Amphenol Common Stock held by Amphenol, any subsidiary of
Amphenol, the Partnership, Newco or any subsidiary of the Partnership, which
will be cancelled and retired, and fractional shares and shares of Amphenol
Common Stock subject to dissenters' rights), will be converted, at the election
of the holder thereof and subject to the terms described herein, into either (a)
the right to receive $26.00 in cash or (b) the right to retain one fully paid
and nonassessable share of Amphenol Common Stock. Because the number of shares
of Amphenol Common Stock to be retained by existing Amphenol stockholders must
equal 4,400,000, the right to receive $26.00 in cash per share or retain shares
of Amphenol Common Stock is subject to proration, as set forth in the Merger
Agreement and described herein. For a more detailed description of the proration
procedures, see "THE MERGER--Merger Consideration." Copies of the Original
Merger Agreement (including the principal exhibits thereto) and the Merger
Agreement Amendment are attached as Annex I to this Proxy Statement and are
incorporated herein by reference. This Proxy Statement describes the material
portions of the Merger Agreement. The description of the Merger Agreement set
forth herein is subject to, and is qualified in its entirety by reference to,
the text of the Merger Agreement.
This Proxy Statement also constitutes a prospectus of the Company with
respect to the 4,400,000 shares of Amphenol Common Stock to be retained by
stockholders in the Merger.
Approval and adoption of the Merger Agreement requires the affirmative vote
of a majority of the outstanding shares of Amphenol Common Stock held by
stockholders of record on March 24, 1997 (the "Record Date"). Lawrence J.
DeGeorge, Chairman of the Board of Amphenol, Florence A. DeGeorge, his wife,
Lawrence F. DeGeorge, one of their sons, and the Lawrence J. and Florence A.
DeGeorge Charitable Trust, a charitable trust founded by Lawrence J. DeGeorge
and Florence A. DeGeorge (collectively, the "DeGeorge Stockholders") owned,
beneficially and/or of record, an aggregate of 13,487,453 shares of Amphenol
Common Stock on March 24, 1997, constituting approximately 30.2% of the
outstanding shares of Amphenol Common Stock entitled to vote at the Special
Meeting. Pursuant to a Stockholders Agreement by and among NXS I, L.L.C., a
Delaware limited liability company ("NXS"), which as of the date hereof is a
wholly owned subsidiary of the Partnership, and the DeGeorge Stockholders, dated
as of January 23, 1997 (the "Stockholders Agreement"), the DeGeorge
Stockholders,
<PAGE>
in their capacity as such, have agreed, among other things, to vote their shares
(the "Subject Shares") in favor of the Merger and the adoption of the Merger
Agreement. The Stockholders Agreement is included as Annex II to this Proxy
Statement. The summaries of the portions of the Stockholders Agreement set forth
in this Proxy Statement describe the material portions of the Stockholders
Agreement but are subject to, and are qualified in their entirety by reference
to, the text of the Stockholders Agreement.
The Board of Directors, after careful consideration, unanimously approved
the Merger Agreement, and determined that the Merger is fair to and in the best
interests of Amphenol and its stockholders, and recommends that you vote FOR
approval and adoption of the Merger Agreement and the transactions contemplated
thereby. In reaching its determination, your Board of Directors considered,
among other things, the opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), as to the fairness of the consideration to be
received by the holders of Amphenol Common Stock in the Merger from a financial
point of view. Merrill Lynch's opinion is included as Annex III to this Proxy
Statement. You are urged to read the opinion in its entirety for further
information with respect to the assumptions made, matters considered and limits
of the reviews undertaken by Merrill Lynch.
In addition to the foregoing matters, at the Special Meeting, the
stockholders of Amphenol will be asked to consider and vote on proposals (i) to
elect two directors to serve either until their terms expire at the 2000 Annual
Meeting of stockholders or until their respective successors are duly elected or
appointed (as the case may be) and qualified; provided, that if the Merger
Agreement is approved and adopted by the Amphenol stockholders, the directors of
Amphenol immediately after the Effective Time will be Martin H. Loeffler and the
then current directors of Newco and (ii) to ratify the selection of Price
Waterhouse LLP as independent auditors of the Company.
Amphenol Common Stock is listed for trading on The New York Stock Exchange
("NYSE") under the symbol "APH." On April 9, 1997, the closing price of Amphenol
Common Stock was $24 7/8 per share. On January 22, 1997, the last trading day
before public announcement of the execution of the Merger Agreement, the closing
price of Amphenol Common Stock on the NYSE was $23 1/8 per share. The Merger is
not expected to cause the Amphenol Common Stock to be de-listed from the NYSE.
However, if the Merger is approved, there will be a substantial decrease in the
number of outstanding shares of Amphenol Common Stock, and the volume of shares
of Amphenol Common Stock traded following the Merger will be substantially
smaller than the trading volume of Amphenol Common Stock prior to the Merger.
See "RISK FACTORS--Loss of Liquidity."
This Proxy Statement, the accompanying form of proxy (the "Proxy") and the
other enclosed documents are first being mailed to stockholders of the Company
on or about April 16, 1997.
SEE "RISK FACTORS" BEGINNING ON PAGE 20 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS OF AMPHENOL COMMON STOCK IN CONNECTION WITH
THEIR CONSIDERATION OF THE MERGER.
THESE SECURITIES 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. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Proxy Statement is April 15, 1997.
ii
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TABLE OF CONTENTS
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AVAILABLE INFORMATION...................................................................................... 1
FORWARD LOOKING STATEMENTS................................................................................. 1
SUMMARY.................................................................................................... 3
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............................................................ 13
SELECTED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)........................................... 14
PRICE OF AMPHENOL COMMON STOCK............................................................................. 19
RISK FACTORS............................................................................................... 20
THE COMPANY................................................................................................ 25
Competitive Strengths.................................................................................. 26
Business Strategy...................................................................................... 27
THE SPECIAL MEETING........................................................................................ 29
Matters to be Considered............................................................................... 29
Required Votes......................................................................................... 29
Voting and Revocation of Proxies....................................................................... 30
Record Date; Stock Entitled to Vote; Quorum............................................................ 30
Dissenters' Rights..................................................................................... 31
Solicitation of Proxies................................................................................ 31
PROPOSAL ONE............................................................................................... 31
THE MERGER................................................................................................. 31
Background of the Merger............................................................................... 31
Opinion of Merrill Lynch............................................................................... 38
Merger Consideration................................................................................... 42
Non-Cash Election...................................................................................... 44
Non-Cash Election Procedure............................................................................ 45
Effective Time of the Merger........................................................................... 45
Conversion/Retention of Shares; Procedures for Exchange of Certificates................................ 46
Fractional Shares...................................................................................... 47
Conduct of Business Pending the Merger................................................................. 47
Conditions to the Consummation of the Merger........................................................... 47
Certain Federal Income Tax Consequences................................................................ 47
Accounting Treatment................................................................................... 51
Effect on Stock and Employee Benefit Matters........................................................... 51
Interests of Certain Persons in the Merger............................................................. 51
Resale of Amphenol Common Stock following the Merger................................................... 52
Merger Financings...................................................................................... 53
Conversion of Newco Stock.............................................................................. 53
Pro Forma Consolidated Financial Statements (Unaudited)................................................ 53
DESCRIPTION OF AMPHENOL CAPITAL STOCK...................................................................... 58
General................................................................................................ 58
Voting Rights.......................................................................................... 58
Dividend Rights........................................................................................ 58
</TABLE>
iii
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<TABLE>
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Liquidation Rights..................................................................................... 58
Amphenol Common Stock following the Merger............................................................. 58
CERTAIN PROVISIONS OF THE MERGER AGREEMENT................................................................. 59
The Merger............................................................................................. 59
Representations and Warranties......................................................................... 59
Certain Pre-closing Covenants.......................................................................... 60
No Solicitation of Transactions........................................................................ 61
Board of Directors and Officers of the Company following the Merger.................................... 62
Stock and Employee Benefit Plans....................................................................... 64
Access to Information.................................................................................. 64
Cooperation and Reasonable Best Efforts................................................................ 64
Indemnification and Insurance.......................................................................... 64
Conditions to the Consummation of the Merger........................................................... 65
Termination............................................................................................ 66
Amendment and Waiver................................................................................... 67
Expenses and Certain Required Payments................................................................. 67
CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT........................................................... 69
Voting................................................................................................. 69
Third Party Business Combination; Remedy............................................................... 69
No Solicitation........................................................................................ 70
Transfer Restrictions.................................................................................. 70
Election Under Merger Agreement........................................................................ 71
Competition............................................................................................ 71
The NXS Option......................................................................................... 71
The Stockholders Option................................................................................ 72
Termination............................................................................................ 72
PRINCIPAL STOCKHOLDERS OF AMPHENOL......................................................................... 73
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................................. 74
REGULATORY APPROVALS....................................................................................... 74
NEWCO, NXS AND THE PARTNERSHIP............................................................................. 75
DISSENTING STOCKHOLDERS' RIGHTS............................................................................ 75
CERTAIN PENDING LITIGATION................................................................................. 78
INDEPENDENT PUBLIC ACCOUNTANTS AND LEGAL OPINIONS.......................................................... 78
PROPOSAL TWO............................................................................................... 78
ELECTION OF DIRECTORS...................................................................................... 78
Certain Information Concerning Nominees and Executive Officers......................................... 79
The Board of Directors and Certain Committees of the Board............................................. 81
EXECUTIVE COMPENSATION AND OTHER MATTERS................................................................... 82
Summary Compensation Table............................................................................. 82
Option/SAR Grants In Last Fiscal Year.............................................................. 83
Aggregated Option/SAR Exercises In Last Fiscal Year and Fiscal Year End Option/SAR Values.......... 83
Performance Graph.................................................................................. 84
Compensation Committee Report on Executive Compensation............................................ 84
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iv
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Compensation Committee Interlocks and Insider Participation........................................ 87
Employment Agreements.............................................................................. 87
Pension Information................................................................................ 87
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................................. 89
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.......................................................... 90
PROPOSAL THREE............................................................................................. 90
RATIFICATION OF SELECTION OF AUDITORS...................................................................... 90
OTHER INFORMATION AND STOCKHOLDER PROPOSALS................................................................ 91
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 91
</TABLE>
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ANNEX I-A Agreement and Plan of Merger dated as of January 23, 1997
ANNEX I-B Merger Agreement Amendment dated as of April 9, 1997
ANNEX II Stockholders Agreement dated as of January 23, 1997
ANNEX III Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
dated January 23, 1997
ANNEX IV Excerpts from the DGCL Relating to Dissenters' Rights
</TABLE>
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN AS CONTAINED IN THIS PROXY STATEMENT, IN CONNECTION
WITH THE MERGER, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY AMPHENOL OR NEWCO. THIS PROXY
STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SECURITIES TO WHICH IT RELATES IN ANY JURISDICTION IN WHICH, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROXY STATEMENT NOR ANY OFFER OR SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
AVAILABLE INFORMATION
Amphenol is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the web site (http://www.sec.gov) maintained by the Commission, or at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
This Proxy Statement also constitutes a prospectus of the Company filed as
part of a Registration Statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"). This Proxy
Statement omits certain information contained in the Registration Statement and
the exhibits thereto. Reference is made to the Registration Statement and
related exhibits for further information with respect to the Company and the
retention of Amphenol Common Stock. Statements contained herein concerning the
contents of any document referred to herein are qualified by reference to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission.
FORWARD LOOKING STATEMENTS
This Proxy Statement includes "forward-looking statements" within the
meaning of various provisions of the Securities Act and the Exchange Act,
including, without limitation, statements under "THE COMPANY--Competitive
Strengths" and "--Business Strategy" and "THE MERGER--Background of the Merger."
All statements, other than statements of historical facts, included in this
Proxy Statement that address activities, events or developments that the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strengths, goals,
expansion and growth of the Company's business and operations, plans, references
to future success and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results and
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, including the risk factors
discussed in this Proxy Statement and other factors, many of which are beyond
the control of the Company. The following includes some, but
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not all, of the factors or uncertainties that could cause the Company to fail to
conform with expectations and predictions:
- A global economic slowdown in any one, or all, of the Company's market
segments.
- The effects of extreme changes in monetary and fiscal policies in the U.S.
and abroad, including extreme currency fluctuations and unforeseen
inflationary pressures.
- Drastic and unforeseen price pressure on the Company's products or
significant cost increases that cannot be recovered through price
increases or productivity improvements.
- Increased difficulties in obtaining a consistent supply of basic materials
like steel, aluminum, copper, gold or plastic resins at stable pricing
levels.
- Unpredictable difficulties or delays in the development of new product
programs.
- Significant changes in interest rates or in the availability of financing
for the Company or certain of its customers.
- Rapid escalation of the cost of regulatory compliance and litigation.
- Unexpected government policies and regulations affecting the Company or
its significant customers.
- Unforeseen intergovernmental conflicts or actions, including but not
limited to armed conflict and trade wars.
- Difficulties and unanticipated expense of assimilating newly-acquired
businesses.
- Any difficulties in obtaining or retaining the management and other human
resource competencies that the Company needs to achieve its business
objectives.
- The risks associated with any technological shifts away from the Company's
technologies and core competencies. For example, a technological shift
away from the use of coaxial cable in cable television/telecommunication
systems could have a substantial impact on the Company's coaxial cable
business.
- Unforeseen interruptions to the Company's business with its largest
customers and distributors resulting from, but not limited to, strikes,
financial instabilities or inventory excesses.
Consequently, all of the forward-looking statements made in this Proxy
Statement are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to or effects on the Company or its business or
operations.
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement. Reference is made to the more detailed information
contained in this Proxy Statement and the Annexes hereto. Stockholders of the
Company are urged to read this Proxy Statement and the Annexes hereto in their
entirety.
FOR A DISCUSSION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE CONSIDERED BY
HOLDERS OF AMPHENOL COMMON STOCK IN CONNECTION WITH THEIR CONSIDERATION OF THE
MERGER, INCLUDING CERTAIN RISKS RELATED TO CONTINUING TO HOLD AMPHENOL COMMON
STOCK, SEE "RISK FACTORS."
THE SPECIAL MEETING
TIME AND PLACE; RECORD DATE
The Special Meeting in lieu of the 1997 Annual Meeting of the stockholders
of Amphenol will be held on May 14, 1997 at Amphenol's headquarters, 358 Hall
Avenue, Wallingford, Connecticut 06492. Stockholders of record at the close of
business on the Record Date will be entitled to notice of, and to vote at, the
Special Meeting. The date of the mailing of this Proxy Statement to stockholders
of the Company will be on or about April 16, 1997. At the close of business on
March 24, 1997, there were 44,719,954 shares of Amphenol Common Stock
outstanding and entitled to vote.
MATTERS TO BE CONSIDERED
At the Special Meeting, the Amphenol stockholders will consider and vote
upon the following proposals: (i) to approve and adopt the Merger Agreement,
including the Merger, pursuant to which Newco will merge with and into the
Company, the stockholders of Amphenol will receive the consideration described
below in this Summary under "THE MERGER--Effect of the Merger" and the
stockholders of Newco, which as of the date hereof is only the Partnership, will
receive 13,116,955 shares of Amphenol Common Stock (the "Merger Proposal"); (ii)
to elect two directors to serve either until their terms expire at the 2000
Annual Meeting of stockholders or until their respective successors are duly
elected or appointed (as the case may be) and qualified; provided, that if the
Merger Proposal is approved and adopted by the Amphenol stockholders, the
directors of Amphenol immediately after the Effective Time will be Martin H.
Loeffler and the then current directors of Newco; and (iii) to ratify the
selection of Price Waterhouse LLP as independent auditors of the Company (the
"Ratification of Auditors Proposal").
REQUIRED VOTES
The approval of the Merger Proposal will require the affirmative vote of the
holders of a majority of the shares of Amphenol Common Stock entitled to vote at
the Special Meeting, provided a quorum is present. If such approval is received,
the Effective Time of the Merger is expected to occur within five business days
following the Special Meeting. The DeGeorge Stockholders, which on March 24,
1997 owned, beneficially and/or of record, an aggregate of 13,487,453 shares of
Amphenol Common Stock, constituting approximately 30.2% of the outstanding
shares of Amphenol Common Stock entitled to vote at the Special Meeting, have
agreed, subject to certain conditions set forth in the Stockholders Agreement,
to vote such shares and all other shares of Amphenol Common Stock that the
DeGeorge Stockholders acquire beneficial ownership of after January 23, 1997 and
during the term of the Stockholders Agreement, if any (such shares collectively,
the "Subject Shares"), in favor of the Merger Proposal. See "THE SPECIAL
MEETING--Required Votes" and "THE MERGER--Interests of Certain Persons in the
Merger."
Directors will be elected by a plurality of the votes cast at the Special
Meeting, provided a quorum is present. The approval of the Ratification of
Auditors Proposal will require the affirmative vote of a
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majority of the shares of Amphenol Common Stock represented at the Special
Meeting and entitled to vote, provided a quorum is present.
VOTING OF PROXIES
All shares of Amphenol Common Stock represented by a properly executed Proxy
received in time for the Special Meeting will be voted in the manner specified
in the Proxy. Proxies that do not contain any instruction to vote for or against
or to abstain from voting on a particular matter will be voted in accordance
with the recommendations of the Board of Directors. See "THE SPECIAL MEETING--
Voting and Revocation of Proxies."
It is not expected that any matter other than those referred to herein will
be brought before the stockholders at the Special Meeting. If, however, other
matters are properly presented, the persons named as proxies will vote in
accordance with their best judgment with respect to such matters, unless
authority to do so is withheld in the Proxy.
ADJOURNMENTS; REVOCABILITY OF PROXIES
If the Special Meeting is adjourned, for whatever reason, the approval of
the Merger Proposal shall be considered and voted upon by stockholders at the
subsequent, reconvened meeting, if any.
You may revoke your Proxy at any time prior to its exercise (i) by attending
the Special Meeting and voting in person (although attendance at the Special
Meeting will not in and of itself constitute revocation of a Proxy), (ii) by
giving notice of revocation of your Proxy at the Special Meeting or (iii) by
delivering (a) a written notice of revocation of your Proxy or (b) a duly
executed Proxy relating to the matters to be considered at the Special Meeting,
bearing a date later than the Proxy previously executed, to the Secretary of
Amphenol, 358 Hall Avenue, Wallingford, Connecticut 06492-7530. Unless revoked
in one of the manners set forth above, Proxies in the form enclosed will be
voted at the Special Meeting in accordance with your instructions.
SOLICITATION OF PROXIES
The cost of soliciting Proxies will be borne by the Company. The Company may
solicit Proxies and the Company's directors, officers and employees may also
solicit Proxies by telephone, telegram or personal interview. Such directors,
officers and employees will not be additionally compensated for any such
solicitation but may be reimbursed for reasonable out-of-pocket expenses in
connection therewith. Arrangements will be made to furnish copies of Proxy
materials to fiduciaries, custodians and brokerage houses for forwarding to
beneficial owners of Amphenol Common Stock. Such persons will be paid reasonable
out-of-pocket expenses.
Mackenzie Partners, Inc. ("Mackenzie") will assist in the solicitation of
Proxies by the Company for an estimated fee of $6,000.00, plus reasonable
out-of-pocket expenses. If you have any questions or require additional
material, please call Mackenzie at (800) 322-2885 (toll free) or (212) 929-5500
(collect).
HOLDERS OF AMPHENOL COMMON STOCK SHOULD NOT SEND STOCK CERTIFICATES WITH
THEIR PROXY CARDS. HOWEVER, SEE "THE MERGER--NON-CASH ELECTION PROCEDURE" FOR
INSTRUCTIONS FOR STOCKHOLDERS ELECTING TO RETAIN SHARES.
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SECURITY OWNERSHIP OF MANAGEMENT
As of March 24, 1997, directors and executive officers of the Company were
beneficial owners of an aggregate of 11,920,227 shares of Amphenol Common Stock
(approximately 27% of the outstanding shares). The directors and executive
officers of the Company have indicated that they intend to vote their shares of
Amphenol Common Stock in favor of the Merger Proposal and the other proposals.
See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
THE MERGER
EFFECT OF THE MERGER
At the Effective Time, Newco will be merged with and into Amphenol and
Amphenol will continue as the surviving corporation in the Merger. Subject to
certain provisions as described herein with respect to shares owned by Amphenol,
any subsidiary of Amphenol, the Partnership, Newco or any subsidiary of the
Partnership, and with respect to fractional shares and Dissenting Shares (as
defined under "DISSENTING STOCKHOLDERS' RIGHTS" below), and subject to the
effects of proration as described herein, (i) each issued and outstanding share
of Amphenol Common Stock (other than Electing Shares, as defined below) will be
converted into the right to receive in cash from Amphenol following the Merger
an amount equal to $26.00 (the "Cash Price") and (ii) each issued and
outstanding share of Amphenol Common Stock with respect to which an election to
retain Amphenol Common Stock has been made and not revoked or lost in accordance
with the Merger Agreement (an "Electing Share") will be converted into the right
to retain one fully paid and nonassessable share of Amphenol Common Stock (a
"Non-Cash Election Share"). Each stockholder of Amphenol may receive the Cash
Price with respect to some of the stockholder's shares of Amphenol Common Stock
and Non-Cash Election Shares with respect to other shares of Amphenol Common
Stock; provided, that the aggregate number of shares of Amphenol Common Stock to
be retained at the Effective Time shall be equal to 4,400,000 (the "Non-Cash
Election Number").
The Merger contemplates that approximately 90% of the presently issued and
outstanding shares of Amphenol Common Stock will be converted into cash, as
described above, and that approximately 10% of the presently issued and
outstanding shares will be retained by stockholders. Because 4,400,000 shares of
Amphenol Common Stock must be retained by existing Amphenol stockholders in the
Merger, stockholders who do not elect to retain any shares may, due to
proration, be required to retain some shares of Amphenol Common Stock. In
addition, stockholders who elect to retain shares may be prorated into shares of
Amphenol Common Stock and cash in amounts which vary from the amounts such
holders elected to retain.
As an example, and as further described below in "THE MERGER--Merger
Consideration," a stockholder holding 100 shares and electing to retain all of
them will receive from 10 to 100 shares, depending upon the actions of other
stockholders. A stockholder holding 100 shares and electing to convert all of
them into the right to receive the Cash Price with respect thereto will receive
the Cash Price for from 90 to 100 of such shares and will receive from 0 to 10
shares, depending upon the actions of other stockholders.
SEE "THE MERGER--MERGER CONSIDERATION" FOR EXAMPLES ILLUSTRATING THE
POTENTIAL EFFECTS OF PRORATION.
The total number of outstanding shares of Amphenol Common Stock will
decrease from approximately 44.7 million to approximately 17.5 million,
approximately 13.1 million of which will be held by the stockholders of Newco
upon the conversion of Newco common stock into Amphenol Common Stock in the
Merger, and 4.4 million of which will be retained by the existing stockholders
of the Company. The 4.4 million shares (representing approximately 10%) of the
presently issued and outstanding Amphenol Common Stock to be retained by
existing stockholders in the Merger will represent approximately 25% of the
shares issued and outstanding immediately after the Merger, and the
approximately 13.1 million shares
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to be owned by the stockholders of Newco as a result of the Merger will
represent approximately 75% of the shares issued and outstanding immediately
after the Merger, in each case, before giving effect to the exercise of the NXS
Option or the Stockholders Option (each, as defined below) granted with respect
to the Subject Shares pursuant to the Stockholders Agreement. Assuming all
stockholders elected to convert all of their shares into the right to receive
the Cash Price, which would maximize the number of Subject Shares subject to the
NXS Option and the Stockholders Option after the Merger, then upon exercise of
either such option, the stockholders of Newco would own, directly and
indirectly, approximately 82% of the shares issued and outstanding immediately
after the Merger, and the remaining stockholders would own, in the aggregate,
approximately 18% of such shares. As is set forth in more detail below under
"THE MERGER--Interests of Certain Persons in the Merger," if Messrs. Loeffler,
Jepsen and Cohane determine to sell a portion of their shares which may be
retained by them following the Merger to such stockholders of Newco, such
stockholders of Newco could own, indirectly, up to an additional 1.5% of such
shares.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors, at a meeting duly called and held, has unanimously
(i) determined that the Merger is fair to and in the best interests of the
Company and its stockholders and (ii) recommended that the Company's
stockholders approve and adopt the Merger Agreement and the transactions
contemplated thereby. The determination of the Board of Directors with respect
to the Merger is based on a number of factors. See "THE MERGER--Background of
the Merger" and "--Recommendation of the Board of Directors; Reasons for the
Merger."
The Board of Directors also recommends a vote for each of the proposed
nominees for election to the Board of Directors and for approval of the
Ratification of Auditors Proposal.
OPINION OF MERRILL LYNCH
On January 23, 1997, Merrill Lynch delivered its written opinion (the
"Merrill Lynch Opinion") to the Company's Board of Directors to the effect that,
as of such date, and based upon the assumptions made, matters considered and
limits of review set forth in such opinion, the proposed consideration to be
received by the holders of Amphenol Common Stock (other than KKR and its
affiliates) in the Merger was fair to such stockholders from a financial point
of view. A copy of the Merrill Lynch Opinion, which sets forth the assumptions
made, matters considered and certain limitations on the scope of review
undertaken by Merrill Lynch, is attached as Annex III to this Proxy Statement.
Company stockholders are urged to read such opinion in its entirety.
NON-CASH ELECTION
Record holders of shares of Amphenol Common Stock will be entitled to make
an unconditional election (a "Non-Cash Election"), on or prior to the Election
Date (as defined below), to retain Non-Cash Election Shares. If the number of
Electing Shares exceeds the Non-Cash Election Number, however, then (i) the
number of Electing Shares covered by a holder's Non-Cash Election to be
converted into the right to retain Non-Cash Election Shares will be determined
by multiplying the total number of Electing Shares covered by such Non-Cash
Election by a proration factor determined by dividing the Non-Cash Election
Number by the total number of Electing Shares and (ii) such number of Electing
Shares will be so converted. All Electing Shares, other than those shares
converted into the right to retain Non-Cash Election Shares as described in the
immediately preceding sentence, will be converted into cash (on a consistent
basis among stockholders who made the election to retain Non-Cash Election
Shares, PRO RATA to the number of shares as to which they made such election) as
if such shares were not Electing Shares.
If a stockholder elects to make a Non-Cash Election and receives cash as a
result of the proration procedures described above, such stockholder may receive
dividend treatment (rather than capital gain treatment) for any cash received in
the Merger as a result of such proration procedures. See "RISK
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FACTORS--Non-Cash Election and Proration into Cash--Possible Dividend
Treatment." See also "THE MERGER--Certain Federal Income Tax Consequences."
If the number of Electing Shares is less than the Non-Cash Election Number,
then (i) all Electing Shares will be converted into the right to retain Non-Cash
Election Shares in accordance with the Merger Agreement, (ii) additional shares
of Amphenol Common Stock, other than Electing Shares and Dissenting Shares, will
be converted into the right to retain Non-Cash Election Shares, which number of
additional shares shall be determined by multiplying the total number of shares,
other than Electing Shares and Dissenting Shares, by a proration factor
determined by dividing (x) the difference between the Non-Cash Election Number
and the number of Electing Shares by (y) the total number of shares of Amphenol
Common Stock, other than Electing Shares and Dissenting Shares, and (iii) such
additional shares of Amphenol Common Stock shall be converted into the right to
retain Non-Cash Election Shares in accordance with the Merger Agreement (on a
consistent basis among stockholders who held shares of Amphenol Common Stock as
to which they did not make the Non-Cash Election, PRO RATA to the number of
shares as to which they did not make such election). See "THE MERGER--Non-Cash
Election."
NON-CASH ELECTION PROCEDURE
Stockholders of Amphenol Common Stock electing to retain Non-Cash Election
Shares must properly complete and sign the Non-Cash Election Form (the "Form of
Election") accompanying this Proxy Statement, and such Form of Election,
together with all certificates representing shares of Amphenol Common Stock duly
endorsed in blank or otherwise in form acceptable for transfer on the books of
the Company (or by appropriate guarantee of delivery, as set forth in such Form
of Election), must be received by IBJ Schroder Bank & Trust Company (the
"Exchange Agent") at one of the addresses listed on the Form of Election by 5:00
p.m., Eastern time, on the business day next preceding the date of the Special
Meeting (the "Election Date") and must not be withdrawn. See "THE
MERGER--Non-Cash Election Procedure."
FRACTIONAL SHARES
Fractional shares of Amphenol Common Stock will not be issued in the Merger.
Holders of Amphenol Common Stock otherwise entitled to a fractional share of
Amphenol Common Stock following the Merger will be paid cash in lieu of such
fractional share determined and paid as described in "THE MERGER--Fractional
Shares."
CONDITIONS TO THE MERGER
The obligations of Amphenol and Newco to consummate the Merger are subject
to various conditions, including, without limitation, obtaining requisite
Amphenol stockholder approval, the termination or expiration of the relevant
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act") (which condition has been satisfied), and the absence
of any injunction or other legal restraint or prohibition preventing the
consummation of the Merger.
Newco's obligations to effect the Merger are further subject, among other
things, to the Company (i) amending the terms of its 12 3/4% Senior Subordinated
Notes due 2002 (the "Subordinated Notes") in a manner agreed to by Newco and the
Company, (ii) purchasing at least an aggregate principal amount of Subordinated
Notes equal to the minimum condition of the Company's tender offer for such
Subordinated Notes (the "Debt Tender Offer"), (iii) calling the 10.45% Senior
Notes due 2001 (the "Senior Notes," and together with the Subordinated Notes,
the "Notes") for redemption, and (iv) receiving financing proceeds, on terms and
conditions contemplated by the Merger Agreement or upon terms and conditions
which are substantially equivalent to such terms and conditions and, to the
extent any of the terms and conditions are not contemplated by the Merger
Agreement, such other terms and conditions which are reasonably satisfactory to
Newco. It is expected that financing proceeds and an equity contribution
aggregating
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approximately $1.331 billion will be required to consummate such transactions.
The equity contribution to be made by the Partnership (and by one or more other
partnerships organized at the direction of KKR (see "NEWCO, NXS AND THE
PARTNERSHIP")) is expected to constitute approximately $341 million of such
amount. It is also a condition to the Merger that Newco is reasonably satisfied
that the Merger will be recorded as a recapitalization for financial reporting
purposes. See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to the
Consummation of the Merger" and "REGULATORY APPROVALS."
REGULATORY APPROVALS
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the applicable waiting period has expired or been terminated. On February 14,
1997, the Company and Newco filed Notification and Report Forms under the HSR
Act with the FTC and the Antitrust Division. On February 26, 1997, the Federal
Trade Commission and the Antitrust Division granted early termination of the
waiting period under the HSR Act with respect to the Merger effective
immediately. See "REGULATORY APPROVALS."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
For a summary of the material U.S. federal income tax consequences of the
Merger, see "THE MERGER--Certain Federal Income Tax Consequences."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING ON THE
PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER, IT IS RECOMMENDED THAT HOLDERS OF
AMPHENOL COMMON STOCK CONSULT THEIR TAX ADVISORS CONCERNING THE FEDERAL (AND ANY
STATE, LOCAL AND FOREIGN) TAX CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR
CIRCUMSTANCES.
TREATMENT OF COMPANY STOCK OPTIONS
It is anticipated that, at the Effective Time, (x) each Company Stock Option
(as defined under "THE MERGER--Effect on Stock and Employee Benefit Matters")
granted under the Stock Plans (as defined under "THE MERGER--Effect on Stock and
Employee Benefit Matters") outstanding immediately prior to the Effective Time,
whether or not then exercisable, will be cancelled and (y) each holder of any
such cancelled Company Stock Option having an exercise price of less than the
Cash Price (which constitutes all outstanding Company Stock Options except for
Company Stock Options to purchase an aggregate of 110,000 shares of Amphenol
Common Stock at an exercise price of 26 5/8 per share) will receive, in
consideration of such cancellation, a payment from the Company after the Merger
(subject to any applicable withholding taxes) equal to the product of (1) the
total number of shares of Amphenol Common Stock subject to such Company Stock
Option and (2) the excess of the Cash Price over the exercise price per share of
Amphenol Common Stock subject to such Company Stock Option, payable in cash as
of or as soon as practicable after the Effective Time.
It is anticipated that the Stock Plans will terminate as of the Effective
Time, and that following the Effective Time, no current holder of a Company
Stock Option nor any current participant in any Stock Plan will have any right
thereunder to acquire equity securities of the Company. It is expected that
certain of the Company's managers will receive new options to acquire shares of
Amphenol Common Stock after the Merger. See "THE MERGER--Interests of Certain
Persons in the Merger."
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of the Company may have interests,
described herein, that present them with potential conflicts of interest in
connection with the Merger. The Board of Directors is aware of the conflicts
described below and considered them in addition to the other matters described
under "THE MERGER--Recommendation of the Board of Directors; Reasons for the
Merger."
Pursuant to the Stockholders Agreement, the DeGeorge Stockholders have
granted NXS an option (the "NXS Option") to purchase their respective Subject
Shares under certain circumstances at $26.00 per share in cash (the "Exercise
Price"), and NXS has granted the DeGeorge Stockholders an option (the
"Stockholders Option") to sell to NXS at the Exercise Price their respective
Subject Shares, if any, that are retained following the Merger as a result of
proration, in each case, subject to the terms and conditions of the Stockholders
Agreement. In addition, if NXS exercises the NXS Option following the
termination of the Merger Agreement under certain circumstances and NXS or any
of its affiliates receives any cash in respect of all or any portion of the
Subject Shares in connection with a Third Party Business Combination (as defined
below) during a period ending one year from the date the Merger Agreement is
terminated, then the DeGeorge Stockholders will be entitled to a portion of such
consideration, to the extent in excess of the Exercise Price. See "CERTAIN
PROVISIONS OF THE STOCKHOLDERS AGREEMENT."
Shares of Amphenol Common Stock held by officers and directors of Amphenol
will be converted into the right to receive the same consideration as shares of
Amphenol Common Stock held by other stockholders. Company Stock Options held by
the officers and directors of Amphenol will be treated in the same manner as
Company Stock Options held by other stockholders. In addition, it is expected
that Messrs. Martin H. Loeffler, Edward G. Jepsen and Timothy F. Cohane, each of
whom is an officer and director of the Company, will elect to retain all of
their shares in the Merger. Messrs. Loeffler, Jepsen and Cohane have agreed in
principle with Newco and NXS that they will retain 96,154 shares, 76,923 shares
and 76,923 shares respectively, of Amphenol Common Stock. Accordingly, following
the Merger, such persons may sell shares which they retain in excess of such
amounts. While no decisions have been made concerning any such potential sale,
NXS has indicated that it would be prepared to purchase any such excess shares.
To the extent that the proration provisions of the Merger Agreement result in
Messrs. Loeffler, Jepsen and Cohane retaining fewer shares than contemplated,
the Company expects to provide such persons with an opportunity to buy shares in
an amount necessary to result in such persons retaining the intended amounts
and, in connection therewith, to eliminate for such persons the impact of any
adverse tax consequences arising from such purchase. Messrs. Loeffler, Jepsen
and Cohane will also be granted options to acquire an additional 336,538 shares,
230,769 shares and 230,769 shares, respectively, of Amphenol Common Stock
following the Merger. It is also expected that approximately 555,000 shares will
be available for sale, either directly or through grants of options, to other
members of the Company's management. No decisions have been reached as to the
identities of the persons who would participate in any such sale or grant or as
to the terms thereof, other than that to the extent any such sale or grant
occurs upon or shortly following the Merger, such sale will be at $26.00 per
share and such options granted will be exercisable at $26.00 per share and,
subject to certain exceptions, will vest over five years at 20% per year. The
sale of any shares or grant of any options to be made in the future may be made
at higher or lower prices and on such other terms as may be determined at the
time. Messrs. Loeffler, Jepsen and Cohane, as well as other members of the
Company's management receiving such shares and options, are expected to enter
into agreements with the Company restricting transferability of the shares of
Amphenol Common Stock held by such persons for up to five years after the
Effective Time and setting forth, among other things, the limited circumstances
in which such shares may be called by or put to the Company.
Pursuant to the Merger Agreement, the Company has agreed for six years after
the Effective Time to indemnify all present directors and officers of the
Company and its subsidiaries and will, subject to certain limitations, maintain
for six years a directors' and officers' insurance and indemnification policy
containing terms and conditions which are not less advantageous than any such
policy which may be in effect prior to the Effective Time. See "CERTAIN
PROVISIONS OF THE MERGER AGREEMENT--Indemnification and Insurance."
9
<PAGE>
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by mutual written consent of Newco and Amphenol; (ii) by either Newco
or Amphenol (a) if any governmental entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger or the Debt Tender Offer, and such order, decree or
ruling or other action shall have become final and nonappealable or (b) if the
Merger shall not have been consummated on or before June 30, 1997 (other than
due to the failure of the party seeking to terminate the Merger Agreement to
perform its obligations under the Merger Agreement); (iii) by either Newco or
the Company if the required approval of the stockholders of the Company shall
not have been obtained at a duly held meeting of stockholders or at any
adjournment thereof; (iv) by Newco, if the Company or the Company's Board of
Directors shall have (A) withdrawn, modified or amended in any respect adverse
to Newco its approval or recommendation of the Merger Agreement or any of the
transactions contemplated therein, (B) failed as soon as practicable after the
effectiveness of the Registration Statement to mail the Proxy Statement to its
stockholders or failed to include in such statement such recommendation, (C)
recommended any Transaction Proposal (as defined under "CERTAIN PROVISIONS OF
THE MERGER AGREEMENT--No Solicitation of Transactions") from a person other than
Newco or any of its affiliates, (D) resolved to do any of the foregoing or (E)
in response to the commencement of any tender offer or exchange offer for more
than 20% of the outstanding shares of Amphenol Common Stock, not recommended
rejection of such tender offer or exchange offer; or (v) by the Company, if,
pursuant to and in compliance with the Merger Agreement, the Board of Directors
of the Company concludes in good faith, based on written advice from outside
counsel, that in order to prevent the Board of Directors of the Company from
breaching its fiduciary duties to the stockholders of the Company under the
DGCL, the Board of Directors must not make or must withdraw or modify its
recommendation to stockholders to approve the Merger Agreement, the Merger and
the transactions contemplated thereby and the Board of Directors does not make
or withdraws or modifies such recommendation. In the event of termination of the
Merger Agreement under certain circumstances (generally requiring the existence
of a competing third-party offer or transaction), the Company would be required
to pay KKR $37.5 million plus out-of-pocket expenses (not to exceed $12.5
million). See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Termination" and
"--Expenses and Certain Required Payments."
THE STOCKHOLDERS AGREEMENT
Pursuant to the Stockholders Agreement, the DeGeorge Stockholders, in their
capacity as such, have agreed, among other things, to vote their respective
Subject Shares, constituting an aggregate of approximately 30.2% of the
outstanding shares of Amphenol Common Stock entitled to vote at the Special
Meeting, in favor of the Merger and the adoption of the Merger Agreement.
Subject to the terms and conditions of the Stockholders Agreement, the DeGeorge
Stockholders have agreed to vote, and have appointed NXS and its officers,
Michael Michelson and Marc Lipschultz, as their irrevocable proxies to vote, the
Subject Shares in favor of the Merger and of certain related actions (together
with the Merger, the "Merger Related Matters") and against certain other
enumerated actions or agreements. Subject to the terms and conditions of the
Stockholders Agreement, all of the DeGeorge Stockholders have agreed to elect to
convert all of their Subject Shares into cash in the Merger, to refrain from
soliciting or responding to certain inquiries or proposals regarding Amphenol,
to refrain from engaging in certain competitive activities with Amphenol, to
comply with certain restrictions upon the transfer of the Subject Shares, to
waive any rights of appraisal available in the Merger and to take or refrain
from taking certain other actions.
If the Merger is consummated, (i) the DeGeorge Stockholders may exercise the
Stockholders Option pursuant to the Stockholders Agreement to sell to NXS the
Subject Shares and (ii) NXS may exercise the NXS Option to buy the Subject
Shares, in each case during the period commencing upon the Effective Time and
ending 30 days thereafter.
10
<PAGE>
If the Merger Agreement has been terminated (x) as described in paragraph
(c) or (d) under "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Termination" or
(y) in accordance with any of its other terms (other than a termination by the
Company as a result of a failure to consummate the Merger on or before June 30,
1997) AND either of the following shall have occurred: (A) any Person (as
defined under "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Expenses and Certain
Required Payments"), other than Newco or any of its affiliates and other than
any party to the Stockholders Agreement, shall have become the beneficial owner
of more than 20% of the outstanding shares of Amphenol Common Stock; or (B) any
Person (other than Newco or any of its affiliates) shall have made or proposed,
communicated or disclosed in a manner which is or otherwise becomes public
(including being known by stockholders of Amphenol owning of record or
beneficially in the aggregate 5% or more of the outstanding shares of Amphenol
Common Stock) a bona fide intention to make a Transaction Proposal (including by
making such a Transaction Proposal), then NXS may exercise the NXS Option to
purchase the Subject Shares during the period commencing on the date of such
termination and ending on the date which is six months later.
If the Merger Agreement is terminated in any of the circumstances described
in the first sentence of the preceding paragraph, AND, upon or following any
such termination, either (i) one or more of the DeGeorge Stockholders or (ii)
NXS receives any cash or non-cash consideration (the party or parties referred
to in clause (i) or (ii) that receives such consideration being herein referred
to as the "Selling Party" and the other party or parties being referred to as
the "Non-Selling Party" with respect to any particular transaction) in respect
of all or any portion of the Subject Shares in connection with a Third Party
Business Combination during the period commencing on January 23, 1997 and ending
one year from the date the Merger Agreement is terminated, the Selling Party
shall promptly pay over to the Non-Selling Party or its designee (x) one half of
the excess, if any, of such consideration over (y) the product of $26.00 and the
number of Subject Shares with respect to which such Selling Party received such
consideration (the "Shared Amount"). The term "Third Party Business Combination"
with respect to Amphenol means the occurrence of any of the following events:
(A) Amphenol or any subsidiary of Amphenol whose assets constitute 20% or more
of Amphenol's consolidated assets is acquired by merger or otherwise by any
person or group, other than Newco or any affiliate thereof (a "Third Party");
(B) Amphenol or any subsidiary of Amphenol enters into an agreement with a Third
Party which contemplates the acquisition of 20% or more of the total assets of
Amphenol and its subsidiaries, taken as a whole; (C) Amphenol or any of the
DeGeorge Stockholders enter into a merger or other agreement with a Third Party
which contemplates the acquisition of more than 20% of the outstanding shares of
Amphenol Common Stock; or (D) a Third Party acquires more than 20% of the
outstanding Amphenol Common Stock.
Upon the Effective Time of the Merger or the date the Merger Agreement is
terminated in accordance with its terms, whichever occurs first, the obligations
of the DeGeorge Stockholders (i) to vote their shares as specified in the
Stockholders Agreement, (ii) to refrain from soliciting or responding to certain
inquiries or proposals regarding Amphenol and (iii) to comply with certain
restrictions upon the transfer of the Subject Shares shall terminate in
accordance with the Stockholders Agreement. If the Merger Agreement is
terminated, the obligations of the DeGeorge Stockholders pursuant to the
Stockholders Agreement to refrain from competing with Amphenol shall also
terminate. Subject to the foregoing, the obligations of the parties to the
Stockholders Agreement otherwise survive termination of the Merger Agreement.
For a more detailed summary of the foregoing provisions and certain other
provisions of the Stockholders Agreement, see "CERTAIN PROVISIONS OF THE
STOCKHOLDERS AGREEMENT."
NEWCO, NXS AND THE PARTNERSHIP
Newco, a Delaware corporation, and NXS, a Delaware limited liability
company, each of which is currently a wholly owned subsidiary of the
Partnership, were organized in connection with the Merger and have not carried
on any activities to date other than those incident to their formation and the
transactions contemplated by the Merger Agreement and the Stockholders
Agreement, respectively. The Partnership is
11
<PAGE>
a Delaware limited partnership, the general partner of which is KKR Associates
1996 L.P., a Delaware limited partnership. The general partner of KKR Associates
1996 L.P. is KKR 1996 GP LLC, a Delaware limited liability company. The
principal assets of the Partnership are currently its shares of Newco common
stock and its interest in NXS. It is expected that prior to the Effective Time,
one or more other partnerships organized at the direction of KKR may acquire
interests in Newco and/or NXS (any such partnerships, together with the
Partnership, hereinafter referred to as the "Partnerships"). The principal
offices of Newco, NXS and the Partnership are located at 9 West 57th Street, New
York, New York, 10019; telephone number (212) 750-8300. See "NEWCO, NXS AND THE
PARTNERSHIP."
CONVERSION OF NEWCO STOCK
As a result of the Merger, in connection with an equity contribution of
approximately $341 million, the Partnerships will receive approximately 13.1
million shares of Amphenol Common Stock, which represent approximately 75% of
the shares of Amphenol Common Stock expected to be outstanding immediately after
the Merger (before taking into account the effect of any exercise of the NXS
Option or the Stockholders Option, the exercise of either of which could result
in the Partnerships owning, directly and indirectly, up to 82% of such shares,
and before taking into account any purchase of shares from Messrs. Loeffler,
Jepsen and Cohane, which could result in the Partnerships owning, indirectly, up
to an additional 1.5% of such shares).
DISSENTING STOCKHOLDERS' RIGHTS
Under Section 262 of the DGCL, a stockholder of the Company may dissent from
the Merger and obtain payment for the fair value of his or her shares of
Amphenol Common Stock. In order to dissent, (i) the dissenting stockholder must
deliver to the Company, prior to the vote being taken on the Merger at the
Special Meeting, written notice of his or her intent to demand payment for his
or her shares of Amphenol Common Stock if the Merger is effected and (ii) the
dissenting stockholder must not vote in favor of the Merger. See "DISSENTING
STOCKHOLDERS' RIGHTS" and Annex IV.
RISK FACTORS
Holders of Amphenol Common Stock should carefully consider the following
factors related to the retention of Amphenol Common Stock in connection with
their consideration of the Merger. As a result of the Merger (i) affiliates of
KKR will have control of the Company, including the ability to elect directors,
(ii) there will be a substantial decrease in the number of shares of Amphenol
Common Stock and a decrease in the liquidity of the Amphenol Common Stock and
(iii) the terms of the Merger Financings (as defined in "THE MERGER--Merger
Financing") are expected to subject the Company to significant operating and
financial restrictions and to substantially increase the leverage of the
Company. The grant or sale by the Company of shares of Amphenol Common Stock or
options to management to purchase Amphenol Common Stock will dilute the holdings
of Amphenol stockholders. The risk of proration, as described in greater detail
herein, may subject holders of Amphenol Common Stock to dividend treatment for
tax purposes with respect to cash received in the Merger; the effects of
proration may also result in stockholders receiving consideration which is
different from the consideration specified in their respective elections. In
addition, the Company's business entails certain risks relating to (i) the
possibility of fluctuations in demand for the Company's coaxial cable products,
particularly as a result of changes in the demand for such products in the cable
television industry, (ii) the possibility that diminished military expenditures
will adversely affect the Company's sales, (iii) competition, (iv) the possible
adverse effect of foreign exchange rate fluctuations and other risks of
conducting business abroad and (v) certain union organizing activities. See
"RISK FACTORS" for a more detailed discussion of the above mentioned risk
factors.
12
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data of the Company. The historical consolidated financial data for the three
fiscal years ended December 31, 1996 have been derived from, and should be read
in conjunction with, the audited consolidated financial statements of Amphenol
and related notes thereto incorporated by reference herein. The historical
consolidated financial data for the two fiscal years ended December 31, 1993
have been derived from audited consolidated financial statements of the Company
which are not incorporated by reference herein. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................................... $ 776,221 $ 783,233 $ 692,651 $ 603,967 $ 457,677
Cost of sales, excluding depreciation and amortization
expense..................................................... 494,689 506,707 458,318 404,709 313,322
Depreciation and amortization expense......................... 28,808 27,795 28,099 28,614 26,048
Selling, general and administrative expense................... 114,746 114,041 102,183 89,386 75,107
----------- ----------- ----------- ----------- -----------
Operating income.............................................. 137,978 134,690 104,051 81,258 43,200
Interest expense.............................................. (24,617) (25,548) (30,382) (41,184) (29,285)
Non-recurring acquisition expense............................. -- -- -- -- (4,130)
Other income (expense), net................................... (3,696) (4,515) (4,160) (1,998) 1,582
----------- ----------- ----------- ----------- -----------
Income before income taxes and extraordinary item............. 109,665 104,627 69,509 38,076 11,367
Provision for income taxes.................................... (42,087) (41,769) (27,109) (13,327) (2,728)
----------- ----------- ----------- ----------- -----------
Net income before extraordinary item.......................... 67,578 62,858 42,400 24,749 8,639
Extraordinary item (a)........................................ -- -- (4,087) -- --
----------- ----------- ----------- ----------- -----------
Net income.................................................... $ 67,578 $ 62,858 $ 38,313 $ 24,749 $ 8,639
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income before extraordinary item per common and common
equivalent share............................................ $ 1.45 $ 1.33 $ .91 $ .58 $ .26
Extraordinary item per common and common equivalent share..... -- -- (.09) -- --
----------- ----------- ----------- ----------- -----------
Net income per common and common equivalent share............. $ 1.45 $ 1.33 $ .82 $ .58 $ .26
Average common and common equivalent shares outstanding....... 46,649,541 47,304,180 46,611,759 42,821,091 32,983,315
OTHER DATA:
EBITDA (b).................................................... $ 166,061 $ 162,145 $ 131,209 $ 109,035 $ 70,080
EBITDA margin (c)............................................. 21.4% 20.7% 18.9% 18.1% 15.3%
Depreciation and amortization expense......................... $ 28,808 $ 27,795 $ 28,099 $ 28,614 $ 26,048
Capital expenditures.......................................... 20,374 20,381 10,936 5,988 6,695
Ratio of earnings to fixed charges (d)........................ 4.41x 4.14x 2.88x 1.83x 1.46x
Cash flow provided by operations.............................. $ 68,207 $ 79,227 $ 88,871 $ 56,471 $ 23,538
Cash flow used by investing activities........................ (49,835) (21,411) (13,460) (7,752) (21,793)
Cash flow used by financing activities........................ (26,416) (50,370) (73,714) (51,039) (3,779)
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................... $ 136,864 $ 121,313 $ 95,590 $ 90,463 $ 151,544
Total assets.................................................. 710,662 689,924 677,055 691,277 766,397
Total debt (e)................................................ 227,243 197,865 248,176 391,839 488,069
Shareholders' equity.......................................... 360,548 344,085 278,640 173,292 149,688
</TABLE>
- ------------------------------
(a) Represents an extraordinary charge related to the write-off of deferred debt
issuance costs in conjunction with the prepayment of certain bank debt.
(b) "EBITDA" represents earnings before interest expense, other financing fees
associated with program fees on sale of accounts receivable, interest
income, income taxes, depreciation and amortization expense, and excludes
minority interest. It is not intended to represent cash flow from operations
as defined by generally accepted accounting principles and should not be
used as an alternative to net income as an indicator of the Company's
operating performance or to cash flow as a measure of liquidity. EBITDA is
included in the Proxy Statement as it is a basis upon which the Company
assesses its financial performance, and certain covenants in the Company's
borrowing arrangements will be tied to similar measures. EBITDA and EBITDA
margin, as presented, represent useful measures of assessing the Company's
ongoing operating activities without the impact of financing activity and
non-recurring charges. While EBITDA is frequently used as a measure of
operations and the ability to meet debt service requirements, it is not
necessarily comparable to other similarly titled captions of other companies
due to potential inconsistencies in the method of calculation. EBITDA in
fiscal 1992 excludes the effects of a non-recurring charge of $4.13 million
associated with an acquisition.
(c) EBITDA margin represents EBITDA divided by net sales.
(d) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as earnings before income taxes and extraordinary items, plus
fixed charges. Fixed charges includes interest expenses on all indebtedness,
other financing fees associated with program fees on sale of accounts
receivable, amortization of deferred debt issuance costs, and one-third of
rental expenses on operating leases, representing that portion of rental
expense deemed by the Company to be attributable to interest.
(e) Total debt includes long-term debt and the current portion of long-term
debt.
13
<PAGE>
SELECTED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following Selected Pro Forma Consolidated Financial Statements have been
derived by the application of pro forma adjustments to the Company's historical
consolidated financial statements incorporated by reference herein. The pro
forma consolidated statement of income for the period presented gives effect to
the Merger and related transactions as if such transactions were consummated as
of January 1, 1996 for the fiscal year ended December 31, 1996. The pro forma
consolidated balance sheet gives effect to the Merger and related transactions
as if such transactions had occurred as of December 31, 1996. The adjustments
are described in the accompanying notes. The Selected Pro Forma Consolidated
Financial Statements should not be considered indicative of actual results that
would have been achieved had the Merger and related transactions been
consummated on the date or for the periods indicated and do not purport to
indicate balance sheet data or results of operations as of any future date or
for any future period. The Selected Pro Forma Consolidated Financial Statements
should be read in conjunction with the Company's historical financial statements
and the notes thereto incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The pro forma adjustments were applied to the respective historical
consolidated financial statements to reflect and account for the Merger as a
recapitalization. Accordingly, the historical basis of the Company's assets and
liabilities has not been impacted by the transaction.
14
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS FORMA
----------- ----------- ---------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
ASSETS
Current Assets:
Cash and short-term cash investments..................................... $ 4.0 $ (1.0)(a) $ 3.0
Accounts receivable...................................................... 64.9 64.9
Inventories.............................................................. 153.3 153.3
Prepaid expenses and other assets........................................ 11.6 9.8(b) 21.4
----------- ----------- ---------
Total current assets................................................... 233.8 8.8 242.6
Land and depreciable assets, net......................................... 102.1 102.1
Deferred debt issuance costs............................................. 3.7 (3.7)(c) 38.7
38.7(d)
Excess of cost over fair value of net assets acquired.................... 346.6 346.6
Other assets............................................................. 24.5 24.5
----------- ----------- ---------
$ 710.7 $ 43.8 $ 754.5
----------- ----------- ---------
----------- ----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........................................ $ 7.8 $ (7.8)(a)
Accounts payable......................................................... 49.5 $ 49.5
Other accrued expenses................................................... 39.7 39.7
----------- ----------- ---------
Total current liabilities.............................................. 97.0 (7.8) 89.2
Long-term debt........................................................... 219.5 (211.2)(a) 8.3
Term Loan Facility....................................................... 750.0(a) 750.0
Revolving Credit Facility................................................ 13.0(a) 13.0
Debt Securities.......................................................... 240.0(a) 240.0
Deferred taxes and other liabilities..................................... 18.7 -- 18.7
Accrued pension and post employment benefit obligations.................. 15.0 -- 15.0
----------- ----------- ---------
Total liabilities...................................................... 350.2 784.0 1,134.2
Total shareholders' equity (deficit)..................................... 360.5 (740.2)(e) (379.7)
----------- ----------- ---------
$ 710.7 $ 43.8 $ 754.5
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet
15
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements as of the
date noted. The Merger has been accounted for as a recapitalization which will
have no impact on the historical basis of the Company's assets and liabilities.
The pro forma financial data assumes that there are no dissenting shareholders
to the Merger.
(a) The net effect of $1.0 million reflects the following:
<TABLE>
<CAPTION>
(DOLLARS IN
TOTAL SOURCES MILLIONS)
- ------------------------------------------------------------------------- -------------------
<S> <C>
Term Loan Facility proceeds.............................................. $ 750.0
Revolving Credit Facility proceeds....................................... 13.0
Debt Securities proceeds................................................. 240.0
Newco equity investment.................................................. 341.0
--------
Total sources............................................................ $ 1,344.0
--------
TOTAL USES
Payment of cash merger consideration..................................... $ 1,048.3
Refinancing of existing debt:
Current maturities of long-term debt................................... 7.8
Long-term debt......................................................... 211.2
Estimated debt retirement premium........................................ 19.3
Options canceled......................................................... 2.4
Estimated transaction fees and expenses.................................. 56.0
--------
Total uses............................................................... $ 1,345.0
--------
Net...................................................................... $ (1.0)
--------
--------
</TABLE>
(b) The adjustment represents the tax benefit, at a 38.5% effective rate, of
deductible expenses reflected in footnote (e) hereto.
(c) The adjustment reflects the write-off of deferred debt issuance costs
associated with the 10.45% Senior Notes and 12.75% Senior Subordinated Notes
being retired and the termination of the Existing Bank Credit Facility.
(d) The adjustment represents the portion of estimated transaction fees and
expenses attributable to the Term Loan Facility, Revolving Credit Facility
and Debt Securities, which will be recorded as deferred debt issuance costs
and will be amortized over the life of the debt to be issued. Such estimated
deferred debt issuance costs include estimated fees and expenses payable to
banks, underwriters and related advisors.
(e) The adjustment represents the net change as a result of the Merger and
related transactions:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
-------------------
<S> <C>
Convert to cash 40.3 million shares of common stock...................... $ (1,048.3)
Issue 13.1 million shares of common stock................................ 341.0
Transaction fees and expenses (1)........................................ (17.3)
Write-off of deferred debt issuance costs................................ (3.7)
Options canceled......................................................... (2.4)
Estimated debt retirement premium........................................ (19.3)
Tax benefit of above expense adjustments at a 38.5% effective rate....... 9.8
--------
Total.................................................................. $ (740.2)
--------
--------
</TABLE>
- ------------------------
(1) Represents the portion of the total $56.0 million of estimated transaction
fees and expenses (excluding $2.4 million of cash consideration related to
the Company stock options to be cancelled in connection with the Merger)
which will be recorded as an expense in connection with the Merger and
related transactions; the remainder of such transaction fees and expenses
are recorded in Note (d) above as deferred debt issuance costs. The expensed
portion of estimated transaction fees and expenses are anticipated to
consist of: (i) professional, advisory and investment banking fees and
expenses, and (ii) miscellaneous fees and expenses such as printing and
filing fees.
16
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS(A) FORMA
----------- --------------- ---------
<S> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
Net sales.................................................................... $ 776.2 $ 776.2
Costs and expenses:
Cost of sales, excluding depreciation and amortization..................... 494.7 494.7
Depreciation and amortization expense...................................... 28.8 28.8
Selling, general and administration expense................................ 114.7 114.7
----------- ---------
Operating income............................................................. 138.0 138.0
Interest expense............................................................. (24.6) $ (71.0)(b) (95.6)
Other expense, net........................................................... (3.7) (0.8)(c) (4.5)
----------- ------ ---------
Income before income taxes................................................... 109.7 (71.8) 37.9
Provision for income taxes................................................... 42.1 (27.6)(d) 14.5
----------- ------ ---------
Net income................................................................... $ 67.6 $ (44.2) $ 23.4
----------- ------ ---------
----------- ------ ---------
Net income per share......................................................... $ 1.45 $ 1.34
----------- ---------
----------- ---------
Average common shares outstanding............................................ 46.65 17.52
----------- ---------
----------- ---------
Ratio of earnings to fixed charges (e)....................................... 4.41x 1.37x
----------- ---------
----------- ---------
</TABLE>
- ------------------------
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements for the
period noted. The Merger has been accounted for as a recapitalization which will
have no impact on the historical basis of the Company's assets and liabilities.
The pro forma financial data assumes that there are no dissenting shareholders
to the Merger.
(a) As described in note (e) to the Pro Forma Consolidated Balance Sheet, the
pro forma adjustments exclude (i) $2.4 million of compensation expense
related to the Company stock options to be canceled in conjunction with the
Merger, (ii) the write-off of $3.7 million of deferred debt issuance costs
associated with the 10.45% Senior Notes and 12.75% Senior Subordinated Notes
being retired and the termination of the existing bank credit facility,
(iii) the estimated $19.3 million of premium on retirement of 10.45% Senior
Notes and 12.75% Senior Subordinated Notes, (iv) $17.3 million of estimated
transaction fees and expenses incurred in connection with the Merger and (v)
$9.8 million of tax benefit of such expenses. Such amounts represent
non-recurring expenses which the Company anticipates will be recorded in the
Consolidated Statement of Income for the period including the Merger.
(b) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
-------------------
<S> <C>
Interest expense on historical debt repaid in Merger..................... $ (23.6)
Interest expense with respect to the Term Loan and revolving credit
facilities and the Debt Securities at an assumed weighted average
interest rate of 8.8%................................................... 88.6
Amortization of deferred debt issuance costs............................. 6.0
------
Total adjustment......................................................... $ 71.0
------
------
</TABLE>
17
<PAGE>
A 0.125% increase or decrease in the assumed weighted average interest rate
would change the pro forma interest expense by $1.3 million. The pro forma
net income would change by $0.8 million and the pro forma net income per
share would change by $0.04.
For the year ended December 31, 1996, each $1.0 million increase or decrease
in the Term Loan, revolving credit facilities and Debt Securities would
change pro forma interest expense by $0.09 million. The pro forma net income
would change by $0.05 million and the pro forma net income per share would
not change.
(c) The adjustment eliminates interest income on cash and short-term investments
not expected to be received after the Merger and related transactions.
(d) The adjustment reflects the tax effect of the pro forma adjustments at a
38.5% effective income tax rate.
(e) For purposes of determining the pro forma ratio of earnings to fixed
charges, earnings are defined as earnings before income taxes and
extraordinary items, plus fixed charges. Fixed charges include interest
expense on all indebtedness, other financing fees associated with program
fees on sale of accounts receivable, amortization of deferred debt issuance
costs, and one-third of rental expense on operating leases representing that
portion of rental expense deemed by the Company to be attributable to
interest.
18
<PAGE>
PRICE OF AMPHENOL COMMON STOCK
The Amphenol Common Stock is listed and traded on the NYSE under the symbol
"APH." The following table shows, for the fiscal periods indicated, the high and
low sale prices of a share of Amphenol Common Stock on the NYSE Composite
Transactions Tape.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C> <C>
FISCAL 1995
First Quarter (ended March 31, 1995)................................... 27 1/2 20
Second Quarter (ended June 30, 1995).................................... 30 3/8 23 3/4
Third Quarter (ended September 30, 1995)............................... 29 1/2 21 1/2
Fourth Quarter (ended December 31, 1995)................................ 24 1/4 18 3/4
FISCAL 1996
First Quarter (ended March 31, 1996) 26 20 1/8
Second Quarter (ended June 30, 1996).................................... 27 5/8 19 7/8
Third Quarter (ended September 30, 1996)............................... 22 7/8 18 3/4
Fourth Quarter (ended December 31, 1996)................................ 23 19
FISCAL 1997
First Quarter (ended March 31, 1997)................................... 26 1/8 21 1/2
Second Quarter (to April 9, 1997)....................................... 25 1/4 24 5/8
</TABLE>
On January 22, 1997, the last trading day before public announcement of the
execution of the Merger Agreement, the last sale price of Amphenol Common Stock
on the NYSE Composite Transactions Tape was $23 1/8 per share.
On April 9, 1997, the most recent practicable date prior to the printing of
this Proxy Statement, the last sale price of Amphenol Common Stock as reported
on the NYSE Composite Transactions Tape was $24 7/8 per share.
Amphenol stockholders should obtain current market prices for Amphenol
Common Stock.
Since its initial public offering in 1991, the Company has not paid any cash
dividends on Amphenol Common Stock and it does not have any present intention to
commence payment of any cash dividends. The Company intends to retain earnings
to provide funds for the operation and expansion of the Company's business and
to repay outstanding indebtedness. The Company's debt agreements contain, and
the agreements related to the Merger Financings are expected to contain, certain
covenants restricting the payment of dividends on, or repurchases of, Amphenol
Common Stock.
19
<PAGE>
RISK FACTORS
Holders of Amphenol Common Stock should carefully consider the following
factors related to the retention of Amphenol Common Stock in connection with
their consideration of the Merger.
CONTROL BY KKR AFFILIATES
Upon completion of the Merger, approximately 75% of the outstanding shares
of Amphenol Common Stock will be held by the stockholders of Newco (before
taking into account the effect of any exercise of the NXS Option or the
Stockholders Option, the exercise of either of which could result in the
stockholders of Newco owning, directly or indirectly, up to 82% of such shares,
and before taking into account any purchase of shares from Messrs. Loeffler,
Jepsen and Cohane, which could result in such stockholders of Newco owning,
indirectly, up to an additional 1.5% of such shares). As of the date hereof the
sole stockholder of Newco is the Partnership, of which KKR Associates 1996 L.P.,
a Delaware limited partnership, is the general partner. The sole general partner
of KKR Associates 1996 L.P. is KKR 1996 GP LLC, a limited liability company
organized under Delaware law. The members of KKR 1996 GP LLC are also the
members of the limited liability company which is a general partner of KKR (and
are expected to be the members of any limited liability company which would act
as a general partner of a partnership organized at the direction of KKR to
acquire interests in Newco and/or NXS). Accordingly, the members of KKR 1996 GP
LLC will control the Company and have the power to elect all of its directors,
appoint new management and approve any action requiring the approval of the
holders of Amphenol Common Stock, including adopting certain amendments to the
Company's certificate of incorporation and approving mergers or sales of all or
substantially all of the Company's assets. The directors elected by the
Partnership will have the authority to effect decisions affecting the capital
structure of the Company, including the issuance of additional capital stock,
the implementation of stock repurchase programs and the declaration of
dividends. There can be no assurance that the capital policies of the Company in
effect prior to the Merger will continue after the Merger.
In addition, the existence of a controlling stockholder of Amphenol may have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from seeking to acquire, a majority of the
outstanding Amphenol Common Stock. A third party would be required to negotiate
any such transaction with the Partnership and the interests of the Partnership
may be different from the interests of other Amphenol stockholders.
LOSS OF LIQUIDITY
Following the consummation of the Merger, there will be a substantial
decrease in the number of shares of Amphenol Common Stock to be held by holders
thereof other than the Partnerships, which is expected to result in a
substantial decrease in the liquidity of Amphenol Common Stock. The Merger is
not expected to cause the Amphenol Common Stock to be de-listed from the NYSE.
However, it is anticipated that the volume of shares of Amphenol Common Stock
traded following the Merger will be substantially smaller than the trading
volume of Amphenol Common Stock prior to the Merger.
SUBSTANTIAL LEVERAGE; STOCKHOLDERS' DEFICIT; LIQUIDITY
In connection with consummating the transactions contemplated by the Merger
Agreement, the Company will enter into the Merger Financings to (i) fund payment
of the cash consideration in the Merger, (ii) repay or repurchase certain
indebtedness of the Company, (iii) pay the fees and expenses incurred in
connection with the Merger and the Merger Financings and (iv) provide for
working capital requirements. Although the definitive terms of the Merger
Financings have not been finalized as of the date of this Proxy Statement, the
Company expects that such terms will include significant operating and financial
restrictions, such as limits on the Company's ability to incur indebtedness,
create liens, sell assets, engage in mergers or consolidations, make investments
and pay dividends.
20
<PAGE>
As of December 31, 1996, after giving pro forma effect to the Merger and the
Merger Financings and the application of the net proceeds therefrom, the Company
would have had (i) $1,011.3 million of consolidated indebtedness and (ii) as a
result of the Merger, because the distribution to stockholders and all
Merger-related expenses will be charged to stockholders' equity, $379.7 million
of consolidated stockholders' deficit. Such level of consolidated indebtedness
is substantially greater than the Company's pre-Merger indebtedness. Such high
leverage may have important consequences for the Company including the
following: (a) the Company's ability to obtain additional financing for future
acquisitions (if any), working capital, capital expenditures or other purposes
may be impaired or any such financing may not be on terms favorable to the
Company; (b) a substantial portion of the Company's cash flow available from
operations after satisfying certain liabilities arising in the ordinary course
of business will be dedicated to the payment of principal and interest on its
indebtedness, thereby reducing funds that would otherwise be available to the
Company, including for future business opportunities; (c) a substantial decrease
in net operating cash flows or an increase in expenses of the Company could make
it difficult for the Company to meet its debt service requirements or force it
to modify its operations; and (d) high leverage may place the Company at a
competitive disadvantage and may make it vulnerable to a downturn in its
business or the economy generally. See "THE MERGER--Merger Financings."
In addition, the substantial leverage will have a negative effect on the
Company's net income. Pro forma net income for the fiscal year ended December
31, 1996 would have been $23.4 million, as compared to $67.6 million for the
same period on a historical basis, and pro forma interest expense for fiscal
1996 would have been $95.6 million, as compared to $24.6 million for the same
period on a historical basis.
After the Merger is consummated, the Company's principal sources of
liquidity are expected to be cash flow from operations and borrowings under a
revolving credit facility. It is anticipated that the Company's principal uses
of liquidity will be to provide working capital, to meet debt service
requirements and other liabilities arising in the ordinary course and to finance
the Company's strategic plans. The revolving credit facility will be available
for the Company's working capital needs and a portion thereof will be available
for the issuance of letters of credit. A term loan facility will be drawn in
full upon consummation of the Merger. See "THE MERGER--Merger Financings."
POTENTIAL DILUTION OF AMPHENOL STOCKHOLDERS
Following the Merger, the Company intends to grant or sell, or grant options
to purchase, additional shares of Amphenol Common Stock to members of the
Company's management. Any such grant or sale, or exercise of any stock option,
will dilute the holdings of Amphenol stockholders and also dilute the holdings
of the Partnerships. See "THE MERGER--Interests of Certain Persons in the
Merger."
NON-CASH ELECTION AND PRORATION INTO CASH--POSSIBLE DIVIDEND TREATMENT
As described herein (subject to the Non-Cash Election Number), a stockholder
may make a Non-Cash Election and thereby elect to retain shares of Amphenol
Common Stock in the Merger. However, if the number of Electing Shares exceeds
the Non-Cash Election Number, such electing stockholder may receive some cash
for a portion of his or her Amphenol Common Stock as a result of the proration
procedures described herein under "THE MERGER--Non-Cash Election." In such
event, a stockholder may receive dividend treatment (rather than the generally
more favorable capital gain treatment) for any cash received in the Merger as a
result of such proration procedures. See "THE MERGER--Certain Federal Income Tax
Consequences" for a more detailed discussion of the tax consequences of
receiving cash. No such dividend treatment should be applicable in the event
stockholders who do not elect to retain shares receive cash for their shares in
the Merger or receive shares of Amphenol Common Stock as a result of proration.
21
<PAGE>
CERTAIN PRORATION RISKS
As described herein, the election of record holders of Amphenol Common Stock
to retain Non-Cash Election Shares or to receive the Cash Price pursuant to the
Merger is subject to the proration procedures of the Merger Agreement.
Accordingly, if the Merger is consummated, stockholders will not necessarily
receive the type of consideration specified in their respective elections.
FACTORS AFFECTING SALES TO THE CABLE TELEVISION INDUSTRY
Demand for domestic coaxial cable television products has historically
depended primarily upon capital spending cycles by cable operators for
constructing, rebuilding, upgrading and maintaining their systems. Such capital
spending is affected by a variety of factors, including general economic
conditions, access by cable operators to financing, changes in governmental
regulation of the cable television industry, competitive pressures and advances
in technology. Beginning in late 1992, capital spending by the U.S. cable
television industry increased from previously depressed levels as a result of
generally better credit markets allowing the cable television industry to take
advantage of technological developments for offering enhanced services and to
address a perceived competitive challenge from regional Bell operating companies
("RBOC's"). Capital spending began to decrease in 1995 and continued to slow in
1996 as cable operators perceived a diminished immediate competitive threat from
RBOC's, the unavailability of some technological advancements such as digital
converters and cable modems, and the higher cost of capital due to the generally
depressed equity values of cable operators. A number of multiple system
operators ("MSOs") are highly leveraged entities with substantial indebtedness.
There can be no assurance that the capital spending by cable operators will not
be further reduced in the future, adversely affecting demand for the Company's
cable products.
The Company's sales of coaxial cable for the U.S. cable television market
were $94.5 million, $115.4 million and $116.8 million for 1996, 1995 and 1994,
respectively. The Company's sales declined in 1996 primarily because (i) certain
RBOCs that began purchasing coaxial cable from the Company in 1994 and 1995 to
install full service communications systems significantly slowed their purchases
in 1996 in an effort to work down inventory levels and to reassess their plans
with respect to building broadband communications systems and (ii) in the fall
of 1996, Tele-Communications, Inc. ("TCI"), a major MSO, announced that it was
slowing down its equipment spending for rebuilding and upgrading many of its
cable television systems and that it would concentrate on developing compression
technology to offer expanded digital channel capacity to such systems. The
Company's sales to the RBOCs and TCI declined by a total of $18.4 million in
1996 compared to 1995.
The Company's sales of coaxial cable products to international markets
increased each year from 1989 through 1995 and will continue to be an important
focus for the Company. In 1996, however, international sales of coaxial cable
declined to $84.7 million from $122.9 million in 1995. While sales to any
individual country may vary from year-to-year, the decline in 1996 was primarily
because (i) a system operator for the major cities in Australia made the
decision to change purchases of coaxial cable from the Company to a newly formed
Australian joint venture between an international coaxial cable supplier and a
local cable manufacturer and (ii) Taiwan is moving from an unregulated cable
television environment to regulation through the awarding of franchises, which
has slowed down the building of cable television systems. Sales to Australia and
Taiwan declined by a total of $29.1 million in 1996 compared to 1995. U.S. cable
television system designs are increasingly being employed in other countries
where cable television penetration is currently low. However, there can be no
assurance that international markets will continue to expand, or that growth and
profitability in the Company's international sales will not be affected by
political uncertainties, currency exchange rate fluctuations or variations in
capital spending cycles in international markets.
Technological developments which may impact the future designs of cable
television systems are occurring rapidly in the communications industry. For
example, under certain conditions, direct broadcast
22
<PAGE>
satellite services to consumers with satellite receiving dishes are being
pursued, and certain cable distribution architectures that make greater use of
fiber optic cable than current hybrid fiber optic/coaxial cable systems are
being investigated. While the Company believes that for the foreseeable future
cable system operators will continue to employ systems using a combination of
fiber optic cable and high performance coaxial cable, any successful
development, financing and implementation of alternative technologies may
adversely affect demand for the Company's coaxial cable products.
EXPOSURE TO CHANGES IN MILITARY EXPENDITURES
The Company is a major supplier of high performance environmental connectors
for military applications. The U.S. defense budget has been declining in real
terms since the mid-1980s, resulting in some delays in new program starts,
program deferrals and program cancellations. Sales under contracts with the U.S.
government or under contracts with subcontractors that identified the U.S.
government as the ultimate purchaser represented approximately 8.0% of the
Company's sales for the year ended December 31, 1996, compared to 7.1% for 1995
and 9.1% for 1994. Additionally, there are sales of the Company's products to
the U.S. government through its distributors. The Company's participation across
a broad spectrum of defense programs is such that the Company believes that no
one military program accounted for more than 1% of 1996 net sales. A significant
further decline in U.S. military expenditures might adversely affect the
Company's sales. The Company believes, however, that to the extent a higher
proportion of available defense budget funds will be allocated to improvements
of existing defense systems, rather than to new program starts, the impact on
the Company of declining military budgets would be mitigated because of its
substantial incumbency in existing programs and its experience in system
upgrades.
COMPETITION
The Company encounters competition in substantially all areas of its
business. The Company competes primarily on the basis of product quality, price,
engineering, customer service and delivery time. Competitors include large,
diversified companies, some of which have substantially greater assets and
financial resources than the Company, as well as medium to smaller companies. In
the area of coaxial cable for cable television, the Company believes that it and
CommScope, a division of General Instrument Corporation, are the primary
providers of such cable; however, CommScope is larger than the Company in this
market. In addition, the Company faces competition from small companies that
have concentrated their efforts in one or more areas of the coaxial cable
market. There can be no assurance that additional competitors will not enter the
Company's existing markets, nor can there be any assurance that the Company will
be able to compete successfully against existing or new competition.
RISKS ASSOCIATED WITH FOREIGN OPERATIONS; EXCHANGE RATE FLUCTUATIONS.
The Company's products are manufactured and assembled at facilities in the
U.S., Canada, Mexico, Germany, France, the United Kingdom, the Czech Republic,
Hong Kong, Taiwan, Japan, India and the People's Republic of China. Sales and
expenses are frequently denominated in local currencies and are, therefore,
subject to changes in currency exchange rates in relation to the U.S. dollar.
There can be no assurance that measures taken by the Company to mitigate its
exchange rate risk, including manufacturing and procuring its products in the
same country or region in which products are sold and periodically engaging in
hedging transactions such as forward exchange contracts, will eliminate or
substantially reduce such risk.
International manufacturing and sales are subject to inherent risks,
including changes in local economic or political conditions, the imposition of
currency exchange restrictions, unexpected changes in regulatory environments,
potentially adverse tax consequences and the exchange rate risk discussed above.
There can be no assurance that these factors will not have a material adverse
impact on the Company's production capabilities or otherwise adversely affect
the Company's business and operating results.
23
<PAGE>
LABOR RELATIONS
Approximately 2,300 of the Company's approximately 4,500 hourly employees
were represented by labor unions as of December 31, 1996. Beginning October 21,
1995, the Company experienced a seven day work stoppage at its plant in Sidney,
New York when approximately 1,000 hourly employees represented by the
International Association of Machinists and Aerospace Workers rejected a Company
proposal for a collective bargaining agreement and voted to strike upon the
expiration of their then current contract. A new three-year contract was
approved and the work stoppage ended on October 28, 1995. In 1996, the United
Steelworkers International Union, AFL-CIO attempted to organize approximately
500 hourly employees at the Company's plant in Chatham, Virginia. The union
organizing effort was defeated by a vote of the hourly employees. A Regional
Director of the National Labor Relations Board subsequently found that unfair
labor practices had been committed by the Company prior to the election and
ordered that a new election be held. The Company's appeal of such finding and
order was denied by the National Labor Relations Board on March 19, 1997. The
Company expects that a new election will be held at the Chatham, Virginia plant
prior to May 30, 1997. If the union is certified, the Company would be required
to bargain in good faith with the union, and its operations at such facility
could be subject to the risks associated with unionized employees generally,
including the risk of work stoppages.
24
<PAGE>
THE COMPANY
The Company is a leading designer, manufacturer and marketer of electrical,
electronic and fiber optic connectors, interconnect systems and coaxial and
flat-ribbon cable. The primary end markets for the Company's products are
telephone, wireless and data communications systems; cable television systems;
commercial and military aerospace electronics; automotive and mass
transportation applications; and industrial factory automation equipment. For
the year ended December 31, 1996, approximately 52% of the Company's net sales
were to the worldwide communications market (including 23% for the cable
television market), 26% were for commercial and military aerospace and other
military electronics applications and 22% were for industrial, transportation
and other applications. The Company focuses on optimizing its mix of higher
margin application-specific products in its product offerings and has enhanced
the cost controls in its operations. As a result of these initiatives, the
Company's operating profit margin has increased from 13.5% in fiscal year 1993
to 17.8% in fiscal year 1996.
The Company designs and manufactures connectors and interconnect systems,
which are used primarily to conduct electrical and optical signals, for a wide
range of sophisticated electronic applications. The Company believes, based
primarily on published market research, that it is one of the largest connector
manufacturers in the world and the leading supplier of high performance
environmental connectors that require superior performance and reliability under
conditions of stress and in hostile environments. Such conditions are frequently
encountered in commercial and military aerospace applications and other
demanding industrial applications such as natural resource exploration, medical
instrumentation and off-road construction. In addition, the Company has
developed a broad range of interconnect products to serve the rapidly growing
markets of wireless communications including cellular and personal
communications networks and fiber optic networks; electronic commerce including
smart cards and electronic purse applications; and automotive safety products
including airbags, pretensioner seatbelts and anti-lock braking systems. The
Company is also one of the leaders in developing interconnect products for
factory automation and machine tools and, in addition, develops interconnect
products for mass transportation applications. The Company believes that the
worldwide industry for interconnect products and systems is highly fragmented
with over 1,000 producers of connectors worldwide, of which the 10 largest
producers accounted for a combined market share of 36% in 1996. The Company
estimates that the total sales for the industry were approximately $27 billion
in 1996.
The Company's Times Fiber subsidiary is the world's second largest producer
of coaxial cable for the cable television market. The Company believes that
Times Fiber is one of the lowest cost producers of coaxial cable for the cable
television market, and that it is one of the technological leaders in increasing
the bandwidth of coaxial cable products to accommodate increased channel
capacity for full service cable television/telecommunication systems. In
addition, the Company is beginning to supply the developing market for high
bandwidth coaxial cable and related interconnect products used in full service
cable television/telecommunication systems being installed by cable operators
and telecommunication companies. The Company has also become a major supplier of
coaxial cable to the emerging international cable television markets. The
Company estimates that the total sales for the worldwide market for coaxial
cable for cable television were approximately $800 million in 1996.
The Company is a global manufacturer employing advanced manufacturing
processes. The Company's products are manufactured and assembled at facilities
in the U.S., Canada, Mexico, Germany, France, the United Kingdom, the Czech
Republic, Hong Kong, Taiwan, Japan, India and the People's Republic of China.
The Company's connector products are sold through its global sales force to
thousands of original equipment manufacturers ("OEMs") in 52 countries
throughout the world as well as through a global network of electronic
distributors. The Company's coaxial cable products are primarily sold to cable
television operators and to telecommunication companies who have entered the
broadband communications market. In 1996, approximately 55% of the Company's net
sales were in North America, 33% were in Europe and 12% were in Asia and other
countries.
25
<PAGE>
COMPETITIVE STRENGTHS
- LEADER IN ATTRACTIVE MARKET SEGMENTS. The Company serves diverse markets
within the connector industry such as the worldwide communications,
aerospace and automotive markets and growing segments within these
markets. For instance, the Company has a broad product offering of
communications-related interconnect products such as sophisticated
wavelength division multiplexers used in fiber optic networks, radio
frequency connector products used in base stations and handheld sets in
wireless communications, and interconnect acceptor devices used in smart
card systems. The Company, in conjunction with a significant OEM customer,
has also developed sophisticated interconnect coupler technology for
advanced commercial aircraft flight control systems. In addition, the
Company has pioneered the development of interconnect products for
automotive safety systems such as airbags and pretensioner seatbelts and
has been an innovator in the development of motion control connector
products for factory automation. With respect to its coaxial cable
products for cable television, the Company has been one of the
technological leaders in expanding the bandwidth characteristics of
coaxial cable so as to permit greater channel capacity for cable
television systems.
- CLOSE RELATIONSHIPS WITH OEMS. Due in part to its sixty year history in
the connector business and reputation for innovative, high quality
interconnection products, the Company has developed close relationships
with many of its OEM customers in its various product segments. To this
end, the Company has achieved preferred supplier designations from many
OEMs, enabling the Company to work closely with these OEMs through product
design teams and collaborative arrangements to design and manufacture
application-specific products. The Company's key account managers enhance
the Company's role as a supplier of application-specific products for OEMs
by directing customer relationships on a global basis and bringing to bear
the Company's global resources to satisfy the worldwide needs of the
Company's multinational OEM customers.
- GLOBAL PRESENCE. Approximately 49% of the Company's sales for fiscal year
1996 were outside of the United States. The Company has 31 manufacturing
and assembly facilities on three continents and sales and distribution
organizations and relationships in 52 countries throughout the world. The
Company's global presence enables it to serve the expanding global needs
and requirements of its existing multinational and international OEM
customers and to position itself to develop new customer relationships
with other multinational and international OEMs. The Company believes that
having a local presence in foreign markets in which its OEM customers
operate is an important factor in its ability to provide high quality
products on a timely and efficient basis. Moreover, the Company attains
important operational advantages by developing and sharing "best
practices" across its vast international design and manufacturing network.
- EXTENSIVE PRODUCT LINE. Through its advanced technological and design
capabilities, the Company has developed an extensive line of interconnect
products for its customers worldwide which resulted in sales of
approximately 83,000 stock keeping units ("SKUs") in 1996. By offering a
broad array of high quality products, the Company strives to provide
highly-engineered, reliable and value-added solutions for all of its
customers' interconnection needs. For example, based on Amphenol's
position as the leading supplier in the high performance environmental
connector market, the Company performed certain research and development
for, and is now producing, a family of connectors comprising approximately
1,000 SKUs for use in the international space station program. The Company
believes that the breadth of its product line combined with its global
presence is an important competitive advantage in an environment in which
many OEMs and other customers are reducing the size of their supplier
bases.
- BROAD CUSTOMER BASE. The Company's products are used in a wide variety of
applications by numerous customers, none of whom accounted for more than
5% of the Company's sales in 1996 (except for sales under contract with
the U.S. Government and its subcontractors, which accounted
26
<PAGE>
for 8% of 1996 sales). In 1996, the Company sold its products to
approximately 11,500 customer locations worldwide. The Company's products
are also sold to additional customer locations through 8 of the 10 largest
U.S. electronics distributors, based on sales, which the Company believes
is an important competitive advantage in effectively marketing its
products. By servicing a broad array of customers in a variety of
different industries and countries, the Company strives to develop
opportunities to cross-market products and technologies.
BUSINESS STRATEGY
The Company's strategic objective is to further enhance its position as a
leading global designer and manufacturer of interconnect solutions and coaxial
cable products. The Company seeks to achieve this objective by pursuing the
following strategies:
- INCREASE DEVELOPMENT OF APPLICATION-SPECIFIC PRODUCTS FOR OEMS. The
Company intends to expand the scope and number of preferred supplier
designations and application-specific assignments it has with OEM
customers. The Company works closely with its network of OEM customers at
the design stage to create and manufacture innovative connector solutions
to meet its customers' specific interconnection needs. The Company's
application-specific products designed and manufactured for OEMs in this
manner generally have higher margins than the Company's other
interconnection products and have been developed across all of the
Company's product lines. In addition to developing further its
relationship with these OEMs and providing a source of high margin sales,
this product development strategy has a number of important ancillary
benefits. For instance, once an application-specific product has been
developed for a specific OEM customer, such new product often becomes
widely accepted in the industry for similar applications and products
manufactured by other potential customers, thereby providing additional
sources of future revenue. For example, the Company developed an
application-specific interconnect system for automotive safety devices for
a European luxury automobile manufacturer that became broadly used by
other European automobile manufacturers for standard car models.
- EXPAND PRODUCTS LINES. The Company's current product lines encompass
market segments comprising approximately 50% of the $27.0 billion
connector industry. The Company continuously strives to expand its product
lines in order to become a primary source supplier of interconnect
solutions for many of its customers. By expanding its product lines, the
Company intends to leverage its extensive customer relationships to
cross-sell additional connector products. For example, in 1995, the
Company developed and is now producing a broad line of radio frequency
coaxial and fiber optic connectors for the cable television industry,
which the Company markets to its large base of existing coaxial cable
customers. Moreover, in an environment in which many OEMs and other
customers are reducing the size of their supplier bases, the Company
believes that the expansion of its product line will further solidify its
importance to existing customers and enable the Company to effectively
market products to new customers.
- FOCUS ON RAPIDLY GROWING COMMUNICATIONS SEGMENT. The Company intends to
capitalize on its advanced technological capabilities and products in the
emerging and rapidly expanding communications segment of the connector
industry, which has displayed strong growth in recent years in connection
with the proliferation of wireless communications including cellular
telephones and personal communication networks. For instance, the Company
has developed a broad range of radio frequency connector products for the
wireless communications market, and the Company's technology for smart
card acceptor devices is used in many of the hand held cellular telephones
in Europe and elsewhere. The Company also believes that many of the
advanced technologies developed through its product development activity
in the commercial and military aerospace segment provide it with a
significant competitive advantages in the development of new commercial
communications connector products. For example, by using the technological
capabilities that it
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developed in designing filtered connectors for the aerospace segment, the
Company was able to develop a line of filtered connectors for the
commercial communications segment.
- EXPAND GLOBAL PRESENCE. The Company intends to further expand its global
manufacturing, sales and service operations to better serve its existing
client base, penetrate developing markets and establish new customer
relationships. As the Company's multinational OEM customers expand their
international operations to take advantage of developing markets and the
lower manufacturing and labor costs of such markets, the Company intends
to similarly expand its international capabilities in order to provide
just-in-time facilities near these customers. Such international expansion
also enables the Company to further reduce its reliance on the U.S.
economy and to take advantage of the lower manufacturing costs in certain
countries. The Company has recently increased its presence in the
Asia-Pacific region through the expansion of its sales force, the
expansion of its manufacturing facilities in the People's Republic of
China and the acquisition of 51% of Kai-Jack Industrial Co., Ltd.
("Kai-Jack"), one of the leading Taiwanese radio frequency connector
manufacturers.
- EXPAND INTERNATIONAL SALES OF COAXIAL CABLE. The Company believes that the
relatively low penetration rate for cable television in countries outside
of the United States provides significant opportunity for future growth in
international sales of coaxial cable. For example, it is estimated that in
1996 only 25% of the television households in Western Europe, 14% of such
households in Asia, and 11% of such households in Latin America subscribe
to some form of multichannel television service as compared to an
estimated subscription rate of 64% in the United States. Cable system
developments are currently planned in a number of different countries,
including large portions of Europe, Asia and Latin America. The Company
believes that it is well positioned to take advantage of this opportunity
because it is the second largest provider of coaxial cable for cable
television in the world and because it has extensive relationships with
many of the foreign and multinational MSOs planning system developments,
including United International Holdings, Inc., Telewest Communication Plc,
and Continental Cablevision, Inc.
- PURSUE STRATEGIC ACQUISITIONS AND INVESTMENTS. The Company intends to
continue to pursue strategic acquisitions that complement its existing
business and further expand its product lines and technological
capabilities. The interconnection industry is highly fragmented with over
1,000 producers of connectors worldwide, of which the 10 largest producers
accounted for a combined market share of approximately 36% in 1996. The
Company believes that the fragmented nature of the connector industry
provides significant opportunities for future strategic acquisitions.
Furthermore, the Company believes that it can improve the profitability of
the acquired companies through economies of scale. The Company's recent
acquisition of The Sine Companies, Inc. and Kai-Jack, which expanded the
Company's capabilities in the factory automation and radio frequency
segments, respectively, and, in the case of Kai-Jack, increased the
Company's presence in the growing Asia-Pacific market, are examples of the
type of synergistic acquisitions the Company plans to continue to pursue.
The Company has no current plans to make any significant divestitures.
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THE SPECIAL MEETING
MATTERS TO BE CONSIDERED
At the Special Meeting, the stockholders of Amphenol will be asked to
consider and vote upon a proposal to approve and adopt the Merger Agreement
entered into between Newco, as of the date hereof a wholly owned subsidiary of
the Partnership, and Amphenol, and the transactions contemplated thereby,
including the Merger. If the Merger is approved by the stockholders of Amphenol,
Newco will merge with and into Amphenol and approximately 40.3 million shares of
Amphenol Common Stock currently held by Amphenol stockholders (representing
approximately 90% of the presently issued and outstanding shares of Amphenol
Common Stock) will be converted into cash. The remaining 4.4 million of
presently issued and outstanding shares of Amphenol Common Stock will be
retained by existing stockholders of Amphenol. These shares which are to be
retained represent approximately 10% of shares of Amphenol Common Stock issued
and outstanding prior to the Merger and will represent approximately 25% of the
shares of Amphenol Common Stock expected to be issued and outstanding
immediately after the Merger. If the Merger is approved, the common stock of
Newco, all of which is owned on the date hereof by the Partnership, will be
converted into approximately 13.1 million shares of Amphenol Common Stock, which
will represent approximately 75% of Amphenol Common Stock expected to be issued
and outstanding after the Merger. In addition, assuming that all stockholders
elected to convert all of their shares into the right to receive the Cash Price,
which would maximize the number of Subject Shares subject to the NXS Option and
the Stockholders Option after the Merger, upon exercise of the NXS Option or the
Stockholders Option pursuant to the Stockholders Agreement, the stockholders of
Newco would own, indirectly, approximately 1.3 million additional shares of
Amphenol Common Stock, resulting in the stockholders of Newco owning, directly
or indirectly, a total of approximately 14.4 million shares of Amphenol Common
Stock representing approximately 82% of the outstanding shares after the Merger
(before taking into account any purchase of shares from Messrs. Loeffler, Jepsen
and Cohane, which could result in the stockholders of Newco owning, indirectly,
up to an additional 1.5% of such shares). See "THE MERGER--Conversion of Newco
Stock" and "--Interest of Certain Persons in the Merger." In addition to the
Merger Proposal, at the Special Meeting, the stockholders will be asked (i) to
elect two directors to serve either until their terms expire at the 2000 Annual
Meeting of stockholders or until their respective successors are duly elected or
appointed (as the case may be) and qualified; provided, that if the Merger
Proposal is approved and adopted by the Amphenol stockholders, the directors of
Amphenol immediately after the Effective Time will be Martin H. Loeffler and the
then current directors of Newco, (ii) to ratify the selection of Price
Waterhouse LLP as independent auditors of the Company and (iii) to transact any
other business properly brought at the Special Meeting. The Board of Directors
of the Company is not presently aware of any such other business.
Immediately after the Effective Time, there will be approximately 17.5
million shares of Amphenol Common Stock issued and outstanding. The Original
Merger Agreement (including the principal exhibits thereto) and the Merger
Agreement Amendment are attached to this Proxy Statement as Annex I. See "THE
MERGER" and "CERTAIN PROVISIONS OF THE MERGER AGREEMENT." The Board of Directors
of Amphenol has unanimously approved the Merger Agreement and recommends a vote
FOR approval and adoption of the Merger Agreement and the Merger. The Board of
Directors of Amphenol also recommends a vote FOR each of the proposed nominees
for election to the Board of Directors and FOR approval of the Ratification of
Auditors Proposal.
REQUIRED VOTES
The approval of the Merger Proposal will require the affirmative vote of the
stockholders of a majority of Amphenol Common Stock entitled to vote thereon.
Pursuant to the Stockholders Agreement, the DeGeorge Stockholders, in their
capacity as such, have agreed to vote all of the Subject Shares, during the term
of the Stockholders Agreement, in favor of the Merger Proposal. The DeGeorge
Stockholders owned, beneficially and/or of record, an aggregate of 13,487,453
shares of Amphenol Common Stock on January 23, 1997, the date of the
Stockholders Agreement, and as of March 24, 1997, constituting approximately
30.2% of the outstanding shares of Amphenol Common Stock entitled to vote at the
Special
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Meeting. A copy of the Stockholders Agreement appears as Annex II to this Proxy
Statement. See "CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT."
Directors will be elected by a plurality of the votes cast at the Special
Meeting, provided a quorum is present. The approval of the Ratification of
Auditors Proposal will require the affirmative vote of a majority of the shares
of Amphenol Common Stock represented at the Special Meeting and entitled to
vote, provided a quorum is present.
As of March 24, 1997, directors and executive officers of the Company were
beneficial owners of an aggregate of 11,920,227 shares (approximately 27%) of
the outstanding shares of Amphenol Common Stock. The directors and executive
officers of the Company have indicated that they intend to vote their shares of
Amphenol Common Stock in favor of the Merger and the adoption of the Merger
Agreement and the other proposals. As of March 24, 1997, the directors and
executive officers and the DeGeorge Stockholders were beneficial owners of an
aggregate of 14,044,762 shares (approximately 31%) of the outstanding shares of
Amphenol Common Stock. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."
VOTING AND REVOCATION OF PROXIES
Shares of Amphenol Common Stock that are entitled to vote and are
represented by a Proxy properly signed and received at or prior to the Special
Meeting, unless subsequently properly revoked, will be voted in accordance with
the instructions indicated thereon. If a Proxy is signed and returned without
indicating any voting instructions, shares of Amphenol Common Stock represented
by such Proxy will be voted FOR the Merger Proposal, FOR the election of all
nominees for director of the Company and FOR the Ratification of Auditors
Proposal. The Board of Directors is not currently aware of any business to be
acted upon at the Special Meeting other than as described herein. If, however,
other matters are properly brought before the Special Meeting or any
adjournments or postponements thereof, the persons appointed as proxies will
have the discretion to vote or act thereon in accordance with their best
judgment, unless authority to do so is withheld in the Proxy. The persons
appointed as proxies will not exercise their discretionary voting authority to
vote any such Proxy in favor of any adjournments or postponements of the Special
Meeting if instruction is given to vote against the approval of the Merger and
the other proposals.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before the shares represented by such Proxy are voted at
the Special Meeting by (i) attending and voting in person at the Special
Meeting, (ii) giving notice of revocation of the Proxy at the Special Meeting,
or (iii) delivering to the Secretary of Amphenol (a) a written notice of
revocation or (b) a duly executed Proxy relating to the same shares and matters
to be considered at the Special Meeting, bearing a date later than the Proxy
previously executed. Attendance at the Special Meeting will not in and of itself
constitute a revocation of a Proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: Amphenol Corporation, 358 Hall Avenue, Wallingford, Connecticut 06492
Attention: Secretary, and must be received before the taking of the votes at the
Special Meeting.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of Amphenol Common Stock at the close of business on March 24,
1997 will be entitled to receive notice of and to vote at the Special Meeting.
At the close of business on March 24, 1997, the Company had outstanding and
entitled to vote 44,719,954 shares of Amphenol Common Stock. Shares of Amphenol
Common Stock represented by Proxies which are marked "abstain" or which are not
marked as to any particular matter or matters will be counted as shares present
for purposes of determining the presence of a quorum on all matters. Proxies
relating to "street name" shares that are voted by brokers will be counted as
shares present for purposes of determining the presence of a quorum on all
matters, but will not be treated as shares having voted at the Special Meeting
as to any proposal as to which authority to vote is withheld by the broker.
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The presence, in person or by proxy, at the Special Meeting of the holders
of at least a majority of the votes entitled to be cast at the Special Meeting
is necessary to constitute a quorum for the transaction of business. Abstentions
will be counted as present for the purposes of determining whether a quorum is
present but will not be counted as votes cast in favor of the Merger Proposal.
Because the vote on the Merger Proposal requires the approval of a majority of
the votes entitled to be cast by the stockholders of the outstanding shares of
Amphenol Common Stock, abstentions will have the same effect as a negative vote
on this proposal.
DISSENTERS' RIGHTS
Each stockholder of Amphenol Common Stock has a right to dissent from the
Merger, and, if the Merger is consummated, to receive "fair value" for his or
her shares in cash by complying with the provisions of Delaware law, including
Section 262 of the DGCL. The dissenting stockholder must deliver to the Company,
prior to the vote being taken on the Merger at the Special Meeting, written
notice of his or her intent to demand payment for his or her shares if the
Merger is effected and must not vote in favor of the Merger. The full text of
Section 262 of the DGCL is attached as Annex IV hereto. See "DISSENTING
STOCKHOLDERS' RIGHTS" for a further discussion of such rights and the legal
consequences of voting shares of Amphenol Common Stock in favor of the Merger
Proposal.
SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of Proxies and the cost
of printing and mailing this Proxy Statement. In addition to solicitation by
mail, the directors, officers and employees of the Company may solicit Proxies
from stockholders of the Company by telephone, telegram or by personal
interview. Such directors, officers and employees will not be additionally
compensated for any such solicitation but may be reimbursed for reasonable
out-of-pocket expenses in connection therewith. Arrangements will also be made
with brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of shares held of
record by such persons and the Company will reimburse such custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses in connection
therewith. Mackenzie will assist in the solicitation of Proxies by the Company
for an estimated fee of $6,000.00, plus reasonable out-of-pocket expenses.
If you have any questions or require additional material, please call
Mackenzie at (800) 322-2885 (toll-free) or (212) 929-5500 (collect).
ONLY HOLDERS OF AMPHENOL COMMON STOCK WHO WISH TO MAKE A NON-CASH ELECTION
ARE REQUIRED TO SEND STOCK CERTIFICATES WITH THEIR FORM OF ELECTION (AS DEFINED
BELOW). HOLDERS OF AMPHENOL COMMON STOCK WHO DO NOT MAKE A NON-CASH ELECTION
WILL RECEIVE, BY MAIL, LETTERS OF TRANSMITTAL WITH WHICH SUCH STOCK CERTIFICATES
SHOULD BE RETURNED AFTER THE EFFECTIVE TIME. HOLDERS WHO DO NOT MAKE A NON-CASH
ELECTION SHOULD THEREFORE NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
SEE "THE MERGER--NON-CASH ELECTION" AND "--NON-CASH ELECTION PROCEDURE."
PROPOSAL ONE
THE MERGER
BACKGROUND OF THE MERGER
Beginning in early 1996, the Company, acting principally through Lawrence J.
DeGeorge, Chairman of the Board, began to consider alternative strategies
designed to maximize stockholder value. In July 1996, the Board of Directors
authorized the Company to implement a program to repurchase up to 2 million
shares of Amphenol Common Stock. The Board increased this amount to 5 million
shares in October 1996. Approximately 2.6 million shares were purchased by the
Company in 1996. The Company also initiated various other efforts, including
making inquiries of certain parties to determine their level of interest in
possible business combinations with the Company, considering a possible
recapitalization of the
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Company to fund a repurchase of shares, or entering into an extraordinary
transaction with a strategic or financial partner.
In April 1996, the Company authorized two investment banking firms to
discuss, on a preliminary and confidential basis, the possible combination of
Amphenol with two publicly-held electronic components manufacturing companies.
On April 19, 1996, Mr. DeGeorge met in New York with the chief executive officer
of one of these companies. Discussions were not pursued with either of the
companies primarily because the levels of consideration that each of the other
companies indicated that they might be prepared to pay to holders of Amphenol
Common Stock (consisting of stock of the respective companies) were, in Mr.
DeGeorge's view, inadequate. In September and early October 1996, Lehman
Brothers and Mr. DeGeorge had preliminary discussions with a major investment
firm which owns a controlling interest in a third publicly-held connector and
electronic components manufacturing company. These discussions were terminated
by Mr. DeGeorge again primarily due to his view of the inadequacy of the price
levels indicated by the other party.
On October 1, 1996, the Company sent to a fourth publicly-held connector and
electronic components manufacturing company a letter indicating Amphenol's high
level of interest in pursuing a business combination with such company. Mr.
DeGeorge had previously met with senior management of such company to discuss
such a transaction. The letter stated Amphenol's belief that a combination would
result in substantial benefits through operating synergies, a significantly
larger market presence, and other factors. Amphenol received a formal response
to this letter on October 7, 1996, stating that the other company had entered
into a merger agreement with a third party and was not interested in pursuing a
business combination with Amphenol.
In early November 1996, the Company authorized Lehman Brothers to discuss
with a major investment firm specializing in leveraged buyout transactions the
possibility of the purchase by such firm of 50% of the Amphenol Common Stock
held by the DeGeorge Stockholders, and the concurrent repurchase by the Company
of a substantial amount of Amphenol Common Stock held by all other stockholders
of the Company. In light of Mr. DeGeorge's view of the inadequacy of the
valuations of the Company that had been made by the parties with whom the
discussions mentioned above had been held, Mr. DeGeorge stated that he was
prepared to remain as a substantial investor in the Company. In order to achieve
liquidity for a portion of the investment of the DeGeorge Stockholders in
Amphenol, and to accomplish the proposed share repurchase, Mr. DeGeorge was
willing to explore working with a financial partner interested in making a
significant minority investment in Amphenol. On November 14, 1996, Mr. DeGeorge,
Edward G. Jepsen, the Company's chief financial officer, representatives of the
Company's legal and financial advisors, and representatives of the investment
firm met in New York to discuss the respective parties' management philosophies,
possible transaction structures, and future due diligence investigation
activities. Shortly thereafter, Mr. DeGeorge determined not to pursue additional
discussions with the investment firm because the pricing levels indicated by
such firm for the stock purchases were unacceptable.
Also in November 1996, Mr. DeGeorge, Mr. Jepsen and counsel to Amphenol had
several telephone discussions and meetings with Lehman Brothers and Merrill
Lynch, respectively, concerning alternative capital markets transactions
designed to effect a retirement of a substantial amount of Amphenol Common Stock
through a recapitalization of the Company and the use of various structured
financing products that would not involve any third party. Investigation of the
legal, tax and financial complexities of these proposals continued through early
December. Throughout 1996, Mr. DeGeorge kept the Board of Directors generally
apprised of these activities and the others described above.
On December 5, 1996, an initial meeting arranged by Lehman Brothers took
place in New York among Mr. Michael W. Michelson and Mr. Marc S. Lipschultz of
KKR, Mr. DeGeorge, Mr. Jepsen, and representatives of Lehman Brothers and the
Company's counsel. Mr. DeGeorge discussed in general with the KKR
representatives the prior efforts that had been undertaken to develop
alternatives that could increase stockholder value. Mr. DeGeorge also repeated
his desire to retain, with the other DeGeorge Stockholders, a significant
investment in the Company while achieving some level of liquidity for his family
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and other Amphenol stockholders through a recapitalization transaction
undertaken with an equal financial partner whose management philosophies and
objectives were consistent with Amphenol's. Mr. Michelson indicated that KKR
would promptly respond to Mr. DeGeorge's conceptual proposal, but that in the
normal course KKR required a control position in the companies it invests in.
On December 6, Mr. Michelson sent a letter to Mr. DeGeorge that contained a
conceptual outline of a transaction structure whereby, after giving effect to
such transaction, the DeGeorge Stockholders could retain up to 19% of the
outstanding Amphenol Common Stock, and in such event KKR affiliates would own
62% and other stockholders would own 19% of the remaining equity. Mr. DeGeorge
would be allowed to retain a seat on the Board of Directors so long as the
DeGeorge Stockholders held 10% or more of the outstanding Amphenol Common Stock,
but Mr. DeGeorge would have no role in the operations of the Company. Mr.
Michelson proposed that KKR be allowed to commence a due diligence review of the
Company the following week. Mr. DeGeorge called Mr. Michelson later that day to
acknowledge receipt of the letter, and to propose a subsequent telephone
conversation on the following Monday.
On December 8, 1996, Mr. DeGeorge telephoned Mr. Michelson and authorized
KKR to attend due diligence presentations at the Company's headquarters in
Connecticut on December 11 and 12. Representatives of KKR attended these
sessions and discussed the Company's business with various members of senior
management, including Mr. DeGeorge, Mr. Jepsen and Martin H. Loeffler,
Amphenol's President and Chief Executive Officer.
On December 11, 1996, KKR signed a confidentiality and two-year standstill
agreement (the "Confidentiality Agreement") with Amphenol. Pursuant to the
standstill provisions of the Confidentiality Agreement, KKR agreed, among other
things, that it would not acquire, directly or indirectly, any securities or
property of the Company (subject to certain exceptions) unless the Board of
Directors approved such acquisition.
After signing the Confidentiality Agreement, during the course of KKR's
review of the Company, the Company presented certain financial information
regarding the Company to representatives of KKR. The information reviewed
included estimates by the Company's management dated December 10, 1996 that the
Company's sales, net income and earnings per share were expected to be
$897,842,000, $77,802,000 and $1.74, respectively, for the fiscal year ended
December 31, 1997 and $987,626,000, $98,403,000 and $2.20, respectively, for the
fiscal year ended December 31, 1998 (the "Projections")(1).
- ------------------------
1. THE COMPANY DOES NOT, AS A MATTER OF COURSE, PUBLICLY DISCLOSE
PROJECTIONS AS TO FUTURE REVENUES, EARNINGS OR OTHER FINANCIAL INFORMATION. THE
PROJECTIONS ARE DISCLOSED HEREIN BECAUSE THEY WERE DISCLOSED TO KKR, TOGETHER
WITH CERTAIN OTHER PROJECTED FINANCIAL DATA, INCLUDING PROJECTIONS FOR 1999 AND
2000. DATA FOR 1999 AND 2000 HAVE NOT BEEN SUMMARIZED BECAUSE THE COMPANY
BELIEVES THAT DATA PROJECTED AT TIMES SO FAR IN THE FUTURE ARE SO INHERENTLY
MORE SPECULATIVE AS TO NOT BE MATERIAL. ACCORDINGLY, THE COMPANY BELIEVES THAT
THE PROJECTIONS, TOGETHER WITH THE INFORMATION IN THIS FOOTNOTE AND AS SET FORTH
UNDER "FORWARD LOOKING STATEMENTS", CONSTITUTE THE MATERIAL ITEMS OF THE
PROJECTED FINANCIAL DATA PROVIDED TO KKR. STOCKHOLDERS SHOULD NOTE, HOWEVER,
THAT THE PROJECTIONS ARE NOT INCLUDED IN THIS PROXY STATEMENT TO INDUCE ANY
STOCKHOLDER TO VOTE FOR THE MERGER AND DO NOT REFLECT THE SIGNIFICANTLY ALTERED
CAPITAL STRUCTURE EXPECTED TO RESULT FROM THE MERGER. AS A RESULT OF THE MERGER,
THE COMPANY IS EXPECTED TO HAVE HIGHER INTEREST EXPENSE WHICH WOULD ADVERSELY
AFFECT NET INCOME, AND THE PROJECTIONS ARE THEREFORE NOT INDICATIVE OF NET
INCOME OR EARNINGS PER SHARE WHICH COULD BE EXPECTED FOLLOWING THE MERGER. THE
PROJECTIONS WERE BASED UPON A VARIETY OF ASSUMPTIONS, INCLUDING THOSE RELATED TO
THE ACHIEVEMENT OF STRATEGIC GOALS, OBJECTIVES AND TARGETS OVER THE APPLICABLE
PERIODS. SUCH ASSUMPTIONS INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS,
FUTURE ECONOMIC, COMPETITIVE AND REGULATORY CONDITIONS, FOREIGN CURRENCY
EXCHANGE RATES, FINANCIAL MARKET CONDITIONS AND FUTURE BUSINESS DECISIONS, ALL
OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW
TO PUBLIC DISCLOSURE, USE IN THIS PROXY STATEMENT OR COMPLIANCE WITH PUBLISHED
GUIDELINES OF THE COMMISSION, NOR WERE THEY PREPARED IN ACCORDANCE WITH THE
GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
FOR PREPARATION AND PRESENTATION OF FINANCIAL PROJECTIONS. IN LIGHT OF THE
UNCERTAINTIES INHERENT IN ANY PROJECTED DATA, STOCKHOLDERS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THE PROJECTIONS. SEE "FORWARD LOOKING STATEMENTS."
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At the conclusion of the due diligence presentation on December 12, Mr.
Michelson informed Mr. DeGeorge that he would telephone Mr. DeGeorge on the
following Monday, December 16, to provide additional refinements to the
conceptual transaction proposal previously offered by KKR, and to discuss
whether the parties should proceed to conduct additional due diligence and
negotiations.
On December 16, 1996, Mr. Michelson telephoned Mr. DeGeorge and advised him
that he believed that KKR would be able to structure a proposal for a
recapitalization transaction with Amphenol whereby as much as 93% of the
outstanding Amphenol Common Stock would be retired for cash at a premium to
market in a merger. He stated that KKR needed at least an additional month of
intensive due diligence with the Company's management to develop such a
proposal. On December 18, 1996 Mr. DeGeorge telephoned Mr. Michelson and
informed him that, while certain aspects of the transaction structure remained
to be worked out, there existed a sufficient basis to expect that a transaction
might be agreed to and, therefore that Amphenol was willing to host additional
due diligence sessions, which were scheduled for December 19 and 20.
Also on December 18, a conference call took place among Mr. DeGeorge, Mr.
Michelson, and representatives of the Company's and KKR's respective legal
counsel to discuss certain aspects of the proposed transaction structure. In
this discussion, KKR indicated that the support of the DeGeorge Stockholders,
and their willingness to enter into a stockholders' agreement providing for an
option on the part of KKR to purchase the shares of Amphenol Common Stock owned
by them were fundamental conditions of KKR's willingness to proceed with a
transaction. Mr. DeGeorge and Mr. Michelson agreed in principle to such an
arrangement, but Mr. DeGeorge requested that a similar option on the part of the
DeGeorge Stockholders to "put" any shares retained by them in the Merger to KKR
be incorporated. Moreover, in addition to requesting a put option as
consideration for any call option to be granted to KKR, Mr. DeGeorge stated that
the put feature would be necessary given KKR's unwillingness, under the revised
proposal, to allow Mr. DeGeorge to have a board seat or other input into
management and operations of the Company even though the amount of retained
shares potentially allocable to the DeGeorge Stockholders could be material to
them and could constitute a significant percentage of the total shares
outstanding after the Merger not owned by KKR. Additionally, the parties agreed
that any profits on sales by either party of the Amphenol Common Stock subject
to the prospective stockholders' agreement to a third party would be shared
equally by the DeGeorge Stockholders and KKR.
On December 19, 1996, a meeting of Amphenol's Board of Directors was held by
telephone conference call. All members of the Board except Timothy F. Cohane
participated. Mr. DeGeorge apprised the directors of the status of discussions
with KKR, of the execution of the Confidentiality Agreement, of the principal
features of the proposed transaction structure, and of the proposed schedule for
further due diligence and preparation of documentation. The Board of Directors
concluded that KKR should be permitted to continue its due diligence review of
the Company in anticipation that KKR would make a formal proposal to the Company
once its due diligence was completed. The Board also authorized the formal
retention of a financial advisor to the Company and a separate investment
banking firm to render an opinion on the fairness of any offer that might be
made by KKR. Lehman Brothers was subsequently retained by the Company as its
financial advisor under arrangements that provide for a payment by the Company
of a fee of $4,000,000 if the Merger is consummated. As indicated above, Lehman
Brothers had assisted the Company with respect to prior inquiries and
discussions with third parties and other strategies for increasing shareholder
value, but did not furnish any reports or opinions to the Company or make any
presentations to the Board of Directors in connection with the Company's
negotiations with KKR or otherwise in its role as financial advisor. For a
description of the terms of the Company's retention of Merrill Lynch to render a
fairness opinion in connection with the offer made by Newco, see "--Opinion of
Merrill Lynch".
Following the due diligence sessions on December 19 and 20, representatives
of the Company and KKR were in regular contact to further advance the due
diligence process and to negotiate other aspects of the proposed transaction.
Additional presentations by Amphenol's management were made in New York on
January 8, 9 and 10, 1997, to representatives of KKR and of financial
institutions invited by KKR to
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consider providing a portion of the funds necessary to effectuate the
recapitalization. On January 7, 1997, representatives of Merrill Lynch, which
had been retained to render a fairness opinion to the Board of Directors, met
with management representatives for the purpose of a due diligence review. Legal
and accounting advisors to KKR also began due diligence activities. On January
13, an initial draft of the Original Merger Agreement was sent by KKR's counsel
to Amphenol and its counsel. Negotiations concerning the terms of the Original
Merger Agreement and the Stockholders Agreement subsequently commenced.
Additional due diligence work by KKR and its legal and accounting advisors
continued through Sunday, January 19, 1997. On January 20, 1997, a telephone
conference call among Mr. DeGeorge, Mr. Michelson, and the respective counsel to
KKR and Amphenol took place to address the principal remaining business issues
concerning the Merger Agreement and the Stockholders Agreement. The parties
extensively negotiated the provisions regarding termination events and
termination fees that would be contained in the Original Merger Agreement. The
final, agreed forms of these provisions reflect in part the view of the Company
and its advisors that such arrangements should not preclude competitive
proposals from other third parties from being made. KKR rejected any limitation
on the DeGeorge Stockholders' commitment to vote their shares in favor of the
transaction and insisted as a precondition to its willingness to proceed that
its affiliate obtain an irrevocable proxy to vote the shares subject to the
Stockholders Agreement. There was also a lengthy negotiation of the non-compete
provisions in the Stockholders Agreement restricting the Stockholders from
taking various actions following the Merger. See "CERTAIN PROVISIONS OF THE
STOCKHOLDERS AGREEMENT."
On January 22, 1997, a regularly-scheduled meeting of the Board of Directors
took place. All directors were present. At the meeting, Mr. DeGeorge reviewed
with the Board the basic features of the proposal he believed that KKR was
prepared to make. Mr. DeGeorge stated that, as the Company's largest
stockholders, holding collectively approximately 30% of the outstanding shares,
the DeGeorge Stockholders believe that the KKR proposal would be attractive to
all stockholders and, in the view of the DeGeorge Stockholders, represented the
best value reasonably available to the Company in light of the other
alternatives that had been investigated. Mr. Michelson, on behalf of KKR, then
addressed the Board and delivered a letter to the Board formally proposing a
recapitalization transaction that, among other things, would offer to
stockholders the choice to elect $26 in cash per share of Amphenol Common Stock
or to retain Amphenol Common Stock after the Merger, subject to proration. Mr.
Michelson and representatives of Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), KKR's financial advisor, then discussed the terms of the
commitment letter and "highly confident" letter from the financial institutions
contacted by KKR to provide the necessary financing to Amphenol for the
recapitalization, and answered questions regarding the qualifications to and
conditions of such commitments. Copies of the letters evidencing such
commitments, and related term sheets, were distributed by KKR to the directors.
Following the presentation by KKR, the Company's legal advisor reported to
the Board that the parties had negotiated nearly final drafts of the agreements
related to the KKR proposal. Such counsel reviewed the responsibilities of the
Board in considering a transaction which would involve a change of control of
the Company, and discussed the terms of the Original Merger Agreement and the
Stockholders Agreement in depth with the Board. Copies of such draft agreements
were distributed to the directors. The interests of certain members of
management in the transaction, consisting principally of their expected
investment in Amphenol Common Stock and receipt of stock options following the
Merger, were also considered by the Board.
Following this discussion, representatives of Merrill Lynch made a
presentation to the Board concerning its analysis of the fairness of the terms
of the offer made by Newco, and engaged in a lengthy and thorough discussion
with the Board regarding its findings which are summarized below under "THE
MERGER--Opinion of Merrill Lynch." At the conclusion of this discussion, Merrill
Lynch stated that it would be prepared to deliver an opinion to the effect that
the proposed consideration to be received by the holders of Amphenol Common
Stock (other than KKR and its affiliates) in the Merger would be fair to
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such stockholders from a financial point of view. Following this presentation,
the meeting was ended in order to allow all directors an opportunity to review
the materials provided at the meeting.
On January 23, 1997, the Board of Directors met by telephone conference call
to discuss the documents which had been distributed for review and to consider
resolutions related to the KKR proposal. All directors participated in the
meeting, as did representatives of Merrill Lynch and the Company's legal
advisor. The Board of Directors requested and received Merrill Lynch's opinion,
which is set forth herein as Annex III, that the proposed consideration to be
received by the stockholders (other than KKR and its affiliates) in the Merger
is fair to such stockholders from a financial point of view. Resolutions were
then unanimously adopted by (i) A. Henry Morgan and Dr. Marcia A. Savage, voting
separately, and (ii) the entire Board of Directors, approving the Merger, the
Original Merger Agreement and the Stockholders Agreement and resolving to
recommend approval and adoption by the Company's stockholders of the Original
Merger Agreement and the transactions contemplated thereby. At the suggestion of
the Company's counsel, an additional and separate vote was taken by Mr. Morgan
and Dr. Savage in order to provide assurance that the Merger Agreement and the
Stockholders Agreement would have the benefit of provisions of the DGCL which
prescribe optional procedures for consideration by the Board of Directors in
cases where directors may be deemed to be "interested" (such as the directors of
the Company other than Mr. Morgan and Dr. Savage) in the matters being decided
by the Board by virtue of their management or stockholder positions. The meeting
then adjourned.
Immediately following the Board meeting, the Company and Newco entered into
the Original Merger Agreement, and the DeGeorge Stockholders and NXS entered
into the Stockholders Agreement. Later that day, the Company and KKR issued a
joint press release announcing the proposed Merger.
Subsequent to the execution of the Original Merger Agreement, the legal
advisors to Newco contacted the legal advisors to the Company to discuss certain
non-economic modifications to the Merger Agreement. In particular, the legal
advisors discussed the Company's classified board of directors and the
possibility that certain entities organized at the direction of KKR might also
become stockholders of Newco. In light of the foregoing, a draft of the Merger
Agreement Amendment was sent to the Company and Newco on March 28, 1997. On
April 1, 1997, the Board of Directors of the Company acted by unanimous written
consent to approve the Merger Agreement Amendment. On April 9, 1997, the Company
and Newco executed and delivered the Merger Agreement Amendment. The Merger
Agreement Amendment provides that at the Effective Time of the Merger, the
Company's Restated Certificate of Incorporation shall be amended so as to read
in its entirety in the form set forth as Exhibit A to the Merger Agreement
Amendment, which modifies Exhibit A to the Original Merger Agreement to provide
that the Company's board of directors following the Merger shall continue to be
divided into three classes (each as nearly equal in number as possible), with
the directors in each class serving staggered three-year terms, and that
directors will continue to be removable only for cause. In addition, the Merger
Agreement Amendment provides that an affirmative vote of the holders of at least
80% of the outstanding shares of Amphenol Common Stock will continue to be
required to amend such provisions of the Amended and Restated Certificate of
Incorporation. The Merger Agreement Amendment also provides that at the Closing,
the stockholders of Newco could include, in addition to the Partnership, one or
more other entities organized at the direction of KKR.
RECOMMENDATION OF THE BOARD OF DIRECTORS; REASONS FOR THE MERGER
The Board of Directors has unanimously approved the Merger Agreement and has
determined that the Merger is fair to and in the best interests of the Company
and its stockholders and recommends that holders of Amphenol Common Stock vote
FOR approval and adoption of the Merger Agreement. In the course of reaching its
decision to approve the Merger Agreement and the Merger, the Board of Directors
consulted with the Company's legal and financial advisors and considered a
number of factors, including, among others, the following principal factors
which were material to the Board's decision:
(1) The opinion of Merrill Lynch delivered at the January 23, 1997 Board
of Directors meeting to the effect that, as of such date, and based upon the
assumptions made, matters considered and limits
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of review set forth in such opinion, the proposed consideration to be
received by the holders of Amphenol Common Stock (other than KKR and its
affiliates) in the Merger was fair to such stockholders from a financial
point of view, and the presentation of Merrill Lynch at the January 22, 1997
Board meeting in connection with its opinion. See "THE MERGER--Opinion of
Merrill Lynch."
(2) The fact that Lawrence J. and Florence A. DeGeorge, who together
with the other DeGeorge Stockholders hold approximately 30.2% of the
outstanding shares of Amphenol Common Stock, indicated to the Board that
they believe that KKR's proposal and the consideration to be received in the
Merger were attractive and in the best interest of the Company and its
stockholders.
(3) The history of prior efforts to pursue alternatives for maximizing
stockholder value, as described under "Background of the Merger,"
particularly the fact that, based upon the discussions described therein,
none of such alternatives, even if successfully carried to completion, would
have resulted in per-share cash consideration payable to the holders of
Amphenol Common Stock as high as the consideration payable in the Merger.
(4) The experience and high rate of success of KKR in structuring and
closing transactions similar to the Merger; the strength and favorable terms
of the financing commitments for the Merger arranged by KKR, including a
fully underwritten commitment from Bankers Trust Company to provide up to
$950 million of senior secured credit facilities and a "highly confident"
letter from DLJ with respect to the marketing of the Debt Securities; and
the lack of any direct obligations on the part of the Company to pay fees,
reimburse expenses or make indemnity payments to such financial institutions
if the Merger does not occur.
(5) The fact that the Merger Agreement requires that the Merger be
submitted to the stockholders of the Company for approval, which allows for
an informed vote of stockholders on the merits of the transaction without
requiring a tender of shares or other potentially coercive transaction
structure; and the fact that the Merger Agreement provides that it may be
terminated by the Company if such approval is not received.
(6) The fact that the consideration to be received by stockholders of
the Company in the Merger will consist, in the aggregate, of approximately
90% cash while still affording stockholders who wish to continue to
participate in the ownership of the Company an opportunity to do so.
(7) The fact that the stockholders of the Company will have the right to
elect to receive cash or to retain Amphenol Common Stock (up to 4,400,000
shares in the aggregate), subject to proration, which right the Board
believed would provide the possibility of some flexibility to any of the
Company's stockholders who might desire to retain more Amphenol Common Stock
after the Merger than would automatically be retained under a non-election
based formula (subject to proration if the Company's stockholders elected to
retain more than 4,400,000 shares). This election would also provide the
possibility that the Company's stockholders who desire to receive more cash
for their shares than would be provided under a non-election based formula
would receive such additional cash if other stockholders ultimately elect to
retain shares of Amphenol Common Stock.
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(8) The terms of KKR's proposal provide that the Merger is to be treated
as a recapitalization for accounting purposes.
(9) The fact that the interests of the DeGeorge Stockholders are aligned
with those of the other stockholders of the Company in the event unsolicited
offers from third parties (other than KKR) are received, and particularly
the provisions of the Stockholders Agreement which specifically recognize
the rights and obligations of Lawrence J. DeGeorge and Florence A. DeGeorge
to continue to fulfill their fiduciary duties to the Company's stockholders
and which do not disincentivize such directors from recommending any such
unsolicited offers.
(10) The other terms and conditions of the Merger Agreement, including
(i) those relating to the fee of $37.5 million and expense reimbursements
(for documented out of pocket expenses and fees incurred in connection with
the Merger up to a maximum of $12.5 million) to KKR payable upon termination
of the Agreement as a result of competing offers, the aggregate amount of
which would not, in the Board's judgment, preclude a third party from making
an offer that was materially more favorable to the Company's stockholders;
(ii) those relating to the ability of the Board to consider unsolicited
offers from third parties prior to the effectiveness of the Merger; and
(iii) those relating to Newco's undertaking not to take any action for at
least three years from the effectiveness of the Merger to cause the Amphenol
Common Stock to be de-listed from the NYSE, subject to the qualifications
described under "CERTAIN PROVISIONS OF THE MERGER AGREEMENT-- Certain
Pre-closing Covenants."
The foregoing discussion of the information and factors considered by the
Board of Directors is not intended to be exhaustive but is believed to include
all material factors considered by the Board of Directors. In view of the
variety of factors considered in connection with its evaluation of the Merger,
the Board of Directors did not find it practicable to, and did not, quantify or
otherwise attempt to assign relative weight to the specific factors considered
in reaching its determination. In addition, individual members of the Board of
Directors may have given different weights to different factors. In the course
of its deliberations, the Board of Directors did not establish a range of values
for the Company; however, based on the factors outlined above and on the
presentation and opinion of Merrill Lynch, the Board of Directors determined
that the Merger Agreement and the Merger are fair to, and in the best interest
of the Company and its stockholders.
OPINION OF MERRILL LYNCH
On January 23, 1997, Merrill Lynch delivered its written opinion (the
"Merrill Lynch Opinion") to the Company's Board of Directors to the effect that,
as of such date, and based upon the assumptions made, matters considered and
limits of review set forth in such opinion, the proposed consideration to be
received by the holders of Amphenol Common Stock (other than KKR and its
affiliates) in the Merger was fair to such stockholders from a financial point
of view.
A COPY OF THE MERRILL LYNCH OPINION, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND CERTAIN LIMITATIONS ON THE SCOPE OF REVIEW UNDERTAKEN BY
MERRILL LYNCH, IS ATTACHED AS ANNEX III TO THIS PROXY STATEMENT. COMPANY
STOCKHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY. THE MERRILL LYNCH
OPINION WAS INTENDED FOR THE USE AND BENEFIT OF THE BOARD OF DIRECTORS OF THE
COMPANY, WAS DIRECTED ONLY TO THE FAIRNESS OF THE PROPOSED CONSIDERATION TO BE
RECEIVED BY THE HOLDERS OF AMPHENOL COMMON STOCK (OTHER THAN KKR AND ITS
AFFILIATES) FROM A FINANCIAL POINT OF VIEW, AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE WITH
RESPECT TO THE MERGER OR ANY TRANSACTION RELATED THERETO OR AS TO WHETHER ANY
STOCKHOLDER SHOULD ELECT TO RECEIVE CASH OR TO RETAIN THE NON-CASH ELECTION
SHARES. THE SUMMARY OF THE MERRILL LYNCH OPINION SET FORTH IN THIS PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION.
In arriving at the Merrill Lynch Opinion, Merrill Lynch, among other things,
(i) reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1995 and the Company's
Forms 10-Q and the related unaudited financial information for
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the quarterly periods ending March 31, 1996, June 30, 1996 and September 30,
1996; (ii) reviewed certain information furnished to Merrill Lynch by the
Company, including financial forecasts, relating to the business, earnings, cash
flow, assets and prospects of the Company and information relating to certain
pro forma effects on the Company's capital structure after giving effect to the
Merger; (iii) conducted discussions with members of senior management of the
Company and KKR concerning the Company's businesses and prospects and certain
pro forma effects on the Company's capital structure after giving effect to the
Merger; (iv) reviewed the historical market prices and trading activity for
Amphenol Common Stock and compared them with that of certain publicly traded
companies which Merrill Lynch deemed to be reasonably similar to the Company;
(v) compared the results of operations of the Company with that of certain
companies which Merrill Lynch deemed to be reasonably similar to the Company;
(vi) compared the proposed financial terms of the transactions contemplated by
the Merger Agreement with the financial terms of certain other mergers and
acquisitions which Merrill Lynch deemed to be relevant; (vii) reviewed a draft
of the Merger Agreement dated January 21, 1997; (viii) reviewed a draft of the
Stockholders Agreement dated January 21, 1997; and (ix) reviewed such other
financial studies and analyses and performed such other investigations and took
into account such other matters as Merrill Lynch deemed necessary, including
Merrill Lynch's assessment of general economic, market and monetary conditions.
In preparing the Merrill Lynch Opinion, Merrill Lynch relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch by the Company and KKR, and Merrill Lynch did not independently
verify such information or undertake an independent appraisal of the assets or
liabilities of the Company. With respect to the financial forecasts furnished by
the Company and information regarding certain pro forma effects on the Company's
capital structure after giving effect to the Merger, Merrill Lynch assumed that
they had been reasonably prepared and reflected the best currently available
estimates and judgment of the Company's management as to the expected future
financial performance of the Company and of KKR, as to such pro forma effects on
the Company's capital structure, respectively. Merrill Lynch assumed that the
final form of the Merger Agreement would not differ materially from the draft of
the Merger Agreement dated January 21, 1997, reviewed by Merrill Lynch. The
Merrill Lynch Opinion was necessarily based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of the
Merrill Lynch Opinion. The Merrill Lynch Opinion did not address the merits of
the underlying decision by the Company to engage in the Merger.
In connection with the preparation of the Merrill Lynch Opinion, Merrill
Lynch was not authorized by the Company or its Board of Directors to solicit,
nor did Merrill Lynch solicit, third-party indications of interest for the
acquisition of all or any part of the Company. In addition, Merrill Lynch
expressed no opinion as to what the value of the Non-Cash Election Shares would
be upon consummation of the Merger.
The following is a summary of the material financial and comparative
analyses performed by Merrill Lynch in arriving at the Merrill Lynch Opinion
delivered to the Company's Board of Directors on January 23, 1997.
STOCK PRICE STUDY. Merrill Lynch reviewed the per share daily closing
market price movement of Amphenol Common Stock for the period beginning January
1, 1994 and ending January 17, 1997. Merrill Lynch compared (i) the daily
closing market price performance of Amphenol Common Stock for the period
beginning January 1, 1996 and ending January 17, 1997, and (ii) the weekly
closing market price performance of Amphenol Common Stock for the period
beginning January 1, 1994 and ending January 17, 1997, in each case to an index
composed of the following cable equipment manufacturers: Antec Corporation,
Belden, Inc., General Instrument Corporation, Oak Industries Inc. and Scientific
Atlanta, Inc. (collectively, the "Cable Comparables"). This analysis showed
that, during such periods, the Amphenol Common Stock underperformed the Cable
Comparables and slightly outperformed the Cable Comparables, respectively.
Merrill Lynch also compared (i) the daily closing market price performance of
Amphenol Common Stock for the period beginning March 1, 1996 and ending January
17, 1997, and (ii) the weekly closing market price performance of Amphenol
Common Stock for the period beginning
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January 1, 1994 and ending January 17, 1997, in each case to an index composed
of the following connector manufacturers: AMP Incorporated, Methode Electronics,
Inc., Molex, Inc., Thomas & Betts Corp. and, for the period subsequent to its
initial public offering on March 1, 1996, Berg Electronics, Inc. (collectively,
the "Connector Comparables"). This analysis showed that the Amphenol Common
Stock underperformed the Connector Comparables during both such periods. The
Cable Comparables and the Connector Comparables were selected because they are
manufacturing companies in lines of business similar to the Company.
COMPARABLE COMPANY TRADING MULTIPLES ANALYSIS. Using publicly available
earnings per share and growth rate estimates obtained from First Call
Corporation ("First Call") and Institutional Brokers Estimate System ("IBES"),
Merrill Lynch reviewed the ratios of (i) the quotients obtained by dividing the
per share market price of the common stock of each Cable Comparable and
Connector Comparable by the projected 1997 earnings per share for such companies
(the "Market Price/Projected 1997 Earnings Ratio"), to (ii) the projected
five-year earnings per share growth rates plus dividend yields for such
companies (the "Estimated EPS Growth Plus Dividend Yield"), and compared such
ratios to the corresponding ratio implied by Amphenol Common Stock using
projected earnings for the Company obtained from First Call and IBES. This
analysis showed that (i) the Market Price/Projected 1997 Earnings Ratio of the
Amphenol Common Stock was below the mean of such ratios for the Cable
Comparables and the mean of such ratios for the Connector Comparables and (ii)
the Estimated EPS Growth Plus Dividend Yield of the Amphenol Common Stock was
below the mean of such estimates for the Cable Comparables and slightly above
the mean of such estimates for the Connector Comparables.
COMPARABLE ACQUISITION TRANSACTIONS ANALYSIS. Using publicly available
information, Merrill Lynch reviewed (i) thirteen transactions since February 29,
1988 that have closed or are still pending involving the acquisition of cable
equipment companies (the "Comparable Cable Acquisition Transactions") and (ii)
twelve transactions closed since September 29, 1989 involving the acquisition of
connector/passive components and electrical/electronic equipment companies (the
"Comparable Connector Acquisition Transactions"), in each case to derive
estimated per share valuations for Amphenol Common Stock. The Comparable Cable
Acquisition Transactions and the date each transaction closed are as follows:
leveraged buyout of Essex Group, Inc. (February 1988); Draka Holding B.V./BIW
Cable Systems, Inc. (April 1988); The Penn Central Corporation/Capital Wire and
Cable Corporation (June 1988); BICC PLC/Brintec Corporation (May 1989); LPL
Acquisition Group/LPL Technologies Inc. (May 1990); Forstmann Little &
Co./General Instrument Corporation (July 1990); BICC PLC/North American Electric
Cable Operators (June 1992); Amphenol Corporation/LPL Technologies Inc.
(December 1992); The Alpine Group, Inc./ Superior Teletec Inc. (November 1993);
Wassall PLC/General Cable Corporation (May 1994); Belden, Inc./Pope Cable & Wire
B.V. (April 1995); Kuhlman Corporation/Communication Cable, Inc. (February
1996); Antec Corporation/TSX Corp. (pending). The Comparable Connector
Acquisition Transactions and the date each transaction closed are as follows:
Eagle Industries Inc./Amerace Corporation (September 1989); Kyocera
Corporation/AVX Corporation (January 1990); Citicorp Venture Capital, Ltd./KEMET
Electronics Corporation (Union Carbide) (December 1990); Augat Inc./National
Industries, Inc. (August 1991); Vishay Intertechnology, Inc./Sprague
Technologies, Inc. (February 1992); Bain Capital Inc./ Oak Industries
Inc./Gilbert Engineering (December 1992); Hicks, Muse, Tate & Furst Inc./Berg
Electronics, Inc. (February 1993); Berg Electronics Holdings Corporation/AT&T
Connector Business (May 1994); Vishay Intertechnology/Vitramon, Inc. (July
1994); AMP Incorporated/M/A-COM, Inc. (June 1995); Thomas & Betts Corp./Amerace
Corporation (January 1996); Thomas & Betts Corp./Augat Inc. (December 1996).
With respect to each of the Comparable Cable Acquisition Transactions and
the Comparable Connector Acquisition Transactions, Merrill Lynch compared (i)
the equity value as a multiple of then publicly available latest twelve months
("LTM") net income available to common stock (the "Net Income Multiple") and
(ii) the transaction value (defined as the equity value plus the liquidation
value of preferred stock, the principal amount of debt and minority interest
less cash, marketable securities and proceeds from the exercise of options) as a
multiple of then publicly available LTM earnings before interest, taxes,
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depreciation and amortization ("EBITDA") (the "EBITDA Multiple"). For the
Comparable Cable Acquisition Transactions, the maximum, mean, median and minimum
multiple ranges for the Net Income Multiple and the EBITDA Multiple were 23.5x,
13.6x, 12.0x and 8.6x, and 10.1x, 6.7x, 5.8x and 5.3x, respectively. For the
Comparable Connector Acquisition Transactions, the maximum, mean, median and
minimum multiple ranges for the Net Income Multiple and the EBITDA Multiple were
20.5x, 13.8x, 14.6x and 5.6x, and 8.4x, 6.2x, 6.3x and 3.8x, respectively.
Utilizing this methodology, Merrill Lynch derived estimated per share
valuations for Amphenol Common Stock ranging from approximately $21.25 to
$27.25.
DISCOUNTED CASH FLOW ANALYSIS. Merrill Lynch performed a discounted cash
flow ("DCF") analysis for the Company's Times Fiber cable and connector segments
using management projections for the years 1997 through 2000 and fiscal year
2001 projections extrapolated therefrom based upon research analysts' projected
five-year earnings per share growth rate for the Company (the "Management
Case"), as well as two alternative cases, and derived estimated consolidated per
share valuation ranges for Amphenol Common Stock. Alternative case one ("Case
1") and alternative case two ("Case 2") assumed consolidated five-year compound
annual growth rates in sales and earnings per share that were lower than the
Management Case by 3.5% and 4.0%, respectively, in Case 1, and 5.0% and 5.5%,
respectively, in Case 2. In addition, Case 1 and Case 2 assumed earnings before
interest and taxes ("EBIT") margins for the Times Fiber cable segment and
connector segment for the five-year period from 1997 to 2001 that were slightly
lower than the corresponding EBIT margins in the Management Case. The DCF was
calculated assuming discount rates ranging from 12% to 14% for the Company's
Times Fiber cable segment and from 11% to 13% for the Company's connector
segment, and was comprised of the sum of the net present value of (i) the
projected unlevered free cash flow for the years 1997 through 2001 and (ii) the
year 2001 terminal value based upon a range of multiples of 7.0x to 8.5x
projected EBITDA for the Company's Times Fiber cable segment and 7.0x to 9.0x
projected EBITDA for the Company's connector segment.
Utilizing this methodology, Merrill Lynch derived estimated consolidated per
share valuations for Amphenol Common Stock ranging from approximately $25.00 to
$31.00 for the Management Case, $21.50 to $26.50 for Case 1 and $20.00 to $25.00
for Case 2.
LEVERAGED RECAPITALIZATION ANALYSIS. Merrill Lynch performed a leveraged
recapitalization analysis for the Company's Times Fiber cable and connector
segments after giving effect to the Merger, using management projections for the
years 1997 through 2000, KKR's assumed capitalization structure for the Company,
and the assumption that the public stockholders of the Company would own, on a
fully diluted basis, approximately 16.6% of Amphenol Common Stock immediately
following the Merger. This analysis was performed assuming a discount rate of
21% to consolidated earnings for the Company and a range of hypothetical
multiples of projected current fiscal year earnings per share of 10.0x to 16.0x
for the Management Case and Case 1 and 13.0x to 16.0x for Case 2. Utilizing this
methodology, Merrill Lynch estimated consolidated per share valuations for
Amphenol Common Stock after giving effect to the Merger which, when added to the
aggregate cash portion of the consideration to be paid in the Merger, resulted
in per share valuations of KKR's offer ranging from approximately $25.28 to
$27.04 for the Management Case, $24.85 to $25.99 for Case 1 and $25.19 to $25.64
for Case 2.
The summary set forth above does not purport to be a complete description of
the analyses performed by Merrill Lynch, although it is a summary of the
material financial and comparative analyses performed by Merrill Lynch in
arriving at the Merrill Lynch Opinion. Arriving at a fairness opinion is a
complex process not necessarily susceptible to partial analysis or summary
description. Merrill Lynch believes that its analysis must be considered as a
whole and that selecting portions of its analyses and of the factors considered
by it, without considering all such factors and analyses, could create a
misleading view of the processes underlying its opinion. Merrill Lynch did not
assign relative weights to any of its analyses in preparing its opinion. The
matters considered by Merrill Lynch in its analyses were based on numerous
macroeconomic, operating and financial assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the Company's control
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and involve the application of complex methodologies and educated judgment. Any
estimates incorporated in the analyses performed by Merrill Lynch are not
necessarily indicative of actual past or future results or values, which may be
significantly more or less favorable than such estimates. Estimated values do
not purport to be appraisals and do not necessarily reflect the prices at which
businesses or companies may be sold in the future, and such estimates are
inherently subject to uncertainty. No public company utilized as a comparison is
identical to the Company, and none of the Comparable Cable Acquisition
Transactions, Comparable Connector Acquisition Transactions or other business
combinations utilized as a comparison is identical to the proposed Merger.
Accordingly, an analysis of publicly traded comparable companies and comparable
business combinations is not mathematical; rather it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the comparable companies and other factors that could affect
the public trading value of the comparable companies or company to which they
are being compared.
Pursuant to a letter agreement dated January 2, 1997, the Company has agreed
to pay Merrill Lynch (i) a fee of $100,000 payable on January 2, 1997, (ii) an
additional fee of $150,000 payable on the first date the Company makes a public
disclosure of the contents of the Merrill Lynch Opinion, but in no event later
than the date that this Proxy Statement is mailed to the Company's stockholders
and (iii) an additional fee of $1,750,000 payable upon the closing of the
Merger, against which the fees described in clauses (i) and (ii) above will be
credited. In addition, the Company has agreed to reimburse Merrill Lynch for its
reasonable expenses (including the reasonable fees and disbursements of its
legal counsel) and to indemnify Merrill Lynch and certain related parties from
and against certain liabilities, including liabilities under the federal
securities laws, arising out of its engagement.
Merrill Lynch has, in the past, provided financial advisory and financing
services to the Company and has received fees for rendering such services.
Merrill Lynch has, in the past, also provided financial advisory and financing
services to KKR and certain of its affiliates and portfolio companies and has
received fees for rendering such services.
MERGER CONSIDERATION
AMPHENOL COMMON STOCK.
Subject to certain provisions as described herein with respect to shares of
Amphenol Common Stock owned by the Company, any subsidiary of the Company, the
Partnership, Newco or any subsidiary of the Partnership, and with respect to
fractional shares and Dissenting Shares, and subject to the effects of proration
as described herein, (i) each issued and outstanding share of Amphenol Common
Stock (other than Electing Shares as defined below) will be converted into the
right to receive in cash from the Company following the Merger an amount equal
to $26.00 (the "Cash Price") and (ii) each issued and outstanding share of
Amphenol Common Stock with respect to which an election to retain Amphenol
Common Stock has been made and not revoked or lost in accordance with the Merger
Agreement (an "Electing Share") will be converted into the right to retain one
fully paid and nonassessable share of Amphenol Common Stock (a "Non-Cash
Election Share"); provided, that the aggregate number of shares of Amphenol
Common Stock to be converted into the right to retain Amphenol Common Stock at
the Effective Time shall be equal to 4,400,000 (the "Non-Cash Election Number").
With respect to certain risks related to the retention of Amphenol Common Stock,
see "RISK FACTORS" above.
The Merger contemplates that approximately 90% of the presently issued and
outstanding shares of Amphenol Common Stock will be converted into cash and that
approximately 10% of such shares will be retained by existing stockholders.
Because 25% (or 4,400,000) of the shares outstanding after the Merger must be
retained by stockholders (the "Non-Cash Election Requirement"), stockholders who
do not elect to retain any shares of Amphenol Common Stock may, due to
proration, be required to retain shares of Amphenol Common Stock, and
stockholders who do elect to retain such shares may be prorated into some
portion of cash, in each case as set forth in the Merger Agreement and described
herein. See "RISK FACTORS--Certain Proration Risks."
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As set forth in greater detail below, stockholders who elect to retain
shares of Amphenol Common Stock or to convert such shares into the right to
receive the Cash Price may experience a range of actual outcomes based upon the
actions taken by other stockholders. For example, a stockholder holding 100
shares and electing to retain all of them will receive from 10 to 100 shares,
depending upon the actions of other stockholders. A stockholder holding 100
shares and electing to convert all of them into the right to receive the Cash
Price with respect thereto will receive the Cash Price for from 90 to 100 of
such shares and will receive from 0 to 10 shares, depending on the actions of
other stockholders. The following examples further illustrate the potential
effects of proration. All fractional shares are subject to payment of cash
instead of issuing fractional shares, and to simplify the following examples,
the impact of fractional shares has been excluded.
A. HOLDER A OWNS 100 SHARES AND DOES NOT ELECT TO RETAIN ANY SHARES.
1. If other stockholders elect to retain 4,400,000 or more shares in the
aggregate, then Holder A will receive $2,600 in cash (100 shares at $26.00
per share). This is because other stockholders have satisfied the Non-Cash
Election Requirement.
2. If stockholders elect to retain fewer than 4,400,000 shares in the
aggregate, then Holder A will not be able to receive all cash for its 100
shares and will be required to retain some shares. This is because the
Non-Cash Election Requirement has not been met and thus each stockholder
must retain a small number of shares in order to increase the number of
retained shares to 4,400,000 and thus meet the Non-Cash Election
Requirement. However, even in the case of maximum proration (i.e. no
stockholder elects to retain shares and no stockholder exercises dissenters'
rights), Holder A will still be assured of receiving at least $2,340 in cash
(90 shares at $26.00 per share) and will retain 10 shares of Amphenol Common
Stock.
B. HOLDER B OWNS 100 SHARES AND ELECTS TO RETAIN ALL ITS SHARES.
1. If the stockholders (including Holder B) elect to retain more than
4,400,000 shares, then Holder B will not be able to retain all its shares
and will be required to receive some cash. This is because the number of
Electing Shares has exceeded 4,400,000 and thus the number of shares which
may be retained must be reduced in order to meet the Non-Cash Election
Requirement. For example, if stockholders elected to retain 5,000,000 shares
in the aggregate, then each holder, including Holder B, would be able to
retain only 88% of its shares in order to reduce the number of retained
shares to 4,400,000 and thus meet the Non-Cash Election Requirement.
Therefore, Holder B would be able to retain only 88 shares (or 88% of its
100 shares) and would receive $312 in cash (12 shares at $26.00 per share).
In the case of maximum proration (i.e. all stockholders elect to retain
their shares), Holder B would be able to retain only 10 shares (or 10%) and
would receive $2,340 in cash (or 90%).
2. If the stockholders (including Holder B) elect to retain 4,400,000 or
fewer shares in the aggregate, then Holder B will be able to retain all 100
of its shares. This is because in this situation Amphenol will accept all
shares elected to be retained in order to reach the Non-Cash Election
Number. As described in example A.2. above, if fewer than 4,400,000 shares
are elected to be retained, non-electing stockholders will then be prorated
into shares in order to reach the Non-Cash Election Number.
C. HOLDER C OWNS 100 SHARES AND ELECTS TO RETAIN SOME BUT NOT ALL ITS SHARES
(THIS EXAMPLE HAS ASSUMED AN ELECTION TO RETAIN 50 SHARES AND CONVERT 50
SHARES TO CASH).
1. In the unlikely event that stockholders (including Holder C) elect to
retain exactly 4,400,000 shares in the aggregate, then Holder C will be able
to retain its 50 Electing Shares and will receive $1,300 in cash (50 shares
at $26.00 per share). This is because the Non-Cash Election Requirement has
been met exactly.
2. If the stockholders (including Holder C) elect to retain more than
4,400,000 shares in the aggregate, then Holder C will not be able to retain
all of its 50 Electing Shares. Again, this is because
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the number of Electing Shares has exceeded 4,400,000 and thus the number of
shares which may be retained must be reduced in order to meet the Non-Cash
Election Requirement. For example, if stockholders elected to retain
5,000,000 shares in the aggregate, then each holder, including Holder C,
would be able to retain only 88% of its Electing Shares in order to reduce
the number of retained shares to 4,400,000 and thus meet the Non-Cash
Election Requirement. Therefore, Holder C would be able to retain only 44
shares (or 88% of its 50 Electing Shares) and would receive $1,456 in cash
(56 shares at $26.00 per share). If the stockholders elected to retain more
than 5,000,000 shares in the aggregate, Holder C would receive fewer shares
than in the example above, but would receive a commensurately greater amount
of cash.
3. If the stockholders (including Holder C) elect to retain fewer than
4,400,000 shares in the aggregate, then Holder C would be required to retain
more than 50 shares. Again, this is because the Non-Cash Election Number has
not been reached and thus each stockholder must retain a small number of
shares (in the case of Holder C, a small number of additional shares) in
order to increase the aggregate number of retained shares to 4,400,000 and
thus meet the Non-Cash Election Requirement. For example, if stockholders
elected to retain 2,400,000 shares in the aggregate, then all stockholders
must collectively retain an additional 2,000,000 shares in order to reach
the Non-Cash Election Number. In this example, Holder C would be required to
retain an additional 2 shares (for a total of 52 shares) and would receive
$1,248 in cash (48 shares at $26.00 per share). The additional 2 shares is
calculated by multiplying the 50 shares Holder C wants to convert to cash by
a fraction the numerator of which is 2,000,000 and the denominator of which
is the total number of outstanding shares less the 2,400,000 Electing
Shares. If the stockholders elected to retain fewer than 2,400,000 shares in
the aggregate, Holder C would receive more shares than in the example above,
but would receive commensurately less cash.
Fractional shares of Amphenol Common Stock will not be issued in the Merger.
Holders of Amphenol Common Stock otherwise entitled to a fractional share of
Amphenol Common Stock following the Merger will be paid cash in lieu of such
fractional share determined and paid as described under "--Fractional Shares"
below.
Any shares of Amphenol Common Stock owned by the Company, any subsidiary of
the Company, the Partnership, Newco or any subsidiary of the Partnership will
automatically be cancelled at the Effective Time and will cease to exist.
NEWCO COMMON STOCK.
In the Merger, each share of stock of Newco issued and outstanding
immediately prior to the Effective Time will be converted into a number of
shares of Amphenol Common Stock equal to the quotient of (A) 13,116,955 divided
by (B) the number of shares of common stock of Newco outstanding immediately
prior to the Effective Time. As a result of the Merger, the stockholders of
Newco will hold 13,116,955 shares, or approximately 75% of the shares, of
Amphenol Common Stock expected to be outstanding immediately after the Merger,
before giving effect to the exercise of the NXS Option or the Stockholders
Option granted with respect to the Subject Shares pursuant to the Stockholders
Agreement and before giving effect to any purchase of shares from Messrs.
Loeffler, Jepsen and Cohane.
NON-CASH ELECTION
Record holders of shares of Amphenol Common Stock will be entitled to make
an unconditional election (a "Non-Cash Election") on or prior to the Election
Date (as defined below) to retain Non-Cash Election Shares. If the number of
Electing Shares exceeds the Non-Cash Election Number, however, then (i) the
number of Electing Shares covered by a holder's Non-Cash Election to be
converted into the right to retain Non-Cash Election Shares will be determined
by multiplying the total number of Electing Shares covered by such Non-Cash
Election by a proration factor (the "Non-Cash Proration Factor") determined by
dividing the Non-Cash Election Number by the total number of Electing Shares and
(ii) such number of
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Electing Shares will be so converted. All Electing Shares, other than those
shares converted into the right to retain Non-Cash Election Shares as described
in the immediately preceding sentence, will be converted into cash (on a
consistent basis among stockholders who made the election to retain Non-Cash
Election Shares, PRO RATA to the number of shares as to which they made such
election) as if such shares were not Electing Shares.
If a stockholder elects to make a Non-Cash Election and receives cash as a
result of the proration procedures described above, such stockholder may receive
dividend treatment (rather than capital gain treatment) for any cash received in
the Merger as a result of such proration procedures. See "RISK FACTORS--Non-Cash
Election and Proration into Cash--Possible Dividend Treatment." See also "THE
MERGER--Certain Federal Income Tax Consequences."
If the number of Electing Shares is less than the Non-Cash Election Number,
then (i) all Electing Shares will be converted into the right to retain Non-Cash
Election Shares in accordance with the Merger Agreement, (ii) additional shares
of Amphenol Common Stock, other than Electing Shares and Dissenting Shares, will
be converted into the right to retain Non-Cash Election Shares, which number of
additional shares shall be determined by multiplying the total number of shares,
other than Electing Shares and Dissenting Shares, by a proration factor (the
"Cash Proration Factor") determined by dividing (x) the difference between the
Non-Cash Election Number and the number of Electing Shares by (y) the total
number of shares of Amphenol Common Stock, other than Electing Shares and
Dissenting Shares, and (iii) such additional shares of Amphenol Common Stock
shall be converted into the right to retain Non-Cash Election Shares in
accordance with the Merger Agreement (on a consistent basis among stockholders
who held shares of Amphenol Common Stock as to which they did not make the
Non-Cash Election, PRO RATA to the number of shares as to which they did not
make such election).
With respect to certain risks related to the retention of Amphenol Common
Stock, see "RISK FACTORS" above.
NON-CASH ELECTION PROCEDURE
The Form of Election is being mailed to holders of record of Amphenol Common
Stock together with this Proxy Statement. FOR A FORM OF ELECTION TO BE
EFFECTIVE, HOLDERS OF AMPHENOL COMMON STOCK MUST PROPERLY COMPLETE SUCH FORM OF
ELECTION, AND SUCH FORM OF ELECTION, TOGETHER WITH ALL CERTIFICATES FOR SHARES
OF AMPHENOL COMMON STOCK HELD BY SUCH HOLDER, DULY ENDORSED IN BLANK OR
OTHERWISE IN FORM ACCEPTABLE FOR TRANSFER ON THE BOOKS OF THE COMPANY (OR BY
APPROPRIATE GUARANTEE OF DELIVERY AS SET FORTH IN SUCH FORM OF ELECTION), MUST
BE RECEIVED BY IBJ SCHRODER BANK & TRUST COMPANY (THE "EXCHANGE AGENT") AT ONE
OF THE ADDRESSES LISTED ON THE FORM OF ELECTION AND NOT WITHDRAWN, BY 5:00 P.M.,
EASTERN TIME, ON THE BUSINESS DAY NEXT PRECEDING THE DATE OF THE SPECIAL MEETING
(THE "ELECTION DATE"). Holders of Amphenol Common Stock who make a Non-Cash
Election for less than all of their shares will receive a new share certificate
from the Exchange Agent for the remainder of the shares represented by the old
certificate.
The determinations of the Exchange Agent as to whether or not Non-Cash
Elections have been properly made or revoked, and when such election or
revocations were received, will be binding.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware or such later date
as is specified in such Certificate of Merger (the "Effective Time"). The filing
of the Certificate of Merger will occur as soon as practicable on or after the
satisfaction or waiver of the conditions to the Merger specified in the Merger
Agreement unless another date is agreed to in writing by the Company and Newco.
Subject to certain limitations, the Merger
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Agreement may be terminated by either Newco or the Company if, among other
reasons, the Merger has not been consummated on or before June 30, 1997. See
"CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to the Consummation of
the Merger" and "--Termination."
CONVERSION/RETENTION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
AMPHENOL COMMON STOCK.
The conversion of shares of Amphenol Common Stock (other than Dissenting
Shares) into the right to receive cash or the right to retain shares of Amphenol
Common Stock following the Merger will occur at the Effective Time.
As soon as practicable as of or after the Effective Time, the Exchange Agent
will send a letter of transmittal to each holder of Amphenol Common Stock (other
than holders of Amphenol Common Stock making a Non-Cash Election with respect to
all of such holders' shares who have properly submitted Forms of Election and
share certificates to the Exchange Agent). The letter of transmittal will
contain instructions with respect to the surrender of certificates representing
shares of Amphenol Common Stock in exchange for cash and, under certain
circumstances, certificates representing shares of Amphenol Common Stock to be
retained in the Merger, or the amount of cash in lieu of any fractional interest
in a share of Amphenol Common Stock for which the shares represented by the
certificates so surrendered are exchangeable pursuant to the Merger Agreement.
EXCEPT FOR AMPHENOL COMMON STOCK CERTIFICATES SURRENDERED WITH A FORM OF
ELECTION AS DESCRIBED ABOVE UNDER "--NON-CASH ELECTION PROCEDURE," STOCKHOLDERS
OF THE COMPANY SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE AGENT UNTIL
THEY HAVE RECEIVED THE LETTER OF TRANSMITTAL.
As soon as practicable after the Effective Time, each holder of an
outstanding certificate or certificates at such time which prior thereto
represented shares of Amphenol Common Stock shall, upon surrender to the
Exchange Agent of such certificate or certificates and acceptance thereof by the
Exchange Agent, be entitled to the amount of cash, if any, into which the number
of shares of Amphenol Common Stock previously represented by such certificate or
certificates surrendered shall have been converted pursuant to the Merger
Agreement and a certificate or certificates representing the number of full
shares of Amphenol Common Stock, if any, to be retained by the holder thereof
pursuant to the Merger Agreement. The Exchange Agent will accept such
certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in accordance
with normal exchange practices. After the Effective Time, there will be no
further transfer on the records of the Company or its transfer agent of
certificates representing shares of Amphenol Common Stock which have been
converted, in whole or in part, pursuant to the Merger Agreement into the right
to receive cash, and if such certificates are presented to the Company for
transfer, they will be cancelled against delivery of cash and, if appropriate,
certificates for retained Amphenol Common Stock. Until surrendered as
contemplated by the Merger Agreement, each certificate for shares of Amphenol
Common Stock will be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the consideration contemplated by
the Merger Agreement. No interest will be paid or will accrue on any cash
payable as consideration in the Merger or in lieu of any fractional shares of
retained Amphenol Common Stock.
No dividends or other distributions with respect to retained Amphenol Common
Stock with a record date after the Effective Time will be paid to the holder of
any unsurrendered certificate for shares of Amphenol Common Stock with respect
to the shares of retained Amphenol Common Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to the Merger Agreement until the surrender of such certificate in accordance
with the Merger Agreement. Subject to the effect of applicable laws, following
surrender of any such certificate, there shall be paid to the holder of the
certificate representing whole shares of retained Amphenol Common Stock issued
in
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connection therewith, without interest, (i) at the time of such surrender or as
promptly after the sale of the Excess Shares (as defined below) as practicable,
the amount of any cash payable in lieu of a fractional share of retained
Amphenol Common Stock to which such holder is entitled pursuant to the Merger
Agreement and the proportionate amount of dividends or other distributions, if
any, with a record date after the Effective Time theretofore paid with respect
to such whole shares of retained Amphenol Common Stock, and (ii) at the
appropriate payment date, the proportionate amount of dividends or other
distributions, if any, with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such whole shares of retained Amphenol Common Stock.
FRACTIONAL SHARES
No certificates or scrip representing fractional shares of retained Amphenol
Common Stock will be issued in connection with the Merger, and such fractional
share interests will not entitle the owner thereof to vote or to any rights of a
stockholder of the Company after the Merger. Each holder of shares of Amphenol
Common Stock exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of retained Amphenol Common Stock
(after taking into account all shares of Amphenol Common Stock delivered by such
holder) will receive, in lieu thereof, a cash payment (without interest)
representing such holder's proportionate interest in the net proceeds from the
sale by the Exchange Agent (following the deduction of applicable transaction
costs), on behalf of all such holders, of the shares (the "Excess Shares") of
retained Amphenol Common Stock representing such fractions. Such sale shall be
made as soon as practicable after the Effective Time.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, the Company has agreed that prior to the
Effective Time its business and that of its subsidiaries will be conducted only
in the ordinary course of business and in compliance with applicable law. See
"CERTAIN PROVISIONS OF THE MERGER AGREEMENT-- Certain Pre-closing Covenants."
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The obligations of the Company and Newco to consummate the Merger are
subject to various conditions, including, without limitation, obtaining
requisite Amphenol stockholder approval, the termination or expiration of the
relevant waiting period under the HSR Act and the absence of any injunction or
other legal restraint or prohibition preventing the consummation of the Merger.
See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to the Consummation
of the Merger" and "REGULATORY APPROVALS."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Winthrop, Stimson, Putnam & Roberts, the following are,
under currently applicable law, the material United States federal income tax
considerations generally applicable to the Merger. The tax treatment described
herein may vary depending upon each stockholder's particular circumstances and
tax position. Certain stockholders (including insurance companies, tax-exempt
organizations, financial institutions or broker-dealers, foreign corporations,
persons who are not citizens or residents of the United States ("U.S."),
stockholders who do not hold their shares as capital assets and stockholders who
have acquired their existing stock upon the exercise of options or otherwise as
compensation) may be subject to special rules not discussed below. No ruling
from the Internal Revenue Service ("IRS") will be applied for with respect to
the federal income tax consequences discussed herein and, accordingly, there can
be no assurance that the IRS will agree with the conclusions stated herein. The
discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and regulations, rulings
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and judicial decisions thereunder as of the date hereof, and such authorities
may be repealed, revoked or modified so as to result in U.S. federal income tax
consequences different from those discussed below. In addition, this discussion
does not consider the effect of any applicable foreign, state, local or other
tax laws. Each stockholder should consult his or her own tax advisor as to the
particular tax consequences to him or her of the Merger, including the
applicability and effect of any foreign, state, local or other tax laws.
CHARACTERIZATION OF THE MERGER FOR U.S. FEDERAL INCOME TAX PURPOSES. For
U.S. federal income tax purposes, Newco will be disregarded as a transitory
entity, and the Merger of Newco with and into the Company will be treated as a
sale of a portion of a tendering stockholder's Amphenol Common Stock ("Stock")
to the Partnership and as a redemption of a portion of the stockholder's Stock
by the Company. It is unclear how the allocation of proceeds between the sale
and redemption should be determined. The Company intends to take the position
that the percentage of a stockholder's Stock disposed of by the stockholder
pursuant to the Merger which will be treated as sold to the Partnership will be
a percentage of such Stock equal to (i) the amount contributed to Newco by the
Partnership in exchange for Newco stock divided by (ii) the aggregate amount of
cash paid to stockholders pursuant to the Merger. The remainder of the
stockholder's Stock disposed of in the Merger will be treated as redeemed by the
Company. The IRS could, however, adopt a different approach in determining the
portion, if any, of a stockholder's Stock which is treated as redeemed by the
Company. See "--Stockholders Receiving Cash" below for a discussion of the
consequences of cash being deemed paid in redemption of Stock.
STOCKHOLDERS RECEIVING CASH. As described more fully below, the U.S.
federal income tax consequences of the Merger with respect to a particular
stockholder will depend upon, among other things, (i) whether the stockholder
received any cash proceeds pursuant to the Merger, (ii) the extent to which a
stockholder is deemed to have sold his or her Stock to the Partnership or is
deemed to have had his or her Stock redeemed by the Company and (iii) whether
the redemption of a holder's Stock by the Company will qualify as a sale or
exchange under Section 302 of the Internal Revenue Code of 1986, as amended (the
"Code"). First, to the extent that a stockholder is considered to have sold
Stock to the Partnership, such stockholder will recognize either capital gain or
loss (assuming the Stock is held by such stockholder as a capital asset) equal
to the difference between the amount realized on his or her deemed sale of Stock
to the Partnership (i.e., the cash proceeds properly allocated to such sale) and
the stockholder's adjusted tax basis in such Stock. Such gain or loss generally
will be long-term capital gain or loss if the Stock is held as a capital asset
by the stockholder for more than one year. Second, a stockholder also will
recognize either capital gain or loss equal to the difference between the cash
proceeds allocable to the redemption of such stockholder's Stock by the Company
and the stockholder's adjusted tax basis in such Stock, to the extent such
redemption is treated as a sale or exchange under Section 302 of the Code with
respect to such stockholder. Such gain or loss generally will be long-term
capital gain or loss if the Stock is held as a capital asset by the stockholder
for more than one year. Under Section 302 of the Code, a redemption of Stock
pursuant to the Merger will, as a general rule, be treated as a sale or exchange
if such redemption (a) is "substantially disproportionate" with respect to the
stockholder, (b) results in a "complete redemption" of the stockholder's
interest in the Company or (c) is "not essentially equivalent to a dividend"
with respect to the stockholder.
In determining whether any of these Section 302 tests is satisfied,
stockholders must take into account not only the Stock that they actually own,
but also any Stock they are deemed to own under the constructive ownership rules
set forth in Section 318 of the Code. Pursuant to these constructive ownership
rules, a stockholder is deemed to constructively own any Stock that is owned by
certain related individuals or entities and any Stock that the stockholder has
the right to acquire by exercise of an option or by conversion or exchange of a
security.
The redemption of a stockholder's Stock will be "substantially
disproportionate" with respect to such stockholder if, among other things, the
percentage of Stock actually and constructively owned by such stockholder
immediately following the Merger is less than 80% of the percentage of Stock
actually and constructively owned by such stockholder immediately prior to the
Merger. Stockholders should consult
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their own tax advisors with respect to the application of the "substantially
disproportionate" test to their particular facts and circumstances.
The redemption of a stockholder's Stock will result in a "complete
redemption" of a stockholder's interest in the Company if either (a) all the
Stock actually and constructively owned by the stockholder is redeemed pursuant
to the Merger or (b) all the Stock actually owned by the stockholder is redeemed
pursuant to the Merger and the stockholder is eligible to waive, and does
effectively waive in accordance with Section 302(c) of the Code, attribution of
all Stock which otherwise would be considered to be constructively owned by such
stockholder.
Even if the redemption of a stockholder's Stock fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test
described above, the redemption of a stockholder's Stock may nevertheless
satisfy the "not essentially equivalent to a dividend" test if the stockholder's
redemption of Stock pursuant to the Merger results in a "meaningful reduction"
in such stockholder's proportionate Stock interest in the Company. Whether the
receipt of cash by a stockholder will be considered "not essentially equivalent
to a dividend" will depend upon such stockholder's facts and circumstances. In
certain circumstances, even a small reduction in a stockholder's proportionate
equity interest may satisfy this test. For example, the IRS has indicated in a
published ruling that a 3.3% reduction in the proportionate equity interest of a
small (substantially less than 1%) stockholder in a publicly held corporation
who exercises no control over corporate affairs constitutes such a "meaningful
reduction." Stockholders should consult with their own tax advisors as to the
application of this test in their particular situation.
A tendering stockholder may not be able to satisfy one of the above three
tests because of contemporaneous acquisitions of Stock by such stockholder or a
related party whose Stock would be attributed to such stockholder under Section
318 of the Code. Stockholders should consult their own tax advisors regarding
the tax consequences of such acquisitions in their particular circumstances.
If a stockholder cannot satisfy any of the three tests described above and
to the extent the Company has sufficient current and/or accumulated earnings and
profits, such stockholder will be treated as having received a dividend which
will be includible in gross income (and treated as ordinary income) in an amount
equal to the cash received (without regard to gain or loss, if any).
In the case of a corporate stockholder, if the cash paid is treated as a
dividend, such dividend income may be eligible for the 70% dividends-received
deduction. The dividends-received deduction is subject to certain limitations,
and may not be available if the corporate stockholder does not satisfy certain
holding period requirements with respect to the Stock or if the Stock is treated
as "debt financed portfolio Stock" within the meaning of Section 246A(c) of the
Code. Additionally, if a dividends-received deduction is available, the dividend
may be treated as an "extraordinary dividend" under Section 1059(a) of the Code,
in which case a corporate stockholder's adjusted tax basis in the Stock retained
by such stockholder would be reduced, but not below zero, by the amount of the
nontaxed portion of such dividend. Any amount of the nontaxed portion of the
dividend in excess of the corporate stockholder's adjusted tax basis generally
will be subject to tax upon a sale or other taxable disposition of the Stock.
Corporate stockholders are urged to consult their own tax advisors as to the
effect of Section 1059 of the Code on the adjusted tax basis of their Stock.
STOCKHOLDERS RETAINING STOCK AND RECEIVING NO CASH. The Merger will have no
U.S. federal income tax consequences for stockholders who retain their Stock and
receive no cash. Accordingly, a stockholder will not recognize any gain or loss
on any Stock retained by such stockholder.
STOCKHOLDERS RETAINING A PORTION OF THEIR STOCK AND RECEIVING CASH. To the
extent that a stockholder elects to retain a portion of his or her Stock and
exchange a portion of his or her Stock for cash, or to the extent a stockholder
is prorated into receiving cash in exchange for some portion of his or her
Stock, the
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tax treatment of the stockholder's receipt of such cash will be the same as set
forth above under "-- Stockholders Receiving Cash."
As described above under "--Stockholders Retaining Stock and Receiving No
Cash," the Merger will have no tax consequences to a stockholder (and, thus, a
stockholder will not recognize any gain or loss as a result of the Merger), to
the extent such stockholder retains, or is prorated into Stock. However, as
described more fully above under "--Stockholders Receiving Cash," a
stockholder's retention of Stock may, under certain circumstances, cause the
cash received by such stockholder pursuant to the Merger to be treated as a
dividend for U.S. federal income tax purposes.
FOREIGN STOCKHOLDERS--WITHHOLDING. The following is a general discussion of
certain U.S. federal income tax consequences of the Merger to foreign
stockholders. For this purpose, a foreign stockholder is any person who is, for
U.S. federal income tax purposes, a foreign corporation, a non-resident alien
individual, a foreign partnership or a foreign estate or trust.
In the case of any foreign stockholder, the Exchange Agent will withhold 30%
of the amount paid to redeem the Stock of such stockholder in order to satisfy
certain U.S. withholding requirements, unless such foreign stockholder proves in
a manner satisfactory to the Company and the Exchange Agent that either (i) the
redemption of his or her Stock pursuant to the Merger will qualify as a sale or
exchange under Section 302 of the Code, rather than as a dividend for U.S.
federal income tax purposes, in which case no withholding will be required, (ii)
the foreign stockholder is eligible for a reduced tax treaty rate with respect
to dividend income, in which case the Exchange Agent will withhold at the
reduced treaty rate or (iii) no U.S. withholding is otherwise required.
Foreign stockholders should consult their own tax advisors regarding the
application of these withholding rules.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Company must report
annually to the IRS and to each stockholder the amount of dividends paid to such
stockholder and the backup withholding tax, if any, withheld with respect to
such dividends. Copies of these information returns also may be made available
to the tax authorities in the country in which a foreign stockholder resides
under the provisions of an applicable income tax treaty.
Backup withholding (which generally is a withholding tax imposed at the rate
of 31% on certain payments to persons that fail to furnish certain information
under the United States information reporting requirements) generally will not
apply to dividends paid to a foreign stockholder at an address outside the
United States (unless the payor has knowledge that the payee is a U.S. person).
Payment of the proceeds of a sale of Stock by or through a United States
office of a broker is subject to both backup withholding and information
reporting unless the beneficial owner certifies under penalties of perjury that
it is a foreign stockholder and the payor does not have actual knowledge that
such owner is a U.S. person, or otherwise establishes an exemption. In general,
backup withholding and information reporting will not apply to a payment of the
proceeds of a sale of Stock by or through a foreign office of a broker. If,
however, such broker is, for United States federal income tax purposes, a U.S.
person, a controlled foreign corporation, or a foreign person that derives 50%
or more of his or her gross income for certain periods from the conduct of a
trade or business in the United States, such payments will not be subject to
backup withholding but will be subject to information reporting, unless (1) such
broker has documentary evidence in its records that the beneficial owner is a
foreign holder and certain other conditions are met, or (2) the beneficial owner
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against the holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
50
<PAGE>
The backup withholding and information reporting rules are currently under
review by the Treasury Department and their application to the Stock could be
changed by future regulations.
THOUGH THE FOREGOING ARE THE MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
GENERALLY APPLICABLE TO THE MERGER, THE DISCUSSION DOES NOT ADDRESS EVERY
FEDERAL INCOME TAX CONCERN WHICH MAY BE APPLICABLE TO A PARTICULAR STOCKHOLDER.
EACH STOCKHOLDER IS URGED TO CONSULT SUCH STOCKHOLDER'S OWN TAX ADVISOR TO
DETERMINE THE TAX CONSEQUENCES TO SUCH STOCKHOLDER, IN THE LIGHT OF HIS OR HER
PARTICULAR CIRCUMSTANCES, OF THE DISPOSITION OF STOCK PURSUANT TO THE MERGER.
ACCOUNTING TREATMENT
The Merger will be accounted for as a recapitalization. Accordingly, the
historical basis of the Company's assets and liabilities will not be impacted by
the transaction.
EFFECT ON STOCK AND EMPLOYEE BENEFIT MATTERS
It is anticipated that, (x) immediately prior to the Effective Time, each
employee or director stock option to purchase shares of Amphenol Common Stock
("Company Stock Options") granted under any stock option or stock purchase plan,
program or arrangement of the Company, including the Stock Option Plan of
Amphenol, as amended (collectively with the 1996 Long-Term Incentive Stock Plan
of Amphenol and the Restricted Stock Plan of Amphenol, the "Stock Plans"), will
be cancelled, whether or not then exercisable, and (y) each holder of any such
Company Stock Option having an exercise price of less than the Cash Price (which
constitutes all outstanding Company Stock Options except for Company Stock
Options to purchase an aggregate of 110,000 shares of Amphenol Common Stock at
an exercise price of $26 5/8 per share) will receive, in consideration of such
cancellation, a payment from the Company (subject to any applicable withholding
taxes) equal to the product of (1) the total number of shares of Amphenol Common
Stock subject to such Company Stock Option and (2) the excess of the Cash Price
over the exercise price per share of Amphenol Common Stock subject to such
Company Stock Option, payable in cash at the Effective Time or as soon as
practicable thereafter, representing approximately $2.4 million in the
aggregate.
It is anticipated that the Stock Plans will terminate as of the Effective
Time, and that following the Effective Time no holder of a Company Stock Option
nor any participant in any Stock Plan will have any right thereunder to acquire
equity securities of the Company following the Merger. It is expected that
certain managers will receive new options to acquire shares of Amphenol Common
Stock after the Merger. See "THE MERGER--Interests of Certain Persons in the
Merger."
Until December 31, 1997, Newco has agreed in the Merger Agreement, subject
to certain exceptions, that the Company will provide certain employee benefits
under plans, programs and arrangements which, in the aggregate, will provide
benefits to the employees of the Company which are no less favorable, in the
aggregate, than those provided pursuant to plans, programs, and arrangements of
the Company (other than those related to Amphenol Common Stock) in effect and
disclosed to Newco on the date of the Merger Agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of the Company may have interests,
described herein, that present them with potential conflicts of interest in
connection with the Merger. The Board of Directors is aware of the conflicts
described below and considered them in addition to the other matters described
under "THE MERGER--Recommendation of the Board of Directors; Reasons for the
Merger."
51
<PAGE>
Pursuant to the Stockholders Agreement, the DeGeorge Stockholders have
granted NXS the NXS Option to purchase the Subject Shares at the Exercise Price
and NXS has granted the DeGeorge Stockholders the Stockholders Option to sell
the Subject Shares at the Exercise Price. In addition, if NXS exercises the NXS
Option following the termination of the Merger Agreement and NXS or any of its
affiliates receives any cash in respect of all or any portion of the Subject
Shares in connection with a Third Party Business Combination during a period
ending one year from the date the Merger Agreement is terminated, then the
DeGeorge Stockholders will be entitled to a portion of such consideration. See
"CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT."
Shares of Amphenol Common Stock held by officers and directors of Amphenol
will be converted into the right to receive the same consideration as shares of
Amphenol Common Stock held by other stockholders. Company Stock Options held by
the officers and directors of Amphenol will be treated in the same manner as
Company Stock Options held by other stockholders. In addition, it is expected
that Messrs. Martin H. Loeffler, Edward G. Jepsen and Timothy F. Cohane, each of
whom is an officer and director of the Company, will elect to retain all of
their shares in the Merger. Messrs. Loeffler, Jepsen and Cohane have agreed in
principle with Newco and NXS that they will retain 96,154 shares, 76,923 shares
and 76,923 shares respectively, of Amphenol Common Stock. Accordingly, following
the Merger, such persons may sell shares which they retain in excess of such
amounts. While no decisions have been made concerning any such potential sale,
NXS has indicated that it would be prepared to purchase any such excess shares.
To the extent that the proration provisions of the Merger Agreement result in
Messrs. Loeffler, Jepsen and Cohane retaining fewer shares than contemplated,
the Company expects to provide such persons with an opportunity to buy shares in
an amount necessary to result in such persons retaining the intended amounts
and, in connection therewith, to eliminate for such persons the impact of any
adverse tax consequences arising from such purchase. Messrs. Loeffler, Jepsen
and Cohane will also be granted options to acquire an additional 336,538 shares,
230,769 shares and 230,769 shares, respectively, of Amphenol Common Stock
following the Merger. It is also expected that approximately 555,000 shares will
be available for sale, either directly or through grants of options, to other
members of the Company's management. No decisions have been reached as to the
identities of the persons who would participate in any such sale or grant or as
to the terms thereof, other than that to the extent any such sale or grant
occurs upon or shortly following the Merger, such sale will be at $26.00 per
share and such options granted will be exercisable at $26.00 per share and,
subject to certain exceptions, will vest over five years at 20% per year. The
sale of any shares or grant of any options to be made in the future may be made
at higher or lower prices and on such other terms as may be determined at the
time. Messrs. Loeffler, Jepsen and Cohane, as well as other members of the
Company's management receiving such shares and options, are expected to enter
into agreements with the Company restricting transferability of the shares of
Amphenol Common Stock held by such persons for up to five years after the
Effective Time and setting forth, among other things, the limited circumstances
in which such shares may be called by or put to the Company.
Pursuant to the Merger Agreement, the Company has agreed for six years after
the Effective Time to indemnify all present directors and officers of the
Company and its subsidiaries and will, subject to certain limitations, maintain
for six years a directors' and officers' insurance and indemnification policy
containing terms and conditions which are not less advantageous than any such
policy which may be in effect prior to the Effective Time. See "CERTAIN
PROVISIONS OF THE MERGER AGREEMENT--Indemnification and Insurance."
RESALE OF AMPHENOL COMMON STOCK FOLLOWING THE MERGER
The Amphenol Common Stock to be retained in connection with the Merger will
be freely transferable, except that shares retained by any stockholder who may
be deemed to be an "affiliate" (as defined under the Securities Act and
generally including, without limitation, directors, certain executive officers
and beneficial owners of 10% or more of a class of capital stock) of the Company
for purposes of Rule 145 under the Securities Act will not be transferable
except in compliance with the Securities Act. This Proxy
52
<PAGE>
Statement does not cover sales of Amphenol Common Stock retained by any person
who may be deemed to be an affiliate of the Company.
MERGER FINANCINGS
The Company expects to incur approximately $990 million of funded long-term
debt and the Partnerships expect to make an equity contribution to Newco of
approximately $341 million, which amounts will be used to (i) fund payment of
the cash consideration in the Merger, (ii) repay or repurchase certain
indebtedness of the Company and (iii) pay the fees and expenses incurred in
connection with the Merger. It is currently contemplated that the transactions
contemplated by the Merger Agreement will be funded by approximately $750
million of bank borrowings by the Company (the "Term Loan Facility") pursuant to
senior secured credit facilities with a group of banks led by Bankers Trust
Company and approximately $240 million in senior subordinated notes (the "Debt
Securities") (collectively, the "Merger Financings"). Amphenol also expects to
enter into a $150 million senior secured revolving credit facility with a group
of banks led by Bankers Trust Company to provide for the Company's working
capital requirements following the Merger. Amphenol expects to modify its $50
million accounts receivable purchase facility. On January 23, 1997, Amphenol
received an executed commitment from Bankers Trust Company to provide up to $950
million of senior secured credit facilities. The commitment is subject to
customary conditions, including the negotiation, execution and delivery of
definitive documentation with respect to the commitment.
CONVERSION OF NEWCO STOCK
In the Merger, each share of stock of Newco issued and outstanding
immediately prior to the Effective Time will be converted into a number of
shares of Amphenol Common Stock equal to the quotient of (A) 13,116,955 divided
by (B) the number of shares of common stock of Newco outstanding immediately
prior to the Effective Time. As a result of the Merger, the stockholders of
Newco will hold 13,116,955 shares, or approximately 75% of the shares, of
Amphenol Common Stock expected to be outstanding immediately after the Merger,
before giving effect to the exercise of the NXS Option or the Stockholders
Option granted with respect to the Subject Shares pursuant to the Stockholders
Agreement and before giving effect to any purchase of shares from Messrs.
Loeffler, Jepsen and Cohane.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following Pro Forma Consolidated Financial Statements have been derived
by the application of pro forma adjustments to the Company's historical
consolidated financial statements incorporated by reference herein. The pro
forma consolidated statement of income for the period presented gives effect to
the Merger and related transactions as if such transactions were consummated as
of January 1, 1996 for the fiscal year ended December 31, 1996. The pro forma
consolidated balance sheet gives effect to the Merger and related transactions
as if such transactions had occurred as of December 31, 1996. The adjustments
are described in the accompanying notes. The Pro Forma Consolidated Financial
Statements should not be considered indicative of actual results that would have
been achieved had the Merger and related transactions been consummated on the
date or for the periods indicated and do not purport to indicate balance sheet
data or results of operations as of any future date or for any future period.
The Pro Forma Consolidated Financial Statements should be read in conjunction
with the Company's historical financial statements and the notes thereto
incorporated herein by reference. See "AVAILABLE INFORMATION" and "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
The pro forma adjustments were applied to the respective historical
consolidated financial statements to reflect and account for the Merger as a
recapitalization. Accordingly, the historical basis of the Company's assets and
liabilities has not been impacted by the transaction.
53
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS FORMA
----------- ----------- ---------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
ASSETS
Current Assets:
Cash and short-term cash investments..................................... $ 4.0 $ (1.0)(a) $ 3.0
Accounts receivable...................................................... 64.9 64.9
Inventories.............................................................. 153.3 153.3
Prepaid expenses and other assets........................................ 11.6 9.8(b) 21.4
----------- ----------- ---------
Total current assets................................................... 233.8 8.8 242.6
Land and depreciable assets, net......................................... 102.1 102.1
Deferred debt issuance costs............................................. 3.7 (3.7)(c) 38.7
38.7(d)
Excess of cost over fair value of net assets acquired.................... 346.6 346.6
Other assets............................................................. 24.5 24.5
----------- ----------- ---------
$ 710.7 $ 43.8 $ 754.5
----------- ----------- ---------
----------- ----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........................................ $ 7.8 $ (7.8)(a)
Accounts payable......................................................... 49.5 $ 49.5
Other accrued expenses................................................... 39.7 39.7
----------- ----------- ---------
Total current liabilities.............................................. 97.0 (7.8) 89.2
Long-term debt........................................................... 219.5 (211.2)(a) 8.3
Term Loan Facility....................................................... 750.0(a) 750.0
Revolving Credit Facility................................................ 13.0(a) 13.0
Debt Securities.......................................................... 240.0(a) 240.0
Deferred taxes and other liabilities..................................... 18.7 -- 18.7
Accrued pension and post employment benefit obligations.................. 15.0 -- 15.0
----------- ----------- ---------
Total liabilities...................................................... 350.2 784.0 1,134.2
Total shareholders' equity (deficit)..................................... 360.5 (740.2)(e) (379.7)
----------- ----------- ---------
$ 710.7 $ 43.8 $ 754.5
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet
54
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements as of the
date noted. The Merger has been accounted for as a recapitalization which will
have no impact on the historical basis of the Company's assets and liabilities.
The pro forma financial data assumes that there are no dissenting shareholders
to the Merger.
(a) The net effect of $1.0 million reflects the following:
<TABLE>
<CAPTION>
(DOLLARS IN
TOTAL SOURCES MILLIONS)
- ------------------------------------------------------------------------- -------------------
<S> <C>
Term Loan Facility proceeds.............................................. $ 750.0
Revolving Credit Facility proceeds....................................... 13.0
Debt Securities proceeds................................................. 240.0
Newco equity investment.................................................. 341.0
--------
Total sources............................................................ $ 1,344.0
--------
TOTAL USES
Payment of cash merger consideration..................................... $ 1,048.3
Refinancing of existing debt:
Current maturities of long-term debt................................... 7.8
Long-term debt......................................................... 211.2
Estimated debt retirement premium........................................ 19.3
Options canceled......................................................... 2.4
Estimated transaction fees and expenses.................................. 56.0
--------
Total uses............................................................... $ 1,345.0
--------
Net...................................................................... $ (1.0)
--------
--------
</TABLE>
(b) The adjustment represents the tax benefit, at a 38.5% effective rate, of
deductible expenses reflected in footnote (e) hereto.
(c) The adjustment reflects the write-off of deferred debt issuance costs
associated with the 10.45% Senior Notes and 12.75% Senior Subordinated Notes
being retired and the termination of the Existing Bank Credit Facility.
(d) The adjustment represents the portion of estimated transaction fees and
expenses attributable to the Term Loan Facility, Revolving Credit Facility
and Debt Securities, which will be recorded as deferred debt issuance costs
and will be amortized over the life of the debt to be issued. Such estimated
deferred debt issuance costs include estimated fees and expenses payable to
banks, underwriters and related advisors.
(e) The adjustment represents the net change as a result of the Merger and
related transactions:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
-------------------
<S> <C>
Convert to cash 40.3 million shares of common stock...................... $ (1,048.3)
Issue 13.1 million shares of common stock................................ 341.0
Transaction fees and expenses (1)........................................ (17.3)
Write-off of deferred debt issuance costs................................ (3.7)
Options canceled......................................................... (2.4)
Estimated debt retirement premium........................................ (19.3)
Tax benefit of above expense adjustments at a 38.5% effective rate....... 9.8
--------
Total.................................................................. $ (740.2)
--------
--------
</TABLE>
- ------------------------
(1) Represents the portion of the total $56.0 million of estimated transaction
fees and expenses (excluding $2.4 million of cash consideration related to
the Company stock options to be cancelled in connection with the Merger)
which will be recorded as an expense in connection with the Merger and
related transactions; the remainder of such transaction fees and expenses
are recorded in Note (d) above as deferred debt issuance costs. The expensed
portion of estimated transaction fees and expenses are anticipated to
consist of: (i) professional, advisory and investment banking fees and
expenses, and (ii) miscellaneous fees and expenses such as printing and
filing fees.
55
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS(A) FORMA
----------- --------------- ---------
<S> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE DATA)
Net sales.................................................................... $ 776.2 $ 776.2
Costs and expenses:
Cost of sales, excluding depreciation and amortization..................... 494.7 494.7
Depreciation and amortization expense...................................... 28.8 28.8
Selling, general and administration expense................................ 114.7 114.7
----------- ---------
Operating income............................................................. 138.0 138.0
Interest expense............................................................. (24.6) $ (71.0)(b) (95.6)
Other expense, net........................................................... (3.7) (0.8)(c) (4.5)
----------- ------ ---------
Income before income taxes................................................... 109.7 (71.8) 37.9
Provision for income taxes................................................... 42.1 (27.6)(d) 14.5
----------- ------ ---------
Net income................................................................... $ 67.6 $ (44.2) $ 23.4
----------- ------ ---------
----------- ------ ---------
Net income per share......................................................... $ 1.45 $ 1.34
----------- ---------
----------- ---------
Average common shares outstanding............................................ 46.65 17.52
----------- ---------
----------- ---------
Ratio of earnings to fixed charges (e)....................................... 4.41x 1.37x
----------- ---------
----------- ---------
</TABLE>
- ------------------------
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
The pro forma financial data have been derived by the application of pro
forma adjustments to the Company's historical financial statements for the
period noted. The Merger has been accounted for as a recapitalization which will
have no impact on the historical basis of the Company's assets and liabilities.
The pro forma financial data assumes that there are no dissenting shareholders
to the Merger.
(a) As described in note (e) to the Pro Forma Consolidated Balance Sheet, the
pro forma adjustments exclude (i) $2.4 million of compensation expense
related to the Company stock options to be canceled in conjunction with the
Merger, (ii) the write-off of $3.7 million of deferred debt issuance costs
associated with the 10.45% Senior Notes and 12.75% Senior Subordinated Notes
being retired and the termination of the existing bank credit facility,
(iii) the estimated $19.3 million of premium on retirement of 10.45% Senior
Notes and 12.75% Senior Subordinated Notes, (iv) $17.3 million of estimated
transaction fees and expenses incurred in connection with the Merger and (v)
$9.8 million of tax benefit of such expenses. Such amounts represent
non-recurring expenses which the Company anticipates will be recorded in the
Consolidated Statement of Income for the period including the Merger.
(b) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
-------------------
<S> <C>
Interest expense on historical debt repaid in Merger..................... $ (23.6)
Interest expense with respect to the Term Loan and revolving credit
facilities and the Debt Securities at an assumed weighted average
interest rate of 8.8%................................................... 88.6
Amortization of deferred debt issuance costs............................. 6.0
------
Total adjustment......................................................... $ 71.0
------
------
</TABLE>
56
<PAGE>
A 0.125% increase or decrease in the assumed weighted average interest rate
would change the pro forma interest expense by $1.3 million. The pro forma
net income would change by $0.8 million and the pro forma net income per
share would change by $0.04.
For the year ended December 31, 1996, each $1.0 million increase or decrease
in the Term Loan, revolving credit facilities and Debt Securities would
change pro forma interest expense by $0.09 million. The pro forma net income
would change by $0.05 million and the pro forma net income per share would
not change.
(c) The adjustment eliminates interest income on cash and short-term investments
not expected to be received after the Merger and related transactions.
(d) The adjustment reflects the tax effect of the pro forma adjustments at a
38.5% effective income tax rate.
(e) For purposes of determining the pro forma ratio of earnings to fixed
charges, earnings are defined as earnings before income taxes and
extraordinary items, plus fixed charges. Fixed charges include interest
expense on all indebtedness, other financing fees associated with program
fees on sale of accounts receivable, amortization of deferred debt issuance
costs, and one-third of rental expense on operating leases representing that
portion of rental expense deemed by the Company to be attributable to
interest.
57
<PAGE>
DESCRIPTION OF AMPHENOL CAPITAL STOCK
GENERAL
Amphenol is authorized by its Restated Certificate of Incorporation to issue
an aggregate of 96,250,000 shares of Amphenol Common Stock, 3,750,000 shares of
non-voting Class B Common Stock, par value $.001 per share (the "Class B Common
Stock") and 1,000,000 shares of preferred stock, par value $.01 per share (the
"Amphenol Preferred Stock"). There are no shares of Class B Common Stock or
Amphenol Preferred Stock issued or outstanding. The following is a summary of
certain of the rights and privileges pertaining to Amphenol Common Stock. For a
full description of Amphenol Common Stock, reference is made to the Company's
Restated Certificate of Incorporation and By-Laws, as amended, as currently in
effect, copies of which are on file with the Commission, and to the Company's
Amended and Restated Certificate of Incorporation as the same shall be in effect
after the Merger, a copy of which is attached to the Merger Agreement Amendment
as Exhibit A.
VOTING RIGHTS
Holders of Amphenol Common Stock are entitled to one vote per share on all
matters submitted to a vote of stockholders. Approval of matters brought before
the stockholders requires the affirmative vote of a majority of shares present
and voting, except as otherwise required by law and except that the vote of 80%
or more of outstanding shares entitled to vote is required to modify the
provisions of the Restated Certificate of Incorporation relating to the election
of directors for staggered terms, the total number of directors and independent
directors, removal of directors, and the provision requiring an 80% stockholder
vote for certain actions. Director nominations may be made by stockholders in
accordance with the Company's By-Laws, as amended, not less than 90 days in
advance of the meeting at which the election is to occur.
DIVIDEND RIGHTS
Holders of Amphenol Common Stock are entitled to participate in dividends as
and when declared by the Board of Directors of the Company out of funds legally
available therefor. The Company's ability to pay cash dividends is subject to
certain restrictions.
LIQUIDATION RIGHTS
Subject to the rights of creditors and holders of preferred stock, if any,
holders of Amphenol Common Stock are entitled to share ratably in a distribution
of assets of the Company upon any liquidation, dissolution or winding-up of the
Company.
AMPHENOL COMMON STOCK FOLLOWING THE MERGER
If the Merger is approved by the requisite vote of the stockholders of
Amphenol Common Stock at the Special Meeting, at the Effective Time the Amended
and Restated Certificate of Incorporation of the Company will read in its
entirety in the form set forth as Exhibit A to the Merger Agreement Amendment
which is attached hereto as Annex I-B, until thereafter amended as provided
therein and under the DGCL. Following the Merger, under the Amended and Restated
Certificate of Incorporation the Company will be authorized to issue 40 million
shares of Amphenol Common Stock and no shares of Class B Common Stock or
Amphenol Preferred Stock as compared to 96,250,000 shares of Amphenol Common
Stock, 3,750,000 shares of Class B Common Stock and 1,000,000 shares of Amphenol
Preferred Stock prior to the Merger.
In addition, the By-Laws of Newco as in effect at the Effective Time will be
the By-Laws of the Company following the Merger until thereafter changed or
amended as provided therein or by applicable law.
58
<PAGE>
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
The following summarizes the material provisions of the Merger Agreement,
which appears as Annex I to this Proxy Statement and is incorporated herein by
reference. Such summary is qualified in its entirety by reference to the Merger
Agreement.
THE MERGER
The Merger Agreement provides that, following the approval of the Merger and
the adoption of the Merger Agreement by the vote of a majority of the shares of
Amphenol Common Stock entitled to vote thereon and the satisfaction or waiver of
the other conditions to the Merger, Newco will be merged with and into the
Company, and the Company will continue as the surviving corporation in the
Merger.
If the conditions to the Merger are satisfied or waived, the parties will
file with the Secretary of State of the State of Delaware a duly executed
Certificate of Merger, and the Merger will become effective upon the filing and
acceptance thereof or at such date thereafter as is provided in the Certificate
of Merger.
Each share of Amphenol Common Stock outstanding at the Effective Time (other
than Amphenol Common Stock held by Amphenol, any subsidiary of Amphenol, the
Partnership, Newco or any subsidiary of the Partnership, which will be cancelled
and retired, and any fractional shares and Dissenting Shares) will be converted
into either (i) the Cash Price or (ii) a Non-Cash Election Share, as more fully
described under "THE MERGER--Merger Consideration" and "--Non-Cash Election."
With regard to the treatment of fractional share interests, see "--Fractional
Shares."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary representations and warranties of
the Company relating, with respect to the Company and its subsidiaries, to,
among other things, (a) organization, standing and similar corporate matters;
(b) the Company's capital structure; (c) the authorization, execution, delivery,
performance and enforceability of the Merger Agreement; (d) documents filed by
the Company with the Commission, the accuracy of information contained therein
and the absence of undisclosed liabilities; (e) the accuracy of information
supplied by the Company in connection with this Proxy Statement and the
documents executed in connection with the Debt Tender Offer; (f) the absence of
certain changes or events since the date of the most recent audited financial
statements filed with the Commission, including material adverse changes with
respect to the Company; (g) pending or threatened material litigation, certain
labor matters and compliance with applicable laws; (h) benefit plans and other
matters relating to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and employment matters; (i) filing of tax returns and payment
of taxes; (j) title to owned real property, valid leasehold and subleasehold
interests in leased real property, possession of required permits, and other
real-estate related matters; (k) environmental matters; (l) the absence of
defaults under material contracts; (m) brokers' fees and expenses; (n) receipt
of an opinion of the Company's financial advisor; (o) recommendation of the
Board of Directors with respect to the Merger Agreement and the Merger and
related transactions; (p) the absence of a rights plan or similar preferred
stock purchase plan; and (q) ownership of or rights to use Company intellectual
property.
The Merger Agreement also contains customary representations and warranties
of Newco relating to, among other things, (a) organization, standing and similar
corporate matters; (b) the authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters; (c) brokers' fees
and expenses; and (d) the accuracy of information supplied by Newco in
connection with this Proxy Statement and the documents executed in connection
with the Debt Tender Offer.
59
<PAGE>
CERTAIN PRE-CLOSING COVENANTS
Pursuant to the Merger Agreement, the Company has agreed that, until the
Effective Time, the businesses of the Company and its subsidiaries will be
conducted only in, and the Company and its subsidiaries will not take any action
except in, the usual, regular and ordinary course of business consistent with
past practice; and the Company and its subsidiaries shall each use its
reasonable best efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of its present officers and employees and to preserve the present relationships
of the Company and its subsidiaries with customers, suppliers and other persons
with which the Company or any of its subsidiaries has significant business
dealings. Without limiting the generality of the foregoing, until the Effective
Time, the Company agreed that it will not, and will not permit any of its
subsidiaries to, without the prior consent of Newco (which shall not be
unreasonably withheld): (i) (x) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned subsidiary of
the Company to its parent, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, or (z) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, except, in the case of
clause (z), for the Debt Tender Offer and the purchase of Senior Notes; (ii)
authorize for issuance, issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock or the capital stock of any of its subsidiaries, any
other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or any other securities or equity equivalents other than
the issuance of Amphenol Common Stock upon the exercise of Company Stock Options
awarded but unexercised on the date of the Merger Agreement and in accordance
with their present terms; (iii) amend its certificate of incorporation, by-laws
or other comparable charter or organizational documents; (iv) acquire or agree
to acquire any business or any corporation, partnership, joint venture,
association or other business organization or division thereof; (v) subject to
certain exceptions, sell, encumber or otherwise dispose of any of its properties
or assets, except sales of inventory and receivables, in each case in the
ordinary course of business consistent with past practice; (vi) (x) incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities of the Company or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other agreement
to maintain any financial condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business consistent
with past practice and for borrowings to effect the Debt Tender Offer and to
repay the Senior Notes, or (y) make any loans, advances or capital contributions
to, or investments in, any other person, other than to the Company or any direct
or indirect wholly owned subsidiary of the Company; (vii) acquire or agree to
acquire any assets, other than inventory in the ordinary course of business
consistent with past practice, that are material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole, or, subject to
certain exceptions, make or agree to make any capital expenditures; (viii)
subject to certain exceptions, pay, discharge or satisfy any claims (including
claims of stockholders), liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise); (ix) adopt a plan of complete or
partial liquidation or restructuring, recapitalization or reorganization; (x)
enter into any new collective bargaining agreement or any successor collective
bargaining agreement to any collective bargaining agreement; (xi) change any
material accounting principle; (xii) settle or compromise any litigation, other
than settlements or compromises that meet certain specified criteria; (xiii)
subject to certain exceptions, engage in any transaction, or enter into any
agreement, arrangement or understanding with any of the Company's affiliates,
including, without limitation, any such transactions, agreements, arrangements
or understandings that would be required to be disclosed under Item 404 of the
Commission's Regulation S-K; or (xiv) authorize any of, or commit or agree to
take any of, the foregoing actions.
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Under the Merger Agreement, the Company has also agreed, subject to certain
exceptions, that neither it nor any of its subsidiaries will adopt or amend
(except as required by law) any employee benefit plan, agreement, trust, fund or
other arrangement for the benefit or welfare of any employee, director or former
director or employee or, other than increases for individuals (other than
officers and directors) in the ordinary course of business consistent with past
practice, increase the compensation or fringe benefits of any director, employee
or former director or employee or pay any benefit not required by an existing
plan, arrangement or agreement.
Pursuant to the Merger Agreement, the Company has also agreed that neither
it nor any of its subsidiaries will (i) grant any new or modified severance or
termination agreement or increase or accelerate any benefits payable under its
severance or termination pay policies in effect on the date of the Merger
Agreement, (ii) effectuate a "plant closing" or "mass layoff," as defined in the
Worker Adjustment and Retraining Notification Act of 1988, affecting in whole or
in part any site of employment, facility, operating unit or employee of the
Company or any subsidiary, without notifying Newco or its affiliates in advance
and without complying with the notice requirements and other provisions of such
Act or (iii) except in the ordinary course of business and consistent with past
practice, make any tax election or settle or compromise any federal, state,
local or foreign tax liability.
NO SOLICITATION OF TRANSACTIONS
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will (whether directly or indirectly through advisors, agents or
other intermediaries), nor will it or they authorize or permit any of its or
their officers, directors, agents, representatives, advisors or subsidiaries to
(a) solicit, initiate or take any action knowingly to facilitate the submission
of inquiries, proposals or offers from any person relating to (i) any
acquisition or purchase of 20% or more of the consolidated assets of the Company
and its subsidiaries or of over 20% of any class of equity securities of the
Company or any of its subsidiaries, (ii) any tender offer (including a self
tender offer) or exchange offer that if consummated would result in any Person
beneficially owning 20% or more of any class of equity securities of the Company
or any of its subsidiaries, (iii) any merger, consolidation, business
combination, sale of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries whose assets, individually or in the aggregate, constitute more
than 20% of the consolidated assets of the Company other than the transactions
contemplated by the Merger Agreement and the Stockholders Agreement or (iv) any
other transaction the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the Merger or
the Debt Tender Offer or which would or could reasonably be expected to
materially dilute the benefits to Newco of the transactions contemplated by the
Merger Agreement (collectively, "Transaction Proposals") or agree to or endorse
any Transaction Proposal, or (b) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to any other person any
information with respect to its business, properties or assets or any of the
foregoing, or otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. By the terms of the Merger Agreement,
the foregoing provision will not prohibit the Company from (i) furnishing
information pursuant to an appropriate confidentiality letter (which letter may
not be less favorable to the Company in any material respect than the
confidentiality letter agreement entered into between the Company and KKR, and a
copy of which will be provided for information purposes only to Newco)
concerning the Company and its businesses, properties or assets to a third party
who has made a bona fide Transaction Proposal, (ii) engaging in discussions or
negotiations with such a third party who has made a bona fide Transaction
Proposal, (iii) following receipt of a bona fide Transaction Proposal, taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
under the Exchange Act or otherwise making disclosure to its stockholders, (iv)
following receipt of a bona fide Transaction Proposal, failing to make or
withdrawing or modifying its recommendation that the holders of Amphenol Common
Stock approve the Merger Agreement, the Merger and the transactions contemplated
thereby and/or (v) taking any non-appealable, final action ordered to be taken
by the Company by any court of competent
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jurisdiction, but in each case referred to in the foregoing clauses (i) through
(v) only to the extent that the Board of Directors of the Company shall have
concluded in good faith on the basis of written advice from outside counsel that
such action is required to prevent the Board of Directors of the Company from
breaching its fiduciary duties to the stockholders of the Company under
applicable law; PROVIDED, that the Board of Directors of the Company is not
permitted to take any of the foregoing actions referred to in clauses (i)
through (iv) until after reasonable notice to Newco with respect to such action.
The Company's Board of Directors is further required, to the extent it may do so
without breaching such fiduciary duties, to continue to advise Newco after
taking such action and, in addition, if the Board of Directors of the Company
receives a Transaction Proposal, then the Company is obligated to inform
promptly Newco of the terms and conditions of such proposal and the identity of
the person making it. The Company is required to immediately cease and cause its
advisors, agents and other intermediaries to cease any and all then existing
activities, discussions or negotiations with any parties conducted prior to
entering into the Merger Agreement with respect to any of the foregoing and to
use its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on behalf of
the Company to return or destroy all such information. For a description of the
effects that a Transaction Proposal prior to the Effective Time of the Merger
could have under the Merger Agreement and the Stockholders Agreement, see
"--Termination" below and "CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT."
Under the Merger Agreement, the Company has agreed that neither it nor any
of its subsidiaries will waive or fail to enforce any provision of any
confidentiality or standstill or similar agreement to which it is a party
without the prior written consent of Newco.
The Company has also agreed not to take any action for at least three years
from the Effective Time to cause the Amphenol Common Stock to be de-listed from
the NYSE, except in accordance with NYSE rules (and provided, that a majority of
shares not held by the Partnership or its affiliate vote in favor of any such
de-listing); provided, however, that the Company may cause or permit the
Amphenol Common Stock to be de-listed in connection with a transaction which
results in the termination of registration of such securities under Section 12
of the Exchange Act and provided, further, that the Company is not required to
take any affirmative action to prevent the Amphenol Common Stock from being
de-listed by the NYSE in the event that the Amphenol Common Stock ceases to meet
the applicable NYSE listing standards.
BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY FOLLOWING THE MERGER
The Merger Agreement provides that Newco must receive satisfactory evidence
that the directors of the Company have resigned effective as of the Effective
Time, that the size of the Company's board has been expanded to seven members
and that the directors of Newco at the Effective Time and/or such other persons
as may be designated by Newco will be the directors of the Company following the
Merger, and that such persons will fill the vacancies and/or newly created
directorship as so designated. The present directors of Newco are Michael W.
Michelson and Marc S. Lipschultz. It is expected that Henry R. Kravis, George R.
Roberts, Martin H. Loeffler, and two additional individuals will also become
directors of or be so designated by Newco prior to the Effective Time. See
"NEWCO, NXS AND THE PARTNERSHIP." After the Effective Time, the Board of
Directors will be subject to change from time to time.
The Merger Agreement also provides that the officers of Newco at the
Effective Time will be officers of the Company following the Merger until such
time as may be determined by the Board of Directors following the Merger.
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The following table sets forth the name, age and position with the Company
of each person who is expected to serve as a director or executive officer of
Amphenol after the Effective Time. After the Effective Time, the Board of
Directors will be subject to change from time to time.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Martin H. Loeffler 52 Chairman of the Board, Chief Executive Officer,
President and Director
Edward G. Jepsen 53 Executive Vice President and Chief Financial Officer
Timothy F. Cohane 44 Senior Vice President
Edward C. Wetmore 40 Secretary and General Counsel
Diana G. Reardon 37 Controller and Treasurer
Henry R. Kravis 53 Director
George R. Roberts 53 Director
Michael W. Michelson 45 Director
Marc S. Lipschultz 28 Director
</TABLE>
Martin H. Loeffler has been a Director of Amphenol since December 1987 and
Chief Executive Officer since May 1996. He has also served as President of
Amphenol since July 1987. He was a Vice President of LPL Technologies Inc.
("LPL"). LPL merged into a subsidiary of the Company in December 1992. It is
expected that, upon the Effective Time, Mr. Loeffler will become a member of the
class of directors whose term expires in 1998.
Edward G. Jepsen has been Executive Vice President and Chief Financial
Officer of Amphenol since May 1989, and Senior Vice President and Director of
Finance since November 1988. He was a Director, Executive Vice President, Chief
Financial Officer and Controller of LPL. He is also Director of TRC Company,
Inc. and United International Holdings, Inc.
Timothy F. Cohane has been Vice President of Amphenol since December 1991.
He was a Director and Vice President of LPL.
Edward C. Wetmore has been Secretary and General Counsel of Amphenol since
1987. He was also Secretary and General Counsel of LPL.
Diana G. Reardon has been Treasurer of Amphenol since March 1992 and
Controller since July 1994. From June 1988 until her appointment as Treasurer
she served as Assistant Controller of Amphenol and LPL.
Henry R. Kravis is a Founding Partner of KKR and effective January 1, 1996
he became a managing member of the Executive Committee of the limited liability
company which serves as the general partner of KKR. He is also a director of
AutoZone, Inc., Borden, Inc., Bruno's, Inc., Evenflo & Spalding Holdings
Corporation, Flagstar Companies Inc., Flagstar Corporation, The Gillette
Company, IDEX Corporation, K-III Communications Corporation, KinderCare Learning
Centers, Inc., Merit Behavioral Care Corporation, Newsquest Capital plc,
Owens-Illinois Group, Inc., Owens-Illinois, Inc., Safeway, Inc., Sotheby's
Holdings Inc., Union Texas Petroleum Holdings., and World Color Press, Inc. It
is expected that upon the Effective Time, Mr. Kravis will become a member of the
class of directors whose term expires in 2000.
George R. Roberts is a Founding Partner of KKR and effective January 1, 1996
he became a managing member of the Executive Committee of the limited liability
company which serves as the general partner of KKR. He is also a director of
AutoZone, Inc., Borden, Inc., Bruno's, Inc., Evenflo & Spalding
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Holdings Corporation, Flagstar Companies Inc., Flagstar Corporation, IDEX
Corporation, K- III Communications Corporation, KinderCare Learning Centers,
Inc., Merit Behavioral Care Corporation, Newsquest Capital plc, Owens-Illinois
Group, Inc., Owens-Illinois, Inc., Safeway, Inc., Union Texas Petroleum
Holdings, Inc., and World Color Press, Inc. It is expected that, upon the
Effective Time, Mr. Roberts will become a member of the class of directors whose
term expires in 1999.
Michael W. Michelson was a General Partner of KKR from January 1, 1987 until
January 1, 1996 when he became a member of the limited liability company which
serves as the general partner of KKR. Prior to 1987, Mr. Michelson was an
Executive at KKR. He is also a director of AutoZone, Inc., Doubletree
Corporation, Owens-Illinois Group, Inc., Owens-Illinois, Inc., and Union Texas
Petroleum Holdings, Inc. It is expected that, upon the Effective Time, Mr.
Michelson will become a member of the class of directors whose term expires in
1998.
Marc S. Lipschultz has been an Executive at KKR since 1995. From 1993 to
1995, Mr. Lipschultz attended Harvard Business School. Prior thereto, he was an
investment banker with Goldman, Sachs & Co. He is also a director of Evenflo &
Spalding Holdings Corporation. It is expected that, upon the Effective Time, Mr.
Lipschultz will become a member of the class of directors whose term expires in
2000.
Messrs. Kravis and Roberts are first cousins.
The business address of Messrs. Kravis and Lipschultz is 9 West 57th Street,
New York, New York 10019 and of Messrs. Roberts and Michelson is 2800 Sand Hill
Road, Suite 200, Menlo Park, California 94025. The business address of Mr.
Loeffler is 358 Hall Avenue, Wallingford, Connecticut.
For additional information with respect to Messrs. Loeffler, Jepsen and
Cohane see "CURRENT DIRECTORS WITH TERMS EXPIRING IN 1998."
STOCK AND EMPLOYEE BENEFIT PLANS
The treatment in the Merger of outstanding Company Stock Options and of the
Company's employee benefit plans will be as described in "THE MERGER--Effect on
Stock and Employee Benefit Matters."
ACCESS TO INFORMATION
Subject to applicable provisions regarding confidentiality, the Company has
agreed in the Merger Agreement to, and to cause its subsidiaries, officers,
employees, counsel, financial advisors and other representatives to, afford
Newco and its representatives and to the potential financing sources for the
transactions contemplated by the Merger Agreement reasonable access during
normal business hours to all properties, books, contracts, commitments,
personnel and records, and to furnish Newco and such financing sources with all
financial, operating and other data and information as Newco through its
representatives or such financing sources may from time to time reasonably
request.
COOPERATION AND REASONABLE BEST EFFORTS
Pursuant to the Merger Agreement and subject to certain conditions and
limitations described therein, the parties have agreed to cooperate with each
other and to use their respective reasonable best efforts to take certain
specified and other actions, including cooperation in the arrangement of
financing, so that the transactions contemplated by the Merger Agreement may be
consummated.
INDEMNIFICATION AND INSURANCE
Following the Merger, the Certificate of Incorporation and By-Laws of the
Company will contain provisions identical with respect to elimination of
personal liability and indemnification to those set forth in the Amended and
Restated Certificate of Incorporation of the Company (attached as Exhibit A to
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Annex I-B to this Proxy Statement) and the By-laws of the Company as of the date
of the Merger Agreement, respectively, which provisions will not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who at the Effective Time were directors, officers, agents or employees of the
Company.
In addition, the Merger Agreement provides that the Company shall maintain
in effect for six years from the Effective Time policies of directors' and
officers' liability insurance containing terms and conditions which are not less
advantageous than those policies obtained by the Company prior to the Effective
Time, with respect to matters occurring prior to the Effective Time, to the
extent available, and having the maximum available coverage under the policies
of directors' and officers' liability insurance so obtained; provided that (i)
the Company following the Merger shall not be required to spend in excess of
$100,000 per year therefor; provided further that if the Company following the
Merger would be required to spend in excess of a $100,000 per year to obtain
insurance having the maximum available coverage under any such policies, the
Company will be required to spend $100,000 to maintain or procure insurance
coverage pursuant to the Merger Agreement, subject to availability of such (or
similar) coverage, and (ii) such policies may in the sole discretion of the
Company be one or more "tail" policies for all or any portion of the full six
year period. The Company agreed that, in the event it would be required to spend
in excess of $100,000 per year to obtain insurance having such maximum available
coverage, the Company would notify the beneficiaries of such policies and permit
them to pay any excess which may be necessary to maintain such policies.
Officers and directors of the Company that are defendants in all litigation
commenced by stockholders of the Company, with respect to (x) the performance of
their duties as such officers and/or directors under federal or state law
(including litigation under federal and state securities laws) and (y) the
Merger, shall be entitled to be represented, at the reasonable expense of the
Company, in such litigation by one counsel (and Delaware counsel if appropriate
and one local counsel in each jurisdiction in which a case is pending), each of
which such counsel shall be selected by a plurality of such director defendants;
provided that the Company shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and that a condition to any indemnification payments shall be that
such officer/director defendant not have settled any such litigation without the
consent of the Company and, prior to the Effective Time, Newco; and provided
further that neither Newco nor the Company shall have any obligation hereunder
to any officer/director defendant when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
non-appealable, that indemnification of such officer/director defendant in the
manner contemplated hereby is prohibited by applicable law.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The respective obligations of the Company and Newco to effect the Merger are
subject to various conditions which include, in addition to certain other
customary closing conditions, the following: (a) the Merger Agreement shall have
been approved by the requisite vote of holders of outstanding shares of Amphenol
Common Stock; (b) the waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired;
(c) no temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided that the Company and Newco are required to use their best efforts to
have any such injunction, order, restraint or prohibition vacated; and (d) the
Registration Statement of which this Proxy Statement is a part shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceeding seeking a stop order, and any material "blue sky" and other
state securities laws applicable to the registration and qualification of
Amphenol Common Stock following the Merger shall have been complied with. As of
the date of this Proxy Statement, the condition set forth in clause (b) has been
satisfied.
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Newco's obligations to effect the Merger are further subject, in addition to
certain other customary conditions, to the following additional conditions: (a)
Newco shall have received evidence, in form and substance reasonably
satisfactory to it, that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental entities and other
third parties as are necessary in connection with the transactions contemplated
by the Merger Agreement have been obtained, except such licenses, permits,
consents, approvals, authorizations, qualifications and orders which would not,
individually or in the aggregate, have a material adverse affect with respect to
the Company; (b) there shall not be pending or threatened by any governmental
entity any suit, action or proceeding (or by any other person any suit, action
or proceeding which has a reasonable likelihood of success), (i) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by the Merger Agreement or the Stockholders
Agreement or seeking to obtain from the Partnership, Newco or any of their
affiliates any damages that are material to such party, (ii) seeking to prohibit
or limit the ownership or operation by the Company, the Partnership or any of
their respective subsidiaries of any material portion of the business or assets
of the Company or any of its subsidiaries, to dispose of or hold separate any
material portion of the business or assets of the Company or any of its
subsidiaries, as a result of the Merger or any of the other transactions
contemplated by the Merger Agreement or the Stockholders Agreement, (iii)
seeking to impose limitations on the ability of the Partnership or Newco to
acquire or hold, or exercise full rights of ownership of, any shares of Amphenol
Common Stock, including, without limitation, the right to vote the Amphenol
Common Stock on all matters properly presented to the stockholders of the
Company or (iv) seeking to prohibit the Partnership or any of its subsidiaries
from effectively controlling in any material respect the business or operations
of the Company or its subsidiaries; (c) Newco shall have received certain
agreements from each person identified by the Company as an "affiliate" of the
Company for purposes of Rule 145 under the Securities Act; (d) the Company shall
have received the proceeds of financing on the terms and conditions contemplated
by the Merger Agreement or upon terms and conditions which are, in the
reasonable judgement of Newco, substantially equivalent thereto, and to the
extent that any terms and conditions were not so contemplated, on terms and
conditions reasonably satisfactory to Newco; (e) Newco shall be reasonably
satisfied that the Merger shall be recorded as a recapitalization for financial
reporting purposes; (f) Newco shall have received evidence that the terms of the
Subordinated Notes shall have been amended to the reasonable satisfaction of
Newco including, without limitation, the elimination of the negative covenants
contained therein and the elimination of any restrictions applicable to the
transactions contemplated by the Merger Agreement; the Company shall have
purchased an aggregate principal amount of Subordinated Notes equal to the
minimum condition of the Debt Tender Offer, and the Company shall have called
the Senior Notes for redemption; and (g) Messrs. Loeffler, Jepsen and Cohane
shall have entered into one or more subscription, option, stockholder and/or
other agreements relating to their respective equity interests in the Company
after the Effective Time on terms and conditions substantially consistent with
the agreement in principle delivered to the Company prior to the date of the
Merger Agreement or otherwise satisfactory to Newco.
The obligations of the Company to effect the Merger are further subject to
customary closing conditions. See "REGULATORY APPROVALS."
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time of the Merger, whether before or after approval of the Merger by the
stockholders of the Company:
(a) by mutual written consent of Newco and the Company;
(b) by either Newco or the Company if:
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(i) any governmental entity shall have issued an order, decree or ruling
or taken any other action permanently enjoining or otherwise prohibiting the
Merger or the Debt Tender Offer and such order, decree, ruling or other
action shall have become final and nonappealable; or
(ii) if the Merger shall not have been consummated on or before June 30,
1997 (other than due to the failure of the party seeking to terminate the
Merger Agreement to perform its obligations under the Merger Agreement
required to be performed at or prior to the Effective Time of the Merger);
or
(iii) at a duly held meeting of the stockholders of the Company
(including any adjournment thereof) held for the purpose of voting on the
Merger, the Merger Agreement and the consummation of the transactions
contemplated thereby, the holders of a majority of the outstanding shares of
Amphenol Common Stock shall not have approved the Merger, the Merger
Agreement and the consummation of the transactions contemplated thereby;
(c) by Newco if: the Company or its Board of Directors shall have (i)
withdrawn, modified or amended in any respect adverse to Newco its approval or
recommendation of the Merger Agreement or any of the transactions contemplated
therein, (ii) failed as soon as practicable after the Registration Statement was
declared effective to mail the Proxy Statement to its stockholders or failed to
include in such statement such recommendation, (iii) recommended any Transaction
Proposal from a person other than Newco or any of its affiliates, (iv) resolved
to do any of the foregoing or (v) in response to the commencement of any tender
offer or exchange offer for more than 20% of the outstanding shares of Amphenol
Common Stock, not recommended rejection of such tender offer or exchange offer;
or
(d) by the Company, if: pursuant to and in compliance with the Merger
Agreement, the Board of Directors of the Company concludes in good faith, based
on written advice from outside counsel, that in order to prevent the Board of
Directors of the Company from breaching its fiduciary duties to the stockholders
of the Company under the DGCL, the Board of Directors must not make or must
withdraw or modify its recommendation to stockholders to approve the Merger
Agreement, the Merger and the transactions contemplated thereby and the Board of
Directors does not make or withdraws or modifies such recommendation.
AMENDMENT AND WAIVER
The Merger Agreement may be amended by the parties by action taken by or on
behalf of their respective Boards of Directors at any time; provided, however,
that, after approval of the Merger by the stockholders of Amphenol, no amendment
may be made which would reduce the amount or change the type of consideration
into which each share of Amphenol Common Stock shall be converted upon
consummation of the Merger and if any material amendment to the Merger Agreement
were to be made after the date of this Proxy Statement, the proxies solicited
hereby would be resolicited pursuant to a revised proxy statement. The Merger
Agreement may not be amended except by an instrument in writing signed by the
parties thereto. At any time prior to the Effective Time any party may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties of the Merger, (b) waive any inaccuracies in the
representations and warranties made by the other party contained in the Merger
Agreement or in any document delivered pursuant thereto and (c) subject to
certain exceptions, waive compliance with any of the agreements or conditions
contained therein. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.
EXPENSES AND CERTAIN REQUIRED PAYMENTS
In addition to any other amounts which may be payable or become payable
pursuant to the provisions described in the next succeeding paragraph, the
Company has agreed that, if the Company shall have failed to satisfy or perform
any of the conditions or obligations to be satisfied or performed by it in order
to satisfy certain conditions to the Merger and, as a result thereof, the Merger
Agreement is thereafter
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terminated, then the Company will (provided that Newco is not then in material
breach of the Merger Agreement) promptly, but in no event later than one
business day after the termination of the Merger Agreement (or from time to time
after the scheduled closing), reimburse KKR for all its documented Expenses (as
defined below) in connection with the Merger and the consummation of all
transactions contemplated by the Merger Agreement and the financing thereof,
provided that, except as set forth in the next succeeding proviso or with
respect to any reimbursement following the closing, in no event will the Company
be required to pay in excess of an aggregate of $5 million pursuant to such
provision; and provided further, that, whether or not the Company has satisfied
or performed such conditions and obligations, in the event a fee is payable to
KKR pursuant to the provisions described in the next succeeding paragraph, the
Company will be required to pay Expenses up to a maximum of $12.5 million. The
term "Expenses" means all out-of-pocket expenses and fees, including, without
limitation, fees payable to all banks, investment banking firms and other
financial institutions, and their respective agents and counsel, and all fees of
counsel, accountants, financial printers, experts and consultants to Newco and
its affiliates. If the foregoing conditions for Expense reimbursement are not
satisfied, then unless a fee is payable in the circumstances described below,
failure to obtain the approval of the Merger Agreement by the requisite vote of
the holders of outstanding shares of Common Stock will not entitle KKR to
Expense reimbursement.
Under the Merger Agreement, (i) if the Merger Agreement shall have been
terminated in accordance with its terms AND either of the following shall have
occurred prior to such termination: (A) any corporation (including the Company
or any of its subsidiaries or affiliates), partnership, person, or other entity
or "group" (as referred to in Section 13(d)(3) of the Exchange Act) other than
Newco or any of its affiliates and other than any party to the Stockholders
Agreement (including any Permitted Transferee (as defined in the Stockholders
Agreement) which becomes a party to the Stockholders Agreement (collectively,
"Persons")) shall have become the beneficial owner of more than 20% of the
outstanding shares of Amphenol Common Stock; or (B)(x) any person (other than
Newco or any of its affiliates) shall have made, or proposed, communicated or
disclosed in a manner which is or otherwise becomes public (including being
known by stockholders of the Company owning of record or beneficially in the
aggregate 5% or more of the outstanding shares of Amphenol Common Stock) a bona
fide intention to make a Transaction Proposal (including by making such a
Transaction Proposal) AND (y) on or prior to January 15, 1998, the Company
either consummates with a Person a transaction the proposal of which would
otherwise qualify as a Transaction Proposal under the Merger Agreement or enters
into an agreement with a Person with respect to a transaction the proposal of
which would otherwise qualify as a Transaction Proposal under the Merger
Agreement (whether or not such Person is the Person referred to in clause (x)
above); or (ii) if the Merger Agreement is terminated pursuant to the provisions
described in clauses (c) or (d) under "--Termination" above, then the Company
will, (1) in the case of clause (i)(A) and (ii) above, promptly, but in no event
later than one business day after the termination of the Merger Agreement and
(2) in the case of clause (i)(B) above, promptly, but in no event later than one
business day after an event specified in subclause (y) thereof shall have
occurred, pay KKR a fee of $37.5 million in cash, which amount shall be payable
in same day funds. No termination of the Merger Agreement at a time when a fee
is reasonably expected to be payable pursuant to such provision following
termination of the Merger Agreement will be effective until such fee is paid.
Only one fee in the aggregate of $37.5 million will be payable pursuant to such
provision. No amount payable pursuant to any of the other provisions of the
Merger Agreement will reduce the amount of the fee payable pursuant to such
provision.
In addition to the foregoing, in the event a fee is or becomes payable
pursuant to the provisions described in the two immediately preceding
paragraphs, the Company has agreed promptly, but in no event later than two
business days following written notice thereof, together with related bills or
receipts, to reimburse KKR and Newco for all reasonable out-of-pocket costs,
fees and expenses, including, without limitation, the reasonable fees and
disbursements of counsel and the expenses of litigation, incurred in connection
with collecting the Expenses described above and the fees described in the two
immediately preceding paragraphs as a result of any breach by the Company of its
obligations described above.
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Except as otherwise provided above, all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
shall be paid by the party incurring such expenses.
CERTAIN PROVISIONS OF THE STOCKHOLDERS AGREEMENT
The following summarizes the material provisions of the Stockholders
Agreement, a copy of which appears as Annex II to this Proxy Statement and is
incorporated herein by reference. This summary is qualified in its entirety by
reference to the Stockholders Agreement.
VOTING
Each DeGeorge Stockholder has severally agreed that, until the Termination
Date (as defined under "--Termination") at any meeting of the stockholders of
the Company, however called, or in connection with any written consent of the
stockholders of the Company, such DeGeorge Stockholder will vote (or cause to be
voted) the Subject Shares of such DeGeorge Stockholder (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and the Stockholders Agreement and any actions required in
furtherance thereof; (ii) against any action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or the Stockholders
Agreement; and (iii) except as specifically requested in writing by NXS in
advance, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (1) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (2) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (3) (a) any change in the majority of the board of directors
of the Company; (b) any material change in the present capitalization of the
Company or any amendment of the Company's Certificate of Incorporation or
By-Laws; (c) any other material change in the Company's corporate structure or
business; or (d) any other action which is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, discourage or materially
adversely affect the Merger or the transactions contemplated by the Merger
Agreement or the Stockholders Agreement or the contemplated economic benefits of
any of the foregoing. Pursuant to the Stockholders Agreement, the DeGeorge
Stockholders agreed not to enter into any agreement or understanding with any
person or entity prior to the Termination Date to vote or give instructions
after the Termination Date in any manner inconsistent with clauses (i), (ii) or
(iii) of the preceding sentence.
Pursuant to the Stockholders Agreement, each DeGeorge Stockholder has
granted to, and appointed, NXS and Michael Michelson, President of NXS, and Marc
Lipschultz, Vice President of NXS, in their respective capacities as officers of
NXS, and any individual who succeeds to any such office of NXS, and any other
designee of NXS, each of them individually, such DeGeorge Stockholder's
irrevocable (until the Termination Date) proxy and attorney-in-fact (with full
power of substitution) to vote the Subject Shares as indicated in the preceding
paragraph. Each DeGeorge Stockholder has agreed that such proxy will be
irrevocable (until the Termination Date) and coupled with an interest and will
take such further action and execute such other instruments as may be necessary
to effectuate the intent of such proxy and has revoked any proxy previously
granted by such DeGeorge Stockholder with respect to such DeGeorge Stockholder's
Subject Shares.
THIRD PARTY BUSINESS COMBINATION; REMEDY
Pursuant to the Stockholders Agreement, NXS and the DeGeorge Stockholders
have agreed that if the Merger Agreement is terminated in the circumstances
described in paragraph (c) or (d) under "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT--Termination," or if the Merger Agreement is terminated in accordance
with any of its other terms (other than a termination by the Company as a result
of a failure to consummate the Merger on or before June 30, 1997) and either of
the following
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shall have occurred: (A) any Person, other than Newco or any of its affiliates
and other than any party to the Stockholders Agreement, including any Permitted
Transferee which becomes a party to the Stockholders Agreement, becomes the
beneficial owner of more than 20% of the outstanding shares of Amphenol Common
Stock; or (B) any Person (other than Newco or any of its affiliates) shall have
made, or proposed, communicated or disclosed in a manner which is or otherwise
becomes public (including being known by stockholders of Amphenol owning of
record or beneficially in the aggregate 5% or more of the outstanding shares of
Amphenol Common Stock) a bona fide intention to make a Transaction Proposal
(including by making such a Transaction Proposal), and, upon or following any
such termination, either (i) one or more of the DeGeorge Stockholders or (ii)
NXS receives any cash or non-cash consideration in respect of all or any portion
of the Subject Shares in connection with a Third Party Business Combination
during the period commencing on the date of the Stockholders Agreement and
ending one year from the date the Merger Agreement is terminated, the party or
parties in clause (i) or (ii) receiving such consideration (the "Selling Party"
and the other party or parties the "Non-Selling Party" with respect to any
particular transaction) will promptly pay over to the Non-Selling Party or its
designee (x) one half of the excess, if any, of such consideration over (y) the
product of the Cash Election Price and the number of Subject Shares with respect
to which such Selling Party received such consideration; PROVIDED that, (i) if
the consideration received by the Selling Party shall be securities listed on a
national securities exchange or traded on the NASDAQ National Market ("NASDAQ"),
the per share value of such consideration will be equal to the closing price per
share listed on such national securities exchange or NASDAQ on the date such
transaction is consummated and (ii) if the consideration received by the Selling
Party shall be in a form other than such listed securities, the per share value
shall be determined in good faith as of the date such transaction is consummated
by the Non-Selling Party or its designee and the Selling Party, or, if the
Non-Selling Party or its designee and the Selling Party cannot reach agreement,
by a nationally recognized investment banking firm reasonably acceptable to the
parties.
NO SOLICITATION
Each DeGeorge Stockholder has agreed, in its capacity as such, that, prior
to the Termination Date, such DeGeorge Stockholder will not, directly or
indirectly, (including through advisors, agents or other intermediaries) solicit
(including by way of furnishing information) or respond to any inquiries or the
making of any proposal by any person or entity (other than NXS, Newco or any
affiliate thereof) with respect to the Company that constitutes or could
reasonably be expected to lead to a Transaction Proposal, PROVIDED, however,
that the foregoing shall not restrict a DeGeorge Stockholder who is also a
director of the Company from taking actions in such DeGeorge Stockholder's
capacity as a director to the extent and in the circumstances permitted by the
Merger Agreement. Each DeGeorge Stockholder also agreed that if such DeGeorge
Stockholder in its capacity as such receives any such inquiry or proposal, then
such DeGeorge Stockholder shall promptly inform NXS of the terms and conditions,
if any, of such inquiry or proposal and the identity of the person making it.
Each DeGeorge Stockholder, in its capacity as such, also agreed to immediately
cease and cause to be terminated any then existing activities, discussions or
negotiations with any parties conducted prior to entering into the Merger
Agreement with respect to any of the foregoing.
TRANSFER RESTRICTIONS
Pursuant to the Stockholders Agreement, each DeGeorge Stockholder has agreed
that, prior to the Termination Date, such DeGeorge Stockholder will not,
directly or indirectly: (i) except pursuant to the terms of the Merger Agreement
and to NXS pursuant to the Stockholders Agreement, offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, enforce or
permit the execution of the provisions of any redemption agreement with the
Company or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, or exercise any
discretionary powers to distribute, any or all of such DeGeorge Stockholder's
Subject Shares or any interest therein, including any trust income or
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principal, except in each case to certain Permitted Transferees as specified in
such Agreement, who are or agree to become bound by the Stockholders Agreement;
(ii) except as contemplated in the Stockholders Agreement, grant any proxies or
powers of attorney with respect to any Subject Shares, deposit any Subject
Shares into a voting trust or enter into a voting agreement with respect to any
Subject Shares; or (iii) take any action that would make any representation or
warranty of such DeGeorge Stockholder contained in the Stockholders Agreement
untrue or incorrect or have the effect of preventing or disabling such DeGeorge
Stockholder from performing such DeGeorge Stockholder's obligations under the
Stockholders Agreement.
ELECTION UNDER MERGER AGREEMENT
In connection with the Merger, each DeGeorge Stockholder has agreed to elect
to receive cash upon conversion of, and with respect to, all of such DeGeorge
Stockholder's Subject Shares unless otherwise agreed with NXS.
COMPETITION
Each DeGeorge Stockholder has agreed that for the period ending four years
after the Effective Time of the Merger, such DeGeorge Stockholder will not,
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected in any manner
with, any business which competes with any of the businesses of the Company or
any subsidiary or joint venture thereof as such businesses are conducted as of
the Effective Time of the Merger and as any such businesses are to be conducted
based upon a product or service which is in development as of the Effective Time
of the Merger (any such business, a "Relevant Business"), except that the
DeGeorge Stockholders may together have beneficial ownership of up to 5%, in the
aggregate, of a publicly traded company engaged in a business which competes
with a Relevant Business. Each DeGeorge Stockholder has agreed that for a period
ending five years after the Effective Time of the Merger, such DeGeorge
Stockholder will not disclose to any other party, unless required to do so by
law, any confidential, nonpublic or proprietary information relating to the
Company or to any subsidiary or joint venture thereof which information was
acquired during the course of such DeGeorge Stockholder's relationship with the
Company. Each DeGeorge Stockholder has agreed that for a period ending five
years after the Effective Time of the Merger, without the prior written consent
of the Company, neither such DeGeorge Stockholder nor any business or enterprise
with which such DeGeorge Stockholder is associated as an officer, director or
controlling stockholder or other investor with the power to direct or cause the
direction of the management of such business or enterprise will employ or
attempt to employ an employee of the Company or any of its subsidiaries or joint
ventures.
THE NXS OPTION
Each DeGeorge Stockholder has, severally and not jointly, granted to NXS the
NXS Option which will attach to each DeGeorge Stockholder's Shares and be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise. The Exercise Price
of the NXS Option will be equal to the product of the Cash Price and the number
of Subject Shares purchased upon the exercise thereof. The NXS Option may be
exercised until the applicable date specified below (the "NXS Option Termination
Date"):
(i) If the Merger is terminated (x) in the circumstances described in
paragraph (c) or (d) under "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT--Termination," or (y) in accordance with any other provision of
the Merger Agreement (other than a termination by the Company as a result of
a failure to consummate the Merger on or before June 30, 1997) and either of
the following shall have occurred: (A) any Person other than Newco or any of
its affiliates and other than any party to the Stockholders Agreement,
including any Permitted Transferee which becomes a party to the
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Stockholders Agreement, shall have become the beneficial owner of more than
20% of the outstanding shares of Amphenol Common Stock; or (B) any Person
(other than Newco or any of its affiliates) shall have made, or proposed,
communicated or disclosed in a manner which is or otherwise becomes public
(including being known by stockholders of Amphenol owning of record or
beneficially in the aggregate 5% or more of the outstanding shares of
Amphenol Common Stock) a bona fide intention to make a Transaction Proposal
(including by making such a Transaction Proposal), then the NXS Option may
be exercised by NXS during the period commencing upon the date of such
termination and ending on the date which is six months later.
(ii) If the Merger is consummated, then the NXS Option may be exercised
by NXS, with respect to any or all of the Subject Shares not converted into
the right to receive the Cash Price in the Merger, during the period
commencing upon the Effective Time of the Merger and ending 30 days
thereafter.
(iii) In all other circumstances, the NXS Option will expire on the date
of termination of the Merger Agreement.
THE STOCKHOLDERS OPTION
NXS has granted to each DeGeorge Stockholder an irrevocable option to sell
the Subject Shares to NXS at the Exercise Price. The Stockholders Option may be
exercised by the DeGeorge Stockholders, as a whole and not in part, during the
period commencing upon the Effective Time of the Merger and ending 30 days
thereafter.
TERMINATION
The obligations of the DeGeorge Stockholders described under "--Voting,"
"--No Solicitation" and "--Transfer Restrictions" will terminate upon the first
to occur (a) the Effective Time of the Merger and (b) the date the Merger
Agreement is terminated in accordance with its terms (the "Termination Date").
In the event the Merger Agreement is terminated, the obligations described under
"--Competition" will also terminate. All other agreements and obligations of the
parties to the Stockholders Agreement will survive the Effective Time of the
Merger and/or the Termination Date except as otherwise set forth in the
Stockholders Agreement.
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PRINCIPAL STOCKHOLDERS OF AMPHENOL
Listed in the following table are (1) those stockholders known to Amphenol
to be the beneficial owners of more than five percent of the Company's Common
Stock as of March 24, 1997 and (2) Lawrence F. DeGeorge.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(5)
- ----------------------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Lawrence J. DeGeorge......................................................... 11,362,918(1)(3) 25.41%
176 Spyglass Lane
Jupiter, Florida
Florence A. DeGeorge......................................................... 11,362,918(2)(3) 25.41%
176 Spyglass Lane
Jupiter, Florida
Lawrence F. DeGeorge......................................................... 2,124,535(4) 4.75%
3127 Casseeky Island Road
Jupiter, Florida 33477
Aggregate Ownership
of Lawrence J. DeGeorge,
Florence A. DeGeorge and
Lawrence F. DeGeorge ...................................................... 13,487,453 30.16%
Clover Capital Management, Inc............................................... 2,779,685(6) 6.22%
11 Tobey Village Office Park
Pittsford, N.Y. 14534(6)
</TABLE>
- ------------------------
(1) Includes 1,245,166 shares held by the Lawrence J. and Florence A. DeGeorge
Charitable Trust and 3,188,150 shares beneficially owned by Florence A.
DeGeorge, all of which may be deemed to be beneficially owned by Mr.
DeGeorge. Lawrence J. DeGeorge is the husband of Florence A. DeGeorge. Mr.
DeGeorge disclaims beneficial ownership of the shares beneficially owned by
his wife.
(2) Includes 485,604 shares held by the Lawrence J. and Florence A. DeGeorge
Charitable Trust and 8,174,768 shares beneficially owned by Lawrence J.
DeGeorge, all of which may be deemed to be beneficially owned by Mrs.
DeGeorge. Florence A. DeGeorge is the wife of Lawrence J. DeGeorge. Mrs.
DeGeorge disclaims beneficial ownership of the shares beneficially owned by
her husband.
(3) Does not include and Lawrence J. DeGeorge and Florence A. DeGeorge disclaim
beneficial ownership of the 2,124,535 shares owned directly by their son,
Lawrence F. DeGeorge.
(4) Does not include and Lawrence F. DeGeorge disclaims beneficial ownership of
the 11,362,918 shares beneficially owned by his parents, Lawrence J.
DeGeorge and Florence A. DeGeorge.
(5) Calculated without giving effect to the exercise of up to 156,841 options
exercisable as of March 24, 1997.
(6) Based upon a Schedule 13G filed by Clover Capital Management, Inc.
("Clover") and its directors on February 14, 1997. Includes 4,000 shares
owned beneficially by such directors (other than indirectly through Clover).
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 24, 1997, certain information
concerning ownership of shares of Amphenol Common Stock by each director and
nominee for director of the Company, each executive officer of the Company named
in "EXECUTIVE COMPENSATION AND OTHER MATTERS" and all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(5)
- -------------------------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Timothy F. Cohane............................................................... 128,253(1) 0.29%
Florence A. DeGeorge............................................................ 11,362,918(2) 25.41%
Lawrence J. DeGeorge............................................................ 11,362,918(3) 25.41%
Edward G. Jepsen................................................................ 198,386 0.44%
Martin H. Loeffler.............................................................. 189,085 0.42%
A. Henry Morgan................................................................. 5,000 0.01%
Dr. Marcia A. Savage............................................................ 0 --
Edward C. Wetmore............................................................... 8,766(4) 0.02%
All executive officers and directors of the Company as a group
(9 persons)................................................................... 11,920,227 26.66%
</TABLE>
- ------------------------
(1) Excludes, and Mr. Cohane disclaims beneficial ownership of, 77,324 shares
owned by his wife.
(2) Includes, and Mrs. DeGeorge disclaims beneficial ownership of, the 8,174,768
shares beneficially owned by her husband, Lawrence J. DeGeorge, directly and
as a donor to the Lawrence J. DeGeorge and Florence A. DeGeorge Charitable
Trust.
(3) Includes, and Mr. DeGeorge disclaims beneficial ownership of, the 3,188,150
shares beneficially owned by his wife, Florence A. DeGeorge, directly and as
a donor to the Lawrence J. DeGeorge and Florence A. DeGeorge Charitable
Trust.
(4) Excludes, and Mr. Wetmore disclaims beneficial ownership of, 37,214 shares
owned by his wife.
(5) Without giving effect to the exercise of 156,841 options to purchase
Amphenol Common Stock exercisable as of March 24, 1997.
REGULATORY APPROVALS
The Merger is subject to the expiration or termination of the applicable
waiting period under the HSR Act (which condition has been satisfied). Certain
aspects of the Merger will require notification to, and filings with, certain
securities and other authorities in certain states, including jurisdictions
where the Company currently operates.
ANTITRUST
Under the HSR Act and the rules promulgated thereunder by the FTC, the
Merger may not be consummated until notifications have been given and certain
information has been furnished to the FTC and the Antitrust Division and the
applicable waiting period has expired or been terminated. On February 14, 1997,
the Company and Newco filed Notification and Report Forms under the HSR Act with
the FTC and the Antitrust Division. On February 26, 1997, the FTC and the
Antitrust Division granted early termination of the waiting period under the HSR
Act with respect to the Merger effective immediately. At any time before or
after consummation of the Merger, notwithstanding that early termination of the
waiting period under the HSR Act has been granted, the Antitrust Division or the
FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the consummation
of the Merger or seeking divestiture of substantial assets of the Company. At
any time before or after the Effective Time, and notwithstanding that early
termination
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of the waiting period under the HSR Act has been granted, any state could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest. Such action could include seeking to enjoin the consummation of
the Merger or seeking divestiture of substantial assets of the Company. Private
parties may also seek to take legal action under the antitrust laws under
certain circumstances.
Based on information available to them, the Company and Newco believe that
the Merger can be effected in compliance with federal and state antitrust laws.
However, there can be no assurance that a challenge to the consummation of the
Merger on antitrust grounds will not be made or that, if such a challenge were
made, the Company and Newco would prevail or would not be required to accept
certain adverse conditions in order to consummate the Merger.
OTHER
The obligations of Newco under the Merger Agreement are also subject to the
receipt of all necessary licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and other third parties as
are necessary in connection with the transactions contemplated by the Merger.
NEWCO, NXS AND THE PARTNERSHIP
Newco, a Delaware corporation and as of the date hereof a wholly owned
subsidiary of the Partnership, was organized in connection with the Merger and
has not carried on any activities to date other than those incident to its
formation and the transactions contemplated by the Merger Agreement. The
Partnership, whose principal assets as of the date hereof consist of the shares
of Newco and its interest in NXS, is a Delaware limited partnership, the general
partner of which is KKR Associates 1996 L.P., a Delaware limited partnership.
The general partner of KKR Associates 1996 L.P. is KKR 1996 GP LLC, a Delaware
limited liability company. The members of KKR 1996 GP LLC are Messrs. Kravis,
Roberts, MacDonnell, Raether, Michelson, Greene, Tokarz, Golkin, Robbins, Stuart
and Gilhuly. The managing members of KKR 1996 GP LLC are Messrs. Kravis and
Roberts. Each of the members of KKR 1996 GP LLC is also a member of the limited
liability company which serves as the general partner of KKR, and Mr. Lipschultz
is an executive of KKR. Messrs. Michelson and Lipschultz are the directors of
Newco. Prior to the Effective Time, Messrs. Kravis and Roberts are also expected
to become directors of Newco. The officers of Newco are as of the date hereof:
Mr. Michelson, as President, Treasurer and Assistant Secretary, and Mr.
Lipschultz, as Vice President, Secretary and Assistant Treasurer. It is expected
that prior to the Effective Time, one or more other partnerships organized at
the direction of KKR may acquire interests in Newco and/or NXS.
KKR, an affiliate of KKR 1996 GP LLC, is expected to receive a fee of $18
million in cash from the Company upon consummation of the Merger and, from time
to time in the future, KKR may receive customary fees for advisory services
rendered to Amphenol. Such fees will be negotiated from time to time with the
independent members of Amphenol's Board of Directors on an arms-length basis and
will be based on the services performed and the prevalent fees then charged by
third-parties for comparable services. In addition, KKR will receive an annual
management consulting fee of $1,000,000.
DISSENTING STOCKHOLDERS' RIGHTS
Record holders of shares of Amphenol Common Stock who follow the appropriate
procedures are entitled to appraisal rights under Section 262 of the DGCL in
connection with the Merger. The following discussion is not a complete statement
of the law pertaining to appraisal rights under the DGCL and is qualified in its
entirety by the full text of Section 262 which is reprinted in its entirety as
Annex IV to this Proxy Statement. Except as set forth herein, stockholders of
the Company will not be entitled to appraisal rights in connection with the
Merger.
Under the DGCL, record holders of shares of Amphenol Common Stock who follow
the procedures set forth in Section 262 and who have not voted in favor of the
Merger will be entitled to have their shares
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of Amphenol Common Stock (such shares "Dissenting Shares") appraised by the
Delaware Court of Chancery and to receive payment of the "fair value" of such
shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, as determined
by such court.
Under Section 262, where a merger agreement is to be submitted for approval
and adoption at a meeting of stockholders, as in the case of the Special
Meeting, not less than 20 days prior to the meeting, the Company must notify
each of the holders of shares of Amphenol Common Stock at the close of business
on the Record Date that such appraisal rights are available and include in each
such notice a copy of Section 262. This Proxy Statement constitutes such notice.
Any such stockholder who wishes to exercise appraisal rights should review the
following discussion and Annex IV carefully because failure to timely and
properly comply with the procedures specified in Section 262 will result in the
loss of appraisal rights under the DGCL.
A holder of shares of Amphenol Common Stock wishing to exercise appraisal
rights must deliver to the Company, before the vote on the approval and adoption
of the Merger Agreement at the Special Meeting, a written demand for appraisal
of such holder's shares of Amphenol Common Stock. In addition, a holder of
shares of Amphenol Common Stock wishing to exercise appraisal rights must hold
of record such shares on the date the written demand for appraisal is made and
must continue to hold such shares through the Effective Time.
Only a holder of record of shares of Amphenol Common Stock is entitled to
assert appraisal rights for the shares of Amphenol Common Stock registered in
that holder's name. A demand for appraisal should be executed by or on behalf of
the holder of record fully and correctly, as the holder's name appears on the
stock certificates.
If the shares of Amphenol Common Stock are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the demand
should be made in that capacity, and if the shares of Amphenol Common Stock are
owned of record by more than one person, as in a joint tenancy or tenancy in
common, the demand should be executed by or on behalf of all joint owners. An
authorized agent, including one or more joint owners, may execute a demand for
appraisal on behalf of a holder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, the agent is agent for such owner or owners. A record holder such as a
broker who holds shares of Amphenol Common Stock as nominee for several
beneficial owners may exercise appraisal rights with respect to the shares of
Amphenol Common Stock held for one or more beneficial owners while not
exercising such rights with respect to the shares of Amphenol Common Stock held
for other beneficial owners; in such case, the written demand should set forth
the number of shares as to which appraisal is sought and where no number of
shares is expressly mentioned the demand will be presumed to cover all shares of
Amphenol Common Stock held in the name of the record owner. Holders of shares of
Amphenol Common Stock who hold their shares in brokerage accounts or other
nominee forms and who wish to exercise appraisal rights are urged to consult
with their brokers to determine the appropriate procedures for the making of a
demand for appraisal by such nominee. All written demands for appraisal of
shares of Amphenol Common Stock should be mailed or delivered to Edward C.
Wetmore, General Counsel and Secretary, Amphenol Corporation, 358 Hall Avenue,
Wallingford, Connecticut 06492 so as to be received before the vote on the
approval and adoption of the Merger Agreement at the Special Meeting.
Within 10 days after the Effective Time, the Company, as the surviving
corporation in the Merger, must send a notice as to the effectiveness of the
Merger to each person who has satisfied the appropriate provisions of Section
262. Within 120 days after the Effective Time, but not thereafter, the Company,
or any holder of shares of Amphenol Common Stock entitled to appraisal rights
under Section 262 and who has complied with the foregoing procedures, may file a
petition in the Delaware Court of Chancery demanding a determination of the fair
value of such shares. The Company is not under any obligation, and has no
present intention, to file a petition with respect to the appraisal of the fair
value of the shares of
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<PAGE>
Amphenol Common Stock. Accordingly, it is the obligation of the stockholders to
initiate all necessary action to perfect their appraisal rights within the time
prescribed in Section 262.
Within 120 days after the Effective Time, any record holder of shares of
Amphenol Common Stock who has complied with the requirements for exercise of
appraisal rights will be entitled, upon written request, to receive from the
Company a statement setting forth the aggregate number of shares of Amphenol
Common Stock with respect to which demands for appraisal have been received and
the aggregate number of holders of such shares. Such statements must be mailed
within 10 days after a written request therefor has been received by the
Company.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the holders of shares of
Amphenol Common Stock entitled to appraisal rights and will appraise the "fair
value" of the shares of Amphenol Common Stock, exclusive of any element of value
arising from the accomplishment or expectation of the Merger, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. Holders considering seeking appraisal should be aware that the fair
value of their shares of Amphenol Common Stock as determined under Section 262
could be more than, the same as or less than the value of the consideration that
they would otherwise receive in the Merger if they did not seek appraisal of
their shares of Amphenol Common Stock. The Delaware Supreme Court has stated
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in the appraisal proceedings. More specifically, the Delaware
Supreme Court has stated that: "Fair value, in an appraisal context, measures
`that which has been taken from the shareholder, viz., his proportionate
interest in a going concern.' In the appraisal process the corporation is valued
`as an entity,' not merely as a collection of assets or by the sum of the market
price of each share of its stock. Moreover, the corporation must be viewed as an
on-going enterprise, occupying a particular market position in the light of
future prospects." In addition, Delaware courts have decided that the statutory
appraisal remedy, depending on factual circumstances, may or may not be a
stockholder's exclusive remedy. The Court will also determine the amount of
interest, if any, to be paid upon the amounts to be received by persons whose
shares of Amphenol Common Stock have been appraised. The costs of the action may
be determined by the Court and taxed upon the parties as the Court deems
equitable. The Court may also order that all or a portion of the expenses
incurred by any holder of shares of Amphenol Common Stock in connection with an
appraisal, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts utilized in the appraisal proceeding, be charged
PRO RATA against the value of all of the shares of Amphenol Common Stock
entitled to appraisal.
Any holder of shares of Amphenol Common Stock who has duly demanded an
appraisal in compliance with Section 262 will not, after the Effective Time, be
entitled to vote the shares of Amphenol Common Stock subject to such demand for
any purpose or be entitled to the payment of dividends or other distributions on
those shares (except dividends or other distributions payable to holders of
record of shares of Amphenol Common Stock as of a date prior to the Effective
Time).
If any holder of shares of Amphenol Common Stock who demands appraisal of
shares under Section 262 fails to perfect, or effectively withdraws or loses,
the right to appraisal, as provided in the DGCL, the shares of Amphenol Common
Stock of such holder will be converted into either (i) the Cash Price or (ii) a
Non-Cash Election Share in accordance with the Merger Agreement, as more fully
described under "THE MERGER--Merger Consideration" and "--Non-Cash Election." A
holder of shares of Amphenol Common Stock will fail to perfect, or will
effectively lose, the right to appraisal if no petition for appraisal is filed
within 120 days after the Effective Time. A holder may withdraw a demand for
appraisal by delivering to the Company a written withdrawal of the demand for
appraisal and acceptance of the Merger, except that any such attempt to withdraw
made more than 60 days after the Effective Time will require the written
approval of the Company.
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<PAGE>
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
The foregoing is a summary of certain of the provisions of Section 262 of
the DGCL and is qualified in its entirety by reference to the full text of such
Section, a copy of which is attached hereto as Annex IV.
CERTAIN PENDING LITIGATION
On January 23, 1997 (the date on which the proposed Merger was publicly
announced) and on January 29, 1997, the Company and its directors (four of whom
are also executive officers of the Company) were named as defendants in
complaints filed in the Court of Chancery in the State of Delaware by two
persons and one person, respectively, claiming to be stockholders of the
Company, individually and purportedly as a class action on behalf of
stockholders of the Company. In general, the complaints allege that the
Company's directors have breached their fiduciary duties by, among other things,
resolving to approve the Merger at an allegedly inadequate price and by
allegedly failing to take adequate steps to enhance the value of the Company
and/or its attractiveness as a merger or acquisition candidate, including
failing to conduct an auction process. The complaints seek injunctive relief
prohibiting the Company from, among other things, consummating the Merger. The
complaints also seek unspecified damages, attorneys' fees and other relief.
The Company believes that the allegations contained in the complaints are
without merit and intends to contest the actions vigorously, on behalf of itself
and its directors if the plaintiffs elect to proceed with their actions.
INDEPENDENT PUBLIC ACCOUNTANTS AND LEGAL OPINIONS
FINANCIAL STATEMENTS
The consolidated financial statements of the Company as of December 31, 1996
and December 31, 1995 and for each of the three years in the period ended
December 31, 1996 incorporated herein by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 have been audited by
Price Waterhouse LLP, independent accountants, as indicated in their report with
respect thereto and incorporated by reference herein.
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.
LEGAL OPINIONS
The legality of Amphenol Common Stock being retained in the Merger is being
passed on by Winthrop, Stimson, Putnam and Roberts, New York, New York, special
counsel to the Company.
Winthrop, Stimson, Putnam and Roberts has delivered an opinion concerning
certain federal income tax consequences of the Merger. See "THE MERGER--Certain
Federal Income Tax Consequences."
PROPOSAL TWO
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation and By-Laws of the Company provide
for a Board of Directors of three or more directors. Currently, the number of
directors of the Company is set at seven. Directors of the Company are elected
for terms of three years, with one-third of the directors subject to election
each year. Accordingly, action will be taken at the meeting for the election of
two directors, Lawrence J. DeGeorge and Dr. Marcia A. Savage. Each of these
directors will hold office either until their terms expire at the 2000 Annual
Meeting of stockholders of the Company or until their successors shall
78
<PAGE>
have been elected or appointed (as the case may be) and qualified. However, if
the Merger Proposal is approved and adopted by the Amphenol stockholders and the
Merger is consummated, the directors of Amphenol immediately after the Effective
Time will be Martin H. Loeffler and the then current directors of Newco.
Thereafter, the Board of Directors will be subject to change from time to time.
It is intended that the proxies delivered pursuant to this solicitation will
be voted in favor of the election of Mr. DeGeorge and Dr. Savage, except in
cases of proxies bearing contrary instructions. In the event that either of
these nominees should become unavailable for election for any presently
unforeseen reason, the person named in the proxy will have the right to use his
discretion to vote for a substitute.
The Board of Directors recommends a vote FOR the two nominees for election
as directors. The affirmative vote of the holders of a plurality of the shares
represented and voted in the election at the Special Meeting at which a quorum
is present is required for the election of the nominees.
CERTAIN INFORMATION CONCERNING NOMINEES AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS. The following table sets forth the names of the
nominees, their ages, the year in which each was first elected a director, their
positions with the Company, their principal occupations and employers for at
least the last five years and any other directorships held by them in companies
that are subject to the reporting requirements of the Exchange Act or any
company registered as an investment company under the Investment Company Act of
1940, as amended. For information concerning membership on committees of the
Board of Directors, see "--The Board of Directors and Certain Committees of the
Board" below. For information concerning directors' ownership of Common Stock,
see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
NOMINEES FOR ELECTION IN 1997
<TABLE>
<CAPTION>
NAME, AGE AND YEAR PRINCIPAL OCCUPATION
FIRST ELECTED DIRECTOR AND OTHER INFORMATION
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Lawrence J. DeGeorge................... Chairman of the Board of the Company since June 1987. He was chief
Age 80 executive officer from June 1987 to May 1995. Member of the Audit and
A Director since Compensation Committees and Chairman of the Pension Committee. Director
June 1987 of United International Holdings, Inc., a leading provider of
multi-channel television services outside the United States. Since
December 1985, Chairman of the Board and Chief Executive Officer of
Times Fiber Communications, Inc. ("Times Fiber"), which became a
wholly-owned subsidiary of the Company in December 1992. Chairman of the
board and chief executive officer of LPL Technologies Inc. ("LPL") from
1985 to December 1992 and president from 1991 to December 1992. LPL
merged into a subsidiary of the Company in December 1992.
Dr. Marcia A. Savage................... Chairperson of the Compensation Committee and member of the Audit
Age 57 Committee. Director of Women's Services of Western Massachusetts since
A Director since May 1995. President and chief executive officer of Manhattanville
December 1992 College from 1985 to 1994. From January of 1995 to May of 1995, Dr.
Savage was on sabbatical. She was also a director of LPL from 1988 to
December 1992.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSED NOMINEES
FOR ELECTION TO THE BOARD OF DIRECTORS.
79
<PAGE>
CURRENT DIRECTORS WITH TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
NAME, AGE AND YEAR PRINCIPAL OCCUPATION
FIRST ELECTED DIRECTOR AND OTHER INFORMATION
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Timothy F. Cohane...................... Senior Vice President of the Company since January 1994. Member of the
Age 44 Pension Committee. President of Times Fiber since January 1994. He was
A Director since senior vice president, administration of the Company from May 1993 to
June 1987 January 1994 and vice president from December 1991 to May 1993. He was
also a director of LPL from December 1986 to December 1992 and a vice
president of LPL from April 1988 to December 1992.
Florence A. DeGeorge................... Member of the Audit Committee. Director of Facilities of the Company
Age 76 since December 1992 and of LPL from July 1987 through December 1992.
A Director since Mrs. DeGeorge is the wife of Lawrence J. DeGeorge, who is Chairman of
December 1992 the Board of the Company.
Edward G. Jepsen....................... Executive Vice President and Chief Financial Officer of the Company
Age 53 since May 1989. Member of the Audit and Pension Committees. Executive
A Director since Vice President and Chief Financial Officer of Times Fiber since May
January 1991 1989. Director and member of the Compensation Committee of TRC Company,
Inc., an environmental research firm. He is also a Director and Chairman
of the Compensation Committee of United International Holdings, Inc., a
leading provider of multi-channel television services outside the United
States. He was executive vice president, chief financial officer and
controller of LPL from November 1988 to December 1992 and a director of
LPL from January 1991 to December 1992.
Martin H. Loeffler..................... Chief Executive Officer of the Company since May 1996. President of the
Age 52 Company since July 1987. Member of the Audit, Compensation and Pension
A Director since Committees. Vice Chairman of Times Fiber since September 1993. From May
December 1987 1989 to December 1992, a vice president of LPL.
A. Henry Morgan........................ Chairman of the Audit Committee and member of the Compensation
Age 71 Committee. President of TRG Financial Services, Inc., a provider of
A Director since financial and business planning to individuals and businesses from 1987
December 1992 to 1993. In 1958, founded T-Bar, Incorporated, a manufacturer of
products that process computer and data communications, and from 1958 to
1987, served as chairman and chief executive of that company. He was
also a director of LPL from 1988 to December 1992.
</TABLE>
80
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
<TABLE>
<CAPTION>
NAME, AGE AND YEAR PRINCIPAL OCCUPATION
FIRST ELECTED DIRECTOR AND OTHER INFORMATION
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Diana G. Reardon....................... Controller of the Company since 1994. Treasurer of the Company since
Age 37 1992.
Edward C. Wetmore...................... Secretary and General Counsel of the Company since 1987.
Age 40
</TABLE>
THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors of the Company has three standing committees: The
Audit Committee, the Compensation Committee and the Pension Committee. The
Company does not have a Nominating Committee.
The Audit Committee recommends the appointment of independent auditors,
reviews the plan of audit, the audit report and management letter, and consults
periodically with the Company's independent auditors with regard to the adequacy
of internal controls. The members of the Audit Committee are Florence A.
DeGeorge, Dr. Marcia A. Savage and Messrs. DeGeorge, Jepsen, Loeffler and Morgan
(Chairman).
The Compensation Committee approves compensation guidelines, reviews the
role and performance of executive officers and key management personnel,
establishes compensation levels for such executive officers and key management
personnel (either directly or through a subcommittee) and reviews the Chairman's
and the President's recommendations for compensation, bonus allocations,
restricted stock awards, incentive stock option awards and long-term incentive
stock awards for employees of the Company and its affiliates. The members of the
Compensation Committee are Dr. Marcia A. Savage (Chairperson) and Messrs.
DeGeorge, Loeffler and Morgan. Messrs. DeGeorge and Loeffler are nonvoting
ex-officio members of this Committee. See "EXECUTIVE COMPENSATION AND OTHER
MATTERS--Compensation Committee Interlocks and Insider Participation."
The Pension Committee administers the Company's pension plans and consults
with the trustee of the pension plans and investment managers of the assets
thereof. The Pension Committee of the Board of Directors consists of Messrs.
Cohane, DeGeorge (Chairman), Jepsen and Loeffler.
During 1996, there were seven meetings of the Board of Directors, two
meetings of the Audit Committee and two meetings of the Compensation Committee.
The Pension Committee met informally from time to time on an as-needed basis and
acted on several matters by unanimous written consent. All directors attended
each of the meetings of the Board of Directors and the Committees on which they
served.
The Company has authorized a retainer to unaffiliated directors at an annual
rate of $20,000 plus $500 for each Board and $650 for each Committee meeting
attended (plus an additional $150 per Committee meeting for the Chairman of a
committee). A director who is also an executive officer of the Company does not
receive any director or Committee fees.
Director's fees and expenses of $29,800, $31,400 and $34,644 were paid in
1996 to Mrs. DeGeorge, Dr. Savage and Mr. Morgan, respectively.
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<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning the
compensation for the past three years of the Chairman and each of the other four
most highly compensated executive officers of the Company (the "named executive
officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
LONG-TERM COMPENSATION AWARDS
-------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LONG-TERM SECURITIES
INCENTIVE RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK STOCK OPTIONS(7)/
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(5) AWARDS(6) SARS(#)
- -------------------- ----- -------- -------- ------------ ----------------- --------------- -------------
M.H. Loeffler....... 1996 $660,000 $330,000(2) 0 0 0 50,000
President & CEO 1995 556,250 300,000(3) 0 0 0 25,000
1994 400,000 215,000(4) 0 0 0 25,000
L.J. DeGeorge....... 1996 600,000 210,000(2) 0 0 0 0
Chairman 1995 600,000 330,000(3) 0 0 0 0
1994 550,000 330,000(4) 0 0 0 0
E.G. Jepsen......... 1996 385,000 135,000(2) 0 0 0 15,000
Executive V.P. & CFO 1995 365,000 132,000(3) 0 0 0 15,000
1994 325,000 130,000(4) 0 0 0 15,000
T.F. Cohane......... 1996 280,000(1) 70,000(1)(2) 0 0 0 10,000
Senior Vice 1995 260,000(1) 78,000(1)(3) 0 0 0 12,000
President 1994 200,000 100,000(4) 0 0 0 10,000
E.C. Wetmore........ 1996 204,000 41,000(2) 0 0 0 3,000
Secretary & General 1995 195,000 40,000(3) 0 0 0 3,000
Counsel 1994 175,000 35,000(4) 0 0 0 3,000
<CAPTION>
<S> <C>
NAME AND ALL OTHER(8)
PRINCIPAL POSITION COMPENSATION
- -------------------- -------------
M.H. Loeffler....... $ 2,858
President & CEO 605,596(9)
6,048
L.J. DeGeorge....... 24,816
Chairman 24,816
22,560
E.G. Jepsen......... 1,930
Executive V.P. & CFO 182,564(9)
1,452
T.F. Cohane......... 469
Senior Vice 90,803(9)
President 306
E.C. Wetmore........ 437
Secretary & General 168
Counsel 153
</TABLE>
- ------------------------------
(1) Salary and Bonus paid by Times Fiber.
(2) 1996 Bonus was paid in January 1997.
(3) 1995 Bonus was paid in January 1996.
(4) 1994 Bonus was paid in January 1995.
(5) The Company has reserved 350,000 shares of Amphenol Common Stock pursuant to
the 1996 Long-Term Incentive Stock Plan of which all 350,000 shares are
available for future awards as of January 31, 1997. None of the named
executive officers were awarded Long-Term Incentive Stock Awards in 1996.
The Board of Directors of the Company has thus far postponed any action on
any proposed Long-Term Incentive Stock Awards in 1997.
(6) The Company has reserved 350,000 shares of Amphenol Common Stock for
issuance pursuant to the Amphenol Restricted Stock Plan, of which 4,334
shares are available for future awards as of January 31, 1997. None of the
named executive officers were awarded restricted stock in 1996.
(7) On April 17, 1996, Messrs. Loeffler, Jepsen, Cohane and Wetmore were awarded
50,000, 15,000, 10,000 and 3,000 stock options, respectively. All stock
options were awarded with an exercise price of $23.875 per share. On April
20, 1995, Messrs. Loeffler, Jepsen, Cohane and Wetmore were awarded 25,000,
15,000, 12,000 and 3,000 stock options, respectively. All stock options were
awarded with an exercise price of $26.625 per share. On April 7, 1994,
Messrs. Loeffler, Jepsen, Cohane and Wetmore were awarded 25,000, 15,000,
10,000 and 3,000 stock options, respectively. All stock options were awarded
with an exercise price of $15.50 per share. The Company has reserved
1,000,000 shares of Amphenol Common Stock for issuance pursuant to the
Amphenol Stock Option Plan, of which 452,065 shares are available for future
awards as of January 31, 1997.
(8) Includes imputed compensation for Group Term Life Insurance.
(9) Includes the fair market value of restricted stock awards to Messrs.
Loeffler, Jepsen and Cohane on June 24, 1992 which vested on June 24, 1995,
in the amounts of $602,500, $180,750 and $90,375 respectively.
82
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during 1996 to the
named executive officers.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(5)
OPERATIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(#)(3)(4) DATE 5%($) 10%($)
- ---------------------------------------- ----------- --------------- -------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
L. J. DeGeorge.......................... -- -- -- -- -- --
M.H. Loeffler........................... 50,000 28.8% $ 23.875 4/16/2006 $ 750,745 $ 1,902,530
E.G. Jepsen............................. 15,000 8.6% 23.875 4/16/2006 225,224 570,759
T. F. Cohane............................ 10,000 5.8% 23.875 4/16/2006 150,149 380,506
E. C. Wetmore........................... 3,000 1.7% 23.875 4/16/2006 45,045 114,152
</TABLE>
- ------------------------
(1) The Company has reserved 1,000,000 shares of Amphenol Common Stock for
issuance pursuant to the Stock Option Plan, of which 452,065 shares are
available for future awards as of January 31, 1997.
(2) Percentages indicated are based on a total of 173,600 options granted to 58
employees of the Company and its subsidiaries during 1996.
(3) No options were repriced during the last fiscal year.
(4) Options become exercisable in equal installments of 33.3%, commencing on the
first anniversary of the date of grant.
(5) The potential realizable values reflected in these columns result from
calculations assuming 5% and 10% growth rates over a 10 year period and are
not intended to forecast future prices of Amphenol Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
The following table provides information concerning the exercise of stock
options during 1996 by the named executive officers and the year-end value of
unexercised options.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END (#) AT FY-END ($)(2)
--------------- -------------------
<S> <C> <C> <C> <C>
SHARED ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------- --------------------- ----------------- --------------- -------------------
L.J. DeGeorge.............................. -- -- --/-- --/--
M.H. Loeffler.............................. 0 0 50,000/75,000 $ 583,337/179,163
E.G. Jepsen................................ 0 0 25,000/30,000 $ 267,500/79,375
T.F. Cohane................................ 0 0 15,667/21,333 $ 150,837/52,913
E.C. Wetmore............................... 0 0 3,334/6,000 $ 32,261/15,875
</TABLE>
- ------------------------
(1) Based on market value less exercise price at date of exercise.
(2) Based on the NYSE trading closing price of Amphenol Common Stock on January
31, 1997 of $25.75.
83
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF TOTAL DAILY COMPOUNDED RETURN
AMONG AMPHENOL, S&P 500 INDEX AND PEER GROUP COMPOSITE
The following graph compares the performance of Amphenol Common Stock with
the performance of the Standard & Poor's 500 Stock Index and the average
performance of a composite group consisting of the Company's peer corporations
on a line-of-business basis. The Company is excluded from this group. The
corporations comprising the composite group are AMP Inc., Augat Inc., Hubbell
Incorporated, Molex Inc., Raychem Corp., and Thomas & Betts Corporation. Total
Daily Compounded Return indices reflect reinvested dividends and are weighted on
a market capitalization basis at the time of each reported data point.
AMPHENOL CORP. VS. S&P 500
VS. COMPOSITE INDEX(1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMPHENOL S&P 500 COMPOSITE
<S> <C> <C> <C>
1991 100 100 100
1992 77.778 107.434 105.305
1993 183.333 118.110 114.863
1994 266.667 119.635 130.943
1995 269.444 164.033 152.019
1996 247.222 200.231 181.961
</TABLE>
(1) Composite index consists of Amp Inc., Augat Inc., Hubbell Inc., Molex Inc.,
Raychem Corp. and Thomas & Betts Corp.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPOSITION AND PURPOSE. The Compensation Committee of the Board of
Directors has been delegated responsibility for the compensation programs
affecting executive officers and key management employees of the Company and its
subsidiaries including base compensation, bonuses, restricted stock, stock
option and other incentive awards. The Committee is currently composed of two
directors who are not officers of the Company and two nonvoting ex-officio
directors who are officers of the Company. The Compensation Committee is chaired
by Dr. Marcia A. Savage. The activities and actions of the Committee are subject
to the review of the full Board of Directors.
84
<PAGE>
The Committee's specific responsibilities currently include:
- Approval of the compensation philosophy and guidelines for all executive
officers and key management employees of the Company and its subsidiaries.
- Review, at least annually, of the roles and the performance of the
Company's President and Chief Executive Officer, the Company's Chairman
and any Vice President and approval of changes in levels of base
compensation for said employees.
- Review (either directly or through a subcommittee) of recommendations from
the Company's President and Chief Executive Officer and the Company's
Chairman related to base compensation, bonus allocations, restricted
stock, stock option and other incentive awards and related matters for
other executive officers, key management employees and prospective senior
management employees of the Company.
- Maintenance and review of, from time to time, the Company's management
succession program.
COMPENSATION POLICIES AND PRACTICES. Philosophy. The Committee's objective
is the development, refinement and implementation of a complete compensation
program that serves to attract, retain and stimulate motivated senior management
employees. The Committee also recognizes its responsibilities and obligations to
the stockholders of the Company and that such stockholders include executive
officers of the Company. The stock-based programs summarized below have been
intended to more specifically align the interests of senior management employees
with the interests of the Company's stockholders and encourage long-term
decision making.
BASE COMPENSATION. The performance and salary of each executive officer and
each senior management employee of the Company whose base compensation is at
least $150,000 is reviewed annually by the Committee. In establishing general
compensation policies and in reviewing and assessing the appropriateness of base
compensation levels, the Committee carefully considers current published
information and independent professional salary surveys of comparably situated
individuals in other companies of the same size and/or type. The Committee also
considers the historical, current and forecasted performance of the Company and
each senior management employee's contribution or expected contribution to those
results in the course of its annual review.
BONUS PLAN. In addition to base salary, executive officers and key
management employees participated in the Company's 1996 Management Incentive
Plan. Payments under this plan are contingent upon the Company's achievement of
targeted levels of operating income and revenues. Targeted bonuses based upon a
percentage of average base compensation have been established at the beginning
of each year. Target bonuses for most plan participants range from 20% to 50% of
average base salary. Discretionary payments are also considered when specific
objectives are undertaken and achieved. The maximum allowable payout for
employees participating in such plan is 50% of average base salary.
RESTRICTED STOCK AND STOCK OPTION PROGRAMS. Restricted stock awards, with
deferred vesting, and stock option grants provide necessary forward-looking
incentives for senior management employees. Restricted stock awards vest after
three years. Restricted stock awards have been generally reserved for officers
and other senior management employees reporting directly to the President and
Chief Executive Officer of the Company or the Chairman of the Company. There
remain approximately 4,334 shares reserved for future awards under the Company's
Restricted Stock Plan. Stock options have been granted at fair market value and
have typically vested in equal annual installments over a three year period.
Stock options have been awarded annually to executive officers and other key
management employees. There remain approximately 452,065 shares reserved for
future awards under the Company's Stock Option Plan. In determining a restricted
stock or stock option award, the Committee (or a subcommittee established for
the purpose of making such determinations) has considered an individual's
contributions to the Company's financial performance and an individual's
responsibilities for assisting the Company in achieving its long-term
85
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strategic goals. The Committee believes that an option grant and/or a restricted
stock award have accreting value when there is an increase in the price of the
Company's stock. The Committee also believes that extended vesting periods for
restricted stock and option awards help retain key employees.
1996 LONG-TERM INCENTIVE STOCK PLAN. In 1996 the Committee requested and
stockholders approved a new Long-Term Incentive Stock Plan pursuant to which up
to 350,000 restricted shares may be awarded to key management employees
including executive officers of the Company over the life of the Plan. Awards
under the 1996 Long-Term Incentive Stock Plan would vest after a five year
period and would only be made following the achievement of previously
established objectives. In view of the Merger Agreement the Committee has
deferred action on any current awards to participants in the 1996 Long-Term
Incentive Stock Plan based upon achievement of 1996 objectives and any target
awards for participants for the current year. The Committee believes that the
five year vesting period for awards pursuant to the 1996 Long-Term Incentive
Stock Plan provides necessary and appropriate long-term, forward-looking
incentives for the most senior management employees of the Company.
IMPACT OF MERGER AGREEMENT. If the Merger Proposal is approved and adopted
by the Amphenol stockholders and the Merger is consummated, the Company's
current Restricted Stock Plan, Stock Option Plan and Long-Term Incentive Stock
Plan will be cancelled. For a description of the extent to which stock options
are expected to be available for grants to management following the Merger, see
"THE MERGER--Interests of Certain Persons in the Merger".
CEO COMPENSATION. Following the 1996 Annual Meeting of stockholders, Martin
H. Loeffler was given the title and responsibilities of the Chief Executive
Officer of the Company. Martin H. Loeffler also continues to serve as President
of the Company. Lawrence J. DeGeorge has continued to actively participate in
the management of the Company as Chairman. The Committee believes that it is
appropriate to report on the compensation paid to each of Mr. DeGeorge and Mr.
Loeffler.
The Committee believes that the Company had an excellent year in 1996.
Earnings per share were up, operating margins were good and working capital
requirements were under control resulting in strong, positive cash flow. The
Committee afforded appropriate consideration to these matters in establishing
base compensation and bonuses for Messrs. Loeffler and DeGeorge.
Lawrence J. DeGeorge continues to provide a strong motivating influence upon
the performance and direction of the Company. His experience and leadership
contributed significantly to the Company's success in 1996. Mr. DeGeorge has
continued to transition additional responsibilities to Mr. Loeffler and other
executive officers of the Company. On that basis, since 1995 he asked the
Committee not to consider any increase in his base compensation. He also
recommended that his bonus pursuant to the 1996 Management Incentive Plan be
less than the bonus he received pursuant to the 1995 Management Incentive Plan.
The Committee has respected both requests. The Committee recognizes that Mr.
DeGeorge's position as the largest stockholder of the Company directly aligns
his personal financial interests with those of its stockholders.
Martin H. Loeffler has accepted increasing responsibilities as the President
and Chief Executive Officer of the Company. His continuing dedication,
leadership, effort and energy will be important in sustaining the success of the
Company and growing stockholder value. His base compensation and his target
bonus payout pursuant to the 1996 Management Incentive Plan were established
based upon the Committee's review and consideration of Company performance as
described above, Mr. Loeffler's personal performance and available compensation
surveys and similar published information of companies of comparable size with
comparable financial performance. The Committee believes that stock option
awards to Mr. Loeffler during 1993, 1994, 1995 and 1996 have served to more
closely align his interests with those of the Company's stockholders and
provided appropriate additional incentive and potential financial reward. If the
Merger Agreement is not completed, the Committee intends to consider awards to
Mr. Loeffler pursuant to the 1996 Long-Term Incentive Stock Plan.
86
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SECTION 162(M) OF THE INTERNAL REVENUE CODE. In 1993, Congress created a
new Internal Revenue Code subsection 162(m) which could have the effect of
limiting the deductibility of compensation paid to the Company's five highest
paid executive officers to no more than $1 million per year beginning in 1994.
Certain types of compensation are exempted from this limitation including any
payments that are based on a plan setting forth objective performance goals
which is administered by outside directors and that has been approved by
stockholders.
Although the Committee will consider this legislation when reviewing
executive compensation, the Committee intends to use its business judgment to
determine whether levels of base compensation and bonus payments are in the best
interests of the Company and its stockholders notwithstanding the deductibility
of any portion of such payments in view of the limitations of subsection 162(m).
Regardless, the Committee and the Company do not believe that this legislation
will have any material effect on the financial condition of the Company for the
foreseeable future.
<TABLE>
<S> <C>
Dr. Marcia A. Savage Lawrence J. DeGeorge
A. Henry Morgan Martin H. Loeffler
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Martin H. Loeffler, President and Chief Executive Officer of the Company and
Lawrence J. DeGeorge, Chairman of the Board of the Company served as EX-OFFICIO
members of the Company's Compensation Committee in 1996. Messrs. DeGeorge and
Loeffler did not have any voting power on such Committee. See also "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."
EMPLOYMENT AGREEMENTS
Pursuant to an employment letter agreement with the Company dated July 28,
1987, Mr. Loeffler received 40,000 shares of restricted Amphenol Common Stock in
1987 and is guaranteed a minimum annual bonus of $30,000. Under this agreement,
Mr. Loeffler is entitled upon termination of his employment with the Company to
18 months severance pay, which includes base salary plus any bonus; upon
involuntary termination, Mr. Loeffler is also entitled to relocation expenses to
the country of his origin, provided that he requests this benefit within six
months after his last day of employment with the Company.
PENSION INFORMATION
THE AMPHENOL PLAN. The Salaried Employees' Pension Plan of Amphenol
Corporation (the "Retirement Plan") provides for annual pensions to certain
salaried employees including directors who are employees, who complete five
years of service with the Company. The Company is required to make all
contributions necessary to provide benefits payable under the Retirement Plan.
No participant contributions are required or permitted. In 1996, Mr. Loeffler
was the only executive officer of the Company who participated in the Retirement
Plan.
The normal retirement date under the Retirement Plan is the first day of the
month following a participant's 65th birthday. A participant may also retire as
of the first day of any month subsequent to the participant's 55th birthday and
completion of ten years of service. The monthly normal retirement benefit for a
participant is equal to the greater of: (i) Formula A: 1.1% of the participant's
average final pensionable compensation multiplied by the participant's years of
credited service or (ii) Formula B: 1.8% of the participant's average final
pensionable compensation multiplied by the participant's years of credited
service not in excess of 25 (1% for years in excess of 25) reduced by 2% of the
participant's estimated monthly social security benefit multiplied by the
participant's years of credited service not in excess of 30. Retirement benefits
are reduced by the amount of any other retirement pension from a defined benefit
pension plan maintained by the Company or any of its subsidiaries based upon the
years of
87
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credited service used for purposes of determining benefits under the Retirement
Plan. Average final pensionable compensation is defined as the participant's
highest average monthly total compensation from the Company and its affiliates,
excluding bonuses, during any five consecutive years of service with the Company
or its affiliates during the ten calendar years of service preceding termination
of employment. A participant's normal retirement benefit is reduced for early
retirement by 1/180 for each complete calendar month up to 60 months (1/360 for
each additional calendar month) by which the commencement date for the payment
of benefits precedes the participant's normal retirement date. Retirement
benefits are paid in the form of a life annuity (joint and survivor annuity for
married participants). A participant has a nonforfeitable right to his
retirement benefit upon completion of five years of service.
The following table sets forth the estimated annual benefits payable on
retirement for specified earnings and years of participation categories assuming
retirement at age 65.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION PAYABLE BY THE COMPANY AT NORMAL
RETIREMENT BASED ON YEARS OF PARTICIPATION INDICATED
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FINAL AVERAGE
COMPENSATION 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ------------------------------------------------ --------- --------- --------- --------- --------- ---------
$150,000........................................ $ 13,500 $ 27,000 $ 40,500 $ 54,000 $ 67,500 $ 75,000
200,000........................................ 18,000 36,000 54,000 72,000 90,000 100,000
250,000........................................ 22,500 45,000 67,500 90,000 112,500 125,000
300,000........................................ 27,000 54,000 81,000 108,000 135,000 150,000
350,000........................................ 31,500 63,000 94,500 126,000 157,500 175,000
400,000........................................ 36,000 72,000 108,000 144,000 180,000 200,000
450,000........................................ 40,500 81,000 121,500 162,000 202,500 225,000
500,000........................................ 45,000 90,000 135,000 180,000 225,000 250,000
</TABLE>
The above benefits are computed on a straight life annuity basis and do not
take into account any reduction for joint and survivor payments or social
security offsets.
Section 415 of the Code, currently limits the maximum annual benefit which
may be paid to any employee from the Retirement Plan to $120,000 in 1996
($125,000 in 1997). Section 401(a)(17) of the Code currently limits the amount
of compensation taken into account under a tax-qualified plan to $150,000 in
1996 ($160,000 in 1997). Both of these limitations are subject to future
adjustment. The Company has adopted a Supplemental Employee Retirement Plan
("SERP") which formally provides for the portion of an annual pension which
cannot be paid from the Retirement Plan as a result of these Code limitations.
Final Average Compensation under the SERP, however, is limited to $500,000.
As of December 31, 1996, Mr. Loeffler has 23 years of credited service in
the Retirement Plan, and his covered compensation amounts to $660,000. Messrs.
Cohane, DeGeorge, Jepsen and Wetmore do not participate in the Retirement Plan.
THE LPL PLAN. In 1996, Messrs. Cohane, Jepsen and Wetmore participated in
the LPL Technologies Inc. Retirement Plan (the "LPL Plan") which terms, except
for required employee contributions, are similar to those of the Amphenol
Retirement Plan. The LPL Plan has been adopted by the Company and will remain in
effect separate from the Retirement Plan.
88
<PAGE>
The following table sets forth the estimated annual benefits under the Plan
payable on retirement for specified earnings and years of participation
categories assuming retirement at age 65.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION PAYABLE BY LPL AT NORMAL
RETIREMENT BASED ON YEARS OF PARTICIPATION INDICATED
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FINAL AVERAGE
COMPENSATION 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ------------------------------------------------ --------- --------- --------- --------- --------- ---------
$150,000........................................ $ 15,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 75,000
200,000........................................ 20,000 40,000 60,000 80,000 100,000 100,000
250,000........................................ 25,500 50,000 75,000 100,000 125,000 125,000
300,000........................................ 30,000 60,000 90,000 120,000 150,000 150,000
350,000........................................ 35,500 70,000 105,000 150,000 175,000 175,000
400,000........................................ 40,000 80,000 120,000 160,000 200,000 200,000
450,000........................................ 45,500 90,000 135,500 180,000 225,000 225,000
500,000........................................ 50,000 100,000 150,000 200,000 250,000 250,000
</TABLE>
The above benefits are computed on a straight life annuity basis and do not
take into account any reduction for joint and survivor payments or social
security offsets.
Section 415 of the Code currently limits the maximum annual benefit which
may be paid to any employee from the Retirement Plan to $120,000 in 1996
($125,000 in 1997). Section 401(a)(17) of the Code currently limits the amount
of compensation taken into account under a tax-qualified plan to $150,000 in
1996 ($160,000 in 1997). Both of these limitations are subject to future
adjustment. The Company SERP formally provides for the portion of an annual
pension which cannot be paid from the LPL Plan as a result of these Code
limitations. Final Average Compensation under the SERP, however, is limited to
$500,000.
As of December 31, 1996, Mr. Cohane has 10 years of credited service in the
LPL Plan, and his covered compensation amounts to $358,000, Mr. Jepsen has 7
years of credited service in the LPL Plan, and his covered compensation amounts
to $517,000 and Mr. Wetmore has 9 years of credited service in the LPL Plan, and
his covered compensation amounts to $244,000. Lawrence J. DeGeorge, as a former
retired employee of Times Fiber Communications, Inc., receives approximately
$9,374 annually under the LPL Plan. Mr. Loeffler does not participate in the LPL
Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE LPL MERGER AND RELATED MATTERS
Amphenol entered into an Agreement and Plan of Merger, dated as of October
28, 1992 (the "LPL Merger Agreement"), among Amphenol, LPL and Cable Acquisition
Corp., subsequently known as Amphenol Cable Corporation ("Cable Corp."), a newly
formed Delaware corporation and wholly-owned subsidiary of Amphenol. Pursuant to
the LPL Merger Agreement, LPL, on December 22, 1992, merged with and into Cable
Corp., which became the surviving corporation (the "LPL Merger"). As a result of
the LPL Merger, LPL's operating subsidiary, Times Fiber Communications, Inc.,
became an indirect wholly-owned subsidiary of Amphenol. The approval of the LPL
Merger by the stockholders of Amphenol, as required by the LPL Merger Agreement
and Amphenol's listing agreement with the NYSE, was obtained at a special
meeting of Amphenol's stockholders on December 9, 1992. The Company dissolved
Cable Corp. on March 27, 1996. As a result, Times Fiber became a direct
wholly-owned subsidiary of Amphenol.
Amphenol agreed in the LPL Merger Agreement that all rights to
indemnification then existing in favor of the present and former directors and
officers of Amphenol or any of its subsidiaries (including LPL) as provided in
its Restated Certificate of Incorporation, its By-Laws, under the DGCL or
otherwise shall survive the LPL Merger and shall continue in full force and
effect in accordance with their terms through December 22, 1998.
89
<PAGE>
LPL STOCKHOLDERS AGREEMENT
Concurrently with the consummation of the LPL Merger, a Stockholders
Agreement (the "LPL Stockholders Agreement") was entered into between Amphenol
and holders of LPL Common Stock who, at that time, owned more than 5,000 shares
of LPL Common Stock. The LPL Stockholders Agreement provides that so long as Mr.
Lawrence J. DeGeorge, together with his estate and his spouse, beneficially owns
at least 25% of the outstanding Amphenol Common Stock, Amphenol will agree to
nominate directors designated by Mr. DeGeorge, his estate or his spouse that
represent up to 25% of the Board of Directors (but in no event fewer than two
directors). If Mr. DeGeorge, together with his estate and his spouse,
beneficially owns less than 25% but at least 10% of the outstanding Amphenol
Common Stock, Amphenol will agree to nominate that number of directors
designated by Mr. DeGeorge, his estate or his spouse, that represent not less
than 10% of the Board of Directors (but in no event fewer than one director).
Lawrence J. DeGeorge and Florence A. DeGeorge were nominated as directors
pursuant to this provision.
The LPL Stockholders Agreement also provides the parties thereto with
certain demand and piggyback registration rights in respect of Amphenol Common
Stock received in the LPL Merger. No such rights were exercised during 1996.
The LPL Stockholders Agreement will be terminated upon consummation of the
Merger.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission and the NYSE. Officers, directors and greater than
10% stockholders are required by the Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it since
January 1, 1996, or written representations from certain reporting persons that
no Forms 5 were required for those persons, the Company believes that its
officers, directors, and greater than 10% beneficial owners complied with all
applicable filing requirements.
PROPOSAL THREE
RATIFICATION OF SELECTION OF AUDITORS
The Company's Board of Directors has selected Price Waterhouse LLP to
conduct the annual audit of the financial statements of the Company for the
fiscal year ending December 31, 1997. Price Waterhouse LLP has no financial
interest, direct or indirect, in the Company, and it does not have any
connection with the Company except in its professional capacity as independent
auditors and professional advisors. The ratification by the stockholders of the
selection of Price Waterhouse LLP as independent auditors is not required by law
or by the By-Laws of the Company. The Board of Directors, consistent with the
practice of many publicly held corporations, is nevertheless submitting this
selection to the stockholders.
If the foregoing proposal is not approved by the affirmative vote of a
majority of the shares represented at the Special Meeting and entitled to vote,
or if prior to the 1998 Annual Meeting, Price Waterhouse LLP shall decline to
act or otherwise become incapable of acting, or if its employment is otherwise
discontinued by the Board of Directors, then in any such case the Board of
Directors will appoint other independent accountants whose employment for any
period subsequent to the Special Meeting will be subject to ratification by the
stockholders at the 1998 Annual Meeting.
The Board of Directors recommends a vote FOR ratification of the appointment
of Price Waterhouse LLP as independent auditors.
90
<PAGE>
OTHER INFORMATION AND STOCKHOLDER PROPOSALS
Management of the Company knows of no other matters that may properly be, or
which are likely to be, brought before the Special Meeting. However, if any
other matters are properly brought before such Special Meeting, the persons
named in the enclosed Proxy or their substitutes intend to vote the Proxies in
accordance with their judgment with respect to such matters, unless authority to
do so is withheld in the Proxy.
Stockholder proposals intended to be presented at the 1998 Annual Meeting of
stockholders must have been received by the Company not later than December 16,
1997 for inclusion in the proxy materials for such meeting. Such proposals
should be sent by Certified Mail-Return Receipt Requested to the attention of
the Secretary of the Company, 358 Hall Avenue, P.O. Box 5030, Wallingford,
Connecticut 06492-7530. Under the rules of the Commission, a stockholder
submitting a proposal is required to be a record or beneficial owner of at least
1% or $1,000 in market value of Amphenol Common Stock for at least one year
prior to the date of submission of the proposal, and he or she must continue to
own such securities through the date on which the meeting is held.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement incorporates by reference documents which are not
presented herein or delivered herewith. Copies of any such documents relating to
the Company, other than exhibits to such documents (unless such exhibits
specifically are incorporated by reference in such documents), are available
without charge, upon written or oral request, from Amphenol Corporation, 358
Hall Avenue, Wallingford, Connecticut 06492, Attention: Secretary, telephone:
(203) 265-8900. In order to ensure timely delivery of the documents requested,
any such request should be made by May 7, 1997.
The following documents previously filed by the Company with the Commission
(File Number 1-10879) are incorporated in this Proxy Statement by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (filed with the Commission on February 19, 1997), as
amended by Amendment No. 1 thereto on Form 10-K/A (filed with the Commission
on March 31, 1997);
(2) The Company's Current Report on Form 8-K dated January 23, 1997; and
(3) The description of Amphenol Common Stock set forth in Amphenol's
registration statement on Form 8-A dated October 1, 1991, as amended.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the date of
the Special Meeting shall be deemed to be incorporated by reference herein and
to be part hereof from the date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein, or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Proxy Statement.
91
<PAGE>
ANNEX I-A
Conformed Copy
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 23, 1997,
BETWEEN
NXS ACQUISITION CORP.
AND
AMPHENOL CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-------------
<S> <C> <C>
ARTICLE I
The Merger.................................................................... I-A-1
SECTION 1.01. The Merger.................................................................... I-A-1
SECTION 1.02. Closing....................................................................... I-A-1
SECTION 1.03. Effective Time of the Merger.................................................. I-A-2
SECTION 1.04. Effects of the Merger......................................................... I-A-2
SECTION 1.05. Certificate of Incorporation; By-Laws; Purposes............................... I-A-2
SECTION 1.06. Directors..................................................................... I-A-2
SECTION 1.07. Officers...................................................................... I-A-2
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations..... I-A-2
SECTION 2.01. Effect on Capital Stock....................................................... I-A-2
SECTION 2.02. Company Common Stock Elections................................................ I-A-3
SECTION 2.03. Proration..................................................................... I-A-4
SECTION 2.04. Treatment of Options and Other Employee Equity Rights......................... I-A-5
SECTION 2.05. Exchange of Certificates...................................................... I-A-6
SECTION 2.06. The Debt Offer................................................................ I-A-8
ARTICLE III
Representations and Warranties................................................ I-A-9
SECTION 3.01. Representations and Warranties of the Company................................. I-A-9
SECTION 3.02. Representations and Warranties of Newco....................................... I-A-21
ARTICLE IV
Covenants Relating to Conduct of Business Prior to Merger..................... I-A-22
SECTION 4.01. Conduct of Business of the Company............................................ I-A-22
ARTICLE V
Additional Agreements......................................................... I-A-25
SECTION 5.01. Preparation of Form S-4 and Proxy Statement; Stockholder Meeting.............. I-A-25
SECTION 5.02. Access to Information; Confidentiality........................................ I-A-25
SECTION 5.03. Reasonable Best Efforts....................................................... I-A-26
SECTION 5.04. Benefit Matters............................................................... I-A-27
SECTION 5.05. Indemnification............................................................... I-A-27
SECTION 5.06. Public Announcements.......................................................... I-A-28
SECTION 5.07. Affiliates.................................................................... I-A-29
SECTION 5.08. No Solicitation............................................................... I-A-29
SECTION 5.09. Resignation of Directors...................................................... I-A-30
SECTION 5.10. Certain Agreements............................................................ I-A-30
</TABLE>
I-A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-------------
<S> <C> <C>
SECTION 5.11. Stop Transfer................................................................. I-A-30
SECTION 5.12. New York Stock Exchange Listing............................................... I-A-30
ARTICLE VI
Conditions Precedent.......................................................... I-A-30
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Merger.................... I-A-30
SECTION 6.02. Conditions to Obligations of Newco............................................ I-A-31
SECTION 6.03. Conditions to Obligation of the Company....................................... I-A-32
ARTICLE VII
Termination, Amendment and Waiver............................................. I-A-32
SECTION 7.01. Termination................................................................... I-A-32
SECTION 7.02. Effect of Termination......................................................... I-A-33
SECTION 7.03. Amendment..................................................................... I-A-33
SECTION 7.04. Extension; Waiver............................................................. I-A-33
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver..................... I-A-33
ARTICLE VIII
General Provisions............................................................ I-A-33
SECTION 8.01. Nonsurvival of Representations and Warranties................................. I-A-33
SECTION 8.02. Fees and Expenses............................................................. I-A-34
SECTION 8.03. Notices....................................................................... I-A-35
SECTION 8.04. Definitions................................................................... I-A-35
SECTION 8.05. Interpretation................................................................ I-A-36
SECTION 8.06. Counterparts.................................................................. I-A-36
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries................................ I-A-36
SECTION 8.08. GOVERNING LAW................................................................. I-A-36
SECTION 8.09. Assignment.................................................................... I-A-36
SECTION 8.10. Enforcement................................................................... I-A-36
SCHEDULES
Disclosure Schedule
EXHIBITS
Exhibit A Amendments to Certificate of Incorporation of the Company
Exhibit B Form of Affiliate Letter
</TABLE>
I-A-ii
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of January 23, 1997, between NXS
ACQUISITION CORP., a Delaware corporation ("Newco"), and AMPHENOL CORPORATION, a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Company and Newco have
determined that the merger of Newco with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement, would
be fair and in the best interests of their respective stockholders, and such
Boards of Directors have approved such Merger, pursuant to which each share of
Class A common stock, par value $.001 per share, of the Company (the "Company
Common Stock") issued and outstanding immediately prior to the Effective Time of
the Merger (as defined in Section 1.03) (other than (a) shares of Company Common
Stock owned, directly or indirectly, by the Company or any subsidiary (as
defined in Section 8.04) of the Company or by Parent (as defined below), Newco
or any subsidiary of Parent and (b) Dissenting Shares (as defined in Section
2.01(d)) will be converted into either (A) the right to retain at the election
of the holder thereof and subject to the terms hereof, Class A common stock, par
value $.001 per share, of the Company or (B) the right to receive cash;
WHEREAS, the Merger and this Agreement require the vote of a majority of the
outstanding shares of the Company Common Stock for the approval thereof (the
"Company Stockholder Approval");
WHEREAS, Newco is a wholly owned subsidiary of KKR 1996 Fund L.P.
("Parent");
WHEREAS, Newco is unwilling to enter into this Agreement unless,
contemporaneously with the execution and delivery of this Agreement, certain
beneficial and record stockholders of the Company enter into an agreement (the
"Stockholders Agreement") providing for certain actions relating to the shares
of Company Common Stock owned by them; and the Company has approved the entering
into by NXS I, L.L.C., a Delaware limited liability company ("NXS") and a
subsidiary of Parent, and such stockholders of the Stockholders Agreement, and
such stockholders have agreed to enter into, execute and deliver the
Stockholders Agreement;
WHEREAS, Newco and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"), Newco shall be merged with and into the Company at the
Effective Time of the Merger. Upon the Effective Time of the Merger, the
separate existence of Newco shall cease, and the Company shall continue as the
surviving corporation and shall continue under the name "Amphenol Corporation."
SECTION 1.02. CLOSING. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.01 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. on the second business day after satisfaction of the conditions
set forth in Section 6.01 (or as soon as practicable thereafter following
satisfaction or waiver of the conditions set forth in Sections 6.02 and 6.03)
(the "Closing Date"), at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, unless another date, time or place
is agreed to in writing by the parties hereto.
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SECTION 1.03. EFFECTIVE TIME OF THE MERGER. As soon as practicable
following the satisfaction or waiver of the conditions set forth in Article VI,
the parties shall file with the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware, or at such other time as is permissible in accordance
with the DGCL and as Newco and the Company shall agree should be specified in
the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time of the Merger").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the applicable provisions of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION; BY-LAWS; PURPOSES. (a) At the
Effective Time of the Merger, and without any further action on the part of the
Company or Newco, the Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time of the Merger, shall be amended so as to
read in its entirety in the form set forth as Exhibit A hereto, and, as so
amended, until thereafter further amended as provided therein and under the
DGCL, it shall be the certificate of incorporation of the Company following the
Merger.
(b) At the Effective Time of the Merger, and without any further action on
the part of the Company or Newco, the By-laws of Newco as in effect at the
Effective Time of the Merger shall be the By-laws of the Company following the
Merger until thereafter changed or amended as provided therein or by applicable
law.
SECTION 1.06. DIRECTORS. The directors of Newco at the Effective Time of
the Merger shall be the directors of the Company following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of Newco at the Effective Time of the
Merger shall be the officers of the Company following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.01. EFFECT ON CAPITAL STOCK. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the
Company, Newco or any holder of any shares of Company Common Stock or any shares
of capital stock of Newco:
(a) COMMON STOCK OF NEWCO. Each share of common stock of Newco issued
and outstanding immediately prior to the Effective Time of the Merger shall
be converted into a number of shares of the Class A common stock, par value
$.001 per share, of the Company following the Merger equal to the quotient
of (i) 13,116,955 divided by (ii) the number of shares of common stock of
Newco outstanding immediately prior to the Effective Time of the Merger.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED COMPANY COMMON
STOCK. Each share of Company Common Stock that is owned by the Company or by
any subsidiary of the Company, and each share of Company Common Stock that
is owned by Parent, Newco or any subsidiary of Parent shall automatically be
cancelled and retired and shall cease to exist, and no cash, Company Common
Stock or other consideration shall be delivered or deliverable in exchange
therefor.
(c) CONVERSION (OR RETENTION) OF COMPANY COMMON STOCK. Except as
otherwise provided herein and subject to Section 2.03, each issued and
outstanding share of Company Common Stock (other
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than shares cancelled pursuant to Section 2.01(b) and Dissenting Shares)
shall be converted into the following (the "Merger Consideration"):
(i) for each such share of Company Common Stock with respect to
which an election to retain Company Common Stock has been effectively
made and not revoked or lost, pursuant to Sections 2.02(c), (d) and (e)
("Electing Shares"), the right to retain one fully paid and nonassessable
share of Company Common Stock (a "Non-Cash Election Share"); and
(ii) for each such share of Company Common Stock (other than
Electing Shares), the right to receive in cash from the Company following
the Merger an amount equal to $26.00 (the "Cash Election Price").
(d) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger held by a holder (if any) who has
the right to demand payment for and an appraisal of such shares in
accordance with Section 262 of the DGCL (or any successor provision)
("Dissenting Shares") shall not be converted into a right to receive Merger
Consideration or any cash in lieu of fractional shares of Company Common
Stock (but shall have the rights set forth in Section 262 of the DGCL (or
any successor provision)) unless such holder fails to perfect or otherwise
loses such holder's right to such payment or appraisal, if any. If, after
the Effective Time of the Merger, such holder fails to perfect or loses any
such right to appraisal, each such share of such holder shall be treated as
a share (other than an Electing Share) that had been converted as of the
Effective Time of the Merger into the right to receive Merger Consideration
in accordance with this Section 2.01. The Company shall give prompt notice
to Newco of any demands received by the Company for appraisal of shares of
Company Common Stock, and Newco shall have the right to participate in and
approve all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Newco, make any
payment with respect to, or settle or offer to settle, any such demands.
(e) CANCELLATION AND RETIREMENT OF COMPANY COMMON STOCK. As of the
Effective Time of the Merger, all shares of Company Common Stock (other than
shares referred to in Section 2.01(d) and 2.01(c)(i)) issued and outstanding
immediately prior to the Effective Time of the Merger, 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 of
Company Common Stock shall, to the extent such certificate represents such
shares, cease to have any rights with respect thereto, except the right to
receive cash, including cash in lieu of fractional shares of Company Common
Stock, to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.05.
SECTION 2.02. COMPANY COMMON STOCK ELECTIONS. (a) Each person who, on or
prior to the Election Date (as defined in Section 2.02(c)) is a record holder of
shares of Company Common Stock will be entitled, with respect to all or any
portion of his shares, to make an unconditional election (a "Non-Cash Election")
on or prior to such Election Date to retain Non-Cash Election Shares, on the
basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as defined in Section
3.01(d)), Newco shall appoint a bank or trust company which is reasonably
satisfactory to the Company to act as exchange agent (the "Exchange Agent") for
the payment of the Merger Consideration.
(c) Newco shall prepare a form of election, which form shall be subject to
the reasonable approval of the Company (the "Form of Election"), to be mailed by
the Company with the Proxy Statement to the record holders of Company Common
Stock as of the record date for the Stockholders Meeting (as defined in Section
5.01(c)), which Form of Election shall be used by each record holder of shares
of Company Common Stock who wishes to elect to retain Non-Cash Election Shares
for any or all shares of Company Common Stock held, subject to the provisions of
Section 2.03 hereof, by such holder. The Company will
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use its reasonable best efforts to make the Form of Election and the Proxy
Statement available to all persons who become holders of Company Common Stock
during the period between such record date and the Election Date referred to
below. Any such holder's election to retain Non-Cash Election Shares shall have
been properly made only if the Exchange Agent shall have received at its
designated office, by 5:00 p.m., New York City time on the business day next
preceding the date of the Stockholders Meeting (the "Election Date"), a Form of
Election properly completed and signed and accompanied by certificates
representing the shares of Company Common Stock to which such Form of Election
relates, duly endorsed in blank or otherwise in form acceptable for transfer on
the books of the Company (or by an appropriate guarantee of delivery of such
certificates as set forth in such Form of Election from a firm which is a member
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, provided such certificates are in fact
delivered to the Exchange Agent within five New York Stock Exchange trading days
after the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the holder submitting it to the
Exchange Agent only by written notice received by the Exchange Agent prior to
5:00 p.m, New York City time on the Election Date (unless Newco and the Company
determine not less than two business days prior to the Election Date that the
Closing Date is not likely to occur within five business days following the date
of the Stockholders Meeting, in which case any Form of Election will remain
revocable until a subsequent date which shall be a date prior to the Closing
Date determined by Newco and the Company). In addition, all Forms of Election
shall automatically be revoked if the Exchange Agent is notified in writing by
Newco and the Company that the Merger has been abandoned. If a Form of Election
is revoked, the certificate or certificates (or guarantees of delivery, as
appropriate) for the shares of Company Common Stock to which such Form of
Election relates shall be promptly returned by the Exchange Agent to the
stockholder submitting the same.
(e) The determination of the Exchange Agent shall be binding whether or not
elections to retain Non-Cash Election Shares have been properly made or revoked
pursuant to this Section 2.02 with respect to shares of Company Common Stock and
when elections and revocations were received by it. If the Exchange Agent
reasonably determines in good faith that any election to retain Non-Cash
Election Shares was not properly made with respect to shares of Company Common
Stock, such shares shall be treated by the Exchange Agent as shares which were
not Electing Shares at the Effective Time of the Merger, and such shares shall
be exchanged in the Merger for cash pursuant to Section 2.01(c)(ii). The
Exchange Agent shall also make all computations as to the allocation and the
proration contemplated by Section 2.03, and any such computation shall be
conclusive and binding on the holders of shares of Company Common Stock. The
Exchange Agent may, with the mutual written agreement of Newco and the Company,
make such rules as are consistent with this Section 2.02 for the implementation
of the elections provided for herein as shall be necessary or desirable fully to
effect such elections.
SECTION 2.03. PRORATION.
(a) Notwithstanding anything in this Agreement to the contrary, the
aggregate number of shares of Company Common Stock to be converted into the
right to retain Company Common Stock at the Effective Time of the Merger (the
"Non-Cash Election Number") shall be equal to 4,400,000 (excluding for this
purpose any shares of Company Common Stock to be cancelled pursuant to Section
2.01(b)).
(b) If the number of Electing Shares exceeds the Non-Cash Election Number,
then each Electing Share shall be converted into the right to retain Non-Cash
Election Shares or receive cash in accordance with the terms of Section 2.01(c)
in the following manner:
(i) A proration factor (the "Non-Cash Proration Factor") shall be
determined by dividing the Non-Cash Election Number by the total number of
Electing Shares.
(ii) The number of Electing Shares covered by each Non-Cash Election to
be converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Non-Cash Proration Factor by the total number
of Electing Shares covered by such Non-Cash Election.
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(iii) All Electing Shares, other than those shares converted into the
right to receive Non-Cash Election Shares in accordance with Section
2.03(b)(ii), shall be converted into cash (on a consistent basis among
stockholders who made the election referred to in Section 2.01(c)(i), PRO
RATA to the number of shares as to which they made such election) as if such
shares were not Electing Shares in accordance with the terms of Section
2.01(c)(ii).
(c) If the number of Electing Shares is less than the Non-Cash Election
Number, then:
(i) all Electing Shares shall be converted into the right to retain
Company Common Stock in accordance with the terms of Section 2.01(c)(i);
(ii) additional shares of Company Common Stock other than Electing
Shares and Dissenting Shares shall be converted into the right to retain
Non-Cash Election Shares in accordance with the terms of 2.01(c) in the
following manner:
(1) a proration factor (the "Cash Proration Factor") shall be
determined by dividing (x) the difference between the Non-Cash Election
Number and the number of Electing Shares, by (y) the total number of
shares of Company Common Stock other than Electing Shares and Dissenting
Shares; and
(2) the number of shares of Company Common Stock in addition to
Electing Shares to be converted into the right to retain Non-Cash
Election Shares shall be determined by multiplying the Cash Proration
Factor by the total number of shares other than Electing Shares and
Dissenting Shares; and
(iii) subject to Section 2.01(d), shares of Company Common Stock subject
to clause (ii) of this paragraph (c) shall be converted into the right to
retain Non-Cash Election Shares in accordance with Section 2.01(c)(i) (on a
consistent basis among shareholders who held shares of Company Common Stock
as to which they did not make the election referred to in Section
2.01(c)(i), PRO RATA to the number of shares as to which they did not make
such election).
SECTION 2.04. TREATMENT OF OPTIONS AND OTHER EMPLOYEE EQUITY RIGHTS. (a)
Except as otherwise agreed to in writing between the Company and the holder of
any Company Stock Option (as defined below), and as consented to by Newco,
immediately prior to the Effective Time of the Merger, each outstanding stock
option to purchase shares of Company Common Stock held by a current or former
employee or director of the Company or any subsidiary thereof (a "Company Stock
Option") granted under any stock option or stock purchase plan, program or
arrangement of the Company, including without limitation, the Stock Option Plan
of Amphenol, as amended, and the 1996 Long-Term Incentive Stock Plan of Amphenol
(collectively and together with the Restricted Stock Plan of Amphenol, the
"Stock Plans"), whether or not then exercisable, shall be cancelled by the
Company, and at the Effective Time of the Merger or as soon as practicable
thereafter, the holder thereof shall be entitled to receive from the Company as
of or as soon as practicable after the Effective Time of the Merger in
consideration for such cancellation an amount in cash equal to the product of
(i) the number of shares of Company Common Stock previously subject to such
Company Stock Option and (ii) the excess, if any, of the Cash Election Price per
share over the exercise price per share, if any, previously subject to such
Company Stock Option, reduced by the amount of withholding or other taxes
required by law to be withheld.
(b) Prior to the Effective time of the Merger, any restrictions imposed
pursuant to any Stock Plan on any outstanding shares of Company Common Stock
(such shares, "Company Restricted Stock") shall lapse and each share of Company
Restricted Stock shall be subject to the same terms and conditions of this
Agreement as other shares of Company Common Stock, including, but not limited
to, Section 2.03(c) herein.
(c) Except as provided herein or as otherwise agreed by the parties, the
Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time of the
Merger, and
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the Company shall exercise its best efforts to ensure that following the
Effective Time of the Merger, no current or former employee or director shall
have any Company Stock Option to purchase shares of the Company Common Stock or
any other equity interest in the Company under any Stock Plan.
(d) Prior to the Effective Time of the Merger, the Board of Directors (or,
if appropriate, any committee administering the Stock Plans) shall adopt such
resolutions or take such actions as are necessary, subject if necessary, to
obtaining consents of the holders thereof, to carry out the terms of this
Section 2.04.
SECTION 2.05. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. As of or as
soon as reasonably practicable after the Effective Time of the Merger, the
Company shall deposit with the Exchange Agent, for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with this Article II,
the cash portion of Merger Consideration.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time of
the Merger, each holder of an outstanding certificate or certificates which
prior thereto represented shares of Company Common Stock shall, upon surrender
to the Exchange Agent of such certificate or certificates and acceptance thereof
by the Exchange Agent, be entitled to a certificate or certificates representing
the number of full shares of Company Common Stock, if any, to be retained by the
holder thereof pursuant to this Agreement and the amount of cash, if any, into
which the number of shares of Company Common Stock previously represented by
such certificate or certificates surrendered shall have been converted pursuant
to this Agreement. The Exchange Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. After the Effective Time of the Merger, there shall be no further
transfer on the records of the Company or its transfer agent of certificates
representing shares of Company Common Stock which have been converted, in whole
or in part, pursuant to this Agreement into the right to receive cash, and if
such certificates are presented to the Company for transfer, they shall be
cancelled against delivery of cash and, if appropriate, certificates for
retained Company Common Stock. If any certificate for such retained Company
Common Stock is to be issued in, or if cash is to be remitted to, a name other
than that in which the certificate for Company Common Stock surrendered for
exchange is registered, it shall be a condition of such exchange that the
certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the person
requesting such exchange shall pay to the Company or its transfer agent any
transfer or other taxes required by reason of the issuance of certificates for
such retained Company Common Stock in a name other than that of the registered
holder of the certificate surrendered, or establish to the satisfaction of the
Company or its transfer agent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.05(b), each certificate for
shares of Company Common Stock shall be deemed at any time after the Effective
Time of the Merger to represent only the right to receive upon such surrender
the Merger Consideration as contemplated by Section 2.01. No interest will be
paid or will accrue on any cash payable as Merger Consideration or in lieu of
any fractional shares of retained Company Common Stock.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions with respect to retained Company Common Stock with a record date
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered certificate for shares of Company Common Stock with respect to the
shares of retained Company Common Stock represented thereby and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.05(e) until the surrender of such certificate in accordance with this
Article II. Subject to the effect of applicable laws, following surrender of any
such certificate, there shall be paid to the holder of the certificate
representing whole shares of retained Company Common Stock issued in connection
therewith, without interest, (i) at the time of such surrender or as promptly
after the sale of the Excess Shares (as defined in Section 2.05(e)) as
practicable, the amount of any cash payable in lieu of a fractional share of
retained Company Common Stock to which such holder is entitled pursuant to
Section 2.05(e) and the proportionate amount of any dividends or other
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distributions with a record date after the Effective Time of the Merger
theretofore paid with respect to such whole shares of retained Company Common
Stock, and (ii) at the appropriate payment date, the proportionate amount of any
dividends or other distributions with a record date after the Effective Time of
the Merger but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of retained Company Common
Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK EXCHANGED FOR CASH.
All cash paid upon the surrender for exchange of certificates representing
shares of Company Common Stock in accordance with the terms of this Article II
(including any cash paid pursuant to Section 2.05(e)) shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to the
shares of Company Common Stock exchanged for cash theretofore represented by
such certificates.
(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip representing fractional shares of retained
Company Common Stock shall be issued in connection with the Merger, and such
fractional share interests will not entitle the owner thereof to vote or to
any rights of a stockholder of the Company after the Merger; and
(ii) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of retained
Company Common Stock (after taking into account all shares of Company Common
Stock delivered by such holder) shall receive, in lieu thereof, a cash
payment (without interest) representing such holder's proportionate interest
in the net proceeds from the sale by the Exchange Agent (following the
deduction of applicable transaction costs), on behalf of all such holders,
of the shares (the "Excess Shares") of retained Company Common Stock
representing such fractions. Such sale shall be made as soon as practicable
after the Effective Time of the Merger.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Merger Consideration
deposited with the Exchange Agent pursuant to this Section 2.05 (the "Exchange
Fund") which remains undistributed to the holders of the certificates
representing shares of Company Common Stock for six months after the Effective
Time of the Merger shall be delivered to the Company, upon demand, and any
holders of shares of Company Common Stock prior to the Merger who have not
theretofore complied with this Article II shall thereafter look only to the
Company and only as general creditors thereof for payment of their claim for
cash, if any, retained Company Common Stock, if any, any cash in lieu of
fractional shares of retained Company Common Stock and any dividends or
distributions with respect to retained Company Common Stock to which such
holders may be entitled.
(g) NO LIABILITY. None of Newco or the Company or the Exchange Agent shall
be liable to any person in respect of any shares of retained Company Common
Stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any certificates representing
shares of Company Common Stock shall not have been surrendered prior to one year
after the Effective Time of the Merger (or immediately prior to such earlier
date on which any cash, if any, any cash in lieu of fractional shares of
retained Company Common Stock or any dividends or distributions with respect to
retained Company Common Stock in respect of such certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 3.01(d))), any such cash, dividends or distributions in respect of such
certificate shall, to the extent permitted by applicable law, become the
property of the Company, free and clear of all claims or interest of any person
previously entitled thereto.
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(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by the Company, provided that such
investment shall be (i) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or instrumentality thereof
having maturities of not more than six months from the Effective Time of the
Merger, (ii) certificates of deposit, eurodollar time deposits and bankers'
acceptances with maturities not exceeding six months and overnight bank deposits
with any commercial bank, depository institution or trust company incorporated
or doing business under the laws of the United States of America, any state
thereof or the District of Columbia, provided that such commercial bank,
depository institution or trust company has, at the time of investment, (A)
capital and surplus exceeding $250 million and (B) outstanding short-term debt
securities which are rated at least A-1 by Standard & Poor's Rating Group
Division of The McGraw-Hill Companies, Inc. or at least P-1 by Moody's Investors
Services, Inc. or carry an equivalent rating by a nationally recognized rating
agency if both of the two named rating agencies cease to publish ratings of
investment, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clauses (i) and (ii) above
entered into with any financial institution meeting the qualifications specified
in clause (ii) above, (iv) commercial paper having a rating in the highest
rating categories from Standard & Poor's Rating Group Division of The
McGraw-Hills Companies, Inc. or Moody's Investors Services, Inc. or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease to publish ratings of investments and in each case
maturing within six months of the Effective Time of the Merger and (v) money
market mutual or similar funds having assets in excess of $1 billion. Any
interest and other income resulting from such investments shall be paid to the
Company.
SECTION 2.06. THE DEBT OFFER. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 7.01, the Company shall, within
10 days of receiving any request by Newco to do so (but in no event earlier than
twenty calendar days after the date hereof), commence an offer to purchase all
of the outstanding aggregate principal amount of the Company's Subordinated
Notes (as defined in Section 3.01(c)) on the terms set forth in Section 2.06 of
the Disclosure Schedule (as defined in Section 3.01(a)) and such other customary
terms and conditions as are reasonably acceptable to Newco (the "Debt Offer").
The Company shall waive any of the conditions to the Debt Offer and make any
other changes in the terms and conditions of the Debt Offer as may be reasonably
requested by Newco, and the Company shall not, without Newco's prior consent,
waive any material condition to the Debt Offer, make any changes to the terms
and conditions of the Debt Offer set forth in Section 2.06 of the Disclosure
Schedule or make any other material changes in the terms and conditions of the
Debt Offer. Notwithstanding the immediately preceding sentence, Newco shall not
request that the Company make any change to the terms and conditions of the Debt
Offer which decreases the price per Subordinated Note payable in the Debt Offer,
changes the form of consideration payable in the Debt Offer (other than by
adding consideration) or imposes conditions to the Debt Offer in addition to
those set forth in Section 2.06 of the Disclosure Schedule which are materially
adverse to holders of the Subordinated Notes (it being agreed that a request by
Newco that the Company waive any condition in whole or in part at any time and
from time to time in its sole discretion shall not be deemed to be materially
adverse to any holder of Subordinated Notes), unless such change was previously
approved by the Company in writing. The Company covenants and agrees that,
subject to the terms and conditions of this Agreement, including but not limited
to the conditions to the Debt Offer, it will accept for payment and pay for the
Subordinated Notes as soon as such conditions to the Debt Offer are satisfied
and it is permitted to do so under applicable law, provided that the Company
shall coordinate the timing of any such purchase with Newco in order to obtain
the greatest participation in the Debt Offer.
(b) Promptly following the date of this Agreement, the Company shall
prepare, subject to advice and comments of Newco, an offer to purchase the
Subordinated Notes (or portions thereof) and forms of the related letter of
transmittal (the "Letter of Transmittal") (collectively, the "Offer to
Purchase") and summary advertisement, as well as all other information and
exhibits (collectively, the "Offer Documents"). All mailings to the holders of
Subordinated Notes in connection with the Debt Offer shall be subject to the
prior review, comment and reasonable approval of Newco. The Company will use its
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reasonable best efforts to cause the Offer Documents to be mailed to the holders
of the Subordinated Notes as promptly as practicable following receipt of the
request from Newco to do so. The Company agrees promptly to correct any
information in the Offer Documents that shall be or have become false or
misleading in any material respect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Newco as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company and
each of its Subsidiaries (as defined in Section 3.01(b)) is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority
to carry on its business as now being conducted. Each of the Company and
each of its Subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate) could not
reasonably be expected to have a Material Adverse Effect (as defined in
Section 8.04) with respect to the Company. Attached as Section 3.01(a) of
the disclosure schedule ("Disclosure Schedule") delivered to Newco by the
Company at the time of execution of this Agreement are complete and correct
copies of the Certificate of Incorporation and Bylaws of the Company as
currently in effect. The Company has made available to Newco complete and
correct copies of the certificates of incorporation (or other organizational
documents) and by-laws of each of its Subsidiaries, in each case as amended
to the date of this Agreement.
(b) SUBSIDIARIES. The only direct or indirect subsidiaries of the
Company (other than any subsidiary of the Company that does not constitute a
"Significant Subsidiary" within the meaning of Rule 1-02 of Regulation SX of
the Securities and Exchange Commission (the "SEC")) are those listed in
Section 3.01(b) of the Disclosure Schedule (the "Subsidiaries"). All the
outstanding shares of capital stock of each such Subsidiary have been
validly issued and are fully paid and nonassessable and, other than director
qualifying shares and except as is set forth in Section 3.01(b) of the
Disclosure Schedule, are owned (of record and beneficially) by the Company,
by another Subsidiary (wholly owned) of the Company or by the Company and
another such Subsidiary (wholly owned), free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except for the ownership
interests set forth in Section 3.01(b) of the Disclosure Schedule, the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, business association,
joint venture or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of (i) 96,250,000 shares of Company Common Stock, par value $.001
per share, and (ii) 3,750,000 shares of Class B Common Stock (the "Class B
Common Stock") and (iii) 1,000,000 shares of preferred stock (the "Preferred
Stock"). Subject to any Permitted Changes (as defined in Section
4.01(a)(ii)) there are: (i) 47,366,158 shares of Company Common Stock issued
and outstanding (including shares held in the treasury of the Company and
including shares of Company Restricted Stock); (ii) 2,645,871 shares of
Company Common Stock held in the treasury of the Company; (iii) 452,065
shares of Company Common Stock reserved for issuance upon exercise of
authorized but unissued Company Stock Options pursuant to the Stock Plans,
and 354,334 shares of Company Common Stock reserved for issuance pursuant to
the Stock Plans (other than upon exercise of Company Stock Options); (iv)
423,438 shares of Company Common Stock issuable upon exercise of awarded but
unexercised Company Stock Options, with an exercise price per each awarded
but unexercised Company Stock Option as is set forth in Section 3.01(c) of
the Disclosure Schedule; (v) no shares of Class B Common Stock issued and
outstanding or in the treasury of the Company, and, to the knowledge of the
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Company, no shares of Class B Common Stock issuable upon conversion of
Company Common Stock; and (vi) no shares of Preferred Stock issued and
outstanding or in the treasury of the Company. Except as set forth above, no
shares of capital stock or other equity securities of the Company are
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all shares which may be issued
pursuant to the Stock Plans will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are no outstanding bonds, debentures, notes or other indebtedness or
other securities of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote. Except as set forth
above, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its subsidiaries is a party or by which any of
them is bound obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity or voting securities of the Company or of
any of its subsidiaries or obligating the Company or any of its subsidiaries
to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking. As of the
date hereof, the only outstanding indebtedness for borrowed money of the
Company and its subsidiaries is (i) $100 million in principal amount of
10.45% Senior Notes Due 2001 (the "Senior Notes") issued pursuant to the
Note and Guarantee Agreement, dated as of October 30, 1991, as amended as of
December 9, 1992 (the "Note and Guarantee Agreement"), (ii) $95 million in
aggregate principal amount of 12 3/4% Senior Subordinated Notes Due 2002
(the "Subordinated Notes," and together with the Senior Notes, the "Notes")
issued pursuant to the Indenture dated as of December 15, 1992 (the
"Indenture"), (iii) debt under the Credit Agreement dated as of November 30,
1995 among the Company, Chemical Bank, as Administrative Agent and the
several lenders parties thereto (the "Credit Agreement") of $29,200,000, and
(iv) other indebtedness for borrowed money not exceeding $10,000,000, the
sources of which, and amounts attributable to each such source, are set
forth in Section 3.01(c) of the Disclosure Schedule. As of the Closing, the
total outstanding indebtedness for borrowed money of the Company (subject to
Section 3.01(c) of the Disclosure Schedule) will not exceed $210,000,000.
Other than the Senior Notes and any loans and other extensions of credit
under the Credit Agreement, each of which is prepayable in full in
accordance with its terms, and other than the Subordinated Notes, no
indebtedness for borrowed money of the Company or its subsidiaries contains
any restriction upon the incurrence of indebtedness for borrowed money by
the Company or any of its subsidiaries or restricts the ability of the
Company or any of its subsidiaries to grant any Liens on its properties or
assets. Other than the Company Stock Options and the Stockholders Agreement,
(i) there are no outstanding contractual obligations, commitments,
understandings or arrangements of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in respect of
any shares of capital stock of the Company or any of its subsidiaries and
(ii) to the knowledge of the Company, there are no irrevocable proxies with
respect to shares of capital stock of the Company or any subsidiary of the
Company. Schedule I to the Stockholders Agreement accurately sets forth in
all material respects the record and, to the knowledge of the Company,
beneficial ownership of, and voting power in respect of, the capital stock
of the Company with respect to the signatories to the Stockholders
Agreement. Except as set forth above, there are no agreements or
arrangements pursuant to which the Company is or could be required to
register shares of Company Common Stock or other securities under the
Securities Act of 1933, as amended (the "Securities Act") or other
agreements or arrangements with or among any securityholders of the Company
with respect to securities of the Company.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite corporate
power and authority to enter into this Agreement and, subject to the Company
Stockholder Approval with respect to the consummation of the Merger, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the
Merger, to the Company Stockholder Approval. This
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<PAGE>
Agreement has been duly executed and delivered by the Company and (assuming
due authorization, execution and delivery by Newco) constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be subject
to applicable bankruptcy, insolvency or similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. Except for the Notes, the
Credit Agreement and the Receivables Purchase Agreement dated as of December
3, 1993, and the Purchase and Sale Agreement, dated as of December 3, 1993,
each as amended, between the Company, certain of its subsidiaries, Pooled
Accounts Receivable Corporation and Nesbitt Burns Securities Inc. (successor
to Bank of Montreal) (the "Receivables Agreements") and except as disclosed
in Section 3.01(d) of the Disclosure Schedule, the execution and delivery of
this Agreement does not, and the consummation by the Company of the
transactions contemplated by this Agreement and compliance by the Company
with the provisions hereof will not, conflict with, or result in any breach
or violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of
a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its subsidiaries under,
(i) the Certificate of Incorporation, as amended, or By-laws, as amended, of
the Company or the comparable charter or organizational documents of any of
its subsidiaries, (ii) any loan or credit agreement, note, note purchase
agreement, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the Company or any of
its subsidiaries or their respective properties or assets or (iii) subject
to the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, breaches, violations,
defaults, rights, losses or Liens that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect with
respect to the Company or could not prevent, hinder or materially delay the
ability of the Company to consummate the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, except, with respect to this Agreement, for (i) the
filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the SEC of (x) a proxy statement relating to the
Company Stockholder Approval (such proxy statement as amended or
supplemented from time to time, the "Proxy Statement"), (y) the registration
statement on Form S-4 to be filed with the SEC by the Company in connection
with the issuance of the Common Stock of the Company following the Merger
(the "Form S-4") and (z) such reports under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement and the transactions contemplated by this Agreement,
including the Debt Offer, (iii) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is
qualified to do business, and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations, filings or notices the failure
of which to make or obtain, individually or in the aggregate, could not
reasonably be expected to (x) prevent or materially delay consummation of
the Debt Offer, the Merger or the other transactions contemplated hereby or
(y) have a Material Adverse Effect with respect to the Company.
(e) SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The Company has filed with
the SEC all reports, schedules, forms, statements and other documents
required pursuant to the Securities Act and the
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<PAGE>
Exchange Act since January 1, 1994 (collectively, and in each case including
all exhibits and schedules thereto and documents incorporated by reference
therein, the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents (including any and all financial
statements included therein) as of such dates contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included in all SEC
Documents filed since January 1, 1994 (the "SEC Financial Statements")
comply as to form in all material respects with 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 (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC), applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to normal
year-end audit adjustments). Except as set forth in the SEC Documents filed
by the Company since January 1, 1996 and prior to the date of this Agreement
(the "Recent SEC Documents") and except as disclosed in Section 3.01(e) of
the Disclosure Schedule, at the date of the most recent audited financial
statements of the Company included in the Recent SEC Documents, neither the
Company nor any of its subsidiaries had, and since such date neither the
Company nor any of such subsidiaries has incurred, any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company.
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i)
the Form S-4 will, at the time the Form S-4 is filed with the SEC, and at
any time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) the Proxy Statement
will, at the date it is first mailed to the Company's stockholders or at the
time of the Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, or (iii) the Offer
Documents will, at the time the Offer Documents or any amendments or
supplements thereto are first published, sent or given to holders of
Subordinated Notes, as the case may be, or at the time the Debt Offer is
consummated, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Form S-4 will, as of its effective
date, and the prospectus contained therein will, as of its date, comply as
to form in all material respects with the requirements of the Securities Act
and the rules and regulations promulgated thereunder, and the Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied in writing by Newco specifically for inclusion therein.
For purposes of this Agreement, the parties agree that statements made and
information in the Form S-4 and the Proxy Statement relating to the Federal
income tax consequences of the transactions herein contemplated to holders
of Company Common Stock shall be deemed to be supplied by the Company and
not by Newco.
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<PAGE>
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as required by this
Agreement, and except as disclosed in the Recent SEC Documents, since the
date of the most recent audited financial statements included in such Recent
SEC Documents, the Company has conducted its business only in the ordinary
course consistent with past practice, and there is not and has not been: (i)
any Material Adverse Change (as defined in Section 8.04) with respect to the
Company; (ii) any condition, event or occurrence which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect or give rise to a Material Adverse Change with respect to the
Company; (iii) any action which, if it had been taken or occurred after the
execution of this Agreement, would have required the consent of Newco
pursuant to this Agreement; or (iv) any condition, event or occurrence
which, individually or in the aggregate, could reasonably be expected to
prevent, hinder or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement.
(h) LITIGATION; LABOR MATTERS; COMPLIANCE WITH LAWS.
(i) Except as disclosed in the Recent SEC Documents, there is (1) no
suit, action or proceeding pending, and (2) to the knowledge of the
Company, no suit, action or proceeding threatened against or
investigation pending with respect to the Company or any of its
subsidiaries that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company or
prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement, nor is there
any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its
subsidiaries which, individually or in the aggregate, has or could
reasonably be expected to have, any such effect.
(ii) Except as disclosed in Section 3.01(h)(ii) of the Disclosure
Schedule, (1) neither the Company nor any of its subsidiaries is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization; (2)
to the knowledge of the Company, neither the Company nor any of its
subsidiaries is the subject of any proceeding asserting that it or any
subsidiary has committed an unfair labor practice or seeking to compel it
to bargain with any labor organization as to wages or conditions of
employment; (3) there is no strike, work stoppage or other labor dispute
involving it or any of its subsidiaries pending or, to its knowledge,
threatened; (4) no action, suit, complaint, charge, arbitration, inquiry,
proceeding or investigation by or before any court, governmental agency,
administrative agency or commission brought by or on behalf of any
employee, prospective employee, former employee, retiree, labor
organization or other representative of the Company's employees is
pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
with respect to the Company; (5) no grievance is pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries which, individually or in the aggregate, could have a
Material Adverse Effect with respect to the Company; (6) neither the
Company nor any of its subsidiaries is a party to, or otherwise bound by,
any consent decree with, or citation by, any government agency relating
to employees or employment practices; (7) to the knowledge of the
Company, the Company and each subsidiary is in compliance with all
applicable laws, agreements, contracts, and policies relating to
employment, employment practices, wages, hours, and terms and conditions
of employment except for failures so to comply, if any, that individually
or in the aggregate could not reasonably be expected to have a Material
Adverse Effect with respect to the Company; (8) the Company has paid in
full to all employees of the Company and its subsidiaries all wages,
salaries, commissions, bonuses, benefits and other compensation due and
payable to such employees under any policy, practice, agreement, plan,
program, statute or other law; (9) the Company is not liable for any
severance pay or other payments to any employee or former employee
arising from the termination of employment under any benefit or severance
policy, practice, agreement, plan, or program of the Company, nor to the
knowledge of the Company will the Company have any liability which
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<PAGE>
exists or arises, or may be deemed to exist or arise, under any
applicable law or otherwise, as a result of or in connection with the
transactions contemplated hereunder or as a result of the termination by
the Company of any persons employed by the Company or any of its
subsidiaries on or prior to the Effective Time of the Merger; and (10)
the Company is in compliance with its obligations pursuant to the Worker
Adjustment and Retraining Notification Act of 1988, and all other
employee notification and bargaining obligations arising under any
collective bargaining agreement, statute or otherwise.
(iii) The conduct of the business of each of the Company and each of
its subsidiaries complies with all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees or arbitration awards
applicable thereto, except for violations or failures so to comply, if
any, that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect with respect to the Company.
(i) EMPLOYEE BENEFIT PLANS.
(1) Section 3.01(i) of the Disclosure Schedule contains a true and
complete list of each "employee benefit plan" (within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (including, without limitation, multiemployer plans
within the meaning of ERISA Section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other
employee benefit plans, agreements, programs, policies or other
arrangements relating to employment, benefits or entitlements, whether or
not subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or informal,
oral or written, legally binding or not under which any employee or
former employee of the Company has any present or future right to
benefits or under which the Company has any present or future liability.
All such plans, agreements, programs, policies and arrangements shall be
collectively referred to as the "Company Plans".
(2) With respect to each Company Plan, the Company will deliver to
Newco a current, accurate and complete copy (or, to the extent no such
copy exists, an accurate description) thereof and, to the extent
applicable, (i) any related trust agreement, annuity contract or other
funding instrument; (ii) the most recent determination letter; (iii) any
summary plan description and other written communications (or a
description of any oral communications) by the Company to its employees
concerning the extent of the benefits provided under a Company Plan; and
(iv) for the three most recent years (I) the Form 5500 and attached
schedules; (II) audited financial statements; (III) actuarial valuation
reports; and (IV) attorney's response to an auditor's request for
information.
(3) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the
"Code") and other applicable laws, rules and regulations (including the
applicable laws, rules and regulations of any foreign jurisdiction), in
each case, in all material respects; (ii) each Company Plan which is
intended to be qualified within the meaning of Code Section 401(a) is so
qualified and has received a favorable determination letter as to its
qualification and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification; (iii) with respect
to any Company Plan, no actions, suits or claims (other than routine
claims for benefits in the ordinary course) are pending or, to the best
knowledge of the Company, threatened, no facts or circumstances exist
which could give rise to any such actions, suits or claims and the
Company will promptly notify Newco in writing of any pending claims or,
to the knowledge of the Company, any threatened claims arising between
the date hereof and the Effective Time of the Merger; (iv) neither the
Company nor any other party has engaged in a prohibited transaction, as
such term is defined under Code Section 4975 or
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<PAGE>
ERISA Section 406, which would subject the Company or the Buyer to any
material taxes, penalties or other liabilities under the Code or ERISA
(v) no event has occurred and no condition exists that would subject the
Company, either directly or by reason of its affiliation with any member
of its Controlled Group (defined as any organization which is a member of
a controlled group of organizations within the meaning of Code Sections
414(b), (c), (m) or (o)), to any material tax, fine or penalty imposed by
ERISA, the Code or other applicable laws, rules and regulations
(including the applicable laws, rules and regulations of any foreign
jurisdiction); (vi) all insurance premiums required to be paid and all
contributions required to be made under the terms of any Company Plan,
the Code, ERISA or other applicable laws, rules and regulations
(including the applicable laws, rules and regulations of any foreign
jurisdiction) as of the Effective Time of the Merger have been or will be
timely paid or made prior thereto and adequate reserves have been
provided for on the Company's balance sheet for any premiums (or portions
thereof) and for all benefits attributable to service on or prior to the
Effective Time of the Merger; (vii) for each Company Plan with respect to
which a Form 5500 has been filed, no material change has occurred with
respect to the matters covered by the most recent Form since the date
thereof; and (viii) no Company Plan provides for an increase in benefits
on or after the Effective Time of the Merger.
(4) Except to the extent that each of the following, individually or
in the aggregate, would not result in a material liability to the
Company, (i) no Company Plan has incurred any "accumulated funding
deficiency" as such term is defined in ERISA Section 302 and Code Section
412 (whether or not waived); (ii) no event or condition exists which
could be deemed a reportable event within the meaning of ERISA Section
4043 which could result in a liability to the Company or any member of
its Controlled Group and no condition exists which could subject the
Company or any member of its Controlled Group to a fine under ERISA
Section 4071; (iii) as of the Effective Time of the Merger, the Company
and each member of its Controlled Group have made all required premium
payments when due to the Pension Benefit Guaranty Corporation; (iv)
neither the Company nor any member of its Controlled Group is subject to
any liability to the PBGC for any plan termination occurring on or prior
to the Effective Time of the Merger; (v) no amendment has occurred which
has required or could require the Company or any member of its Controlled
Group to provide security pursuant to Code Section 401(a)(29); and (vi)
neither the Company nor any member of its Controlled Group has engaged in
a transaction which could subject it to liability under ERISA Section
4069.
(5) With respect to each of the Company Plans which is not a
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA but
is subject to Title IV of ERISA (or a substantially similar provision of
a foreign jurisdiction), as of the Effective Time of the Merger, except
as disclosed in Section 3.01(i) of the Disclosure Schedule, the assets of
each such Company Plan are at least equal in value to the present value
of the accrued benefits (vested and unvested) of the participants in such
Company Plan on an accumulated benefit obligation and projected benefit
obligation basis within the meaning of Statement of Financial Accounting
Standard ("SFAS") No. 87, based on the actuarial methods and assumptions
indicated in the most recent actuarial valuation reports.
(6) With respect to any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Company or any member of its
Controlled Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) the Company and each
member of its Controlled Group has or will have, as of the Effective Time
of the Merger, made all contributions to each such multiemployer plan
required by the terms of such multiemployer plan or any collective
bargaining agreement; (ii) neither the Company nor any member of its
Controlled Group has incurred any material withdrawal liability under
Title IV of ERISA or would be subject to such liability if, as of the
Effective Time of the Merger, the Company or any member of its Controlled
Group were to engage in a complete withdrawal (as
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<PAGE>
defined in ERISA Section 4203) or partial withdrawal (as defined in ERISA
Section 4205) from any such multiemployer plan; (iii) no such
multiemployer plan is in reorganization or insolvent (as those terms are
defined in ERISA Sections 4241 and 4245, respectively); and (iv) neither
the Company nor any member of its Controlled Group has engaged in a
transaction which could subject it to liability under ERISA Section
4212(c).
(7) (i) Each Company Plan which is intended to meet the requirements
for tax-favored treatment under Subchapter B of Chapter 1 of Subtitle A
of the Code meets such requirements; and (ii) the Company has received a
favorable determination from the Internal Revenue Service with respect to
any trust intended to be qualified within the meaning of Code Section
501(c)(9).
(8) Section 3.01(i)(8) of the Disclosure Schedule sets forth, on a
plan by plan basis, the present value of benefits payable presently or in
the future to present or former employees of the Company under each
unfunded Company Plan that must be accounted for in accordance with SFAS
No. 87, 106 or 112.
(9) Except as set forth in Section 3.01(i)(9) of the Disclosure
Schedule, no Company Plan exists which could result in the payment to any
Company employee of any money or other property or rights or accelerate
or provide any other rights or benefits to any Company employee as a
result of the transaction contemplated by this Agreement, whether or not
such payment would constitute a parachute payment within the meaning of
Code section 280G.
(j) TAX RETURNS AND TAX PAYMENTS. Except as disclosed in Section 3.01(j)
of the Disclosure Schedule, the Company and each of its subsidiaries, and
any consolidated, combined, unitary or aggregate group for Tax purposes of
which the Company or any of its subsidiaries is or has been a member (a
"Consolidated Group") has timely filed all Tax Returns required to be filed
by it and such Tax Returns are complete and correct in all respects, has
paid all Taxes shown thereon to be due and has provided adequate reserves in
its financial statements for any Taxes that have not been paid, whether or
not shown as being due on any returns. Except as disclosed in Section
3.01(j) of the Disclosure Schedule, (i) no material claim for unpaid Taxes
has become a lien against the property of the Company or any of its
subsidiaries or is being asserted against the Company or any of its
subsidiaries; (ii) to the best knowledge of the Company, no audit of any Tax
Return of the Company or any of its subsidiaries is pending, threatened or
being conducted by a Tax authority; (iii) no extension of the statute of
limitations on the assessment of any Taxes has been granted by the Company
or any of its subsidiaries and is currently in effect; (iv) no consent under
Section 341(f) of the Code has been filed with respect to the Company or any
of its subsidiaries; (v) neither the Company nor any of its subsidiaries is
a party to any agreement or arrangement that would result, separately or in
the aggregate, in the actual or deemed payment by the Company or a
subsidiary of any "excess parachute payments" within the meaning of Section
280G of the Code; (vi) no acceleration of the vesting schedule for any
property that is substantially unvested within the meaning of the
regulations under Section 83 of the Code will occur in connection with the
transactions contemplated by this Agreement; (vii) none of the Company or
its subsidiaries has been at any time a member of any partnership or joint
venture or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any Tax has not expired; (viii)
none of the Company or its subsidiaries has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code; (ix) none of the Company or its subsidiaries is doing business in
or engaged in a trade or business in any jurisdiction in which it has not
filed all required income or franchise tax returns; (x) the Company and each
of its subsidiaries have made all payments of estimated Taxes required to be
made under Section 6655 of the Code and any comparable state, local or
foreign Tax provision; (xi) all Taxes required to be withheld, collected or
deposited by or with respect to the Company and each of its subsidiaries
have been timely withheld, collected or deposited, as the case may be, and,
to the extent required, have been paid to the relevant taxing authority;
(xii) neither the Company nor any of its subsidiaries has
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issued or assumed (A) any obligations described in Section 279(a) of the
Code, (B) any applicable high yield discount obligations, as defined in
Section 163(i) of the Code, or (C) any registration-required obligations,
within the meaning of Section 163(f)(2) of the Code, that is not in
registered form; (xiii) there are no requests for information currently
outstanding that could affect the Taxes of the Company or any of its
subsidiaries; (xiv) there are no proposed reassessments of any property
owned by the Company or any of its subsidiaries or other proposals that
could increase the amount of any Tax to which the Company or any such
subsidiary would be subject; and (xv) no power of attorney that is currently
in force has been granted with respect to any matter relating to Taxes that
could materially affect the Tax liability of the Company or one of its
subsidiaries. As used herein, "Taxes" shall mean all taxes of any kind,
including, without limitation, those on or measured by or referred to as
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any governmental authority, domestic or foreign. As used herein,
"Tax Return" shall mean any return, report or statement required to be filed
with any governmental authority with respect to Taxes.
(k) PROPERTIES. Section 3.01(k) of the Disclosure Schedule contains a
true and complete list of all real properties owned or leased by the Company
or any of its subsidiaries. Each of the Company and its subsidiaries has
good and marketable title to all properties, assets and rights of any kind
whatsoever (whether real, personal or mixed, and whether tangible or
intangible) owned by it (collectively, the "Company Assets"), in each case
free and clear of all Liens and other encumbrances except those which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect with respect to the Company. There are no pending
or, to the knowledge of the Company, threatened condemnation proceedings
against or affecting any Company Asset, and none of the Company Assets is
subject to any commitment or other arrangement for its sale to a third party
outside the ordinary course of business, which either individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect
with respect to the Company. Each of the Company and each of its
subsidiaries has all permits (other than Environmental Permits (as defined
in Section 3.01(l)), the representations and warranties with respect to
which are set forth in Section 3.01(l)) necessary to own or operate the
Company Assets owned or leased by it, and no such permits will be required,
as a result of the Merger or the other transactions contemplated hereby, to
be issued, re-issued or transferred after the Closing in order to permit the
Company following the Merger to continue to own or operate such Company
Assets, other than any such permits which are ministerial in nature or the
absence of which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect with respect to the Company.
(l) ENVIRONMENTAL MATTERS. Except as could not reasonably be expected to
result in liability under Environmental Laws to the Company or any of its
subsidiaries which would be material to the Company, and except as disclosed
in Section 3.01(l) of the Disclosure Schedule, which disclosed items of
non-compliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to the Company
(i) the Company and its subsidiaries hold and to the knowledge of
the Company are in compliance with all Environmental Permits, and the
Company and its subsidiaries are otherwise in compliance with all
Environmental Laws and, to the knowledge of the Company, there are no
conditions that might prevent or interfere with such compliance in the
future;
(ii) As of the date hereof, neither the Company nor any of its
subsidiaries has received any Environmental Claim, and to the knowledge
of the Company there is no threatened Environmental Claim;
(iii) Neither the Company nor any of its subsidiaries have entered
into any consent decree, order or agreement under any Environmental Law;
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(iv) There are no (A) underground storage tanks, (B) polychlorinated
biphenyls, (C) friable asbestos or asbestos-containing materials, (D)
sumps, (E) surface impoundments, (F) landfills, or (G) sewers or septic
systems present at any facility currently owned, leased, operated or
otherwise used by the Company or any of its subsidiaries that could
reasonably be expected to give rise to liability of the Company or any of
its subsidiaries under any Environmental Laws;
(v) There are no past (including, without limitation, with respect
to assets or businesses formerly owned, leased or operated by the Company
or any of its subsidiaries) or present actions, activities, events,
conditions or circumstances, including without limitation the release,
threatened release, emission, discharge, generation, treatment, storage
or disposal of Hazardous Materials, that could reasonably be expected to
give rise to liability of the Company or any of its subsidiaries under
any Environmental Laws;
(vi) No modification, revocation, reissuance, alteration, transfer,
or amendment of the Environmental Permits, or any review by, or approval
of, any third party of the Environmental Permits is required in
connection with the execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby or the continuation
of the business of the Company or its subsidiaries following such
consummation;
(vii) Hazardous Materials have not been generated, transported,
treated, stored, disposed of, released or threatened to be released at,
on, from or under any of the properties or facilities currently owned,
leased or otherwise used by the Company or any of its subsidiaries, in
violation of, or so as could result in liability under, any Environmental
Laws;
(viii) None of the Company or its subsidiaries have contractually
assumed, any liabilities or obligations under any Environmental Laws;
(ix) To the extent required by generally accepted accounting
principles, the Company and its subsidiaries have accrued or otherwise
provided for all damages, liabilities, penalties or costs that they may
incur in connection with any claim pending or threatened against them, or
any requirement that is or may be applicable to them, under any
Environmental Laws, and such accrual or other provision is reflected in
the Company's most recent consolidated financial statements.
(x) For purposes of this Agreement, the following terms shall have
the following meanings:
"Environmental Claim" means any written or oral notice, claim,
demand, action, suit, complaint, proceeding or other communication by
any person alleging liability or potential liability (including
without limitation liability or potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resource
damages, property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (A) the
presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, whether or not owned, leased or
operated by the Company or any of its subsidiaries or (B)
circumstances forming the basis of any violation or alleged violation
of any Environmental Law or Environmental Permit or (C) otherwise
relating to obligations or liabilities under any Environmental Laws.
"Environmental Permits" means all permits, licenses,
registrations and other governmental authorizations required under
Environmental Laws for the Company and its subsidiaries to conduct
their operations and businesses on the date hereof and consistent
with past practices.
"Environmental Laws" means all applicable federal, state and
local statutes, rules, regulations, ordinances, orders, decrees and
common law relating in any manner to contamination, pollution or
protection of the environment, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act,
the Solid Waste Disposal
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<PAGE>
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Occupational Safety and Health Act, the Emergency
Planning and Community-Right-to-Know Act, the Safe Drinking Water
Act, all as amended, and similar state laws.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, friable asbestos and
asbestos-containing materials, pollutants, contaminants and all other
materials, and substances regulated pursuant to, or that could
reasonably be expected to provide the basis of liability under, any
Environmental Law.
(m) MATERIAL CONTRACTS.
(i) Neither the Company nor any of its subsidiaries is, or has
received any notice or has any knowledge that any other party is, in
default in any respect under any material contract, agreement,
commitment, arrangement, lease, policy or other instrument to which it or
any of its subsidiaries is a party or by which it or any such subsidiary
is bound ("Material Contracts"), except for those defaults which could
not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect with respect to the Company; and, to the
knowledge of the Company, there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a
material default.
(ii) The Agreement and Plan of Merger among Amphenol Acquisition
Corporation, Allied Corporation ("Allied") and the Company, dated April
1, 1987, and the Amendment thereto dated as of May 15, 1987, and the
Settlement Agreement among Allied Signal Inc., the Company and LPL
Investment Group, Inc. dated November 28, 1988 (collectively, the "Allied
Agreements") are valid and binding agreements of the Company and, to the
knowledge of the Company, the other parties thereto. The Company has
given the notice or notices required under the Allied Agreements to
entitle the Company to be indemnified by Allied with respect to the
Environmental Claims arising at the facilities set forth in Section
3.01(m) of the Disclosure Schedule. The Company's right to be indemnified
against certain Environmental Claims pursuant to such Allied Agreements
is enforceable against Allied and its successors, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding therefor may
be brought. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict
with, or result in a breach or violation of, or give rise to a right of
termination or cancellation under, the Allied Agreements or otherwise
adversely affect the Company's right to be indemnified thereunder.
(n) BROKERS. No broker, investment banker, financial advisor or other
person, other than Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), the fees and expenses of which will be
paid by the Company (pursuant to fee agreements, copies of which have been
provided to Newco), is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company.
(o) OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of Merrill Lynch, dated the date of this Agreement, to the effect that, as
of such date, the consideration to be received in the Merger by the
Company's stockholders (other than Parent or any affiliate thereof) is fair
to such holders of the Company Common Stock from a financial point of view,
a signed copy of which opinion has been delivered to Newco.
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<PAGE>
(p) BOARD RECOMMENDATION. The Board of Directors of the Company, at a
meeting duly called and held, has by unanimous vote of those directors
present (i) determined that this Agreement and the transactions contemplated
hereby, including the Merger, taken together are fair to and in the best
interests of the stockholders of the Company and has taken all actions
necessary on the part of the Company to render the restrictions on business
combinations contained in Section 203 of the DGCL inapplicable to this
Agreement, the Merger and the Stockholders Agreement and (iii) resolved to
recommend that the holders of the shares of Company Common Stock approve
this Agreement and the transactions contemplated herein, including the
Merger.
(q) REQUIRED COMPANY VOTE. The Company Stockholder Approval, being the
affirmative vote of a majority of the outstanding shares of the Company
Common Stock, is the only vote of the holders of any class or series of the
Company's securities necessary to approve this Agreement, the Merger and the
other transactions contemplated hereby. There is no vote of the holders of
any class or series of the Company's securities necessary to approve the
Stockholders Agreement or the Debt Offer.
(r) NO RIGHTS PLAN. Neither the Company nor any of its subsidiaries has
any rights plan or similar preferred stock purchase plan or similar
arrangement.
(s) INTELLECTUAL PROPERTY.
(i) Section 3.01(s)(i) of the Disclosure Schedule sets forth all
material Intellectual Property, owned or used by the Company or its
subsidiaries, which is registered or filed with, or has been submitted
to, any Governmental Entity, and the nature of the Company's or its
subsidiaries' rights therein and thereto.
(ii) To the knowledge of the Company, the Company and its
subsidiaries own or have the right to use all material Intellectual
Property reasonably necessary for the Company and its subsidiaries to
conduct their business as it is currently conducted and consistent with
past practice.
(iii) Except as set forth on Section 3.01(s)(iii) of the Disclosure
Schedule, to the knowledge of the Company:
(1) all of the Intellectual Property of the Company and its
subsidiaries is subsisting and unexpired, free of all liens,
encumbrances or other defects, has not been abandoned and does not
infringe or otherwise impair the intellectual property rights of any
third party; (2) none of the Intellectual Property of the Company and
its subsidiaries is the subject of any license, security interest or
other agreement granting rights therein to any third party; (3) no
judgment, decree, injunction, rule or order has been rendered by any
U.S. or foreign Governmental Entity which would limit, cancel or
question the validity of, or the Company's or its subsidiaries rights
in and to any Intellectual Property in any respect that could
reasonably be expected to have individually or in the aggregate a
Material Adverse Effect with respect to the Company; (4) the Company
has not received notice of any pending or threatened suit, action or
proceeding that seeks to limit, cancel or question the validity of,
or the Company's or its subsidiaries' rights in and to any
Intellectual Property, which, if adversely determined, could
reasonably be expected to have individually or in the aggregate a
Material Adverse Effect with respect to the Company; and (5) the
Company and its subsidiaries take reasonable steps to protect,
maintain and safeguard their Intellectual Property, including any
material Intellectual Property for which improper or unauthorized
disclosure would impair its value or validity, and have caused their
employees to execute agreements in connection with the foregoing.
(iv) For purposes of this Agreement "Intellectual Property" shall
mean all rights, privileges and priorities provided under U.S., state and
foreign law relating to intellectual property, including without
limitation all (i) (a) inventions, discoveries, processes, formulae,
designs,
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<PAGE>
methods, techniques, procedures, concepts, developments, technology, new
and useful improvements thereof and know-how relating thereto, whether or
not patented or eligible for patent protection; (b) copyrights and
copyrightable works, including computer applications, programs, software,
databases and related items; (c) trademarks, service marks, trade names,
and trade dress, the goodwill of any business symbolized thereby, and all
common-law rights relating thereto; (d) trade secrets and other
confidential information; and (ii) all registrations, applications,
recordings, and licenses or other similar agreements related to the
foregoing.
(t) SENIOR NOTES MAKE-WHOLE PREMIUM. As of April 1, 1997, the Make-Whole
Premium (as defined in the Note and Guarantee Agreement) in respect of the
Senior Notes to be paid in connection with any offer to prepay the Senior
Notes upon a Change in Control (as defined in the Note and Guarantee
Agreement) shall equal the amount set forth in Section 3.01(t) of the
Disclosure Schedule after giving effect to the assumptions set forth
therein.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF NEWCO. Newco represents
and warrants to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Newco is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority
to carry on its business as now being conducted. Newco is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect
with respect to Newco. Newco has delivered to the Company complete and
correct copies of its certificate of incorporation (or other organizational
documents) and by-laws.
(b) SUBSIDIARIES. Newco has no direct or indirect subsidiaries.
(c) CAPITAL STRUCTURE. The authorized capital stock of Newco consists of
100 shares of common stock, par value $.01 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned by Parent,
free and clear of any Lien.
(d) AUTHORITY; NONCONTRAVENTION. Newco has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by Newco and the consummation by Newco of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Newco. This Agreement has been duly executed
and delivered by Newco and (assuming due authorization, execution and
delivery by the Company) constitutes a valid and binding obligation of
Newco, enforceable against Newco in accordance with its terms, except that
(i) such enforcement may be subject to applicable bankruptcy, insolvency or
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought. The execution and delivery of this Agreement do not, and the
consummation by Newco of the transactions contemplated by this Agreement and
compliance by Newco with the provisions of this Agreement will not, conflict
with, or result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of or "put" right with respect to
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Newco under,
(i) the certificate of incorporation or by-laws of Newco, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Newco or
its properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to Newco or its
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<PAGE>
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or Liens that
individually or in the aggregate could not have a material adverse effect
with respect to Newco or could not prevent, hinder or materially delay the
ability of Newco to consummate the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Entity is
required by or with respect to Newco in connection with the execution and
delivery of this Agreement by Newco or the consummation by Newco of any of
the transactions contemplated by this Agreement, except for (i) the filing
of a premerger notification and report form under the HSR Act, (ii) the
filing with the SEC of (y) the Proxy Statement and the Form S-4 and (z) such
reports under the Exchange Act as may be required in connection with this
Agreement, the Stockholders Agreement and the transactions contemplated
hereby and thereby, including the Debt Offer, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations, filings or
notices as may be required under the "takeover" or "blue sky" laws of
various states.
(e) BROKERS. No broker, investment banker, financial advisor or other
person, other than Donaldson, Lufkin & Jenrette Securities Corporation, the
fees and expenses of which will be paid by Newco or its affiliates, is
entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Newco to its
affiliates.
(f) INTERIM OPERATIONS OF NEWCO. Newco was formed on January 13, 1997
solely for the purpose of engaging in the transactions contemplated hereby,
has engaged in no other business activities and has conducted its operations
only as contemplated hereby.
(g) OFFER DOCUMENTS; PROXY STATEMENT. None of the information supplied
in writing by Newco specifically for inclusion in (i) the Offer Documents
shall, at the time the Offer Documents or any amendments or supplements
thereto are first published, sent or given to noteholders, as the case may
be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, (ii) the Form S-4 will, at the time the Form S-4 is
filed with the SEC, and at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
(iii) the Proxy Statement will, at the date it is first mailed to the
stockholders of the Company or at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, Newco makes no
representation or warranty with respect to any information supplied by the
Company or any of its representatives which is contained in or incorporated
by reference in any of the foregoing documents.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER.
SECTION 4.01. CONDUCT OF BUSINESS OF THE COMPANY. (a) Conduct of Business
by the Company. During the period from the date of this Agreement to the
Effective Time of the Merger (except as otherwise expressly contemplated by the
terms of this Agreement), the Company shall, and shall cause its subsidiaries
to, act and carry on their respective businesses in the usual, regular and
ordinary course of business consistent with past practice and use its and their
respective reasonable best efforts to preserve substantially intact their
current business organizations, keep available the services of their current
officers
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<PAGE>
and employees and preserve their relationships with customers, suppliers,
licensors, licensees, advertisers, distributors and others having significant
business dealings with them. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time of the
Merger, the Company shall not, and shall not permit any of its subsidiaries (or
Subsidiaries as set forth below) to, without the prior consent of Newco (which
consent shall not be unreasonably withheld):
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a direct or indirect wholly owned domestic subsidiary
of the Company to its parent, (y) split, combine or reclassify any capital
stock of the Company or any subsidiary or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for shares
of capital stock of the Company or any subsidiary, or (z) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, except, in the case
of clause (z), for the Debt Offer and the purchase of the Senior Notes;
(ii) authorize for issuance, issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock or the capital stock of any of its
subsidiaries, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or any other securities or equity
equivalents (including without limitation stock appreciation rights) other
than the issuance of Company Common Stock upon the exercise of Company Stock
Options awarded but unexercised on the date of this Agreement and in
accordance with their present terms (such issuances, together with the
acquisitions of securities permitted under clause (i)(z) above, being
referred to herein as "Permitted Changes");
(iii) amend the certificate of incorporation, by-laws or other comparable
charter or organizational documents of the Company or any subsidiary;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets other than
any such properties or assets the value of which do not exceed $100,000
individually and $1,000,000 in the aggregate, except sales of inventory and
receivables in the ordinary course of business consistent with past practice
and except for the sale-leaseback of the land and buildings owned by
Kai-Jack Industrial Co., Ltd.;
(vi) (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for borrowings necessary
to effect the Debt Offer and to repay the principal amount of the Senior
Notes and pay the Make-Whole Premium, and for short-term borrowings incurred
in the ordinary course of business consistent with past practice, or (B)
make any loans, advances or capital contributions to, or investments in, any
other person, other than to the Company or any direct or indirect wholly
owned subsidiary of the Company;
(vii) acquire or agree to acquire any assets, other than inventory in the
ordinary course of business consistent with past practice, that are
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, or make or agree to make any capital
expenditures except capital expenditures which, individually or in the
aggregate, do not exceed the amount budgeted therefor in the Company's
annual capital expenditures budget for 1997 previously provided to Newco;
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<PAGE>
(viii) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction of (x) liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as
in effect on the date hereof, (y) claims settled or compromised to the
extent permitted by Section 4.01(a)(xii), or waive, release, grant, or
transfer any rights of material value or modify or change in any material
respect any existing material license, lease, contract or other document,
other than in the ordinary course of business consistent with past practice
or (z) the Notes;
(ix) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(x) enter into any new collective bargaining agreement or any successor
collective bargaining agreement to any collective bargaining agreement
disclosed in Section 3.01(h)(ii) of the Disclosure Schedule;
(xi) change any material accounting principle used by it;
(xii) settle or compromise any litigation (whether or not commenced prior
to the date of this Agreement) other than settlements or compromises of
litigation where the amount paid (after giving effect to insurance proceeds
actually received) in settlement or compromise does not exceed $100,000,
provided that the aggregate amount paid in connection with the settlement or
compromise of all such litigation matters shall not exceed $250,000;
(xiii) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of the
Company's affiliates, including, without limitation, any transactions,
agreements, arrangements or understandings with any affiliate or other
Person covered under Item 404 of SEC Regulation S-K that would be required
to be disclosed under such Item 404 other than such transactions of the same
general nature, scope and magnitude as are disclosed in the Company SEC
Documents; or
(xiv) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) CHANGES IN EMPLOYMENT ARRANGEMENTS. Neither the Company nor any of its
subsidiaries shall (except as may be required in order to give effect to the
requirements of Section 2.04) adopt or amend (except as may be required by law)
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement (including any Company Plan) for the benefit or
welfare of any employee, director or former director or employee or, other than
increases for individuals (other than officers and directors) in the ordinary
course of business consistent with past practice, increase the compensation or
fringe benefits of any director, employee or former director or employee or pay
any benefit not required by any existing plan, arrangement or agreement.
(c) SEVERANCE. Neither the Company nor any of its subsidiaries shall grant
any new or modified severance or termination arrangement or increase or
accelerate any benefits payable under its severance or termination pay policies
in effect on the date hereof.
(d) WARN. Neither the Company nor any of its subsidiaries shall effectuate a
"plant closing" or "mass layoff", as those terms are defined in the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN"), affecting in whole
or in part any site of employment, facility, operating unit or employee of the
Company or any subsidiary, without notifying Newco or its affiliates in advance
and without complying with the notice requirements and other provisions of WARN.
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(e) TAX ELECTIONS. Except in the ordinary course of business and consistent
with past practice, neither the Company nor any of its subsidiaries shall make
any tax election or settle or compromise any federal, state, local or foreign
Tax liability.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF FORM S-4 AND PROXY STATEMENT; STOCKHOLDER
MEETING.
(a) Promptly following the date of this Agreement, the Company shall prepare
the Proxy Statement, and the Company shall prepare and file with the SEC the
Form S-4, in which the Proxy Statement will be included. Newco will cooperate
with the Company in connection with the preparation of the Proxy Statement
including, but not limited to, furnishing to the Company any and all information
regarding Parent as may be required to be disclosed therein. The Company shall
use its reasonable best efforts to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after such filing. The Company
will use its reasonable best efforts to cause the Proxy Statement to be mailed
to the Company's stockholders as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. The Company shall also take any
action required to be taken under any applicable state securities laws in
connection with the registration and qualification of Common Stock of the
Company following the Merger. The information provided and to be provided by
Newco and the Company, respectively, for use in the Form S-4 shall, at the time
the Form S-4 becomes effective and on the date of the Stockholders Meeting
referred to below, be true and correct in all material respects and shall not
omit to state any material fact required to be stated therein or necessary in
order to make such information not misleading, and the Company and Newco each
agree to correct any information provided by it for use in the Form S-4 which
shall have become false or misleading.
(b) The Company will as promptly as practicable notify Newco of (i) the
effectiveness of the Form S-4, (ii) the receipt of any comments from the SEC and
(iii) any request by the SEC for any amendment to the Form S-4 or for additional
information. All filings by the Company with the SEC, including the Form S-4 and
any amendment thereto, and all mailings to the Company's stockholders in
connection with the Merger, including the Proxy Statement, shall be subject to
the prior review, comment and approval of Newco (such approval not to be
unreasonably withheld or delayed).
(c) The Company will, as promptly as practicable following the date of this
Agreement and in consultation with Newco, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Stockholders Meeting") for the purpose
of approving this Agreement and the transactions contemplated by this Agreement
to the extent required by the DGCL. The Company will, through its Board of
Directors, recommend to its stockholders approval of the foregoing matters, as
set forth in Section 3.01(p); provided, however, that the Board of Directors of
the Company may fail to make or withdraw or modify such recommendation, but only
to the extent that the Board of Directors of the Company shall have concluded in
good faith on the basis of written advice from outside counsel that such action
is required to prevent the Board of Directors of the Company from breaching its
fiduciary duties to the stockholders of the Company under applicable law. Any
such recommendation, together with a copy of the opinion referred to in Section
3.01(o) shall be included in the Proxy Statement. The Company will use its best
efforts to hold such meeting as soon as practicable after the date hereof.
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) The Company
shall, and shall cause its subsidiaries, officers, employees, counsel, financial
advisors and other representatives to, afford to Newco and its representatives
and to potential financing sources reasonable access during normal business
hours, in a manner initially coordinated with the chief executive officer of the
Company, and thereafter coordinated with those persons designated by the chief
executive officer, during the period prior to the Effective Time of the Merger
to its properties, books, contracts, commitments, personnel and records,
including security position listings and other information concerning beneficial
owners and/or record
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owners of the Company's securities which may be relevant to the Merger or Debt
Offer, and, during such period, the Company shall, and shall cause its
subsidiaries, officers, employees and representatives to, furnish promptly to
Newco (i) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (ii) all other information concerning its business,
properties, financial condition, operations and personnel as Newco may from time
to time reasonably request. Each of the Company and Newco will hold, and will
cause its respective directors, officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in confidence to the extent required by, and in accordance
with, the provisions of the letter dated December 11, 1996, between Kohlberg
Kravis Roberts & Co. ("KKR & Co.") and the Company (and additional individual
agreements executed and delivered pursuant thereto) (collectively, the
"Confidentiality Agreement").
(b) No investigation pursuant to this Section 5.02 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 5.03. REASONABLE BEST EFFORTS. (a) Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including the Debt Offer. Newco and the Company will use their
reasonable best efforts and cooperate with one another (i) in promptly
determining whether any filings are required to be made or consents, approvals,
waivers, licenses, permits or authorizations are required to be obtained (or,
which if not obtained, would result in an event of default, termination or
acceleration of any agreement or any put right under any agreement) under any
applicable law or regulation or from any governmental authorities or third
parties, including parties to loan agreements or other debt instruments, in
connection with the transactions contemplated by this Agreement, including the
Merger and the Debt Offer and (ii) in promptly making any such filings, in
furnishing information required in connection therewith and in timely seeking to
obtain any such consents, approvals, permits or authorizations.
(b) The Company shall make, subject to the condition that the transactions
contemplated herein actually occur, any undertakings (including undertakings to
make divestitures, provided that such divestitures need not themselves be made
until after the transactions contemplated hereby actually occur) required in
order to comply with the antitrust requirements or laws of any governmental
entity, including the HSR Act, in connection with the transactions contemplated
by this Agreement; provided that no such divestiture or undertaking shall be
made unless acceptable to Newco.
(c) The Company shall cooperate with any reasonable requests of Newco or the
SEC related to the recording of the Merger as a recapitalization for financial
reporting purposes, including, without limitation, to assist Newco and its
affiliates with any presentation to the SEC with regard to such recording and to
include appropriate disclosure with regard to such recording in all filings with
the SEC and all mailings to stockholders made in connection with the Merger. In
furtherance of the foregoing, the Company shall provide to Newco for the prior
review of Newco's advisors any description of the transactions contemplated by
this Agreement which is meant to be disseminated.
(d) The Company agrees to provide, and will cause its subsidiaries and its
and their respective officers, employees and advisors to provide, all necessary
cooperation in connection with the arrangement of any financing to be
consummated contemporaneous with or at or after the Closing in respect of the
transactions contemplated by this Agreement, including without limitation, (x)
participation in meetings, due diligence sessions and road shows, (y) the
preparation of offering memoranda, private placement memoranda, prospectuses and
similar documents, and (z) the execution and delivery of any commitment letters,
underwriting or placement agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents,
including a certificate of the chief financial officer of the Company with
respect to solvency matters, comfort letters of accountants and legal opinions
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as may be requested by Newco; provided that the form and substance of any of the
material documents referred to in clause (y), and the terms and conditions of
any of the material agreements and other documents referred to in clause (z),
shall be substantially consistent with the terms and conditions of the financing
required to satisfy the condition precedent set forth in Section 6.02(f) and,
provided, further, that the terms and conditions of such financing may not
require the payment of any commitment or other similar fee by the Company, or
the incurrence of any liabilities by the Company, prior to the Effective Time of
the Merger without the Company's prior consent (which consent will not be
unreasonably withheld). The parties acknowledge that the payment of any fees by
the Company in connection with any commitment letters shall be subject to the
occurrence of the Closing. In addition, in conjunction with the obtaining of any
such financing, the Company agrees, at the request of Newco, to call for
prepayment or redemption, or to prepay, redeem and/or renegotiate, as the case
may be, any then existing indebtedness of the Company, including, without
limitation, the Senior Notes; provided that no such prepayment or redemption or
in the case of the Senior Notes, call for prepayment or redemption, shall
themselves actually be made until contemporaneously with or after, or, in the
case of the call for prepayment of the Senior Notes, immediately prior to or
contemporaneously with, the Effective Time of the Merger.
(e) (i) Newco hereby agrees to use its reasonable best efforts, subject to
normal conditions, to assist the Company in arranging the financing in respect
of the transactions contemplated by this Agreement described in Annex A-1 and
Annex A-2 of the Disclosure Schedule, including, subject to normal conditions,
using its reasonable best efforts (A) to assist the Company in the negotiation
of definitive agreements with respect thereto and (B) to satisfy all conditions
applicable to Newco in such definitive agreements. Newco will keep the Company
informed of the status of its efforts to assist the Company in arranging such
financing, including making reports with respect to significant developments. In
the event any portion of such financing becomes unavailable in the manner or
from the sources originally contemplated, Newco will use its reasonable best
efforts, subject to normal conditions, to assist the Company in arranging any
such portion from alternative sources. Each of Newco and the Company shall
notify the other within 24 hours of its learning that any such financing will
not be available on terms satisfactory to Newco.
(ii) Subject to the Company having received the proceeds of the
financing described in Section 6.02(f) on terms satisfactory to Newco, Newco
at Closing will be capitalized with an equity contribution of at least $341
million. Newco will be under no obligation pursuant to the preceding
sentence unless and until the Company receives the proceeds of the financing
described in Section 6.02(f) on terms satisfactory to Newco. In addition,
Newco will be under no obligation under any circumstances to be capitalized
with equity of more than $341 million.
SECTION 5.04. BENEFIT MATTERS. Except as contemplated herein, the Company,
for the period ending on December 31, 1997, shall provide employee benefits
under plans, programs and arrangements which, in the aggregate, will provide
benefits to the employees of the Company which are no less favorable, in the
aggregate, than those provided pursuant to the plans, programs and arrangements
of the Company (other than those related to Company Common Stock) in effect and
disclosed to Newco on the date hereof; provided, however, that nothing herein
shall prevent the amendment or termination of any such plan, program or
arrangement, require that the Company provide or permit investment in the
securities of the Company, interfere with the Company's right or obligation to
make such changes as are necessary to conform with applicable law or prevent the
termination by the Company or any subsidiary of any employee of the Company or
of any subsidiary.
SECTION 5.05. INDEMNIFICATION. (a) The Certificate of Incorporation and
By-laws of the Company following the Merger shall contain provisions identical
with respect to elimination of personal liability and indemnification to those
set forth in Articles Sixth and Seventh of the Certificate of Incorporation of
the Company set forth in Exhibit A hereto and Article VIII of the By-laws of the
Company on the date hereof, respectively, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
of the Merger in any manner that would adversely affect the rights
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<PAGE>
thereunder of individuals who at the Effective Time of the Merger were
directors, officers, agents or employees of the Company.
(b) The Company shall maintain in effect for six years from the Effective
Time of the Merger policies of directors' and officers' liability insurance
containing terms and conditions which are not less advantageous than any such
policies which may be purchased by the Company prior to the Effective Time of
the Merger (the "Company Insurance"), with respect to matters occurring prior to
the Effective Time of the Merger, to the extent available, and having the
maximum available coverage under any such Company Insurance policies; provided
that (i) the Company following the Merger shall not be required to spend in
excess of $100,000 per year therefor; provided further that if the Company
following the Merger would be required to spend in excess of $100,000 per year
to obtain insurance having the maximum available coverage under the Company
Insurance policies, the Company will be required to spend up to such amount to
maintain or procure insurance coverage pursuant hereto, subject to availability
of such (or similar) coverage and (ii) such policies may in the sole discretion
of the Company be one or more "tail" policies for all or any portion of the full
six year period. The Company agrees that in the event it would be required to
spend in excess of $100,000 per year to obtain insurance having the maximum
available coverage under the Company Insurance policies, the Company will notify
the officers and directors who are the beneficiaries thereof and permit such
officers and directors to pay any excess amount over $100,000 which may be
necessary to maintain such policies.
(c) In furtherance of and not in limitation of the preceding paragraph,
Newco agrees that the officers and directors of the Company that are defendants
in all litigation commenced by stockholders of the Company with respect to (x)
the performance of their duties as such officers and/or directors under federal
or state law (including litigation under federal and state securities laws) and
(y) the Merger, including, without limitation, any and all such litigation
commenced on or after the date of this Agreement (the "Subject Litigation")
shall be entitled to be represented, at the reasonable expense of the Company,
in the Subject Litigation by one counsel (and Delaware counsel if appropriate
and one local counsel in each jurisdiction in which a case is pending) each of
which such counsel shall be selected by a plurality of such director defendants;
provided that the Company shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and that a condition to the indemnification payments provided in
Section 5.05(a) shall be that such officer/director defendant not have settled
any Subject Litigation without the consent of the Company (such consent not to
be unreasonably withheld) and, prior to the Closing, Newco; and provided further
that neither Newco nor the Company shall have any obligation hereunder to any
officer/director defendant when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
non-appealable, that indemnification of such officer/director defendant in the
manner contemplated hereby is prohibited by applicable law.
SECTION 5.06. PUBLIC ANNOUNCEMENTS. Neither Newco, on the one hand, nor
the Company, on the other hand, will issue any press release or public statement
with respect to the transactions contemplated by this Agreement and the
Stockholders Agreement, including the Merger and the Debt Offer, without the
other party's prior consent (such consent not to be unreasonably withheld),
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with the New York Stock Exchange. In addition
to the foregoing, Newco and the Company will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
such press release or other public statements with respect to such transactions.
The parties agree that the initial press release or releases to be issued with
respect to the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof.
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SECTION 5.07. AFFILIATES. Prior to the Closing Date, the Company shall
deliver to Newco a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its reasonable best efforts to cause each such person to
deliver to Newco on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit B hereto.
SECTION 5.08. NO SOLICITATION. Neither the Company nor any of its
subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its subsidiaries
authorize or permit any of its or their officers, directors, agents,
representatives, advisors or subsidiaries to (a) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries, proposals or offers
from any person (other than Newco, Parent or NXS) relating to (i) any
acquisition or purchase of 20% or more of the consolidated assets of the Company
and its subsidiaries or of over 20% of any class of equity securities of the
Company or any of its subsidiaries, (ii) any tender offer (including a self
tender offer) or exchange offer that if consummated would result in any Person
(as defined in Section 8.02) beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries, (iii) any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets of the Company
other than the transactions contemplated by this Agreement and the Stockholders
Agreement, or (iv) any other transaction the consummation of which would or
could reasonably be expected to impede, interfere with, prevent or materially
delay the Merger or Debt Offer or which would or could reasonably be expected to
materially dilute the benefits to Newco of the transactions contemplated hereby
(collectively, "Transaction Proposals"), or agree to or endorse any Transaction
Proposal, or (b) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any other person any information
with respect to its business, properties or assets or any of the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate in,
facilitate or encourage, any effort or attempt by any other person (other than
Newco, Parent or NXS) to do or seek any of the foregoing; provided, however,
that the foregoing shall not prohibit the Company (either directly or indirectly
through advisors, agents or other intermediaries) from (i) furnishing
information pursuant to an appropriate confidentiality letter (which letter
shall not be less favorable to the Company in any material respect than the
Confidentiality Agreement, and a copy of which shall be provided for
informational purposes only to Newco) concerning the Company and its businesses,
properties or assets to a third party who has made a bona fide Transaction
Proposal, (ii) engaging in discussions or negotiations with such a third party
who has made a bona fide Transaction Proposal, (iii) following receipt of a bona
fide Transaction Proposal, taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or otherwise making
disclosure to its stockholders, (iv) following receipt of a bona fide
Transaction Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 3.01(p), and/or (v) taking any non-
appealable, final action ordered to be taken by the Company by any court of
competent jurisdiction but in each case referred to in the foregoing clauses (i)
through (v) only to the extent that the Board of Directors of the Company shall
have concluded in good faith on the basis of written advice from outside counsel
that such action is required to prevent the Board of Directors of the Company
from breaching its fiduciary duties to the stockholders of the Company under
applicable law; provided, further, that the Board of Directors of the Company
shall not take any of the foregoing actions referred to in clauses (i) through
(iv) until after reasonable notice to Newco with respect to such action and that
such Board of Directors shall, to the extent it may do so without breaching such
fiduciary duties, continue to advise Newco after taking such action and, in
addition, if the Board of Directors of the Company receives a Transaction
Proposal, then the Company shall promptly inform Newco of the terms and
conditions of such proposal and the identity of the person making it. The
Company will immediately cease and cause its advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing, and shall use its reasonable best efforts to cause any such parties
in possession of confidential information about the Company that was furnished
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by or on behalf of the Company to return or destroy all such information in the
possession of any such party or in the possession of any agent or advisor of any
such party.
SECTION 5.09. RESIGNATION OF DIRECTORS. At the Closing, the Company shall
deliver to Newco evidence satisfactory to Newco of the resignation of all
directors of the Company, effective at the Effective Time of the Merger.
SECTION 5.10. CERTAIN AGREEMENTS. (a) Neither the Company nor any
subsidiary of the Company will waive or fail to enforce any provision of any
confidentiality or standstill or similar agreement to which it is a party
without the prior written consent of Newco.
(b) The Company shall, as promptly as practicable and in any event at least
10 days prior to the Closing, prepare and deliver or cause to be delivered to
Newco financial statements for the fiscal year ended December 31, 1996 which
shall be accompanied by an unqualified audit opinion of the Company's
independent certified public accountants.
SECTION 5.11. STOP TRANSFER. The Company acknowledges and agrees to be
bound by and comply with the provisions of the Stockholders Agreement as if a
party thereto with respect to transfers of record ownership of shares of Company
Common Stock, and agrees to notify the transfer agent for any shares of Company
Common Stock or voting rights certificates and provide such documentation and do
such other things as may be reasonably necessary to effectuate the provisions of
such agreement.
SECTION 5.12. NEW YORK STOCK EXCHANGE LISTING. The Company will not take
any action, for at least three years from the Effective Time of the Merger, to
cause the Company Common Stock to be delisted from the New York Stock Exchange
(the "NYSE") except in compliance with Rule 500 of the NYSE, as interpreted in
Section 806 of the NYSE Listed Company Manual as in effect on the date hereof
(and provided that, in addition to the requirements of the NYSE, a majority of
shares not held of record or beneficially by Parent or its affiliates must be
voted in favor of the de-listing); provided, however, that the Company may cause
or permit the Company Common Stock to be de-listed in connection with a
transaction which results in the termination of registration of such securities
under Section 12 of the Exchange Act, and provided, further, that nothing in
this Section 5.12 shall require the Company to take any affirmative action to
prevent the Company Common Stock from being de-listed by the NYSE in the event
that the Company Common Stock ceases to meet the applicable NYSE listing
standards.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) COMPANY STOCKHOLDER APPROVAL. The Company Stockholder Approval shall
have been obtained.
(b) HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however, that
the parties hereto shall use their best efforts to have any such injunction,
order, restraint or prohibition vacated.
(d) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and any material "blue sky" and
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other state securities laws applicable to the registration and qualification
of the Common Stock of the Company following the Merger shall have been
complied with.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF NEWCO. The obligations of Newco
to effect the Merger are further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in each
case as of the date of this Agreement 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 where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) would not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect. Newco
shall have received a certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer of the Company to
the effect set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed the obligations required to be performed by it under this
Agreement at or prior to the Closing Date (except for such failures to
perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect with
respect to the Company or adversely affect the ability of the Company to
consummate the transactions herein contemplated or perform its obligations
hereunder).
(c) CONSENTS, ETC. Newco shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits,
consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties as are necessary in
connection with the transactions contemplated hereby have been obtained,
except where the failure to obtain such licenses, permits, consents,
approvals, authorizations, qualifications and orders could not, individually
or in the aggregate with all other failures, reasonably be expected to have
a Material Adverse Effect with respect to the Company.
(d) NO LITIGATION. There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding (or by any other person
any suit, action or proceeding which has a reasonable likelihood of
success), (i) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by
this Agreement or the Stockholders Agreement or seeking to obtain from
Parent, Newco or any of their affiliates any damages that are material to
any such party, (ii) seeking to prohibit or limit the ownership or operation
by the Company, Parent or any of their respective subsidiaries of any
material portion of the business or assets of the Company or any of its
subsidiaries, to dispose of or hold separate any material portion of the
business or assets of the Company or any of its subsidiaries, as a result of
the Merger or any of the other transactions contemplated by this Agreement
or the Stockholders Agreement, (iii) seeking to impose limitations on the
ability of Parent or Newco to acquire or hold, or exercise full rights of
ownership of, any shares of the Company Common Stock, including, without
limitation, the right to vote the Company Common Stock on all matters
properly presented to the stockholders of the Company or (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company or its
subsidiaries.
(e) AFFILIATE LETTERS. Newco shall have received the agreements referred
to in Section 5.07.
(f) FINANCING. The Company shall have received the proceeds of financing
on terms and conditions set forth in Annex A-1 and Annex A-2 of the
Disclosure Schedule or upon terms and conditions which are, in the
reasonable judgment of Newco, substantially equivalent thereto, and to the
extent that any of the terms and conditions are not set forth in Annex A-1
and Annex A-2 of the Disclosure Schedule, on terms and conditions reasonably
satisfactory to Newco.
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(g) Newco shall have received evidence that the terms of the
Subordinated Notes shall have been amended to the reasonable satisfaction of
Newco including, without limitation, the elimination of the negative
covenants contained therein and the elimination of any restrictions
applicable to transactions contemplated by this Agreement. The Company shall
have purchased at least that principal amount of Subordinated Notes as
equals the minimum condition in the Debt Offer. The Company shall have,
immediately prior to or contemporaneously with the Closing, called the
Senior Notes for redemption.
(h) Newco shall be reasonably satisfied that the Merger shall be
recorded as a recapitalization for financial reporting purposes.
(i) The individuals listed in Section 6.02(i) of the Disclosure Schedule
shall have entered into one or more subscription, option, stockholder and/or
other agreements relating to their respective equity interests in the
Company after the Effective Time of the Merger on terms and conditions
substantially consistent with the agreement in principle delivered to the
Company prior to the date hereof or otherwise satisfactory to Newco.
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger is further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Newco set forth in this Agreement shall be true and correct, in each case
as of the date of this Agreement 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 where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "material
adverse effect" set forth therein) would not individually or in the
aggregate reasonably be expected to have a material adverse effect. The
Company shall have received a certificate signed on behalf of Newco by an
authorized officer of Newco to the effect set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF NEWCO. Newco shall have performed the
obligations required to be performed by it under this Agreement at or prior
to the Closing Date (except for such failures to perform as have not had or
could not reasonably be expected, either individually or in the aggregate,
to have a Material Adverse Effect with respect to Newco or adversely affect
the ability of Newco to consummate the transactions herein contemplated or
perform its obligations hereunder).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated and abandoned
at any time prior to the Effective Time of the Merger, whether before or after
approval of matters presented in connection with the Merger by the stockholders
of the Company:
(a) by mutual written consent of Newco and the Company; or
(b) by either Newco or the Company if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger or the Debt Offer
and such order, decree, ruling or other action shall have become final and
nonappealable; or
(c) by either Newco or the Company if the Merger shall not have been
consummated on or before June 30, 1997 (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under
this Agreement required to be performed at or prior to the Effective Time of
the Merger); or
(d) by either Newco or the Company if at the duly held meeting of the
stockholders of the Company (including any adjournment thereof) held for the
purpose of voting on the Merger, this
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Agreement and the consummation of the transactions contemplated hereby, the
holders of a majority of the outstanding shares of Company Common Stock
shall not have approved the Merger, this Agreement and the consummation of
the transactions contemplated hereby; or
(e) by Newco, if the Company or its Board of Directors shall have (1)
withdrawn, modified or amended in any respect adverse to Newco its approval
or recommendation of this Agreement or any of the transactions contemplated
herein, (2) failed as promptly as practicable after the Form S-4 is declared
effective to mail the Proxy Statement to its stockholders or failed to
include in such statement such recommendation, (3) recommended any
Transaction Proposal from a person other than Newco or any of its
affiliates, (4) resolved to do any of the foregoing or (5) in response to
the commencement of any tender offer or exchange offer for more than 20% of
the outstanding shares of Company Common Stock, not recommended rejection of
such tender offer or exchange offer; or
(f) by the Company, if, pursuant to and in compliance with Section 5.08
hereof, the Board of Directors of the Company concludes in good faith, based
on written advice from outside counsel, that in order to prevent the Board
of Directors of the Company from breaching its fiduciary duties to the
stockholders of the Company under the DGCL, the Board of Directors must not
make or must withdraw or modify its recommendation referred to in Section
3.01(p) and the Board of Directors does not make or withdraws or modifies
such recommendation.
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Newco as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Newco or the Company, other than the provisions of
Section 3.01(n), Section 3.02(e), the last sentence of Section 5.02(a), this
Section 7.02, Section 8.02 and Section 8.07. Nothing contained in this Section
shall relieve any party for any breach of the representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the parties at
any time before or after any required approval of matters presented in
connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such stockholders without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective Time
of the Merger, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 7.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 7.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require in the case of Newco or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time of the Merger and
all such representations and warranties will be extinguished on consummation of
the Merger and neither the Company nor any officer, director or employee or
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shareholder shall be under any liability whatsoever with respect to any such
representation or warranty after such time. This Section 8.01 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger.
SECTION 8.02. FEES AND EXPENSES. (a) In addition to any other amounts
which may be payable or become payable pursuant to any other paragraph of this
Section 8.02, if the Company shall have failed to satisfy or perform any of the
conditions or obligations required to be satisfied or performed by it pursuant
to Section 6.02(a) or 6.02(b) hereof and, as a result thereof, this Agreement is
thereafter terminated, then the Company shall (provided that Newco is not then
in material breach of its obligations under this Agreement), promptly, but in no
event later than one business day after the termination of this Agreement (or
from time to time after Closing), reimburse KKR & Co. for all documented
out-of-pocket expenses and fees (including, without limitation, fees payable to
all banks, investment banking firms and other financial institutions, and their
respective agents and counsel, and all fees of counsel, accountants, financial
printers, experts and consultants to Newco and its affiliates), whether incurred
prior to, on or after the date hereof, in connection with the Merger and the
consummation of all transactions contemplated by this Agreement and the
financing thereof; provided that, except as set forth in the next succeeding
proviso or with respect to any reimbursement following the Closing, in no event
shall the Company be required to pay in excess of an aggregate of $5 million
pursuant to this paragraph (a); and provided further that, whether or not the
Company has satisfied or performed the conditions and obligations required to be
performed by it pursuant to Section 6.02(a) and 6.02(b) hereof, in the event a
fee is payable to KKR & Co. pursuant to Section 8.02(b) hereof, the Company
shall be required to pay expenses pursuant to this paragraph (a) up to a maximum
of $12.5 million.
(b) (i) If this Agreement shall have been terminated in accordance with its
terms and either of the following shall have occurred prior to such termination:
(A) any corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person, other entity or "group" (as referred to in
Section 13(d)(3) of the Exchange Act) other than Newco or any of its affiliates
and other than any party to the Stockholders Agreement, including any Permitted
Transferee (as defined in the Stockholders Agreement) of such a party which is
or agrees to become bound thereby (so long as neither any such party to the
Stockholders Agreement nor any such Permitted Transferee is a member of a
"group" which includes any other person) (collectively, "Persons"), shall have
become the beneficial owner of more than 20% of the outstanding shares of
Company Common Stock; or (B)(x) any Person (other than Newco or any of its
affiliates) shall have made, or proposed, communicated or disclosed in a manner
which is or otherwise becomes public (including being known by stockholders of
the Company owning of record or beneficially in the aggregate 5% or more of the
outstanding shares of Company Common Stock) a bona fide intention to make a
Transaction Proposal (including by making such a Transaction Proposal) and (y)
on or prior to January 15, 1998, the Company either consummates with a Person a
transaction the proposal of which would otherwise qualify as a Transaction
Proposal under Section 5.08 or enters into a definitive agreement with a Person
with respect to a transaction the proposal of which would otherwise qualify as a
Transaction Proposal under Section 5.08 (whether or not such Person is the
Person referred to in clause (x) above); or
(ii) if this Agreement is terminated pursuant to Section 7.01(e) or
Section 7.01(f); then the Company shall, (1) in the case of clause (b)(i)(A)
and (b)(ii) above, promptly, but in no event later than one business day
after the termination of this Agreement and (2) in the case of clause
(b)(i)(B) above, promptly, but in no event later than one business day after
an event specified in subclause (y) thereof shall have occurred, pay KKR &
Co. a fee of $37.5 million in cash, which amount shall be payable in same
day funds. No termination of this Agreement at a time when a fee is
reasonably expected to be payable pursuant to this Section 8.02(b) following
termination of this Agreement shall be effective until such fee is paid.
Only one fee in the aggregate of $37.5 million shall be payable pursuant to
this Section 8.02(b). No amount payable pursuant to any of the other
provisions of this Section 8.02 shall reduce the amount of the fee payable
pursuant to this paragraph (b).
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(c) In addition to the other provisions of this Section 8.02, in the event a
fee is or becomes payable pursuant to Section 8.02(b) hereof, the Company agrees
promptly, but in no event later than two business days following written notice
thereof, together with related bills or receipts, to reimburse KKR & Co. and
Newco for all reasonable out-of-pocket costs, fees and expenses, including,
without limitation, the reasonable fees and disbursements of counsel and the
expenses of litigation, incurred in connection with collecting the expenses
pursuant to paragraph (a) of this Section and the fee pursuant to paragraph (b)
of this Section, as a result of any breach by the Company of its obligations
under this Section 8.02.
(d) Except as provided otherwise in paragraph (a) above, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses.
SECTION 8.03. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Newco, to
c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Attention: Michael Michelson
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Charles I. Cogut, Esq.
(b) if to the Company, to
Amphenol Corporation
358 Hall Avenue
Wallingford, CT 06492
Attention: Martin H. Loeffler
with copies to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 10004
Attention: David P. Falck, Esq.
SECTION 8.04. DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "knowledge" with respect to the Company means the actual knowledge
of the following officers and employees (as well as any of their successors)
of the Company and its subsidiaries: Lawrence J. DeGeorge, Martin H.
Loeffler, Edward G. Jepsen, Timothy F. Cohane, Diana Reardon,
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<PAGE>
and Edward C. Wetmore, and, without duplication, the employees primarily
responsible for environmental and tax matters concerning the Company and its
subsidiaries or any of the foregoing, in each case after reasonable
investigation and inquiry;
(c) "Material Adverse Change" or "Material Adverse Effect" means, when
used in connection with the Company, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole but shall
exclude any change or effect resulting from general economic conditions
(including, without limitation changes in interest rates) and, with respect
to Section 3.01(g)(i) and (ii) hereof, any occurrence or condition arising
out of the transactions contemplated by this Agreement or the public
announcement thereof;
(d) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
and
(e) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or
more of the equity interests of which) is owned directly or indirectly by
such first person.
SECTION 8.05. INTERPRETATION. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 8.06. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the other agreements referred to herein constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement, other than Sections 5.05 and 8.02, is not intended to
confer upon any person other than the parties any rights or remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS.
SECTION 8.09. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.10. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Newco and the Company have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
NXS ACQUISITION CORP.
By: /s/ MICHAEL W. MICHELSON
-----------------------------------------
Name: Michael W. Michelson
Title: President
AMPHENOL CORPORATION
By: /s/ LAWRENCE J. DEGEORGE
-----------------------------------------
Name: Lawrence J. DeGeorge
Title: Chairman of the Board
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<PAGE>
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
AMPHENOL CORPORATION
------------------------
The undersigned, in order to form a corporation for the purpose hereinafter
stated, under and pursuant to the provisions of the Delaware General Corporation
Law, hereby certifies that:
FIRST: The name of the Corporation is Amphenol Corporation.
SECOND: The registered office and registered agent of the Corporation is
The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of stock that the Corporation is
authorized to issue is 40,000,000 shares of Class A Common Stock, par value
$.001 each.
FIFTH: The Board of Directors of the Corporation, acting by majority
vote, may alter, amend or repeal the By-Laws of the Corporation.
SIXTH: Except as otherwise provided by the Delaware General Corporation
Law as the same exists or may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director. Any repeal or modification of this Article SIXTH by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
SEVENTH: To the fullest extent permitted by the Delaware General
Corporation Law, the Corporation shall indemnify any current or former
director or officer of the Corporation and may, at the discretion of the
Board of Directors, indemnify any current or former employee or agent of the
Corporation against all expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with any
threatened, pending or completed action, suit or proceeding brought by or in
the right of the Corporation or otherwise, to which he was or is a party by
reason of his current or former position with the Corporation or by reason
of the fact that he is or was serving, at the request of the Corporation, as
a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
A-1
<PAGE>
EXHIBIT B
FORM OF COMPANY AFFILIATE LETTER
Gentlemen:
The undersigned, a holder of shares of Common Stock, par value $.001 per
share ("Company Stock"), of Amphenol Corporation, a Delaware corporation (the
"Company"), is entitled to retain in connection with the merger (the "Merger")
of the Company with NXS Acquisition Corp., a Delaware corporation, securities
(the "Securities") of the Company. The undersigned acknowledges that the
undersigned may be deemed an "affiliate" of the Company within the meaning of
Rule 145 ("Rule 145") promulgated under the Securities Act of 1933 (the "Act"),
although nothing contained herein should be construed as an admission of such
fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Securities retained by the
undersigned pursuant to the Merger may be restricted unless such transaction is
registered under the Act or an exemption from such registration is available.
The undersigned understands that such exemptions are limited and the undersigned
has obtained advice of counsel as to the nature and conditions of such
exemptions, including information with respect to the applicability to the sale
of such securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with the Company that the
undersigned will not sell, assign or transfer any of the Securities retained by
the undersigned pursuant to the Merger except (i) pursuant to an effective
registration statement under the Act, (ii) in conformity with the volume and
other limitations of Rule 145 or (iii) in a transaction which, in the opinion of
independent counsel reasonably satisfactory to the Company or as described in a
"no-action" or interpretive letter from the Staff of the Securities and Exchange
Commission (the "SEC"), is not required to be registered under the Act.
In the event of a sale or other disposition by the undersigned of Securities
pursuant to Rule 145, the undersigned will supply the Company with evidence of
compliance with such Rule, in the form of a letter in the form of Annex I
hereto. The undersigned understands that the Company may instruct its transfer
agent to withhold the transfer of any Securities disposed of by the undersigned,
but that upon receipt of such evidence of compliance the transfer agent shall
effectuate the transfer of the Securities sold as indicated in the letter.
The undersigned acknowledges and agrees that appropriate legends will be
placed on certificates representing Securities retained by the undersigned in
the Merger or held by a transferee thereof, which legends will be removed by
delivery of substitute certificates upon receipt of an opinion in form and
substance reasonably satisfactory to the Company from independent counsel
reasonably satisfactory to the Company to the effect that such legends are no
longer required for purposes of the Act.
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Securities and
(ii) the receipt by Newco of this letter is an inducement and a condition to
Newco's obligations to consummate the Merger.
Very truly yours,
Dated:
B-1
<PAGE>
ANNEX I
TO EXHIBIT B
[Name] [Date]
On the undersigned sold the securities ("Securities") of
the Company (the "Company") described below in the space provided for that
purpose (the "Securities"). The Securities were retained by the undersigned in
connection with the merger of NXS Acquisition Corp. with and into Amphenol
Corporation.
Based upon the most recent report or statement filed by the Company with the
Securities and Exchange Commission, the Securities sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Securities were sold in "brokers'
transactions" within the meaning of Section 4(4) of the Act or in transactions
directly with a "market maker" as that term is defined in Section 3(a)(38) of
the Securities Exchange Act of 1934, as amended. The undersigned further
represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the undersigned has not
made any payment in connection with the offer or sale of the Securities to any
person other than to the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]
B-2
<PAGE>
ANNEX I-B
MERGER AGREEMENT AMENDMENT
AMENDMENT, dated as of April 9, 1997 (this "Amendment"), to the Agreement
and Plan of Merger between NXS Acquisition Corp. ("Newco") and Amphenol
Corporation (the "Company"), dated as of January 23, 1997 (the "Merger
Agreement").
WITNESSETH:
WHEREAS, pursuant to the Merger Agreement, Newco and the Company have
approved the terms and conditions of the merger of Newco with and into the
Company; and
WHEREAS, Newco and the Company have agreed that certain provisions of the
Merger Agreement be amended in the manner provided for in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used but not defined herein shall have
the meanings given to them in the Merger Agreement.
2. AMENDMENTS TO MERGER AGREEMENT.
(a) DEFINITIONS. As used in the Merger Agreement,
(i) the term "Agreement" shall mean the Merger Agreement between the
parties hereto, dated as of January 23, 1997, and the amendments thereto
entered into on the date hereof, and
(ii) the term "Merger" shall mean the merger of Newco with and into
the Company pursuant to the terms and conditions of the Agreement (as
amended as of the date hereof).
(b) DIRECTORS.
Section 1.06 of the Merger Agreement is hereby amended by inserting
immediately after the phrase, "The directors of Newco at the Effective
Time of the Merger," the phrase, "and/or such other persons as may be
designated by Newco as contemplated by Section 5.09 hereof". Section 5.09
of the Merger Agreement is hereby amended by adding to the end of the
sentence comprising such Section the phrase, "of the expansion of the
board of directors of the Company to seven persons effective at the
Effective Time of the Merger and of the filling of the vacancies created
by such resignations and such newly created directorship with the
individuals designated by Newco".
(c) SECTION 3.02(C).
Section 3.02(c) of the Merger Agreement is hereby amended by adding
to the beginning of the sentence comprising such Section the phrase "As
of the date hereof," and by adding to the end of such sentence the
following phrase ", and as of the Closing Date, all the issued and
outstanding shares of the common stock of Newco will be owned by Parent
and/or by one or more entities organized at the direction of Kohlberg
Kravis Roberts & Co. (in which event, unless the context otherwise
requires, references to Parent shall be deemed to include such other
entities), in each case, free and clear of any Lien".
(d) AMENDMENT TO EXHIBIT A.
Exhibit A to the Merger Agreement is hereby amended by inserting a
new Article SIXTH to the Amended and Restated Certificate of
Incorporation of Amphenol Corporation, and by renumbering Articles SIXTH
and SEVENTH as SEVENTH and EIGHTH, respectively, in each
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<PAGE>
case, in the form of the Amended and Restated Certificate of
Incorporation attached as Exhibit A hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Newco that:
(a) The Company has the requisite corporate power and authority to
execute and deliver this Amendment and, subject to the Company
Stockholder Approval, to consummate the transactions contemplated hereby.
The execution and delivery of this Amendment by the Company and the
consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to the Company
Stockholder Approval. This Amendment has been duly executed and delivered
by the Company and, (assuming due authorization, execution and delivery
hereof by Newco) constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) The Board of Directors of the Company, by unanimous written
consent (i) determined that the Agreement (as amended by this Amendment)
and the transactions contemplated thereby, including the Merger, taken
together, are fair to and in the best interests of the stockholders of
the Company, (ii) approved this Amendment and the transactions
contemplated hereby (including but not limited to the Merger) so as to
render inapplicable hereto and thereto the limitation on business
combinations contained in Section 203 of the DGCL (or any similar
provision) and (iii) resolved to recommend that the holders of the shares
of Company Common Stock approve the Agreement (as amended by this
Amendment) and the transactions contemplated therein, including the
Merger. As a result of the foregoing actions, the only vote required to
authorize the Merger is the affirmative vote of a majority of the
outstanding shares of Company Common Stock.
(c) Attached as Exhibit A hereto is a true and complete copy of the
Amended and Restated Certificate of Incorporation of Amphenol Corporation
which amends, modifies and/or supplements the form of Amended and
Restated Certificate of Incorporation of Amphenol Corporation attached as
Exhibit A to the Merger Agreement.
4. REPRESENTATIONS AND WARRANTIES OF NEWCO. Newco hereby represents
and warrants to the Company that:
(a) Newco has all requisite corporate power and authority to enter
into this Amendment and to consummate the transactions contemplated
hereby. The execution and performance of this Amendment by Newco and the
consummation by Newco of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Newco.
This Amendment has been duly executed and delivered by Newco and
(assuming due authorization, execution and delivery by the Company)
constitutes a valid and binding obligation of Newco enforceable against
it in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
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<PAGE>
(b) The terms and conditions of the Amended and Restated Certificate
of Incorporation of Amphenol Corporation attached as Exhibit A to the
Merger Agreement, as amended, modified and/or supplemented by Exhibit A
hereto, is satisfactory to Newco.
5. MISCELLANEOUS.
(a) Except as expressly amended, modified and supplemented hereby, the
provisions of the Merger Agreement are and shall remain in full force and
effect.
(b) This Amendment shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.
(c) This Amendment may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties.
IN WITNESS WHEREOF, Newco and the Company have caused this Amendment to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
AMPHENOL CORPORATION
By: /s/ EDWARD G. JEPSEN
-----------------------------------------
Title: Executive Vice President and
Chief Financial Officer
NXS ACQUISITION CORP.
By: /s/ MICHAEL W. MICHELSON
-----------------------------------------
Title: President
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<PAGE>
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
AMPHENOL CORPORATION
The undersigned, in order to form a corporation for the purpose hereinafter
stated, under and pursuant to the provisions of the Delaware General Corporation
Law, hereby certifies that:
FIRST: The name of the Corporation is Amphenol Corporation.
SECOND: The registered office and registered agent of the Corporation is The
Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of stock that the Corporation is
authorized to issue is 40,000,000 shares of Class A Common Stock, par value
$.001 each.
FIFTH: The Board of Directors of the Corporation, acting by majority vote,
may alter, amend or repeal the By-Laws of the Corporation.
SIXTH: For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation and of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided:
(1) The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders to make,
alter, amend, change, add to or repeal the By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be three or more as
from time to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. At all times after December 1, 1987, not less than two directors of
the Corporation shall be persons who are not officers or employees of the
Corporation or any affiliate of the Corporation and are not members of the
immediate family of, controlled by, or under common control with any such
officer or employee. Election of directors need not be by written ballot unless
the By-Laws so provide.
(4) The directors shall be classified, with respect to the time for which
they severally hold office, into three classes, as nearly equal in number as
possible, one class to hold office initially for a term expiring at the annual
meeting of stockholders to be held in 1992, another class to hold office
initially for a term expiring at the annual meeting of stockholders to be held
in 1993, and another class to hold office initially for a term expiring at the
annual meeting of stockholders to be held in 1994, with the members of each
class to hold office until their successors are elected and qualified. At each
annual meeting of the stockholders of the Corporation following the adoption of
this Restated Certificate of Incorporation, the successors to the class of
directors whose term expires at that meeting shall be elected to hold office for
a term expiring at the annual meeting of stockholders held in the third year
following the year of their election.
(5) Subject to the rights of the holders of any class or series of capital
stock having preference over the Common Stock as to dividends or to elect
directors under specified circumstances, any director, or the entire Board of
Directors, may be removed from office at any time by the affirmative vote of the
majority of the stockholders entitled to vote for the election of directors but
only for cause.
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(6) The affirmative vote of the holders of at least 80 percent of the
combined voting power of all the then-outstanding shares of the Corporation
entitled to vote in the election of directors, voting together as a single
class, shall be required to alter, amend or repeal paragraphs (3), (4), (5) or
(6) of this Article SIXTH, or any provision thereof.
(7) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the DGCL, this
Restated Certificate of Incorporation, and any By-Laws adopted by the
stockholders; provided, however, that no By-Laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors which would have
been valid if such By-Laws had not been adopted.
SEVENTH: Except as otherwise provided by the Delaware General Corporation
Law as the same exists or may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of this Article SEVENTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
EIGHTH: To the fullest extent permitted by the Delaware General Corporation
Law, the Corporation shall indemnify any current or former director or officer
of the Corporation and may, at the discretion of the Board of Directors,
indemnify any current or former employee or agent of the Corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party by reason of his current
or former position with the Corporation or by reason of the fact that he is or
was serving, at the request of the Corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
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ANNEX II
CONFORMED COPY
STOCKHOLDERS AGREEMENT
AGREEMENT dated as of January 23, 1997 by and between NXS I, L.L.C., a
Delaware limited liability company ("NXS"), and the other parties signatory
hereto (each a "Stockholder").
RECITALS
Concurrently herewith, NXS Acquisition Corp., a Delaware corporation
("Newco"), and Amphenol Corporation, a Delaware corporation (the "Company"), are
entering into an Agreement and Plan of Merger of even date herewith (as such
agreement may be amended from time to time, the "Merger Agreement"; capitalized
terms used but not defined herein shall have the meanings set forth in the
Merger Agreement) pursuant to which (and subject to the terms and conditions
specified therein) Newco will be merged with and into the Company (the
"Merger"), whereby each share of Class A common stock, par value $.001 per
share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time of the Merger will be converted into
either (A) the right to retain at the election of the holder thereof and subject
to the terms of the Merger Agreement, Class A common stock, par value $.001 per
share, of the Company or (B) the right to receive cash, other than (i) shares of
Company Common Stock owned, directly or indirectly, by the Company or any
subsidiary of the Company or by NXS, Newco or any other affiliate of KKR 1996
Fund L.P., the owner of all issued and outstanding common stock of Newco (the
"Parent") and (ii) Dissenting Shares.
As a condition to Newco's entering into the Merger Agreement, Newco requires
that each Stockholder enter into, and each such Stockholder has agreed to enter
into, this Agreement with NXS.
AGREEMENT
To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each Stockholder hereby
severally and not jointly represents and warrants to NXS as follows:
(a) OWNERSHIP OF SHARES. (1) Such Stockholder is either (i) the record
holder or beneficial owner of the number of or (ii) trustee of a trust that
is the record holder or beneficial owner of, and whose beneficiaries are the
beneficial owners (such trustee, a "Trustee") of shares of Company Common
Stock as is set forth opposite such Stockholder's name on Schedule I hereto,
(such shares shall constitute the "Existing Shares", and together with any
shares of Company Common Stock acquired of record or beneficially by such
Stockholder in any capacity after the date hereof and prior to the
termination hereof, whether upon exercise of options, conversion of
convertible securities, purchase, exchange or otherwise, shall constitute
the "Shares").
(2) On the date hereof, the Existing Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the outstanding
shares of Company Common Stock owned of record or beneficially by such
Stockholder.
Such Stockholder does not have record or beneficial ownership of any
Shares not set forth on Schedule I hereto.
(3) Such Stockholder has sole power of disposition with respect to
all of the Existing Shares set forth opposite such Stockholder's name on
Schedule I and sole voting power with respect to the matters set forth in
Section 6 hereof and sole power to demand dissenter's or appraisal
rights, in each case with respect to all of the Existing Shares set forth
opposite such Stockholder's name
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on Schedule I, with no restrictions on such rights, subject to applicable
federal securities laws and the terms of this Agreement.
(4) Such Stockholder will have sole power of disposition with respect
to Shares other than Existing Shares, if any, which become beneficially
owned by such Stockholder and will have sole voting power with respect to
the matters set forth in Section 6 hereof and sole power to demand
dissenter's or appraisal rights, in each case with respect to all Shares
other than Existing Shares, if any, which become beneficially owned by
such Stockholder with no restrictions on such rights, subject to
applicable federal securities laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to
which such Stockholder is a party or by which such Stockholder is bound
including, without limitation, any trust agreement, voting agreement,
stockholders agreement, voting trust, partnership or other agreement. This
Agreement has been duly and validly executed and delivered by such
Stockholder and constitutes a valid and binding agreement of such
Stockholder, enforceable against such Stockholder in accordance with its
terms. There is no beneficiary of or holder of interest in any trust of
which a Stockholder is Trustee whose consent is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Stockholder's spouse, enforceable against such person in
accordance with its terms.
(c) NO CONFLICTS. Except for filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if
applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for
the execution of this Agreement by such Stockholder and the consummation by
such Stockholder of the transactions contemplated hereby and (B) neither the
execution and delivery of this Agreement by such Stockholder nor the
consummation by such Stockholder of the transactions contemplated hereby nor
compliance by such Stockholder with any of the provisions hereof shall (x)
conflict with or result in any breach of any applicable trust, partnership
agreement or other agreements or organizational documents applicable to such
Stockholder, (y) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any
third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to
which such Stockholder is a party or by which such Stockholder or any of
such Stockholder's properties or assets may be bound or (z) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.
(d) Such Stockholder's Shares and the certificates representing such
Shares are now and at all times during the term hereof will be held by such
Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for (i) any such encumbrances or
proxies arising hereunder, (ii) the Stockholders' Agreement dated as of
December 22, 1992, by and among the Company and the persons signatory
thereto (the "Existing Stockholders Agreement") and (iii) the Lawrence J.
and Florence A. DeGeorge Charitable Trust.
(e) No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee
or commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of such Stockholder in his or her
capacity as such.
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(f) Such Stockholder understands and acknowledges that Newco is entering
into the Merger Agreement in reliance upon such Stockholder's execution and
delivery of this Agreement with NXS.
2. REPRESENTATIONS AND WARRANTIES OF NXS. NXS hereby represents and warrants
to each Stockholder as follows:
(a) ORGANIZATION. NXS is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its formation.
(b) AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. NXS has all
necessary power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by NXS of this Agreement and the consummation by NXS of the
transactions contemplated hereby have been duly and validly authorized by
its members. This Agreement has been duly executed and delivered by NXS, and
(assuming due authorization, execution and delivery by the Stockholders)
constitutes a valid and binding obligation of NXS, enforceable against it in
accordance with its terms, except that (i) such enforcement may be subject
to applicable bankruptcy, insolvency or other similar laws, now or hereafter
in effect, affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(c) CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of
this Agreement do not, and the consummation by NXS of the transactions
contemplated by this Agreement and compliance by NXS with the provisions of
this Agreement will not, conflict with, or result in any breach or violation
of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of or
"put" right with respect to any obligation or to loss of a material benefit
under, or result in the creation of any lien upon any of the properties or
assets of NXS under, (i) the certificate of formation or limited liability
company agreement of NXS, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to NXS or its properties or
assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree, statute,
law, ordinance, rule, regulation or arbitration award applicable to NXS or
its properties or assets. No consent, approval, order or authorization of,
or registration, declaration or filing with, or notice to, any state or
federal public body or authority is required by or with respect to NXS in
connection with the execution and delivery of this Agreement by NXS or the
consummation by NXS of any of the transactions contemplated by this
Agreement, except for the filing of a premerger notification and report form
under the HSR Act.
(d) FINANCING. NXS has, or will have prior to the closing of the Merger
(the "Closing"), sufficient funds available to purchase the Shares upon
exercise of the Stockholders' Option (as defined below).
3. OPTION GRANTED TO NXS. (a) Each Stockholder, severally and not jointly,
hereby grants to NXS an irrevocable option to purchase, in whole and not in
part, such Stockholder's Shares until the NXS Option Termination Date (as
defined below), on the terms and subject to the conditions set forth herein
(collectively, with respect to all the Stockholders' Shares, the "NXS Option"),
which NXS Option shall attach to each Stockholder's Shares and be binding upon
any person or entity to which legal or beneficial ownership of such Shares shall
pass, whether by operation of law or otherwise, including without limitation
such Stockholder's heirs, guardians, administrators or successors or as a result
of any divorce.
(b) The NXS Option may be exercised until 5:00 p.m., New York time, on the
applicable date specified below (the "NXS Option Termination Date"):
(i) If the Merger is terminated (x) in accordance with Section 7.01(e)
or Section 7.01(f) of the Merger Agreement, or (y) in accordance with any of
its other terms (other than a termination by the Company under Section
7.01(c) of the Merger Agreement) and either of the circumstances set forth
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in Section 8.02(b)(i)(A) or 8.02(b)(i)(B)(x) thereof shall have occurred,
then the NXS Option may be exercised by NXS during the period commencing
upon the date of such termination and ending on the date which is six months
later.
(ii) If the Merger is consummated, then the NXS Option may be exercised
by NXS, with respect to any or all of the Shares not converted into the
right to receive the Cash Election Price in the Merger, during the period
commencing upon the Effective Time of the Merger and ending 30 days
thereafter.
(iii) In all other circumstances, the NXS Option shall expire on the date
of termination of the Merger Agreement.
(c) If NXS wishes to exercise the NXS Option, NXS shall send a written
notice to each Stockholder of its irrevocable election to exercise the NXS
Option, specifying the place, and, if then known, the time and the date (the
"NXS Option Closing Date") of the closing (the "NXS Option Closing") of the
purchase. The NXS Option Closing Date shall occur on the fifth business day (or
such longer period as may be required by applicable law or regulation) after the
later of (i) the date on which such notice is delivered and (ii) the
satisfaction of the conditions set forth in Section 3(f) hereof.
(d) At the NXS Option Closing, each Stockholder shall deliver to NXS (or its
designee) all of such Stockholder's Shares by delivery of a certificate or
certificates evidencing such Shares, duly endorsed to NXS or accompanied by
stock powers duly executed in favor of NXS, with all necessary stock transfer
stamps affixed.
(e) At the NXS Option Closing, NXS shall pay to the Stockholders, by wire
transfer in immediately available funds to the account of such Stockholders
specified in writing no more than two days prior to the NXS Option Closing, an
amount equal to the product of the Cash Election Price and the number of Shares
purchased pursuant to the exercise of the NXS Option (the "NXS Option Purchase
Price").
(f) The NXS Option Closing shall be subject to the satisfaction of each of
the following conditions:
(i) no court, arbitrator or governmental body, agency or official shall
have issued any order, decree or ruling (which has not been stayed or
suspended pending appeal) and there shall not be any effective statute, rule
or regulation, restraining, enjoining or prohibiting the consummation of the
purchase and sale of the Shares pursuant to the exercise of the NXS Option;
(ii) any waiting period applicable to the consummation of the purchase
and sale of the Shares pursuant to the exercise of the NXS Option under the
HSR Act shall have expired or been terminated; and
(iii) all actions by or in respect of, and any filing with, any
governmental body, agency, official, or authority required to permit the
consummation of the purchase and sale of the Shares pursuant to the exercise
of the NXS Option shall have been obtained or made and shall be in full
force and effect.
4. OPTION GRANTED TO THE STOCKHOLDERS. (a) NXS hereby grants to each
Stockholder an irrevocable option to sell to NXS the Shares held by such
Stockholders, on the terms and subject to the conditions set forth herein
(collectively, with respect to all the Shares of the Stockholders, the
"Stockholders Option").
(b) The Stockholders Option may be exercised by the Stockholders, as a whole
and not in part, during the period commencing upon the Effective Time of the
Merger and ending 30 days thereafter.
(c) If the Stockholders wish to exercise the Stockholders Option, each
Stockholder shall send a written notice to NXS of its irrevocable election to
exercise the Stockholders Option, specifying the place, and, if then known, the
time and the date (the "Stockholders Option Closing Date") of the closing (the
"Stockholders Option Closing") of the purchase. The Stockholders Option Closing
Date shall occur on the fifth business day (or such longer period as may be
required by applicable law or regulation) after the later
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of (i) the date on which such notice is delivered and (ii) the satisfaction of
the conditions set forth in Section 4(f) hereof.
(d) At the Stockholders Option Closing, each Stockholder shall deliver to
NXS (or its designee) all of such Stockholder's Shares by delivery of a
certificate or certificates evidencing such Shares, duly endorsed to NXS or
accompanied by stock powers duly executed in favor of NXS, with all necessary
stock transfer stamps affixed.
(e) At the Stockholders Option Closing, NXS shall pay to the Stockholders,
by wire transfer in immediately available funds to the account of such
Stockholders specified in writing no more than two days prior to the
Stockholders Option Closing, an amount equal to the product of the Cash Election
Price and the number of Shares purchased pursuant to the exercise of the
Stockholders Option (the "Stockholders Option Purchase Price").
(f) The Stockholders Option Closing shall be subject to the satisfaction of
each of the following conditions:
(i) no court, arbitrator or governmental body, agency or official shall
have issued any order, decree or ruling (which has not been stayed or
suspended pending appeal) and there shall not be any effective statute, rule
or regulation, restraining, enjoining or prohibiting the consummation of the
purchase and sale of the Shares pursuant to the exercise of the Stockholders
Option;
(ii) any waiting period applicable to the consummation of the purchase
and sale of the Shares pursuant to the exercise of the Stockholders Option
under the HSR Act shall have expired or been terminated; and
(iii) all actions by or in respect of, and any filing with, any
governmental body, agency, official, or authority required to permit the
consummation of the purchase and sale of the Shares pursuant to the exercise
of the Stockholders Option shall have been obtained or made and shall be in
full force and effect.
5. THIRD PARTY BUSINESS COMBINATION; REMEDY. If the Merger Agreement is
terminated in accordance with Section 7.01(e) or Section 7.01(f) of the Merger
Agreement, or if the Merger Agreement is terminated in accordance with any of
its other terms (other than a termination by the Company under Section 7.01(c)
of the Merger Agreement) and either of the circumstances set forth in Section
8.02(b)(i)(A) or 8.02(b)(i)(B)(x) thereof shall have occurred, and, upon or
following any such termination, either (i) any of the Stockholders or (ii) NXS
receives any cash or non-cash consideration (the party or parties referred to in
(i) or (ii) that receives such consideration being herein referred to as the
"Selling Party" and the other party or parties being referred to as the
"Non-Selling Party" with respect to any particular transaction) in respect of
all or any portion of the Shares in connection with a Third Party Business
Combination (as defined below) during the period commencing on the date hereof
and ending one year from the date the Merger Agreement is terminated, the
Selling Party shall promptly pay over to the Non-Selling Party or its designee
(x) one half of the excess, if any, of such consideration over (y) the product
of the Cash Election Price and the number of Shares with respect to which such
Selling Party received such consideration; provided that, (i) if the
consideration received by the Selling Party shall be securities listed on a
national securities exchange or traded on the NASDAQ National Market ("NASDAQ"),
the per share value of such consideration shall be equal to the closing price
per share listed on such national securities exchange or NASDAQ on the date such
transaction is consummated and (ii) if the consideration received by the Selling
Party shall be in a form other than such listed securities, the per share value
shall be determined in good faith as of the date such transaction is consummated
by the Nonselling Party or its designee and the Selling Party, or, if the
Nonselling Party or its designee and the Selling Party cannot reach agreement,
by a nationally recognized investment banking firm reasonably acceptable to the
parties. The term "Third Party Business Combination" with respect to the Company
means the occurrence of any of the following events: (A) the Company or any
subsidiary of the Company
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whose assets constitute 20% or more of the Company's consolidated assets is
acquired by merger or otherwise by any person or group, other than Newco or any
affiliate thereof (a "Third Party"); (B) the Company or any subsidiary of the
Company enters into an agreement with a Third Party which contemplates the
acquisition of 20% or more of the total assets of the Company and its
subsidiaries, taken as a whole; (C) the Company or any of the Stockholders enter
into a merger or other agreement with a Third Party which contemplates the
acquisition of more than 20% of the outstanding shares of Company Common Stock;
or (D) a Third Party acquires more than 20% of the outstanding Company Common
Stock; provided that in the case of clause (C) or (D) transfers by any
Stockholder of Company Common Stock to Permitted Transferees that are or agree
to become bound by this Agreement shall not be deemed to be transfers to a Third
Party. "Permitted Transferees" means, with respect to a Stockholder, any of the
following persons: (a) the spouse of such Stockholder, provided that at all
relevant times of determination such Stockholder is not separated or divorced
from, or is not involved in separation or divorce proceedings with, such spouse;
(b) the issue of such Stockholder; (c) any charitable foundation or similar
organization founded by such Stockholder; (d) a trust of which there are no
principal beneficiaries other than (i) such Stockholder, (ii) such Stockholder's
spouse (provided that at all relevant times of determination such Stockholder is
not separated or divorced from, or is not involved in separation or divorce
proceedings with, such spouse), (iii) the issue of such Stockholder, or (iv) any
charitable foundation or similar organization founded by such Stockholder; (e)
the legal representative of such Stockholder in the event such Stockholder
becomes mentally incompetent; and (f) the beneficiaries under (i) the will of
such Stockholder or the will of such Stockholder's spouse, or (ii) a trust
described in clause (d) above.
The parties agree that if the Stockholders are the Selling Party, the
foregoing payment shall terminate the NXS Option in the event that such Option
has not already expired in accordance with its terms pursuant to Section 3
hereof.
6. AGREEMENT TO VOTE; PROXY.
6.1 VOTING. Each Stockholder hereby severally and not jointly agrees that,
until the Termination Date (as defined in Section 11), at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, such Stockholder shall vote (or
cause to be voted) the Shares held of record or beneficially by such Stockholder
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance hereof and thereof; (ii) against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or this
Agreement; and (iii) except as specifically requested in writing by NXS in
advance, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (1) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (2) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (3) (a) any change in the majority of the board of directors
of the Company; (b) any material change in the present capitalization of the
Company or any amendment of the Company's Certificate of Incorporation or
By-Laws; (c) any other material change in the Company's corporate structure or
business; or (d) any other action which is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, discourage or materially
adversely affect the Merger or the transactions contemplated by the Merger
Agreement or this Agreement or the contemplated economic benefits of any of the
foregoing. Such Stockholder shall not enter into any agreement or understanding
with any person or entity prior to the Termination Date to vote or give
instructions after the Termination Date in any manner inconsistent with clauses
(i), (ii) or (iii) of the preceding sentence.
6.2 PROXY. EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, NXS AND
MICHAEL MICHELSON, PRESIDENT OF NXS, AND MARC LIPSCHULTZ, VICE PRESIDENT
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OF NXS, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF NXS, AND ANY INDIVIDUAL
WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE OF NXS, AND ANY OTHER DESIGNEE OF
NXS, EACH OF THEM INDIVIDUALLY, SUCH STOCKHOLDER'S IRREVOCABLE (UNTIL THE
TERMINATION DATE) PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION)
TO VOTE THE SHARES AS INDICATED IN SECTION 6.1 ABOVE. EACH STOCKHOLDER INTENDS
THIS PROXY TO BE IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN
INTEREST AND WILL TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS
MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY
PROXY PREVIOUSLY GRANTED BY SUCH STOCKHOLDER WITH RESPECT TO SUCH STOCKHOLDER'S
SHARES.
7. CERTAIN COVENANTS OF STOCKHOLDERS. Except in accordance with the terms of
this Agreement, each Stockholder hereby severally covenants and agrees as
follows:
7.1 NO SOLICITATION. Prior to the Termination Date, no Stockholder shall,
in its capacity as such, directly or indirectly (including through advisors,
agents or other intermediaries), solicit (including by way of furnishing
information) or respond to any inquiries or the making of any proposal by any
person or entity (other than NXS, Newco or any affiliate thereof) with respect
to the Company that constitutes or could reasonably be expected to lead to a
Transaction Proposal (as defined in Section 5.08 in the Merger Agreement),
provided, however, that the foregoing shall not restrict a Stockholder who is
also a director of the Company from taking actions in such Stockholder's
capacity as a director to the extent and in the circumstances permitted by
Section 5.08 of the Merger Agreement. If any Stockholder in its capacity as such
receives any such inquiry or proposal, then such Stockholder shall promptly
inform NXS of the terms and conditions, if any, of such inquiry or proposal and
the identity of the person making it. Each Stockholder, in its capacity as such,
will 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.
7.2 RESTRICTION ON TRANSFER, PROXIES AND NONINTERFERENCE; RESTRICTION ON
WITHDRAWAL. Prior to the Termination Date, no Stockholder shall, directly or
indirectly: (i) except pursuant to the terms of the Merger Agreement and to NXS
pursuant to this Agreement, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, enforce or permit the execution of the
provisions of any redemption agreement with the Company or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, or exercise any discretionary powers to
distribute, any or all of such Stockholder's Shares or any interest therein,
including any trust income or principal, except in each case to a Permitted
Transferee who is or agrees to become bound by this Agreement; (ii) except as
contemplated hereby, grant any proxies or powers of attorney with respect to any
Shares, deposit any Shares into a voting trust or enter into a voting agreement
with respect to any Shares; or (iii) take any action that would make any
representation or warranty of such Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.
7.3 WAIVER OF APPRAISAL AND DISSENTER'S RIGHTS. Each Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that such
Stockholder may have. Each Trustee represents that no beneficiary who is a
beneficial owner of Shares under any trust has any right of appraisal or right
to dissent from the Merger which has not been so waived.
7.4 ELECTION UNDER MERGER AGREEMENT. In connection with the Merger, each
Stockholder hereby agrees to elect to receive cash upon conversion of, and with
respect to, all of such Stockholder's Shares unless otherwise agreed with NXS.
7.5 COVENANT NOT TO COMPETE. (a) Each Stockholder agrees that for the
period ending four years after the Effective Time of the Merger, such
Stockholder will not, directly or indirectly, own, manage,
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<PAGE>
operate, control or participate in the ownership, management, operation or
control of, or be connected in any manner with, any business which competes with
any of the businesses of the Company or any subsidiary or joint venture thereof
as such businesses are conducted as of the Effective Time of the Merger and as
any such businesses are to be conducted based upon a product or service which is
in development as of the Effective Time of the Merger (any such business, a
"Relevant Business"), except that the Stockholders may together have Beneficial
Ownership of up to 5%, in the aggregate, of a publicly traded company engaged in
a business which competes with a Relevant Business. In the event that this
covenant not to compete is held by any court of competent jurisdiction to be
unenforceable because it is too extensive in scope or time or territory, it
shall be deemed to be and shall be amended without any further act by the
parties hereto to conform to the scope and period of time and geographical area
which would permit it to be enforced. If this covenant is breached or threatened
to be breached, each Stockholder expressly consents that, in addition to any
other remedy NXS may have, NXS shall be entitled to apply for and receive
injunctive relief in order to prevent the continuation of any existing breach or
the occurrence of any threatened breach.
(b) Each Stockholder agrees that for a period ending five years after the
Effective Time of the Merger, such Stockholder will not disclose to any other
party, unless required to do so by law, any confidential, nonpublic or
proprietary information relating to the Company or to any subsidiary or joint
venture thereof which information was acquired during the course of such
Stockholder's relationship with the Company.
(c) Each Stockholder agrees that for a period ending five years after the
Effective Time of the Merger, without the prior written consent of the Company,
neither such Stockholder nor any business or enterprise with which such
Stockholder is associated as an officer, director or controlling shareholder or
other investor with the power to direct or cause the direction of the management
of such business or enterprise will employ or attempt to employ an employee of
the Company or any of its subsidiaries or joint ventures.
7.6 NO TERMINATION OR CLOSURE OF TRUSTS. Unless, in connection therewith,
the Shares held by any trust which are presently subject to the terms of this
Agreement are transferred upon termination to one or more Stockholders and
remain subject in all respects to the terms of this Agreement, or other
Permitted Transferees who upon receipt of such Shares become signatories to this
Agreement, the Stockholders who are Trustees shall not take any action to
terminate, close or liquidate any such trust and shall take all steps necessary
to maintain the existence thereof at least until the first to occur of (i) the
Effective Time of the Merger and (ii) the Termination Date.
8. FURTHER ASSURANCES. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
9. CERTAIN EVENTS. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors or
as a result of any divorce.
10. STOP TRANSFER. (a) Each Stockholder agrees with, and covenants to, NXS
that such Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of such Stockholder's Shares, unless such transfer is made in
compliance with this Agreement.
(b) Each Stockholder who is an "affiliate" of the Company for purposes of
Rule 145 under the Securities Act of 1933, as amended, hereby agrees to deliver
to Newco, on or prior to the Closing Date (as
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<PAGE>
defined in the Merger Agreement) a written agreement substantially in the form
attached as Exhibit B to the Merger Agreement.
11. Termination. The obligations of the Stockholders under Section 6,
Section 7.1 and Section 7.2 shall terminate upon the first to occur of (a) the
Effective Time of the Merger and (b) the date the Merger Agreement is terminated
in accordance with its terms (the "Termination Date"). In the event the Merger
Agreement is terminated, the obligations set forth in Section 7.5 shall also
terminate. Except as set forth in this Section 11, all other agreements and
obligations of the parties hereto shall survive the Effective Time of the Merger
and/or the Termination Date, as applicable, and in the case of Section 3,
Section 4 and Section 5 hereof, to the extent set forth in each such section.
12. MISCELLANEOUS.
12.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (i) constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise without the prior written
consent of the other party, provided that NXS may assign, in its sole
discretion, its rights and obligations hereunder to any affiliate of NXS, but no
such assignment shall relieve NXS of its obligations hereunder if such assignee
does not perform such obligations.
12.2 AMENDMENTS. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto; provided that Schedule I may be supplemented by
NXS by adding the name and other relevant information concerning any stockholder
of the Company who is or agrees to be bound by the terms of this Agreement
without the agreement of any other party hereto, and thereafter such added
stockholder shall be treated as a "Stockholder" for all purposes of this
Agreement.
12.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
<TABLE>
<S> <C>
If to the c/o Lawrence J. DeGeorge
Stockholder: 176 Spyglass Lane
Jupiter, FL 33477
Attn: Lawrence DeGeorge
copy to: Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 10004
Attn: David P. Falck, Esq.
If to NXS: c/o Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Attn: Michael Michelson
copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Charles I. Cogut, Esq.
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
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<PAGE>
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
12.5 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
12.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
12.7 DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
12.8 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
12.9 DEFINITIONS; CONSTRUCTION. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would
constitute a "group" as described in Section 13(d)(3) of the Exchange Act.
(b) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(c) In the event of a stock dividend or distribution, or any change in
the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall be deemed to refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for
which any or all of the Shares may be changed or exchanged.
12.10 STOCKHOLDER CAPACITY. Notwithstanding anything herein to the
contrary, no person executing this Agreement who is, or becomes during the term
hereof, a director of the Company makes any agreement or understanding herein in
his or her capacity as such director, and the agreements set forth herein shall
in no way restrict any director in the exercise of his or her fiduciary duties
as a director of the Company. Each Stockholder has executed this Agreement
solely in his or her capacity as the record or beneficial holder of such
Stockholder's Shares or as the trustee of a trust whose beneficiaries are the
beneficial owners of such Stockholder's Shares.
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<PAGE>
IN WITNESS WHEREOF, NXS and each Stockholder have caused this Agreement to
be duly executed as of the day and year first above written.
NXS I, L.L.C.
By: /s/ MICHAEL MICHELSON
-----------------------------------------
Name: Michael Michelson
Title: PRESIDENT
/s/ LAWRENCE J. DEGEORGE
-----------------------------------------
Lawrence J. DeGeorge
/s/ FLORENCE A. DEGEORGE
-----------------------------------------
Florence A. DeGeorge
/s/ LAWRENCE F. DEGEORGE
-----------------------------------------
Lawrence F. DeGeorge
LAWRENCE J. AND FLORENCE A.
DEGEORGE CHARITABLE TRUST
By: /s/ LAWRENCE F. DEGEORGE
-----------------------------------------
Lawrence F. DeGeorge
Trustee and
By: /s/ FLORENCE A. DEGEORGE
-----------------------------------------
Florence A. DeGeorge
Trustee
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
RECORD HOLDER OR NUMBER OF
BENEFICIAL OWNER SHARES
- ----------------------------------------------------------------------------------------------------- ----------
<S> <C>
Lawrence J. DeGeorge................................................................................. 6,929,602
Florence A. DeGeorge................................................................................. 2,702,546
Lawrence F. DeGeorge................................................................................. 2,124,535
Lawrence J. and Florence A. DeGeorge Charitable Trust................................................ 1,730,770
</TABLE>
II-12
<PAGE>
ANNEX III
[LOGO]
January 23, 1997
Board of Directors
Amphenol Corporation
358 Hall Avenue
Wallingford, CT 06492
Members of the Board:
Amphenol Corporation (the "Company") and NXS Acquisition Corp. (the
"Acquisition Sub"), an entity formed by Kohlberg Kravis Roberts & Co. and a
wholly owned subsidiary of KKR 1996 Fund L.P. (collectively, the "Acquiror"),
propose to enter into an agreement (the "Agreement") pursuant to which the
Acquisition Sub will be merged with the Company in a transaction (the "Merger")
in which each outstanding share of the Company's Class A common Stock, par value
$0.001 per share (the "Shares"), other than Shares owned by the Company or any
subsidiary of the Company or by the Acquiror, the Acquisition Sub or any
subsidiary of the Acquiror and other than Dissenting Shares (as defined in the
Agreement), will be converted into either $26.00 in cash or the right to retain
at the election of the holder thereof and subject to the terms of the Agreement
1.0 Share (a "Non-Cash Election Share"). The Merger is expected to be considered
by the shareholders of the Company at a special shareholders meeting to be held
as soon as practicable and consummated on or shortly after the date of such
meeting. In connection with the Merger, we understand that certain shareholders
of the Company ("Stockholders") who collectively own in the aggregate
approximately 30% of the outstanding Shares have entered into a stockholders
agreement with an affiliate of the Acquiror (the "Stockholders Agreement")
whereby, subject to the terms of the Stockholders Agreement, (i) Stockholders
have agreed to vote their Shares in favor of the Merger and have granted such
affiliate an option to purchase all Shares held by them for $26.00 per Share in
cash, and (ii) such affiliate has granted Stockholders an option to sell to such
affiliate all of their Shares for $26.00 per Share in cash.
You have asked us whether, in our opinion, the proposed consideration to be
received by the holders of the Shares (other than the Acquiror and its
affiliates) in the Merger is fair to such shareholders from a financial point of
view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1995 and the
Company's Forms 10-Q and the related unaudited financial information for
the quarterly periods ending March 31, 1996, June 30, 1996 and September
30, 1996;
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<PAGE>
(2) Reviewed certain information furnished to us by the Company, including
financial forecasts, relating to the business, earnings, cash flow,
assets and prospects of the Company and information relating to certain
pro forma effects on the Company's capital structure after giving effect
to the Merger;
(3) Conducted discussions with members of senior management of the Company
and the Acquiror concerning the Company's businesses and prospects and
certain pro forma effects on the Company's capital structure after
giving effect to the Merger;
(4) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be reasonably similar to the Company;
(5) Compared the results of operations of the Company with that of certain
companies which we deemed to be reasonably similar to the Company;
(6) Compared the proposed financial terms of the transactions contemplated
by the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
(7) Reviewed a draft of the Agreement dated January 21, 1997;
(8) Reviewed a draft of the Stockholder Agreement dated January 21, 1997;
and
(9) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of
all information supplied or otherwise made available to us by the Company and
the Acquiror, and we have not independently verified such information or
undertaken an independent appraisal of the assets or liabilities of the Company.
With respect to the financial forecasts furnished by the Company and information
regarding certain pro forma effects on the Company's capital structure after
giving effect to the Merger, we have assumed that they have been reasonably
prepared and reflect the best currently available estimates and judgment of the
Company's management as to the expected future financial performance of the
Company and of the Acquiror, as to such pro forma effects on the Company's
capital structure, respectively. We have assumed that the final form of the
Agreement will not differ materially from the draft of the Agreement dated
January 21, 1997, reviewed by us.
Our opinion is necessarily based upon market, economic and other conditions
as they exist on, and can be evaluated as of, the date of this letter. Our
opinion does not address the merits of the underlying decision by the Company to
engage in the Merger. This opinion is for the use and benefit of the Board of
Directors of the Company and does not constitute a recommendation to any
shareholder as to how such shareholder should vote with respect to the Merger or
any transaction related thereto or as to whether any shareholders should elect
to receive cash or to retain the Non-Cash Election Shares.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third-party indications of interest for the acquisition of all or any
part of the Company. In addition, we express no opinion as to what the value of
the Non-Cash Election Shares will be upon consummation of the Merger.
We have, in the past, provided financial advisory and financing services to
the Company and the Acquiror and have received fees for the rendering of such
services. We have been retained by the Company solely for the purpose of
providing an opinion in connection with the Merger and will receive a fee for
our services, a substantial portion of which is contingent upon the consummation
of the Merger. In the ordinary course of our business, we actively trade in the
securities of the Company for our own account
III-2
<PAGE>
and for the accounts of our customers and, accordingly, may at any time hold a
long or short position in such securities.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed consideration to be received by the holders of the Shares (other
than the Acquiror and its affiliates) in the Merger is fair to such shareholders
from a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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<PAGE>
ANNEX IV
DELAWARE CODE ANNOTATED
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER OR CONSOLIDATION
8 DEL. C. SECTION 262
SECTION 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of his shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section, the word "stockholder"
means a holder of record of stock in a stock corporation and also a member of
record of a nonstock corporation; the words "stock" and "share" mean and include
what is ordinarily meant by those words and also membership or membership
interest of a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to SectionSection251 (other than a merger effected pursuant to
subsection (g) of Section251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
SectionSection251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 holders;
IV-1
<PAGE>
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand for
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares. A proxy
or vote against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective date
of such merger or consolidation, the surviving or resulting corporation
shall notify each stockholder of each constituent corporation who has
complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to Section228
or Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are available for
any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of the
merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of
a constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights
may, within twenty days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of
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<PAGE>
any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send such
a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either notice
that such notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation
may fix, in advance, a record date that shall not be more than 10 days prior
to the date the notice is given; provided that, if the notice is given on or
after the effective date of the merger or consolidation, the record date
shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or
IV-3
<PAGE>
expectation of the merger or consolidation, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account all relevant
factors. In determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the surviving or
resulting corporation would have had to pay to borrow money during the pendency
of the proceeding. Upon application by the surviving or resulting corporation or
by any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial proceedings and
may proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted his certificates of stock to the Register
in Chancery, if such is required, may participate fully in all proceedings until
it is finally determined that he is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
IV-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
for, among other things: (a) permissive indemnification for expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by designated persons, including directors and officers of a
corporation, in the event such persons are parties to litigation other than
stockholder derivative actions if certain conditions are met; (b) permissive
indemnification for expenses (including attorneys' fees) actually and reasonably
incurred by designated persons, including directors and officers of a
corporation, in the event such persons are parties to stockholder derivative
actions if certain conditions are met; (c) mandatory indemnification for
expenses (including attorneys' fees) actually and reasonably incurred by
designated persons, including directors and officers of a corporation, in the
event such persons are successful on the merits or otherwise in defense of
litigation covered by (a) and (b) above; and (d) that the indemnification
provided for by Section 145 is not deemed exclusive of any other rights which
may be provided under any by-law, agreement, stockholder or disinterested
director vote, or otherwise.
Article Eighth of Amphenol's Restated Certificate of Incorporation provides
that no director of Amphenol shall be personally liable to Amphenol or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, provided, however, that such indemnification shall not apply to any
liability of a director (i) for any breach of the director's duty of loyalty to
Amphenol or its stockholders, (ii) for acts or omissions that are not in good
faith or involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL (certain illegal distributions), or (iv) for any
transaction from which the director derived an improper personal benefit. In
addition, Article Eighth authorizes Amphenol to indemnify any person entitled to
be indemnified under law to the fullest extent permitted by law.
Article VIII of Amphenol's By-laws authorizes the Company to purchase and
maintain insurance for its directors and officers against any liability asserted
against them in their respective capacities, and to indemnify any person
entitled to be indemnified under law to the fullest extent permitted by law, as
in Article Eighth of the Restated Certificate of Incorporation. In addition, the
By-laws provide that expenses incurred by any director or officer in defending
any action may be paid by the Company in advance of the final disposition of
such action as determined by the Board of Directors.
The Stockholders' Agreement dated as of December 22, 1992, between Amphenol
and certain of its stockholders (the "Stockholders"), provides that either the
Company or each Stockholder will indemnify and hold harmless each director and
certain officers of the Company under certain circumstances involving a material
omission or untrue statement in the registration documents relating to such
Stockholders' shares.
The Company maintains officers' and directors' insurance covering certain
liabilities that may be incurred by officers and directors in the performance of
their duties.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See the Exhibit Index included immediately preceding the exhibits to this
Registration Statement.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
II-1
<PAGE>
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed to be underwriters, in addition to the information
called for by the other Items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding undertaking or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wallingford, State of
Connecticut, on April 15, 1997.
AMPHENOL CORPORATION
BY /S/ MARTIN H. LOEFFLER
-----------------------------------------
Martin H. Loeffler
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ LAWRENCE J. DEGEORGE
- ------------------------------ Chairman of the Board April 15, 1997
Lawrence J. DeGeorge
/s/ MARTIN H. LOEFFLER
- ------------------------------ Director, President and April 15, 1997
Martin H. Loeffler Chief Executive Officer
/s/ EDWARD G. JEPSEN
- ------------------------------ April 15, 1997
Edward G. Jepsen Director, Executive Vice
President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
/s/ TIMOTHY F. COHANE
- ------------------------------ Director, Senior Vice April 15, 1997
Timothy F. Cohane President
/s/ FLORENCE A. DEGEORGE
- ------------------------------ Director April 15, 1997
Florence A. DeGeorge
/s/ DR. MARCIA A. SAVAGE
- ------------------------------ Director April 15, 1997
Dr. Marcia A. Savage
/s/ A. HENRY MORGAN
- ------------------------------ Director April 15, 1997
A. Henry Morgan
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Martin H. Loeffler, Edward G. Jepsen and Edward
C. Wetmore, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as such person might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ LAWRENCE J. DEGEORGE
- ------------------------------ Chairman of the Board April 15, 1997
Lawrence J. DeGeorge
/s/ MARTIN H. LOEFFLER
- ------------------------------ Director, President and April 15, 1997
Martin H. Loeffler Chief Executive Officer
/s/ EDWARD G. JEPSEN
- ------------------------------ April 15, 1997
Edward G. Jepsen Director, Executive Vice
President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
/s/ TIMOTHY F. COHANE
- ------------------------------ Director, Senior Vice April 15, 1997
Timothy F. Cohane President
/s/ FLORENCE A. DEGEORGE
- ------------------------------ Director April 15, 1997
Florence A. DeGeorge
/s/ DR. MARCIA A. SAVAGE
- ------------------------------ Director April 15, 1997
Dr. Marcia A. Savage
/s/ A. HENRY MORGAN
- ------------------------------ Director April 15, 1997
A. Henry Morgan
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of January 23, 1997 and amended as of April 9, 1997, between
Amphenol Corporation, Inc. ("Amphenol") and NXS Acquisition Corp. ("Newco"), including the principal
exhibits thereto (included as Annex I to the Proxy Statement). Schedules to the Agreement and Plan of
Merger are not filed, but will be provided supplementally to the Commission upon request.
3.1 Form of Amended and Restated Certificate of Incorporation of Amphenol Corporation to be filed in
connection with the Merger (included as Exhibit A to Annex I-B to the Proxy Statement).
4.1 Stockholders Agreement, dated as of January 23, 1997, among NXS and the stockholders parties thereto
(included as Annex II to the Proxy Statement).
5.1 Opinion of Winthrop, Stimson, Putnam & Roberts.
8.1 Opinion of Winthrop, Stimson, Putnam & Roberts.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Winthrop, Stimson, Putnam & Roberts (contained in Exhibit 5.1).
23.3 Consent of Winthrop, Stimson, Putnam & Roberts (contained in Exhibit 8.1).
23.4 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
24.1 Powers of Attorney (see Page II-4 of this Registration Statement).
99.1 Form of Proxy Card for Annual Meeting of stockholders.
99.2 Form of Non-Cash Election Form to be used in connection with the Merger.
99.3 Form of Letter of Transmittal to be used in connection with the Merger.
99.4 Form of Exchange Agent Agreement.
99.5 Consent of Michael W. Michelson.
99.6 Consent of Marc S. Lipschultz.
99.7 Consent of Henry R. Kravis.
99.8 Consent of George R. Roberts.
</TABLE>
<PAGE>
EXHIBIT 5.1
April 15, 1997
Amphenol Corporation
358 Hall Avenue
Wallingford, Connecticut 06492
Ladies and Gentlemen:
We have acted as special counsel to Amphenol Corporation, a Delaware
corporation (the "Company"), in connection with the filing by the Company with
the Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-4 (the "Registration Statement"), relating to the proposed
merger of NXS Acquisition Corp., a Delaware corporation, with and into the
Company (the "Merger") pursuant to the Agreement and Plan of Merger between such
parties dated as of January 23, 1997, as amended (the "Merger Agreement").
Pursuant to the Merger, existing stockholders of the Company will retain
4,400,000 shares of the Company's Class A Common Stock, par value $.001 per
share (the "Shares"), on the terms and subject to the conditions set forth in
the Merger Agreement.
We are members of the New York Bar and, for the purposes of this opinion, do
not hold ourselves out as experts on the laws of any jurisdiction other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the laws of the United States of America.
We have examined and relied upon such records, documents and other
instruments as we have deemed relevant and necessary as the basis for this
opinion and have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, and the conformity to original
documents of all documents submitted to us as certified or photostatic copies.
We have also assumed, with your permission, that (i) all outstanding Shares
issued pursuant to the exercise of options and warrants have been, and all
Shares to be issued after the date hereof and prior to the effective time of the
Merger pursuant to the exercise of outstanding options, will be, issued in
accordance with the terms and provisions of the option or warrant agreement
governing such issuance and that such agreement is in the form approved by the
Board of Directors or an appropriately authorized committee thereof and (ii)
upon the exercise of all such options and warrants, the Company received or, if
exercised after the date hereof, will receive, the consideration provided for in
the applicable option or warrant agreement. As to various questions of fact
material to this opinion, we have examined and relied upon, to the extent we
deemed such reliance proper, representations, corporate records, agreements,
documents and other instruments, certificates or comparable documents of public
officials and of officers and representatives of the Company.
Based upon and subject to the foregoing, we are of the opinion that the
Shares to be retained in the manner and on the terms described in the
Registration Statement and the Merger Agreement have been or, if issued after
the date hereof pursuant to outstanding options, will be, duly authorized,
validly issued, fully paid, and nonassessable under the General Corporation Law
of the State of Delaware as in effect on this date.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Independent
Public Accountants and Legal Opinions" in the Proxy Statement/Prospectus
included in the Registration Statement. In giving this consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Commission.
Very truly yours,
/s/ WINTHROP, STIMSON, PUTNAM & ROBERTS
<PAGE>
EXHIBIT 8.1
April 15, 1997
Amphenol Corporation
358 Hall Avenue
Wallingford, CT 06492
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
You have requested our opinion as to the material United States federal
income tax considerations applicable to the merger between Amphenol Corporation
and NXS Acquisition Corp., both Delaware corporations (the "Merger"), as more
fully described in the above-referenced Registration Statement and the exhibits
thereto filed with the Securities and Exchange Commission (the "Registration
Statement"). Capitalized terms not defined herein have the meanings ascribed to
them in the Registration Statement.
Based upon and subject to the facts as set forth in the Registration
Statement, we hereby confirm that our opinion set forth under the heading
"Certain Federal Income Tax Consequences" in the Proxy Statement/Prospectus
included in the Registration Statement addresses the material United States
federal income tax matters and consequences generally applicable to the Merger,
under currently applicable law, subject to the qualifications stated in the
Proxy Statement/Prospectus.
This opinion expresses our views as to the United States federal income tax
laws in effect as of the date hereof, including the Internal Revenue Code of
1986, as amended, applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practice of the IRS,
all of which are subject to change either prospectively or retroactively. Also,
any variation or difference from the facts as set forth in the Registration
Statement and incorporated herein might affect the conclusion stated herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the headings "The
Merger--Certain Federal Income Tax Consequences" and "Independent Accountants
and Legal Opinions" in the Proxy Statement/Prospectus included in the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Commission.
Very truly yours,
/s/ WINTHROP, STIMSON, PUTNAM &
ROBERTS
<PAGE>
EXHIBIT 23.1
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Amphenol
Corporation of our report dated January 14, 1997, except as to Note 12, which is
as of January 23, 1997 appearing on page 21 of Amphenol Corporation's Annual
Report on Form 10-K/A for the year ended December 31, 1996.
Hartford, Connecticut
April 11, 1997
/s/ PRICE WATERHOUSE LLP
<PAGE>
EXHIBIT 23.4
CONSENT OF
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
March 26, 1997
The Board of Directors
Amphenol Corporation
358 Hall Avenue
Wallingford, Connecticut 06492
Dear Members of the Board:
We hereby consent to the use of our opinion letter, dated January 23, 1997,
to the Board of Directors of Amphenol Corporation ("Amphenol"), included as
Annex III to the Proxy Statement/Prospectus which forms a part of the
Registration Statement on Form S-4 relating to the proposed merger of Amphenol
and NXS Acquisition Corp., a wholly owned subsidiary of KKR 1996 Fund L.P., a
limited partnership organized at the direction of Kohlberg Kravis Roberts & Co.
L.P., and to the references therein to such opinion under the captions
"Summary--Opinion of Merrill Lynch," "The Merger--Background of the Merger,"
"The Merger--Recommendation of the Board of Directors; Reasons for the Merger,"
and "The Merger-- Opinion of Merrill Lynch."
In giving such consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder, nor do we thereby admit that we are experts with respect
to any part of such Registration Statement within the meaning of the term
"experts" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
<PAGE>
AMPHENOL CORPORATION
WALLINGFORD, CONNECTICUT
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE SPECIAL
MEETING IN LIEU OF THE
ANNUAL MEETING OF STOCKHOLDERS ON THE 14TH DAY OF MAY, 1997
The undersigned hereby appoints Lawrence J. DeGeorge and Edward G. Jepsen,
and each of them, each with the power to appoint his or her substitute,
attorneys successors and assigns with the powers the undersigned would possess
if personally present to vote all of the Common Stock of Amphenol Corporation
(hereinafter "Amphenol") held of record by the undersigned on March 24, 1997, at
the Special Meeting in lieu of the 1997 Annual Meeting of the Stockholders to be
held on the 14th day of May, 1997 at 10:00 a.m. local time, at Amphenol's
headquarters, 358 Hall Avenue, Wallingford, Connecticut 06492, and at any
adjournments or postponements thereof, upon the matters set forth herein and, in
their discretion, upon all other matters which may come before the meeting.
Without otherwise limiting the general authorization hereby given, said
attorneys are instructed to vote as follows on the matters set forth below:
MANAGEMENT AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR PROPOSALS 1, 2 AND 3.
(1) To consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Merger, dated as of January 23, 1997 and as amended as of April 9,
1997 (the "Merger Agreement"), between Amphenol and NXS Acquisition Corp.
("Newco"). The Merger Agreement provides, among other things, for the merger
of Newco with and into Amphenol (the "Merger") pursuant to which each share
of Amphenol Class A common stock, $.001 par value per share ("Amphenol
Common Stock") (other than (i) shares of Amphenol Common Stock held by
Amphenol, any subsidiary of Amphenol, KKR 1996 Fund L.P., a Delaware limited
partnership (the "Partnership"), Newco or any subsidiary of the Partnership,
which will be cancelled and retired, and (ii) fractional shares and shares
of Amphenol Common Stock subject to dissenters' rights), will be converted
into either (a) the right to receive $26.00 in cash or (b) the right to
retain one share of Amphenol Common Stock (the "Merger Proposal"). Because
approximately 4,400,000 shares of Amphenol Common Stock in the aggregate
must be retained by existing Amphenol stockholders either through election
or proration, the right to receive either $26.00 in cash for each share or
to retain that share of Amphenol Common stock is subject to proration, as
set forth in the Merger Agreement.
FOR: ____ AGAINST: ____ ABSTAIN: ____
(2) To elect the following directors to serve either until their terms expire at
the 2000 Annual Meeting of Stockholders or until their respective successors
are duly elected or appointed (as the case may be) and qualified; provided
that if the Merger Proposal is approved and adopted by the Amphenol
stockholders, the directors of Amphenol immediately after the effective time
of the Merger would be Martin H. Loeffler and the then current directors of
Newco:
Lawrence J. DeGeorge
FOR: ____ AGAINST: ____ ABSTAIN: ____
Dr. Marcia A. Savage
FOR: ____ AGAINST: ____ ABSTAIN: ____
<PAGE>
(3) To ratify the selection of Price Waterhouse LLP as independent auditors of
Amphenol.
FOR: ____ AGAINST: ____ ABSTAIN: ____
(4) To transact such other business as may properly come before the Special
Meeting in lieu of the Annual Meeting or any adjournments or postponements
thereof.
THE PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE IS SPECIFIED, FOR
PROPOSALS 1, 2 AND 3, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
Please mark, sign, date and return this proxy in the enclosed envelope as soon
as possible, even though you plan to attend this meeting.
To help our preparation for the meeting, please check here if you plan to
attend. ____
SPACE FOR MAILING LABEL
SIGN HERE EXACTLY AS NAME(S) APPEAR(S) ABOVE
_________________________________________________ Date: _________________
_________________________________________________ Date: _________________
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
If your address has changed, please note new address:
_________________________________________________________ Zip Code: ____________
<PAGE>
NON-CASH ELECTION FORM
This Form is to accompany the certificates for shares of Class A common
stock, par value $.001 per share ("Amphenol Common Stock"), of Amphenol
Corporation ("Amphenol" or the "Company") if such certificates are submitted
pursuant to an election (a "Non-Cash Election") to retain shares of Amphenol
Common Stock ("Non-Cash Election Shares") in connection with the proposed merger
(the "Merger") of NXS Acquisition Corp. with and into Amphenol.
HOLDERS OF AMPHENOL COMMON STOCK WHO DO NOT WISH TO MAKE A NON-CASH ELECTION
(ANY SUCH HOLDER, A "NON-ELECTING HOLDER") SHOULD NOT SUBMIT THIS FORM. EACH
SHARE OF AMPHENOL COMMON STOCK OWNED BY ANY SUCH NON-ELECTING HOLDER WILL
AUTOMATICALLY, SUBJECT TO PRORATION AS DESCRIBED IN THE PROXY STATEMENT (AS
DEFINED BELOW), BE CONVERTED INTO THE RIGHT TO RECEIVE AN AMOUNT EQUAL TO $26.00
IN CASH FROM AMPHENOL FOLLOWING THE MERGER.
TO: IBJ SCHRODER BANK & TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT COURIER:
IBJ Schroder Bank & Trust Company (212) 858-2611 IBJ Schroder Bank & Trust Company
P.O. Box 84 1 State Street
Bowling Green Station CONFIRM BY TELEPHONE TO: New York, New York 10004
New York, New York 10274-0084 (212) 858-2103 Attention: Reorganization
Attention: Reorganization Department
Department Securities Processing Window SC-1
Information Agent:
Mackenzie Partners, Inc.
(212) 929-5500
(800) 322-2885
</TABLE>
Delivery of this Form to an address, or transmission of instructions via a
telecopy facsimile number, other than as set forth above, does not constitute a
valid delivery.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
BOX I
<TABLE>
<S> <C> <C> <C>
SHARES SUBMITTED
NAME AND ADDRESS OF REGISTERED HOLDER* (ATTACH ADDITIONAL LIST IF NECESSARY)
<CAPTION>
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER CERTIFICATE(S) SUBMITTED**
<S> <C> <C> <C>
Total Common
Shares
* Only certificates registered in a single form may be deposited with this Form of Election. If certificates are registered in
different forms (e.g., John R. Doe and J.R. Doe), it will be necessary to fill in, sign and submit as many separate Forms of
Election as there are different registrations of certificates.
** Unless otherwise indicated, it will be assumed that all shares submitted are to be treated as having made a Non-Cash Election.
</TABLE>
/ / Check here if you cannot locate certificates. Upon receipt of this Form,
the Agent will contact you directly with replacement instructions.
<PAGE>
Ladies and Gentlemen:
In connection with the merger (the "Merger") of NXS Acquisition Corp. with
and into Amphenol Corporation ("Amphenol" or the "Company"), the undersigned
hereby submits the certificate(s) for shares of Class A common stock, par value
$.001 per share, of Amphenol ("Amphenol Common Stock") listed below and elects,
subject as set forth below, to have all or a portion of the shares of Amphenol
Common Stock represented by such certificates as set forth below converted into
the right to retain shares of Amphenol Common Stock following the Merger
("Non-Cash Election Shares").
The following election is subject to (i) the terms, conditions and
limitations set forth in the Proxy Statement, dated April 15, 1997 relating to
the Merger (the "Proxy Statement"), receipt of which is acknowledged by the
undersigned, (ii) the terms of the Agreement and Plan of Merger, dated as of
January 23, 1997 and as amended as of April 9, 1997, as the same may be amended
from time to time (the "Merger Agreement"), a conformed copy of which appears as
Annex I to the Proxy Statement, and (iii) the accompanying Instructions.
The undersigned authorizes and instructs you, as Exchange Agent, to deliver
such certificates of Amphenol Common Stock to the Company and to receive on
behalf of the undersigned, in exchange for the shares of Amphenol Common Stock
represented thereby, any certificate for Non-Cash Election Shares or any check
for cash issuable in the Merger pursuant to the Merger Agreement. If
certificates of Amphenol Common Stock are not delivered herewith, there is
furnished below a guarantee of delivery of such certificates representing shares
of Amphenol Common Stock from a member of a national securities exchange, a
member of the National Association of Securities Dealers, Inc. or a commercial
bank or trust company having an office in the United States.
Unless otherwise indicated under Special Payment Instructions below, please
issue any certificate for Non-Cash Election Shares and/or any check issuable in
exchange for the shares of Amphenol Common Stock represented by the certificates
submitted hereby in the name of the registered holder(s) of such Amphenol Common
Stock. Similarly, unless otherwise indicated under Special Delivery
Instructions, please mail any certificate for shares of Amphenol Common Stock
and/or any check for cash issuable in exchange for the shares of Amphenol Common
Stock represented by the certificates submitted hereby to the registered
holder(s) of the Amphenol Common Stock at the address or addresses shown above.
<PAGE>
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
<TABLE>
<S> <C>
BOX II BOX III
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS D(6) AND D(7)) (SEE INSTRUCTIONS D(8)
To be completed ONLY if the certificates To be completed ONLY if the certificates for
for Non-Cash Election Shares are to be Non-Cash Election Shares are to be registered
registered in the name of, or the checks are in the name of, or the checks are to be made
to be made payable to, someone other than the payable to, the registered holder(s) of
registered holder(s) of shares of Amphenol shares of Amphenol Common Stock, but are to
Common Stock. be sent to someone other than the registered
Name......................................... holders(s) or to an address other than the
(Please Print) address of the registered holder(s) set forth
............................................. above.
(Please Print) Name.........................................
Address...................................... (Please Print)
............................................. .............................................
(Including Zip Code) (Please Print)
............................................. Address .....................................
(Tax Identification or .............................................
Social Security Number) (Including Zip Code)
</TABLE>
BOX IV
<TABLE>
<S> <C>
SIGN HERE AND HAVE SIGNATURES GUARANTEED
(SEE INSTRUCTIONS D(1) AND D(7) CONCERNING SIGNATURE GUARANTEE)
............................................. Name(s):.....................................
............................................. (Please Print)
Signature(s) of Owner(s) Name(s):.....................................
Must be signed by registered holder(s) (Please Print)
exactly as name(s) appear(s) on stock Name(s):.....................................
certificate(s) or by person(s) authorized to (Please Print)
become registered holder(s) by certificates .............................................
and documents transmitted herewith. If .............................................
signature is by a trustee, executor, (Area Code and Telephone Number(s))
administrator, guardian, officer of a .............................................
corporation, attorney-in-fact or any other .............................................
person acting in a fiduciary capacity, set (Tax Identification or
forth full title in such capacity and see Social Security Number(s))
Instruction D(3). Dated: ................................ 1997.
Signature(s)
Guaranteed: .................................
(See Instruction D(7))
</TABLE>
<PAGE>
BOX V
<TABLE>
<S> <C>
GUARANTEE OF DELIVERY
(TO BE USED ONLY IF CERTIFICATES ARE NOT SURRENDERED HEREWITH)
The undersigned is: .............................................
- a member of a national securities (Firm--Please Print)
exchange, .............................................
- a member of the National Association of (Authorized Signature)
Securities Dealers, Inc., or .............................................
- a commercial bank or trust company in the .............................................
United States; .............................................
and guarantees to deliver to the Exchange .............................................
Agent the certificates for shares of Amphenol (Address)
Common Stock to which this Form relates, duly .............................................
endorsed in blank or otherwise in form (Area Code and Telephone Number)
acceptable for transfer on the books of .............................................
Amphenol, no later than 5:00 P.M. New York (Contact Name)
City time on the third New York Stock
Exchange trading day after the date of
execution of this guarantee of delivery.
</TABLE>
(DO NOT WRITE IN SPACES BELOW)
<TABLE>
<CAPTION>
SHARES
CONVERTED
INTO
NON-CASH SHARES
SHARES SHARES ELECTION CERTIFICATE BLOCK CONVERTED CHECK AMOUNT OF
SURRENDERED ACCEPTED SHARES NO. NO. INTO CASH NO. CHECK
<S> <C> <C> <C> <C> <C> <C> <C>
Delivery Prepared By ................ Checked By ................ Date................................
</TABLE>
<PAGE>
INSTRUCTIONS
A. SPECIAL CONDITIONS.
1. TIME IN WHICH TO ELECT. To be effective, an election pursuant to the
terms and conditions set forth herein (an "Election") on this Form or a
facsimile hereof, accompanied by the above-described certificates representing
shares of Amphenol Common Stock or a proper guarantee of delivery thereof, must
be received by the Exchange Agent, at the address set forth above, no later than
5:00 P.M., New York City time, on May 13, 1997 (the "Election Date"). Holders of
Amphenol Common Stock whose stock certificates are not immediately available may
also make an effective Election by completing this form or facsimile hereof,
having the Guarantee of Delivery box (BOX V) properly completed and duly
executed (subject to the condition that the certificates for which delivery is
thereby guaranteed are in fact delivered to the Exchange Agent, duly endorsed in
blank or otherwise in form acceptable for transfer on the books of Amphenol, no
later than 5:00 P.M., New York City time, on the third New York Stock Exchange
trading day after the date of execution of such guarantee of delivery). Each
share of Amphenol Common Stock with respect to which the Exchange Agent shall
have not received an effective Election prior to the Election Date, or with
respect to which the proration procedures set forth in the Proxy Statement
pertain, outstanding at the Effective Time of the Merger will be converted into
the right to receive an amount equal to $26.00 in cash from the Company
following the Merger. See Instruction C.
2. REVOCATION OF ELECTION. Any Election may be revoked by the person who
submitted this Form to the Exchange Agent and the certificate(s) for shares
withdrawn by written notice duly executed and received by the Exchange Agent
prior to the Election Date. Such notice must specify the person in whose name
the shares of Amphenol Common Stock to be withdrawn had been deposited, the
number of shares to be withdrawn, the name of the registered holder thereof, and
the serial numbers shown on the certificate(s) representing the shares to be
withdrawn. If an Election is revoked, and the certificate(s) for shares
withdrawn, the Amphenol Common Stock certificate(s) submitted therewith will be
promptly returned by the Exchange Agent to the person who submitted such
certificate(s).
3. TERMINATION OF RIGHT TO ELECT. If for any reason the Merger is not
consummated or is abandoned, all Forms will be void and of no effect.
Certificate(s) for Amphenol Common Stock previously received by the Exchange
Agent will be returned promptly by the Exchange Agent to the person who
submitted such stock certificate(s).
B. ELECTION AND PRORATION PROCEDURES.
A description of the election and proration procedures is set forth in the
Proxy Statement under "THE MERGER--Non-Cash Election" and "THE MERGER--Non-Cash
Election Procedure." A full statement of the election and proration procedures
is contained in the Merger Agreement and all Elections are subject to compliance
with such procedures. IN CONNECTION WITH MAKING ANY ELECTION, A HOLDER OF
AMPHENOL COMMON STOCK SHOULD READ CAREFULLY, AMONG OTHER MATTERS, THE AFORESAID
DESCRIPTION AND STATEMENT AND THE INFORMATION CONTAINED IN THE PROXY STATEMENT
UNDER "THE MERGER--CERTAIN FEDERAL INCOME TAX CONSEQUENCES." SEE ALSO "RISK
FACTORS--NON-CASH ELECTION AND PRORATION INTO CASH--POSSIBLE DIVIDEND TREATMENT"
IN THE PROXY STATEMENT FOR A DISCUSSION OF THE POSSIBILITY THAT THE RECEIPT OF
CASH AS A RESULT OF PRORATION BY A HOLDER WHO HAS MADE A NON-CASH ELECTION MAY
BE TREATED AS A DIVIDEND AS OPPOSED TO A CAPITAL GAIN.
AS A RESULT OF THE PRORATION PROCEDURES, HOLDERS OF AMPHENOL COMMON STOCK
MAY RECEIVE NON-CASH ELECTION SHARES OR CASH IN AMOUNTS WHICH VARY FROM THE
AMOUNTS SUCH HOLDERS ELECT TO RECEIVE. SUCH HOLDERS WILL NOT BE ABLE TO CHANGE
THE NUMBER OF NON-CASH ELECTION SHARES OR THE AMOUNT OF CASH ALLOCATED TO THEM
PURSUANT TO SUCH PROCEDURES.
C. RECEIPT OF NON-CASH ELECTION SHARES OR CHECKS.
As soon as practicable after the Effective Time of the Merger and after the
Election Date, the Exchange Agent will mail certificate(s) for Non-Cash Election
Shares and/or cash payments by check to the holders of Amphenol Common Stock
with respect to each share of Amphenol Common Stock which is included in any
effective Election. Holders of Amphenol Common Stock who declined to make an
Election, or failed to make an effective Election, with respect to any or all of
their shares will receive, for each such share, the right to receive an amount
equal to $26.00 in cash, subject to proration, as soon as practicable after the
certificate(s) representing such share or shares have been submitted.
<PAGE>
No fractional shares will be issued in connection with the Merger. In lieu
thereof, the Exchange Agent, as agent for the holders of Amphenol Common Stock
who become entitled to a fraction of a Non-Cash Election Share, shall promptly
sell the aggregate of the fractional share interests of such holders and remit
the net proceeds thereof (after commissions, costs and expenses incurred in
connection with such sale) to such holders according to their respective
interests therein.
D. GENERAL.
1. EXECUTION AND DELIVERY. This Form or a facsimile hereof must be
properly filled in, dated and signed in BOX IV, and must be delivered (together
with stock certificates representing the shares of Amphenol Common Stock as to
which the Election is made or with a duly signed guarantee of delivery of such
certificates) to the Exchange Agent at any of the addresses set forth above.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF THE
STOCKHOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS SUGGESTED.
2. INADEQUATE SPACE. If there is insufficient space on this Form to list
all your stock certificates being submitted to the Exchange Agent, please attach
a separate list.
3. SIGNATURES. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on this Form should correspond exactly with
the name(s) as written on the face of the certificate(s) submitted unless the
shares of Amphenol Common Stock described on this Form have been assigned by the
registered holder(s), in which event this Form should be signed in exactly the
same form as the name of the last transferee indicated on the transfers attached
to or endorsed on the certificates.
If this Form is signed by a person or persons other than the registered
owners of the certificates listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered owner(s) appear on the certificates.
If this Form or any stock certificate(s) or stock power(s) are signed by a
trustee, executor, administrator, guardian, officer of a corporation,
attorney-in-fact or any other person acting in a representative or fiduciary
capacity, the person signing must give such person's full title in such capacity
and appropriate evidence of authority to act in such capacity must be forwarded
with this Form.
4. PARTIAL EXCHANGES. If fewer than all the shares represented by any
certificate delivered to the Exchange Agent are to be submitted for exchange,
fill in the number of shares which are to be submitted in the box entitled
"Shares Submitted". In such case, a new certificate for the remainder of the
shares represented by the old certificate will be sent to the registered owners
as soon as practicable following the Election Date. All shares represented by
certificates submitted hereunder will be deemed to have been submitted unless
otherwise indicated.
5. LOST OR DESTROYED CERTIFICATES. If your stock certificate(s) has been
either lost or destroyed, please check the box on the front of this Form below
your name and address and the appropriate forms for replacement will be sent to
you. You will then be instructed as to the steps you must take in order to
receive a stock certificate(s) representing Non-Cash Election Shares and/or any
checks in accordance with the Merger Agreement.
6. NEW CERTIFICATES AND CHECKS IN SAME NAME. If any stock certificate(s)
representing Non-Cash Election Shares or any check(s) in respect of Non-Cash
Election Shares are to be registered in, or payable to the order of, exactly the
same name(s) that appears on the certificate(s) representing shares of Amphenol
Common Stock submitted with this Form, no endorsement of certificate(s) or
separate stock power(s) are required.
7. NEW CERTIFICATES AND CHECKS IN DIFFERENT NAME. If any stock
certificate(s) representing Non-Cash Election Shares or any check(s) in respect
of Non-Cash Election Shares are to be registered in, or payable to the order of,
other than exactly the name that appears on the certificate(s) representing
shares of Amphenol Common Stock submitted for exchange herewith, such exchange
shall not be made by the Exchange Agent unless the certificates submitted are
endorsed, BOX II is completed, and the signature is guaranteed in BOX IV by a
member of a national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank (not a savings bank or a
savings & loan association) or trust company in the United States which is a
member in good standing of the Agent's Medallion Program.
<PAGE>
8. SPECIAL DELIVERY INSTRUCTIONS. If the checks are to be payable to the
order of, or the certificates for Non-Cash Election Shares are to be registered
in, the name of the registered holder(s) of shares of Amphenol Common Stock, but
are to be sent to someone other than the registered holder(s) or to an address
other than the address of the registered holder, it will be necessary to
indicate such person or address in BOX III.
9. MISCELLANEOUS. A single check and/or a single stock certificate
representing Non-Cash Election Shares will be issued.
All questions with respect to this Form and the Elections (including,
without limitation, questions relating to the timeliness or effectiveness of
revocation or any Election and computations as to proration) will be determined
by Amphenol and Newco, which determination shall be conclusive and binding.
10. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under
the "backup withholding" provisions of Federal income tax law, the Exchange
Agent may be required to withhold 31% of the amount of any payments made to
holders of Amphenol Common Stock pursuant to the Merger. To prevent backup
withholding, each holder should complete and sign the Substitute Form W-9
included in this Form and either: (a) provide the correct taxpayer
identification number ("TIN") and certify, under penalties of perjury, that the
TIN provided is correct (or that such holder is awaiting a TIN), and that (i)
the holder has not been notified by the Internal Revenue Service ("IRS") that
the holder is subject to backup withholding as a result of failure to report all
interest or dividends, or (ii) the IRS has notified the holder that the holder
is no longer subject to backup withholding; or (b) provide an adequate basis for
exemption. If the box in Part 2 of the substitute Form W-9 is checked, the
Exchange Agent shall retain 31% of cash payments made to a holder during the
sixty (60) day period following the date of the Substitute Form W-9. If the
holder furnishes the Exchange Agent with his or her TIN within sixty (60) days
of the date of the Substitute Form W-9, the Exchange Agent shall remit such
amounts retained during the sixty (60) day period to the holder and no further
amounts shall be retained or withheld from payments made to the holder
thereafter. If, however, the holder has not provided the Exchange Agent with his
or her TIN within such sixty (60) day period, the Exchange Agent shall remit
such previously retained amounts to the IRS as backup withholding and shall
withhold 31% of all payments to the holder thereafter until the holder furnishes
a TIN to the Exchange Agent. In general, if a holder is an individual, the TIN
is the Social Security number of such individual. If the certificates for
Amphenol Common Stock are registered in more than one name or are not in the
name of the actual owner, consult the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the Exchange Agent is not provided with the correct TIN or
an adequate basis for exemption, the holder may be subject to a $50 penalty
imposed by the IRS and backup withholding at a rate of 31%. Certain holders
(including, among others, all corporations and certain foreign individuals) are
not subject to these backup withholding and reporting requirements. In order to
satisfy the Exchange Agent that a foreign individual qualifies as an exempt
recipient, such holder must submit a statement (generally, IRS Form W-8), signed
under penalties of perjury, attesting to that individual's exempt status. A form
for such statements can be obtained from the Exchange Agent.
For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not
have one and how to complete the Substitute Form W-9 if Stock is held in more
than one name), consult the Guideline of the IRS for Certification of Taxpayer
Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Amphenol Common Stock to be deemed invalidly tendered, but may require the
Exchange Agent to withhold 31% of the amount of any payments made pursuant to
the Merger. Backup withholding is not an additional Federal income tax. Rather,
the Federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
Additional copies of this Form may be obtained from Mackenzie Partners, Inc.
(whose telephone number is (800) 322-2885).
April 15, 1997
<PAGE>
<TABLE>
<CAPTION>
PAYER: [TO BE NAMED]
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN Social Security Number
FORM W-9 IN THE BOX AT THE RIGHT AND OR ------------------------
CERTIFY BY SIGNING AND DATING Employer Identification Number
BELOW.
Department of the Treasury PART 2--Please check the box at the right if you have applied
Internal Revenue Service for, and are awaiting receipt of, your TIN. / /
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
Certification--under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the IRS
that I am subject to backup withholding as a result of a failure to report all interests or
dividends, or the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting interest or dividends on
your tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see Certification under Specific
Instructions in the enclosed Guidelines.)
SIGNATURE ------------------------------------ DATE
- ------------------, 1997
</TABLE>
IF YOU CHECKED THE BOX IN PART 2 OF THE SUBSTITUTE FORM W-9, YOU MUST SIGN
AND DATE THE FOLLOWING CERTIFICATION:
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification
Number has not been issued to me, and that I mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate IRS
Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31 percent of all
payments made to me pursuant to this Merger shall be retained until I provide
a Tax Identification Number to the payer and that, if I do not provide my
Taxpayer Identification Number within sixty (60) days, such retained amounts
shall be remitted to the IRS as backup withholding and 31 percent of all
reportable payments made to me thereafter will be withheld and remitted to the
IRS until I provide a Taxpayer Identification Number.
SIGNATURE
-------------------------- DATE
--------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
ELECTION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
<PAGE>
Questions and requests for assistance or additional copies of the Proxy
Statement/Prospectus or this Form of Election may be directed to the Information
Agent at the address set forth below:
THE INFORMATION AGENT IS:
[LOGO]
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
<PAGE>
LETTER OF TRANSMITTAL
TO ACCOMPANY CERTIFICATE(S) FOR SHARES OF COMMON STOCK OF
AMPHENOL CORPORATION
SURRENDERED IN CONNECTION WITH THE MERGER OF
NXS ACQUISITION CORP.
WITH AND INTO
AMPHENOL CORPORATION
This Letter of Transmittal is to accompany certificates for shares of Class
A common stock, par value $.001 per share ("Amphenol Common Stock"), of Amphenol
Corporation ("Amphenol" or the "Company") if such certificates have not been
submitted pursuant to an effective election (a "Non-Cash Election") to retain
shares of Amphenol Common Stock ("Non-Cash Election Shares") in connection with
the proposed merger (the "Merger") of NXS Acquisition Corp. ("Newco") with and
into Amphenol. Holders of Amphenol Common Stock who have previously made an
effective Non-Cash Election (any such holder, an "Electing Holder") need not
submit this Form with respect to the shares covered by such Non-Cash Election.
Each share of Amphenol Common Stock subject to such Non-Cash Election will
automatically, subject to proration as described in the Proxy Statement (as
defined below), be converted into the right to retain Non-Cash Election Shares.
By delivering certificates for shares of Amphenol Common Stock, the
registered holder of such certificates releases the Company, Newco and their
respective affiliates, directors, officers, employees, partners, agents,
advisors and representatives, and their respective successors and assigns, from
any and all claims arising from or in connection with the purchase or ownership
of such Amphenol Common Stock or the exchange of such Amphenol Common Stock
pursuant to the Merger Agreement (as defined herein).
<TABLE>
<S> <C> <C>
To: IBJ Schroder Bank & Trust Company, Exchange Agent
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT COURIER:
IBJ Schroder Bank & Trust Company (212) 858-2611 IBJ Schroder Bank & Trust Company
P.O. Box 84 1 State Street
Bowling Green Station CONFIRM BY TELEPHONE TO: New York, New York 10004
New York, New York 10274-0084 (212) 858-2103 Attention: Reorganization Department
Attention: Reorganization Department Securities Processing Window SC-1
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set forth
above does not constitute a valid delivery. PLEASE READ CAREFULLY THE
ACCOMPANYING INSTRUCTIONS
BOX I
<TABLE>
<CAPTION>
SHARES SUBMITTED
NAME AND ADDRESS OF REGISTERED HOLDER* (ATTACH ADDITIONAL LIST IF NECESSARY)
<S> <C> <C>
TOTAL NUMBER OF
CERTIFICATE SHARES REPRESENTED BY
NUMBER CERTIFICATE(S)
Total Shares
</TABLE>
* Only certificates registered in a single form may be deposited with this
Letter of Transmittal. If certificates are registered in different forms
(e.g., John R. Doe and J.R. Doe), it will be necessary to fill in, sign and
submit as many separate Letters of Transmittal as there are different
registrations of certificates.
<TABLE>
<S> <C> <C>
/ / Check here if you cannot locate your certificates. Upon receipt of this
Letter of Transmittal, the Agent will contact you directly with replacement
instructions.
</TABLE>
<PAGE>
Ladies and Gentlemen:
In connection with the Merger, the undersigned hereby submits the
certificate(s) for shares of Class A common stock, par value $.001 per share, of
Amphenol ("Amphenol Common Stock") listed in BOX I. Delivery of the enclosed
certificates shall be effected, and risk of loss of and title to such
certificates shall pass, only upon delivery thereof to you.
It is understood that this Letter of Transmittal is subject to (i) the
terms, conditions and limitations set forth in the Proxy Statement, dated April
15, 1997, relating to the Merger (including all annexes thereto, and as it may
be amended or supplemented from time to time, the "Proxy Statement"), receipt of
which is acknowledged by the undersigned, (ii) the terms of the Agreement and
Plan of Merger, dated as of January 23, 1997 and as amended as of April 9, 1997,
as the same may be amended or supplemented from time to time (the "Merger
Agreement"), a conformed copy of which appears as Annex I to the Proxy
Statement, and (iii) the accompanying Instructions.
By delivering certificates for shares of Amphenol Common Stock, the
registered holder of such certificates releases the Company, Newco and their
respective affiliates, directors, officers, employees, partners, agents,
advisors and representatives, and their respective successors and assigns, from
any and all claims arising from or in connection with the purchase or ownership
of such Amphenol Common Stock or the exchange of such Amphenol Common Stock
pursuant to the Merger Agreement.
The undersigned authorizes and instructs you, as Exchange Agent, to deliver
such certificates of Amphenol Common Stock to the Company and to receive on
behalf of the undersigned, in exchange for the shares of Amphenol Common Stock
represented thereby, any check for cash or, in the event of proration,
certificate for Non-Cash Election Shares issuable in the Merger.
Unless otherwise indicated under Special Payment Instructions below, please
issue any check and/or any certificate for Non-Cash Election Shares issuable in
exchange for the shares of Amphenol Common Stock represented by the certificates
submitted hereby in the name of the registered holder(s) of such Amphenol Common
Stock. Similarly, unless otherwise indicated under Special Delivery
Instructions, please mail any check and/or any certificate for Non-Cash Election
Shares issuable in exchange for the shares of Amphenol Common Stock represented
by the certificates submitted hereby to the registered holder(s) of Amphenol
Common Stock at the address or addresses shown above.
<TABLE>
<S> <C>
BOX II BOX III
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS C(5) AND C(6)) (SEE INSTRUCTION C(7))
To be completed ONLY if the checks are to be made To be completed ONLY if the checks are to be made
payable to someone other than the registered payable to the registered holder(s) of shares of
holder(s) of shares of Amphenol Common Stock. Amphenol Common Stock, but are to be sent to someone
Name other than the registered holder(s) or to an address
(PLEASE PRINT) other than the address of the registered holder(s)
(PLEASE PRINT) set forth above.
Address Name
(INCLUDING ZIP CODE) (PLEASE PRINT)
(TAX IDENTIFICATION OR (PLEASE PRINT)
SOCIAL SECURITY NUMBER) Address
(INCLUDING ZIP CODE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
BOX IV
SIGN HERE AND HAVE SIGNATURES GUARANTEED
(SEE INSTRUCTIONS C(1) AND C(6) CONCERNING SIGNATURE GUARANTEE)
Name(s):
(PLEASE PRINT)
Name(s):
(PLEASE PRINT)
(SIGNATURE(S) OF OWNER(S) (PLEASE PRINT)
Must be signed by registered holder(s) exactly as (AREA CODE AND TELEPHONE NUMBER(S))
name(s) appear(s) on stock certificate(s) or by per- (TAX IDENTIFICATION OR
son(s) authorized to become registered holder(s) by SOCIAL SECURITY NUMBER(S))
certificates and documents transmitted herewith. If Dated: 1997.
signature is by a trustee, executor, administrator,
guardian, officer of a corporation, attorney-in-fact
or any other person acting in a fiduciary capacity,
set forth full title in such capacity and see
Instruction C(3).
SIGNATURE(S)
GUARANTEED:
(SEE INSTRUCTION C(6))
</TABLE>
(DO NOT WRITE IN SPACES BELOW)
<TABLE>
<CAPTION>
SHARES
CONVERTED
SHARES INTO NON-CASH
SHARES CONVERTED AMOUNT OF ELECTION CERTIFICATE BLOCK
SURRENDERED INTO CASH CHECK NO. CHECK SHARES NO. NO.
<S> <C> <C> <C> <C> <C> <C>
DELIVERY PREPARED BY CHECKED BY
</TABLE>
<PAGE>
INSTRUCTIONS
A. SPECIAL CONDITIONS; PRORATION PROCEDURES
Subject to the proration procedures described in the Proxy Statement,
holders of Amphenol Common Stock who (i) declined to make a Non-Cash Election,
(ii) failed to make an effective Non-Cash Election or (iii) made an effective
Non-Cash Election but who will not receive Non-Cash Election Shares due to
proration, in each case with respect to any or all of their shares, will receive
in exchange for each share of Amphenol Common Stock, the right to receive $26.00
in cash. See Instruction B.
A description of the proration procedures is set forth in the Proxy
Statement under "THE MERGER--Non-Cash Election" and "THE MERGER--Non-Cash
Election Procedure." A full statement of the proration procedures is contained
in the Merger Agreement and any receipt of cash is subject to compliance with
such procedures.
AS A RESULT OF THE PRORATION PROCEDURES, HOLDERS OF AMPHENOL COMMON STOCK
MAY RECEIVE NON-CASH ELECTION SHARES OR CASH IN AMOUNTS WHICH VARY FROM THE
AMOUNTS SUCH HOLDERS ELECT TO RECEIVE. SUCH HOLDERS WILL NOT BE ABLE TO CHANGE
THE NUMBER OF NON-CASH ELECTION SHARES OR THE AMOUNT OF CASH ALLOCATED TO THEM
PURSUANT TO SUCH PROCEDURES.
B. RECEIPT OF CHECKS AND/OR CERTIFICATES IN EXCHANGE FOR AMPHENOL COMMON STOCK.
As soon as practicable after the Effective Time, the Exchange Agent will
mail to the registered holder listed in BOX I (or his or her designee listed in
BOX II OR III), a check from Amphenol for an amount equal to $26.00 in cash with
respect to each share of Amphenol Common Stock which is submitted with any
Letter of Transmittal, subject to the proration procedures described in the
Proxy Statement.
As a result of proration, a holder of Amphenol Common Stock may receive
Non-Cash Election Shares instead of cash. No fractional Non-Cash Election Shares
will be issued in connection with the Merger. In lieu thereof, the Exchange
Agent, as agent for the holders of Amphenol Common Stock who become entitled to
a fraction of a Non-Cash Election Share, shall promptly sell the aggregate of
the fractional share interests of such holders and remit the net proceeds
thereof (after commissions, costs and expenses incurred in connection with such
sale) to such holders according to their respective interests therein.
C. GENERAL.
1. EXECUTION AND DELIVERY. This Letter of Transmittal must be properly
filled in, dated and signed in Box IV, and must be delivered (together with
stock certificates representing the shares of Amphenol Common Stock being
submitted) to the Exchange Agent at either of the addresses set forth above.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE OPTION AND RISK OF THE
STOCKHOLDER, BUT IF SENT BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS SUGGESTED.
2. INADEQUATE SPACE. If there is insufficient space on this Form to list all
your stock certificates being submitted to Exchange Agent, please attach a
separate list.
3. SIGNATURES. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on this Letter of Transmittal should
correspond exactly with the name(s) as written on the face of the certificate(s)
submitted, unless shares of Amphenol Common Stock described on this Letter of
Transmittal have been assigned by the registered holder(s), in which event this
Letter of Transmittal should be signed in exactly the same form as the name of
the last transferee indicated on the transfers attached to or endorsed on the
certificates.
If this Letter of Transmittal is signed by a person or persons other than
the registered owners of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered owner(s) appear on the certificates.
If this Letter of Transmittal or any stock certificate(s) or stock power(s)
are signed by a trustee, executor, administrator, guardian, officer of a
corporation, attorney-in-fact or any other person acting in a representative or
fiduciary capacity, the person signing must give such person's full title in
such capacity and appropriate evidence of authority to act in such capacity must
be forwarded with this Letter of Transmittal.
4. LOST OR DESTROYED CERTIFICATES. If your stock certificate(s) has been
either lost or destroyed, please check the box on the front of this Letter of
Transmittal below your name and address and the appropriate forms for
replacement will be sent to you. You will then be instructed as to the steps you
must take in order to receive any checks and/or a stock certificate(s)
representing Non-Cash Election Shares in accordance with the Merger Agreement.
<PAGE>
5. CHECKS AND/OR NEW STOCK CERTIFICATES IN SAME NAME. If any checks or stock
certificate(s) representing Non-Cash Election Shares are to be registered in, or
made payable to the order of, exactly the same name(s) that appears on the
certificate(s) representing shares of Amphenol Common Stock submitted with this
Letter of Transmittal, no endorsement of certificate(s) or separate stock
power(s) is required.
6. CHECKS AND/OR NEW CERTIFICATES IN DIFFERENT NAME. If any checks or stock
certificate(s) representing Non-Cash Election Shares are to be registered in, or
made payable to the order of, other than exactly the name that appears on the
certificate(s) representing shares of Amphenol Common Stock submitted for
exchange herewith, such exchange shall not be made by the Exchange Agent unless
the certificates submitted are endorsed, BOX II is completed, and the signature
is guaranteed in BOX IV by a member of a national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a commercial bank
(not a savings bank or a savings & loan association) or trust company in the
United States which is a member in good standing of the Agent's Medallion
Program.
7. SPECIAL DELIVERY INSTRUCTIONS. If the checks are to be made payable to
the order of, or the certificates for Non-Cash Election Shares are to be
registered in, the name of the registered holder(s) of shares of Amphenol Common
Stock, but are to be sent to someone other than the registered holder(s) or to
an address other than the address of the registered holder, it will be necessary
to indicate such person or address in BOX III.
8. MISCELLANEOUS. A single check and/or a single stock certificate
representing Non-Cash Election Shares will be issued in exchange for shares of
Amphenol Common Stock submitted herewith.
All questions with respect to this Letter of Transmittal will be determined
by Amphenol and Newco, which determination shall be conclusive and binding.
9. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under the
"backup withholding" provisions of Federal income tax law, the Exchange Agent
may be required to withhold 31% of the amount of any payments made to holders of
Amphenol Common Stock pursuant to the Merger. To prevent backup withholding,
each holder should complete and sign the Substitute Form W-9 included in this
Letter of Transmittal and either: (a) provide the correct taxpayer
identification number ("TIN") and certify, under penalties of perjury, that the
TIN provided is correct (or that such holder is awaiting a TIN), and that (i)
the holder has not been notified by the Internal Revenue Service (the "IRS")
that the holder is subject to backup withholding as a result of failure to
report all interest or dividends, or (ii) the IRS has notified the holder that
the holder is no longer subject to backup withholding; or (b) provide an
adequate basis for exemption. If the box in Part 2 of the substitute Form W-9 is
checked, the Exchange Agent shall retain 31% of payments made to a holder during
the sixty (60) day period following the date of the Substitute Form W-9. If the
holder furnishes the Exchange Agent with his or her TIN within sixty (60) days
of the date of the Substitute Form W-9, the Exchange Agent shall remit such
amounts retained during the sixty (60) day period to the holder and no further
amounts shall be retained or withheld from payments made to the holder
thereafter. If, however, the holder has not provided the Exchange Agent with his
or her TIN within such sixty (60) day period, the Exchange Agent shall remit
such previously retained amounts to the IRS as backup withholding and shall
withhold 31% of all payments to the holder thereafter until the holder furnishes
a TIN to the Exchange Agent. In general, if a holder is an individual, the TIN
is the Social Security number of such individual. If the certificates for
Amphenol Common Stock are registered in more than one name or are not in the
name of the actual owner, consult the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the Exchange Agent is not provided with the correct TIN or
an adequate basis for exemption, the holder may be subject to a $50 penalty
imposed by the IRS and backup withholding at a rate of 31%. Certain holders
(including, among others, all corporations and certain foreign individuals) are
not subject to these backup withholding and reporting requirements. In order to
satisfy the Exchange Agent that a foreign individual qualifies as an exempt
recipient, such holder must submit a statement (generally, IRS Form W-8), signed
under penalties of perjury, attesting to that individual's exempt status. A form
for such statements can be obtained from the Exchange Agent.
For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not
have one and how to complete the Substitute Form W-9 if Amphenol Common Stock is
held in more than one name), consult the Guideline of the IRS for Certification
of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Amphenol Common Stock to be deemed invalidly tendered, but may require the
Exchange Agent to withhold 31% of the amount of any payments made pursuant to
the Merger. Backup withholding is not an additional Federal income tax. Rather,
the Federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
Additional copies of this Letter may be obtained from IBJ Schroder Bank &
Trust Company (whose telephone number is (212) 858-2000).
<PAGE>
<TABLE>
<CAPTION>
PAYER: [TO BE NAMED]
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN Social Security Number
FORM W-9 IN THE BOX AT THE RIGHT AND OR ------------------------
CERTIFY BY SIGNING AND DATING Employer Identification Number
BELOW.
Department of the Treasury PART 2--Please check the box at the right if you have applied
Internal Revenue Service for, and are awaiting receipt of, your TIN. / /
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
Certification--under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the IRS
that I am subject to backup withholding as a result of a failure to report all interests or
dividends, or the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting interest or dividends on
your tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see Certification under Specific
Instructions in the enclosed Guidelines.)
SIGNATURE ------------------------------------ DATE
- ------------------, 1997
</TABLE>
IF YOU CHECKED THE BOX IN PART 2 OF THE SUBSTITUTE FORM W-9, YOU MUST SIGN
AND DATE THE FOLLOWING CERTIFICATION:
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification
Number has not been issued to me, and that I mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate IRS
Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31 percent of all
payments made to me pursuant to this Merger shall be retained until I provide
a Tax Identification Number to the payer and that, if I do not provide my
Taxpayer Identification Number within sixty (60) days, such retained amounts
shall be remitted to the IRS as backup withholding and 31 percent of all
reportable payments made to me thereafter will be withheld and remitted to the
IRS until I provide a Taxpayer Identification Number.
SIGNATURE
-------------------------------- DATE
--------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
ELECTION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
<PAGE>
EXHIBIT 99.4
DRAFT
EXCHANGE AGENT AGREEMENT
April __, 1997
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Reorganization Department
NXS Acquisition Corp., a Delaware corporation ("Newco") and a
subsidiary of KKR 1996 Fund L.P. (the "Partnership"), and Amphenol Corporation,
a Delaware corporation (the "Company" or "Amphenol"), have entered into an
Agreement and Plan of Merger, dated as of January 23, 1997, as amended by an
amendment dated as of April 9, 1997 (as the same may be further amended, the
"Merger Agreement"), pursuant to which Newco will be merged with and into the
Company (the "Merger"), with the Company to be the surviving corporation. At
the Effective Time of the Merger, subject to certain provisions as described in
the Merger Agreement with respect to shares owned, directly or indirectly, by
the Company or any subsidiary of the Company, or by the Partnership, Newco or
any subsidiary of the Partnership, and with respect to fractional shares and
Dissenting Shares, (i) each share of Common Stock, par value $.001 per share, of
the Company (the "Company Common Stock") issued and outstanding (other than
Electing Shares, as defined below) will be converted into the right to receive
in cash from Amphenol following the Merger an amount equal to $26.00 (the "Cash
Election Price") and (ii) each issued and outstanding share of Company Common
Stock with respect to which an election has been made and not withdrawn in
accordance with the Merger Agreement (an "Electing Share") will be converted
into the right to retain one fully paid and nonassessable share of Company
Common Stock (a "Non-Cash Election Share"). Capitalized terms not otherwise
defined herein shall have the meanings given to such terms in the Merger
Agreement.
The Merger Agreement and the Proxy Statement/Prospectus dated
___________, 1997 (the "Proxy Statement") (which constitutes a part of a
Registration Statement on Form S-4 of the Company with respect to 4,400,000
shares of the Company Common Stock) and the related proxy cards and Non-Cash
Election Form have previously been delivered to you.
You have agreed to act as exchange agent (the "Exchange Agent") in
connection with the Merger in accordance with the terms of the Merger Agreement,
the Proxy Statement and this Exchange Agent Agreement (this "Agreement").
Without limiting the generality of the preceding sentence, your specific
responsibilities as Exchange Agent shall be as follows:
<PAGE>
2
1. PRORATION OF NON-CASH ELECTION SHARES. The Company hereby
notifies you that the Non-Cash Election Number referred to in Section 2.03
of the Merger Agreement is 4,400,000. If the number of Electing Shares
exceeds the Non-Cash Election Number, then (i) the number of Electing
Shares covered by each Non-Cash Election to be converted into the right to
retain Non-Cash Election Shares will be determined by multiplying the total
number of Electing Shares covered by such Non-Cash Election by a proration
factor (the "Non-Cash Proration Factor") determined by dividing the
Non-Cash Election Number by the total number of Electing Shares and (ii)
such number of Electing Shares will be so converted. All Electing Shares,
other than those shares converted into the right to retain Non-Cash
Election Shares as described in the immediately preceding sentence, will be
converted into cash (on a consistent basis among shareholders who made the
election to retain Non-Cash Election Shares, pro rata to the number of
shares as to which they made such election) as if such shares were not
Electing Shares.
If the number of Electing Shares is less than the Non-Cash Election
Number, then (i) all Electing Shares will be converted into the right to
retain Company Common Stock in accordance with the Merger Agreement, (ii)
additional shares of Amphenol Common Stock, other than Electing Shares,
will be converted into the right to retain Non-Cash Election Shares, which
number of additional shares shall be determined by multiplying the total
number of shares, other than Electing Shares and Dissenting Shares, by a
proration factor (the "Cash Proration Factor") determined by dividing (x)
the difference between the Non-Cash Election Number and the number of
Electing Shares by (y) the total number of shares of Amphenol Common Stock,
other than Electing Shares and Dissenting Shares, and (iii) such additional
shares of Amphenol Common Stock shall be converted into the right to retain
Non-Cash Election Shares in accordance with the Merger Agreement (on a
consistent basis among shareholders who held shares of Amphenol Common
Stock as to which they did not make the Non-Cash Election, pro rata to the
number of shares as to which they did not make such election).
2. MERGER CONSIDERATION. As soon as reasonably practicable as of or
after the Effective Time of the Merger:
(a) The Company shall deliver to the transfer agent and registrar for
the Company Common Stock (the "Company Transfer Agent"), duly executed
certificates for Company Common Stock to be countersigned and re-issued as
Non-Cash Election Shares.
(b) Upon or as soon as practicable after the Effective Time of the
Merger, the Company (either directly, or indirectly through its financing
sources) shall deposit or
<PAGE>
3
cause to be deposited in an Escrow Account, pursuant to an Escrow
Agreement, dated as of __________, 1997 (the "Escrow Agreement"), between
_______________ (the "Escrow Agent"), IBJ Schroder Bank & Trust Company and
the Company, immediately available funds (the "Escrow Fund") in an
aggregate amount equal to the product of (i) the Cash Election Price and
(ii) each issued and outstanding share of Company Common Stock (other than
Electing Shares) converted through election or proration into the right to
receive the Cash Election Price pursuant to Section 2.01(c) of the Merger
Agreement. Pursuant to the Escrow Agreement, the Escrow Fund shall be held
in a segregated account the principal of which is held for the benefit of
the holders of each issued and outstanding share of Company Common Stock
(other than Electing Shares) converted through election or proration into
the right to receive the Cash Election Price pursuant to Section 2.01(c) of
the Merger Agreement. Any interest and other income with respect to the
Escrow Fund shall be paid to the Company as and when requested by the
Company. Amounts other than such interest and other income shall be
withdrawn from the Escrow Fund by the Exchange Agent to make cash payments
pursuant to the Merger Agreement in respect of shares of Company Common
Stock in accordance with Section 6 below or any required tax withholdings.
The Exchange Agent shall not use the Escrow Fund for any other purpose
unless specifically so directed by the Company in writing. Pursuant to the
Escrow Agreement, the Escrow Fund shall terminate, and all funds therein
will be remitted to the Company, upon either (i) the earlier of (a)
delivery by the Exchange Agent of the entire principal amount of the Escrow
Fund pursuant to this Agreement and (b) October __, 1997 or (ii) such date
following October __, 1997 but no later than April __ 1998, as shall be
communicated in writing by the Company to the Escrow Agent (such date, the
"Escrow Termination Date").
(c) In the event the Escrow Agreement is terminated, from the Escrow
Termination Date until April __, 1998, the Exchange Agent shall make cash
payments from funds received for such purpose by the Exchange Agent
pursuant to the Merger Agreement (the "Post-Escrow Payments") to holders of
Company Common Stock in respect of shares of Company Common Stock in
accordance with Section 6 below or any required tax withholdings. Until
April __, 1998, the Company shall make weekly remittances to the Exchange
Agent in an amount sufficient, as communicated to the Company by the
Exchange Agent, to satisfy the Post-Escrow Payments.
3. NON-CASH ELECTION FORM. Attached hereto as Exhibit A-1 is a Non-
Cash Election Form (the "Form of Election") to be used by holders of shares of
Company Common Stock who elect to retain Non-Cash Election Shares.
<PAGE>
4
4. TRANSMITTAL LETTER. Attached hereto as Exhibit B-1 is a Letter of
Transmittal (the "Transmittal Letter") to be used by holders of shares of
Company Common Stock (other than holders who properly submit Forms of
Election with respect to such shares) to surrender such shares (and the
certificates evidencing such shares) in exchange for the Cash Election
Price. Promptly following the closing of the Merger, Company shall notify
you that the Effective Time of the Merger has occurred. As soon as
reasonably practicable thereafter, you shall address and mail and otherwise
make available the Transmittal Letter to each holder of shares of Company
Common Stock as of the Effective Time of the Merger (other than holders who
properly submit Forms of Election with respect to such shares).
5. EXAMINATION OF DOCUMENTS. (a) Upon receipt thereof, you agree to
examine Forms of Election, Transmittal Letters, certificates representing
shares of Company Common Stock ("Certificates") and other documents
delivered to you by or for holders of Company Common Stock in connection
with such Forms of Election and/or Transmittal Letters to ascertain whether
(i) such Forms of Election and/or the Transmittal Letters are duly executed
and properly completed in accordance with the instructions set forth
therein (including, in the case of Forms of Election, whether such Forms
have been received by you by 5:00 p.m., New York city time, on April __,
1997 (the "Election Deadline")), (ii) the Certificates are in proper form
for surrender and (iii) any other required documents submitted to you are
in proper form. In addition, you are to examine surrendered Certificates
to ascertain whether any stop transfer orders are in effect with respect
thereto.
(b) If a Form of Election or Transmittal Letter or other document has
been improperly executed or completed, or is otherwise not in proper form
or is subject to any other irregularity (including any irregularity
relating to a stop transfer order), you are to take such action as you deem
appropriate to notify the tendering stockholder of such irregularity and to
request that such irregularity be corrected; PROVIDED, that with respect to
any irregularity in or relating to a Form of Election of which you become
aware following the Election Deadline, you shall notify the stockholder who
submitted such Form of Election of such irregularity, shall advise such
stockholder in such notice to execute and complete a Transmittal Letter in
order to receive the Cash Election Price in the Merger and shall provide
such stockholder with a Transmittal Letter. If any such irregularity is
not corrected within a reasonable period of time after you notify the
tendering stockholder of such irregularity, you are to notify the Company
and await further written instructions from Company. The Company reserves
the right to waive any defect or irregularity in
<PAGE>
5
the form of delivery of Certificates and accompanying Forms of Election
and/or Transmittal Letters.
6. PAYMENT OF THE MERGER CONSIDERATION.
(a) As soon as practicable following the Effective Time of the Merger,
you shall, with respect to each Electing Share converted through election
or proration into the right to receive Non-Cash Election Shares pursuant to
Section 2.01(c) of the Merger Agreement, (i) arrange for the issuance by
the Company Transfer Agent and the delivery of stock certificates in the
name of the person or persons entitled thereto representing the number of
WHOLE shares of Company Common Stock issuable in respect of such shares
pursuant to the Merger Agreement (it being understood that no certificates
or scrip representing fractional shares of Company Common Stock shall be
issued upon the surrender for exchange of Certificates representing shares
of Company Common Stock), (ii) arrange for the sale of the shares of
Company Common Stock representing such fractional interests and (iii)
subject to the effect of any applicable laws, distribute the net proceeds
from such sale (following the deduction of applicable transaction costs) to
the holders of shares of Company Common Stock entitled thereto pursuant to
the Merger Agreement.
(b) As soon as practicable following the Effective Time of the Merger,
you shall, with respect to shares of Company Common Stock (other than
Electing Shares converted into the right to receive Non-Cash Election
Shares pursuant to Section 2.01(c) of the Merger Agreement), upon receipt
of the Certificate(s) covering such shares, together with a duly executed
and completed Transmittal Letter and any other required documents with
respect to such shares, make the cash payment in respect of each such
Electing Share required pursuant to the Merger Agreement on a basis
consistent with the requirements of the Merger Agreement and the Form of
Election related to such Electing Share. Each such cash payment shall be
made with funds withdrawn from the Escrow Fund.
(c) You will execute and deliver to the Company Transfer Agent, at
least twice weekly, a written notice and appropriate computer materials
indicating the certificates for Company Common Stock necessary for payment
of the Merger Consideration and setting forth the number of shares to be
represented by each such certificate and the name in which each certificate
should be issued.
(d) No interest shall be paid to holders of shares of Company Common
Stock on or with respect to any amount payable upon surrender of
Certificates in respect thereof. Insofar as required by any governmental
agency or authority, you shall provide all information and file all forms
or
<PAGE>
6
returns with regard to the payments made pursuant to this Agreement,
including, without limitation, information and forms and returns relating
to income taxes.
7. RECORDS OF COMPANY COMMON STOCK RECEIVED. Unless otherwise
required pursuant to this Agreement, all Forms of Election and Transmittal
Letters (and related documentation) shall be recorded by you as to date and
time of receipt and shall be preserved and retained by you, subject to
Section 13 hereof.
8. CANCELLATION OF SHARES; NOTATION. Upon delivering the Merger
Consideration in exchange for any Shares, you shall cancel or arrange for
the cancellation of all such Shares and related Certificates, and such
Certificates shall be retained by you pending further instructions from the
Company.
9. LOST CERTIFICATES. After the Effective Date of the Merger, if any
holder of Company Common Stock shall report to you that his failure to
surrender Certificates registered in his name is due to the loss,
misplacement or destruction of such Certificates, you shall require such
holder to furnish an appropriate affidavit of loss and a bond of indemnity
of a recognized surety company, which shall include indemnification of you,
the Company and all transfer agents and registrars of Company Common Stock
and Company Common Stock, all in such form as shall have been approved by
counsel for the Company. Upon receipt by you of the foregoing, you are
authorized to transmit the Merger Consideration to such holder without
surrender by him of Certificates. You will promptly comply with any
requests from or on behalf of the Company for current information
concerning the number of shares covered by Forms of Election.
10. REQUEST FOR INFORMATION. You will comply with telephone requests
for information with respect to Forms of Election, Transmittal Letters,
Certificates, the surrender of shares of Company Common Stock and payment
therefor; PROVIDED, that any telephone or written request for information
concerning dissenters' rights shall be referred to the Company. In
addition, you will transmit by telephone, and promptly thereafter confirm
in writing to, such persons as Company may designate, any information which
such persons reasonably request.
11. DISSENTING SHARES. Following the Effective Time of the Merger,
the Company shall notify you of the names of holders of shares of Company
Common Stock who have preserved, and the number of shares of Company Common
Stock with respect to which there have been preserved, statutory rights of
dissenting stockholders. If you receive certificates representing shares
of Company Common Stock
<PAGE>
7
owned by any such holders you are authorized to, and you shall, after
consultation with Company, endorse or stamp such certificates with a
statement that such shares are Dissenting Shares and the certificates shall
be returned to such holders. To the extent that shares of Company Common
Stock as to which dissenters' rights have been demanded are deemed to be
converted into the Merger Consideration pursuant to Section 2.01(d) of the
Merger Agreement, Company shall promptly notify you of the names of the
holders of such shares and number of shares deemed to be so converted, and
you shall, as soon as practicable upon receipt of Transmittal Letters and
certificates with respect to such shares, deliver to the holders thereof
the Merger Consideration in accordance with the Merger Agreement.
12. EXCHANGE AGENT FEES. For your services as Exchange Agent
hereunder, Company shall pay you the fees set forth in Exhibit C. Company
shall also reimburse you for your reasonable out-of-pocket expenses
incurred in connection with your services hereunder after submission to the
Company of an itemized statement in reasonable detail.
13. TERMINATION. Promptly following the date which is one year after
the Effective Time of the Merger, upon request of the Company, you shall
deliver to the Company all cash, Certificates, stock lists and stock
records of the Company and other instruments in your possession relating to
the transactions described herein, accompanied by an accounting for all
payments made by you pursuant to this Agreement, and your duties shall
thereupon terminate. If any Certificates are surrendered to you for
payment after such termination, you will promptly forward such
Certificates, together with the related Transmittal Letters and any other
documents, to the Company, or as the Company may otherwise direct.
14. INDEMNITY, ETC. (a) We agree to indemnify you for, and to hold
you harmless from any and all reasonable costs and expenses (including
reasonable fees and expenses of counsel) that may be paid or suffered by
you or to which you may become subject without gross negligence, willful
misconduct or bad faith on your part in the performance of your duties as
Exchange Agent, or as a result of defending yourself against any claim or
liability resulting from your actions as Exchange Agent pursuant hereto.
Anything in this agreement to the contrary notwithstanding, in no event
shall you be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but no limited to lost profits), even if
you have been advised of the likelihood of such loss or damage and
regardless of the form of action.
(b) In no case shall the Company be liable under this indemnity with
respect to any claim against you unless the
<PAGE>
8
Company shall be notified by you, by letter or by cable or telex confirmed
by letter, of the written assertion of a claim against you or of any action
commenced against you, promptly after you shall have received any such
written assertion of a claim or shall have been served with the summons or
other first legal process giving information as to the nature and basis of
the claim, but failure to so notify the Company shall not relieve the
Company from any liability which it may have otherwise than on account of
this Section 14, except to the extent that such failure prejudices the
Company's rights with respect to such claim. The Company shall be entitled
to participate at its own expense in the defense of any such claim, and if
the Company so elects at any time after receipt of such notice, it shall
assume the defense of any suit brought to enforce any such claim. In the
event of such assumption, the Company shall not be liable for any fees and
expenses of counsel thereafter incurred by you. In the event, however, that
it is determined and expressed in the written opinion of your counsel that
having common counsel or counsel selected by the Company would present such
counsel conflict of interest or there are alternative defenses
available to you which are incompatible with those of or unavailable to the
Company, then you may employ separate counsel to represent and defend you
with respect to such claim.
15. VERIFICATION. You shall have the right but no obligation to
submit each calculation made by you pursuant to Sections 1, 2, 3, 6 and 11
of this Agreement in writing to the Company for verification. The Company
shall verify in writing each such calculation so submitted to it to you.
You shall have full authorization and protection for any action taken in
reliance on a calculation which has been so verified.
16. CERTAIN RIGHTS. You shall: (a) have no duties or obligations
other than those specifically set forth herein; (b) not be required to and
shall make no representations and have no responsibilities as to the
validity, accuracy, value or genuineness of (i) the Merger, (ii) any
certificates or documents prepared by the Company in connection with the
Merger or (iii) any signatures or endorsements, other than your own; (c)
not be obligated to take any legal action hereunder that might, in your
reasonable judgment, involve any expense or liability, unless you have been
furnished with reasonable indemnity by the Company; (d) be able to rely on
and shall be protected in acting on the written or oral instructions with
respect to your actions as Exchange Agent specifically covered by this
Agreement, of any officer of the Company; (e) be able to rely on and shall
be protected in acting upon any certificate, instrument, opinion, notice,
letter, telegram or any other document or security delivered to you and
believed by you reasonably and in good faith to be genuine and to have been
signed by the proper party or parties; (f) not be responsible for or liable
in any respect on account of the identity, authority or rights of any
person executing or delivering or purporting to execute or deliver any
document or property under this Agreement and shall have no responsibility
with respect to the use or application of any property delivered by you
pursuant to the provisions hereof; (g) be able to
<PAGE>
9
consult with counsel satisfactory to you (including counsel for the
Company) and the advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by you hereunder in good faith and in accordance with
advice or opinion of such counsel; (h) not be called on at any time to
advise, and shall not advise, any person as to the value of the
consideration to be received; (i) not be liable for anything which you may
do or refrain from doing in connection with this Agreement except for your
own gross negligence, willful misconduct or bad faith; (j) not be bound by
any notice or demand, or any waiver or modification of this Agreement or
any of the terms hereof, unless evidenced by a writing delivered to you
signed by the proper authority or authorities and, if your duties or rights
are affected, unless you shall give your prior written consent thereto; (k)
have no duty to enforce any obligation of any person to make delivery, or
to direct or cause any delivery to be made, or to enforce any obligation of
any person to perform any other act; (l) have the right to assume, in
absence of written notice to the contrary from the proper person or
persons, that a fact or an event by reason of which an action would or
might be taken by you does not exist or has not occurred without incurring
liability for any action taken or omitted, or any action suffered by you to
be taken or omitted, in good faith or in the exercise of your best
judgment, in reliance upon such assumption.
17. DEPOSITORY TRUST COMPANY. You shall make arrangements with
respect to delivery of shares of Company Common Stock and Certificates by
The Depository Trust Company in connection with the Merger in accordance
with your customary procedures for such transfer not inconsistent with the
terms of this Agreement or custom and practice in the industry generally.
18. FURTHER INFORMATION. Should you have any questions which are not
covered by these instructions, you will consult with representatives of
Newco and act in accordance with their instructions.
19. NOTICES. All notices and other communications hereunder shall be
delivered to the respective parties at the following addresses:
If to the Company: Amphenol Corporation
358 Hall Avenue
Wallingford, Connecticut 06492
Attention: Chief Financial Officer
<PAGE>
10
If to the Exchange
Agent: IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Reorganization
Department
<PAGE>
11
20. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the law of the State of New York, without
regard to the conflicts of law rules thereof.
Please confirm your agreement to act as Exchange Agent by signing in
the space indicated below.
Very truly yours,
AMPHENOL CORPORATION
By:
-------------------------------
Title:
The undersigned hereby accepts its appointment as Exchange Agent on
the terms set forth above as of the date first above written.
IBJ SCHRODER BANK & TRUST COMPANY
By:
-------------------------
Title:
<PAGE>
EXHIBIT 99.5
April 11, 1997
Amphenol Corporation
358 Hall Avenue
Wallingford, Connecticut 06492
Ladies and Gentlemen:
I hereby consent to the references to my becoming a director of Amphenol
Corporation ("Amphenol") in the Registration Statement on Form S-4 of Amphenol,
the preliminary copy of which was initially filed on February 19, 1997 with the
Securities and Exchange Commission.
Sincerely yours,
/s/ MICHAEL W. MICHELSON
Michael W. Michelson
<PAGE>
EXHIBIT 99.6
April 11, 1997
Amphenol Corporation
358 Hall Avenue
Wallingford, Connecticut 06492
Ladies and Gentlemen:
I hereby consent to the references to my becoming a director of Amphenol
Corporation ("Amphenol") in the Registration Statement on Form S-4 of Amphenol,
the preliminary copy of which was initially filed on February 19, 1997 with the
Securities and Exchange Commission.
Sincerely yours,
/s/ MARC S. LIPSCHULTZ
Marc S. Lipschultz
<PAGE>
EXHIBIT 99.7
April 11, 1997
Amphenol Corporation
358 Hall Avenue
Wallingford, Connecticut 06492
Ladies and Gentlemen:
I hereby consent to the references to my becoming a director of Amphenol
Corporation ("Amphenol") in the Registration Statement on Form S-4 of Amphenol,
the preliminary copy of which was initially filed on February 19, 1997 with the
Securities and Exchange Commission.
Sincerely yours,
/s/ HENRY R. KRAVIS
Henry R. Kravis
<PAGE>
EXHIBIT 99.8
April 11, 1997
Amphenol Corporation
358 Hall Avenue
Wallingford, Connecticut 06492
Ladies and Gentlemen:
I hereby consent to the references to my becoming a director of Amphenol
Corporation ("Amphenol") in the Registration Statement on Form S-4 of Amphenol,
the preliminary copy of which was initially filed on February 19, 1997 with the
Securities and Exchange Commission.
Sincerely yours,
/s/ GEORGE R. ROBERTS
George R. Roberts
