<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number 1-12280
BELDEN INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0412617
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7701 Forsyth Boulevard, Suite 800
St. Louis, Missouri 63105
(Address of Principal Executive Offices and Zip Code)
(314) 854-8000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirement
for the past 90 days.
Yes X No
Number of shares outstanding of the issuer's Common Stock, par
value $.01 per share, as of November 1, 1996: 26,137,882 shares
Page 1 of 13 <PAGE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
(Unaudited)
(in thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 450 $ 750
Receivables 102,063 93,931
Inventories 67,130 67,961
Deferred income taxes 5,645 6,906
Other 2,737 3,616
Total current assets 178,025 173,164
Property, plant and equipment, less
accumulated depreciation 148,774 143,648
Intangibles, less accumulated amortization 14,207 15,862
Other assets - 113
$341,006 $332,787
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 63,744 $ 78,847
Income taxes payable 5,063 4,399
Total current liabilities 68,807 83,246
Long-term debt 70,777 81,458
Postretirement benefits other than pensions 17,534 18,555
Deferred income taxes 7,843 8,014
Other long-term liabilities 11,484 9,612
Stockholders' equity:
Preferred stock - -
Common stock 261 261
Additional paid-in capital 51,084 51,034
Retained earnings 119,123 83,717
Translation component (4,234) (3,110)
Treasury stock, at cost (1,673) -
Total stockholders' equity 164,561 131,902
$341,006 $332,787
</TABLE>
See accompanying notes.
- 2 - <PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues $495,991 $430,793 $159,067 $156,722
Cost of sales 373,281 323,181 119,284 118,456
Gross profit 122,710 107,612 39,783 38,266
Selling, general and administrative expenses 55,221 52,254 16,778 18,366
Operating earnings 67,489 55,358 23,005 19,900
Interest expense 2,752 2,891 879 1,112
Income before income taxes 64,737 52,467 22,126 18,788
Income taxes 25,423 20,593 8,698 7,374
Net income 39,314 31,874 13,428 11,414
Net income per share $1.50 $1.21 $.51 $.43
</TABLE>
See accompanying notes.
- 3 - <PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
Nine Months Ended
September 30,
1996 1995
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 39,314 $ 31,874
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 11,871 10,190
Amortization 1,117 1,191
Deferred income taxes 1,091 987
Changes in operating assets and liabilities(*):
Receivables (9,561) 1,298
Inventories (129) (10,880)
Accounts payable and accrued liabilities (13,260) (7,342)
Income taxes payable 823 914
Other assets and liabilities, net 2,911 337
Net cash provided by operating activities 34,177 28,569
Cash flows from investing activities:
Capital expenditures (20,400) (14,687)
Cash paid for acquired businesses - (59,789)
Proceeds from sales of property, plant and equipment 120 106
Net cash used for investing activities (20,280) (74,370)
Cash flows from financing activities:
Net borrowings (payments) under long-term credit
facility and credit agreements (8,580) 49,817
Exercise of stock options 749 436
Purchase of treasury stock (2,425) -
Cash dividends paid (3,908) (3,912)
Net cash used for financing activities (14,164) 46,341
Effect of exchange rate changes on cash and cash equivalents (33) 516
Increase (decrease) in cash and cash equivalents (300) 1,056
Cash and cash equivalents, beginning of period 750 4,700
Cash and cash equivalents, end of period $ 450 $ 5,756
</TABLE>
(*) Net of the effects of exchange rate changes and acquired business.
See accompanying notes.
- 4 -<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Consolidated Financial Statements include Belden and all
of its subsidiaries. All significant intercompany accounts and transactions
are eliminated in consolidation. The financial information presented as of
any date other than December 31, 1995, has been prepared from the books and
records without audit. The accompanying Consolidated Financial Statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and the footnotes required by generally
accepted accounting principles for complete statements. In the opinion of
management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such financial statements
have been included. These Consolidated Financial Statements should be read
in conjunction with the Consolidated Financial Statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
Note 2: Supplemental Cash Flow Information
Cash payments for income taxes during the first nine months of 1996 and
1995 amounted to $23,531,000 and $18,798,000, respectively. Included in
these amounts were $8,400,000 and $9,000,000 paid to Cooper Industries,
Inc. in the first nine months of 1996 and 1995, respectively, in accordance
with a Tax Sharing and Separation Agreement.
Total interest paid, net of amounts capitalized, during the first nine
months of 1996 and 1995 amounted to $2,803,000 and $2,896,000,
respectively.
Note 3: Inventories
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Raw materials $ 14,850 $ 17,449
Work-in-process 19,272 19,374
Finished goods 48,500 46,236
Perishable tooling and supplies 3,752 3,512
Total 86,374 86,571
Allowances (primarily LIFO reserves) (19,244) (18,610)
Net inventories $ 67,130 $ 67,961
</TABLE>
- 5 - <PAGE>
<PAGE>
Note 4: Per Share Information
Earnings per share have been computed based on the weighted average number
of common shares outstanding and common stock options which are dilutive,
using the treasury stock method. The shares used in the computation for the
three months ended September 30, 1996 and 1995 were 26,231,000 and
26,292,000, respectively. The shares used in the computation for the nine
months ended September 30, 1996 and 1995 were 26,226,000 and 26,236,000,
respectively.
On August 15, 1996, the Company declared a quarterly cash dividend of $.05
per share payable on October 1, 1996.
Note 5: Subsequent Event
On October 22, 1996, the Company entered into a definitive agreement to
purchase substantially all of the assets of Intech Cable, Inc. (Intech) for
cash. Intech, with revenues of $34 million in 1995, manufactures and
markets specialty wire and cable for a variety of markets, including the
telecommunications and industrial markets.
This acquisition, which is contingent on several factors including review
by appropriate government organizations, will be accounted for under the
purchase method of accounting and is expected to close by the end of the
year.
Item 2: Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Nine Months Ended September 30, 1996 Compared With Nine Months Ended
September 30, 1995
Revenues
Revenues for the nine months ended September 30, 1996 were $496.0 million
compared with $430.8 million in the same period last year, an increase of
15%, approximately half of which was due to the acquisitions of Pope Cable
and Wire B.V. (Pope) and American Electric Cordsets (AEC). Revenues
increased 7% when including revenues of Pope (acquired April 3, 1995) and
AEC (acquired March 23, 1995) as if they had been acquired at the beginning
of the period. The following table shows the components of the 15% increase
in the Company's revenues for the first nine months of 1996 in each of the
Company's four served markets.
- 6 - <PAGE>
<PAGE>
<TABLE>
<CAPTION>
% Increase
% of Total in 1996 Revenues
Revenues Compared with 1995
<S> <C> <C>
Computer 33% 11%
Audio/video 26 24
Industrial 17 23
Electrical 24 7
</TABLE>
The increase in the computer market revenues for the nine months ended
September 30, 1996 compared with 1995 was due to the acquisition of Pope
and growth in networking of computers, workstations and servers, which
resulted in increased sales of the Company's high performance twisted pair
products. However, the rate of growth in revenues for the Company's
networking cables slowed in the second quarter and turned unfavorable in
the third quarter. Elevated inventory levels at certain significant
customers, which negatively affected orders, and lower copper costs, which
were reflected in reduced selling prices, both contributed to this trend in
revenues. In addition, the Company reduced prices for its high temperature
computer networking cables in August primarily to be more competitive in
the market. Customer inventory levels have since been reduced, but the
impact of lower copper prices and the price reductions are expected to
continue to constrain revenue growth in the fourth quarter. Sales of the
Company's computer interconnection products, which link personal computers
to discrete peripheral devices and mainframes to terminals, were down
slightly during the first nine months of 1996 compared with the first nine
months of 1995.
The revenue growth in the audio/video market was due to additional revenues
from the acquisition of Pope and increased sales of the Company s cable
television (CATV) and broadcast products. Demand for domestic CATV drop
cable has declined as CATV providers have delayed spending due to
uncertainties regarding telecommunication network architecture and the
effect of the telecommunications legislation enacted earlier this year.
This decline in domestic CATV revenues was offset by increased
international sales of CATV drop and fiber optic cables.
Industrial market revenues benefited from continued strong capital
investment by manufacturers and increased market penetration by the
Company. The Company has penetrated the industrial markets as a result of
the introduction of new signal and alarm products in 1996 and a focused
selling effort.
- 7 - <PAGE>
<PAGE>
The acquisitions of Pope and AEC represented all of the growth in the
electrical market revenues during the first nine months of 1996. Excluding
the impact of the acquisitions, revenues declined almost 7%. This decline
was primarily attributable to reductions in selling prices due to lower
copper costs and weaker demand in Canada and Europe. Management expects
continued decline in demand throughout 1996 for electrical products sold in
Canada and Europe due to weakness in these economies. In order to focus on
more profitable product lines, the Company discontinued manufacturing
residential building wire in Canada in September 1996, which is also
expected to contribute to lower future revenues.
Average prices for the Company's products were down in the first nine
months of 1996 compared with 1995. This decline was primarily attributable
to a decline in copper costs during the period and price reductions on
CATV, computer interconnect and high temperature computer networking
products to be more competitive in the market. Revenues were also reduced
by approximately $5 million due to the unfavorable impact of foreign
currency exchange rates. All of these factors will continue to affect
average selling prices in the fourth quarter. In addition, the Company
changed its internal accounting calendar in 1996 such that each quarter
now has thirteen weeks. This change, although not impacting revenues for
the full year, will result in one less week of shipments in the fourth
quarter of 1996 compared with 1995.
Costs, Expenses and Earnings
The following table sets forth information regarding the components of
earnings for the first nine months of 1996 compared with the same period in
1995.
<TABLE>
<CAPTION>
Nine Months Ended % Increase
September 30, 1996 Compared
1996 1995 With 1995
(in thousands, except % data)
<S> <C> <C> <C>
Gross profit $122,710 $107,612 14.0%
As a % of revenue 24.7% 25.0%
Operating earnings $67,489 $55,358 21.9%
As a % of revenue 13.6% 12.9%
Income before income taxes $64,737 $52,467 23.4%
As a % of revenue 13.1% 12.2%
Net income $39,314 $31,874 23.3%
As a % of revenue 7.9% 7.4%
</TABLE>
- 8 - <PAGE>
<PAGE>
The revenue growth for the first nine months of 1996 caused the increase in
gross profit. However, gross profit as a percent of revenues declined
during the period as a result of the impact of including the currently
less profitable Pope and AEC and price reductions taken to be more
competitive in certain markets. Productivity gains at our European facility
and the impact of lower copper and other raw material costs partially
offset this decline.
Operating earnings increased during the first nine months of 1996 compared
to the first nine months of 1995 due to greater gross profit. This increase
was partially offset by the additional selling, general and administrative
costs of the acquired operations. Operating earnings as a percent of
revenues for the first nine months of 1996 increased from the same period
in 1995 due primarily to savings from the consolidation of the Company's
operations in Europe and leveraging of the Company's fixed selling, general
and administrative costs with increased unit sales.
Income before income taxes increased due to greater operating earnings.
Interest expense declined during the first nine months of 1996 compared to
1995 as lower interest rates more than offset the increase in debt levels
associated with the acquisitions and the elevation of working capital
levels. Average debt during the first nine months of 1996 and 1995 was $85
million and $71 million, respectively. The Company's average daily interest
rate for the first nine months of 1996 was 5.0% compared to 5.7% for the
same period in 1995.
The Company's effective tax rate was 39.3% and 39.2%, respectively, for the
first nine months of 1996 and 1995.
Three Months Ended September 30, 1996 Compared With Three Months Ended
September 30, 1995
Revenues
Revenues for the three months ended September 30, 1996 increased 2% to
$159.1 million compared with $156.7 million in the same period last year.
The following table shows the components of the 2% increase in the
Company's third quarter 1996 revenues in each of the Company's four served
markets.
<TABLE>
<CAPTION>
% Change
% of Total in 1996 Revenues
Revenues Compared with 1995
<S> <C> <C>
Computer 32% (3)%
Audio/video 27 9
Industrial 17 21
Electrical 24 (10)
</TABLE>
- 9 - <PAGE>
<PAGE>
Factors affecting the revenue improvement, excluding the acquisitions, in
the three months ended September 30, 1996 and 1995, were essentially the
same as those noted above in the comparison of the nine months ended
September 30, 1996 and 1995. However, the impact of elevated inventories at
certain customers and reduced pricing due to lower copper costs and price
reductions taken on the Company's high temperature networking cables, were
more severe in the third quarter of 1996 compared to 1995.
Costs, Expenses and Earnings
The following table sets forth information regarding the components of
earnings for the third quarter of 1996 compared with the same period in
1995.
<TABLE>
<CAPTION>
Three Months Ended % Increase
September 30, 1996 Compared
1996 1995 With 1995
(in thousands, except % data)
<S> <C> <C> <C>
Gross profit $39,783 $38,266 4.0%
As a % of revenue 25.0% 24.4%
Operating earnings $23,005 $19,900 15.6%
As a % of revenue 14.5% 12.7%
Income before income taxes $22,126 $18,788 17.8%
As a % of revenue 13.9% 12.0%
Net income $13,428 $11,414 17.6%
As a % of revenue 8.4% 7.3%
</TABLE>
Revenue growth, productivity improvements and lower costs for certain raw
materials other than copper contributed to the increases in gross profit.
The productivity improvements and lower costs for certain raw materials
other than copper also contributed to the increase in gross profit as a
percent of revenues, as did the impact of lower copper costs. Because lower
copper costs affected both revenues and expenses, it had minimal impact on
gross profit.
Operating earnings increased during the three months ended September 30,
1996 compared with the same period in 1995 due to greater gross profit,
savings realized from the consolidation of the Company's operations in
Europe and controlled discretionary spending. The increase in operating
earnings as a percent of revenues from the third quarter of 1995 to the
third quarter of 1996 was attributable to the increase in gross profit as a
percent of revenues and a reduction in selling, general and administrative
costs primarily due to savings realized from consolidation of the European
operations and controlled discretionary spending.
- 10 - <PAGE>
<PAGE>
The increase in income before income taxes was due to higher operating
earnings and lower interest costs during the third quarter of 1996 compared
to the same period in 1995. A decline in average debt levels and average
interest rates contributed to the decrease in interest costs. Average debt
during the third quarter of 1996 and 1995 was $86 million and $89 million,
respectively. The Company's average daily interest rate for the third
quarter of 1996 was 5.0% compared with 5.5% for the same period in 1995.
The Company's effective tax rate was 39.3% and 39.2%, respectively, for
the third quarter of 1996 and 1995.
Financial Condition
Liquidity and Capital Resources
The Company has a $150 million multicurrency variable rate bank revolving
credit agreement ("Credit Agreement") with a group of eight banks. The
Credit Agreement is unsecured and expires in August 1999. At September 30,
1996, the Company had $79 million available under the Credit Agreement. In
addition, as of September 30, 1996, the Company had unsecured, uncommitted
arrangements with five banks under which it may borrow up to $80 million at
prevailing interest rates. At September 30, 1996, the Company had $48
million available under these arrangements. The Company expects that cash
provided by operations and borrowings available under the Credit Agreement
will provide it with sufficient liquidity to meet its operating needs and
fund its normal dividends and anticipated capital expenditures.
Working Capital
During the first nine months of 1996, operating working capital (defined as
r e ceivables and inventories less payables and accrued liabilities,
excluding the effect of exchange rate changes) increased $19.2 million. The
increase was primarily due to increases in inventories, associated with
supporting current growth and the slowdown in certain markets, and
decreases in accounts payable and accrued liabilities associated with
spending related to restructuring projects.
Capital Expenditures
For the first nine months in 1996, the Company had capital expenditures of
$20.4 million, primarily for modernization and enhancement of machinery and
equipment and capacity expansion of machinery and equipment for the
production of twisted pair wire and CATV coaxial cable. The Company
currently plans on spending approximately $7 million during the remainder
of 1996, primarily on machinery and equipment.
- 11 - <PAGE>
<PAGE>
All of the statements in this document other than historical facts are
forward looking statements made in reliance upon the Safe Harbor of the
Private Securities Litigation Reform Act of 1955. There can be no
assurances that the Company s actual results will be materially consistent
with such forward looking information. Developments in technology,
acceptance of the Company s products, changes in raw material costs,
pricing of the Company s products, foreign currency rates and changes in
the economy will have an impact on the Company s actual results. These
factors are more specifically described in the Company Annual Report on
Form 10-K for the year ended December 31, 1995.
- 12 -<PAGE>
<PAGE>
PART II OTHER INFORMATION
PART II Other Information
Item 1: Legal Proceedings
The Furon Company has filed a lawsuit against Belden Wire & Cable
Company ("BWC", a wholly-owned subsidiary of the Company),
claiming that BWC is infringing a Furon patent. The Company
intends to vigorously defend its position and believes that the
lawsuit will not have a material adverse effect on the Company.
Item 6: Exhibits and Reports on Form 8-K
(a) 10.1 Asset Purchase Agreement, dated October 21, 1996, between
Belden Wire & Cable Company and Intech Cable, Inc.
10.2 Non-Employee Director Stock Plan, effective August 15, 1996
(Exhibit 4.5 to Registration Statement on Form S-8 filed in
connection with the Belden Inc. Non-Employee Director Stock
Plan (File No. 333-11071)).
10.3 Change of Control Employment Agreements, dated as of August
16, 1996, between Belden Inc. and C. Baker Cunningham,
Richard K. Reece, Peter J. Wickman, Kevin L. Bloomfield and
Larry E. Fast.
10.4 Trust Agreement ("Rabbi Trust"), dated June 3, 1996, between
Belden Wire & Cable Company (a wholly-owned subsidiary of
the Company) and Boatmen's Trust Company.
27 Financial Data Schedule
(b) None.
- 13 -<PAGE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BELDEN INC.
Date: November 13, 1996 By: /s/ C. Baker Cunningham
C. Baker Cunningham
Chairman of the Board, President
and Chief Executive Officer
Date: November 13, 1996 By: /s/ Richard K. Reece
Richard K. Reece
Vice President, Finance, Treasurer
and Chief Financial Officer
- 14 -<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 450
<SECURITIES> 0
<RECEIVABLES> 102660
<ALLOWANCES> 597
<INVENTORY> 67130
<CURRENT-ASSETS> 178025
<PP&E> 278467
<DEPRECIATION> 129693
<TOTAL-ASSETS> 341006
<CURRENT-LIABILITIES> 68807
<BONDS> 0
0
0
<COMMON> 261
<OTHER-SE> 164300
<TOTAL-LIABILITY-AND-EQUITY> 341006
<SALES> 159067
<TOTAL-REVENUES> 159067
<CGS> 119284
<TOTAL-COSTS> 119284
<OTHER-EXPENSES> 16778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 879
<INCOME-PRETAX> 22126
<INCOME-TAX> 8698
<INCOME-CONTINUING> 13428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13428
<EPS-PRIMARY> .51
<EPS-DILUTED> .51
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
between
BELDEN WIRE & CABLE COMPANY
as Buyer
and
INTECH CABLE, INC.
as Seller
Dated October 21, 1996
ASSET PURCHASE AGREEMENT Page 1 <PAGE>
<PAGE>
INTECH CABLE, INC.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of October 21,
1996, by Belden Wire & Cable Company, a Delaware corporation ("Buyer")
and Intech Cable, Inc., a Massachusetts corporation ("Seller"). (The
Buyer and the Seller may be individually referred to as a "Party" and
collectively as the "Parties").
This Agreement contemplates a transaction in which the Buyer will
purchase certain assets in exchange for cash and the assumption of
certain liabilities.
Now, the Parties agree as follows:
1. CERTAIN DEFINITIONS
1.1. "Active Employee" means an employee of Seller who on the
Closing Date is either (i) at work or (ii) absent from work
solely because of (a) holiday, (b) vacation, (c) illness or
disability which has prevented, or is expected to prevent, the
employee from working at his or her assigned job for no longer
than three months in total duration (including time before and
after the Closing Date), or (d) leave of absence which has
lasted or is expected to last no longer than three months in
total duration (including time before and after the Closing
Date) or which is for military duty.
1.2 "Affiliate" means any Person that directly or indirectly
controls, is controlled by or is under common control with the
named party.
1.3 "Agreement" means this Asset Purchase Agreement.
1.4 "Ancillary Agreements" means collectively the Hudson Lease for
the Hudson, Massachusetts Facility (the "Hudson Facility")
(Exhibit 1.24), the Non-Compete Covenant of John Schwanbeck
(Exhibit 1.4A), the Agreement for the Assignment of the
Charlotte, North Carolina Lease (the "Charlotte Lease
Assignment") (Exhibit 1.4B), the Assignment and Adoption
Agreement (Exhibit 6.10.2B), and the Escrow Agreement (Exhibit
2.3A).
1.5 "Assets" means all right, title, and interest in and to all of
the assets of the Seller, including without limitation all of
its (a) rights in the real property lease for the facility
located at 100 Brookford Street, Charlotte, North Carolina (the
"Charlotte Facility"), (b) tangible personal property (such as
machinery, and all other equipment, inventories of raw
materials and supplies, manufactured and purchased parts, goods
in process and finished goods, furniture, fixtures, fittings,
automobiles, trucks, tractors, trailers, tools, jigs, and
dies), other than those fixtures at Seller's Hudson Facility
listed in subparts (a) and (b) of Exhibit 1.5, (c) Intellectual
Property (including such rights as Seller may have to use the
names "Intech Cable, Inc." and "ICI" and any other name used by
Seller), the goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and
rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions, (d) non-real property leases, subleases, and
ASSET PURCHASE AGREEMENT Page 2 <PAGE>
<PAGE>
INTECH CABLE, INC.
rights thereunder, (e) agreements, contracts, and
rightsthereunder, (f) indentures, mortgages, instruments,
Security Interests, guaranties, other similar arrangements, and
rights thereunder, all of which are in favor of the Seller and
none of which involve the Seller as being an obligor, (g)
accounts, notes, and other receivables in favor of the Seller,
(h) securities, (i) claims, deposits, lockboxes, prepayments,
refunds, causes of action, choses in action, rights of
recovery, rights of set off, and rights of recoupment (other
than any right of refund for the payment of income Taxes), (j)
franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights
obtained from governments and governmental agencies, (k) books,
records, ledgers files, documents, correspondence, lists,
plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials, and
(l) all other property, right and assets of any kind not
otherwise described in (a)-(k) above, whether tangible or
intangible, used in the operation of the Business; provided,
however, that the Assets shall not include the Retained Assets.
It is understood that any dividend or rebate to which Seller
may be entitled after the Closing pursuant to its workers'
compensation insurance shall be payable to Buyer pursuant to
subpart (i) above. However, such dividend or rebate shall be
subject to any workers' compensation claims that Seller pays
after the Closing but which relate to the period prior to the
Closing Date. In no event shall Buyer be responsible for any
of Seller's workers' compensation claims.
1.6 "Assumed Liabilities" means those Liabilities of the Seller
incurred in the Ordinary Course:
1.6.1 that are listed on the Final Closing Balance Sheet, to
the extent and only to the extent of the amounts of such
items so listed;
1.6.2 that arise after the Closing under contracts entered into
by the Seller which are not reflected on the Final
Closing Balance Sheet, but (i) are listed on Schedule
3.14 as "Contracts Being Assumed by Buyer"; or (ii) are
not so listed on Schedule 3.14, but were entered into in
the Ordinary Course for the purchase of goods or services
to Seller or for the sale of wire and cable products by
Seller; and
1.6.3 that arise after the Closing under the Intech Savings
Plan in accordance with the Assignment and Adoption
Agreement (Exhibit 6.10.2B) to the extent Buyer elects to
adopt the Intech Savings Plan pursuant to subpart (i) of
Section 6.10.2 below.
Assumed Liabilities shall not include any Retained Liabilities,
including the following:
(A) any Liabilities of the Seller for income or transfer
Taxes arising from the consummation of the transactions
contemplated by this Agreement;
(B) any Liabilities of the Seller to indemnify any Person
(including the Seller or its stockholders) by reason of
ASSET PURCHASE AGREEMENT Page 3 <PAGE>
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the fact that such Person was a director, officer,
employee or agent of the Seller;
(C) any Liabilities of the Seller for the costs and expenses
incurred in connection with this Agreement;
(D) any Liabilities resulting from or relating to the
borrowing of money, breach of contract, tort,
infringement or violation of law;
(E) any Liabilities of Seller or its predecessors relating to
or arising from the transfer of assets or capital stock
by Allied Corporation ("Allied") and Eltra Corporation
("Eltra"), which may have been made in connection with
the sale of the wire and cable operations of Allied and
Eltra to Seller or its predecessors; (Fany Liabilities
of Seller with respect to its or its predecessors'
acquisition (i) of any of the assets or capital stock of
Carolina Wire & Cable, (ii) of any of the fiber optic
assets of Arcomm Corporation, or (iii) of any of the
assets or capital stock of any other business; and
(G) any Liabilities of Seller under this Agreement or any
Ancillary Agreement, and any Liabilities of Seller listed
on Exhibit 1.6G.
1.7 "Balance Sheet Payment" has the meaning assigned in Section
2.4.
1.8 "Business" means the business conducted by the Seller involving
the design, manufacture and distribution of wire and cable
products.
1.9 "Buyer's Indemnified Group" has the meaning assigned in Section
8.2.
1.10 "Buyer's Letter" has the meaning assigned in Section 2.8.
1.11 "Claim" has the meaning assigned in Section 11.1.
1.12 "Closing" means the meeting held on the Closing Date at which
the Parties consummate the contemplated transactions.
1.13 "Closing Date" has the meaning assigned in Section 2.17.
1.14 "Code" means the Internal Revenue Code of 1986, as amended.
1.15 "Consents" has the meaning assigned in Section 5.2.
1.16 "Disclosure Schedules" has the meaning assigned in Article 3.
1.17 "Employee Benefit Plan" means each employee pension benefit
plan or arrangement, profit sharing plan or savings plan
(including any 401(k) plan), each employee welfare benefit plan
and each bonus, incentive compensation, deferred compensation,
severance or similar plan, "key man" life insurance policy,
policy, contract or payroll practice providing compensation or
employee benefits maintained by, on behalf of, or for the
benefit of the Seller or to which the Seller is a participating
employer or is obligated to contribute or has any legally
enforceable liability and under which any employee participates
or has accrued any rights or under which the Seller is liable
in respect of an employee.
1.18 "Environmental Laws" shall include any federal, state or local
law, regulation, rule, standard, order or decree relating to
protection of health, safety or the environment, including
without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
section 9601 et seq. ("CERCLA"), the Solid Waste Disposal Act, as
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amended, 42 U.S.C. sections 6901 et seq., the Clean Air Act, as
amended, 42 U.S.C. sections 7401 et seq., the Toxic Substances
Control Act, 15 U.S.C.sections 2601 et seq., the Water Pollution
Control Act, as amended, 33 U.S.C. sections 1251 et seq., the
Occupational Safety and Health Act of 1970, 29 U.S.C. sections 651 et
seq., and state or local laws similar to any of the foregoing.
1.19 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.20 "Escrow Agreement" has the meaning assigned in Section 2.3.
1.21 "Final Closing Date Net Asset Value" has the meaning assigned
in Section 2.15.
1.22 "Financial Statements" has the meaning assigned in Section
3.6.
1.23 "GAAP" means United States generally accepted accounting
principles as in effect from time to time.
1.24 "Hudson Lease" means that certain Agreement (attached as
Exhibit 1.24) between the Buyer and Seller regarding the right
of the Buyer to use the Seller's Hudson, Massachusetts facility
for a certain period after the date of this Agreement.
1.25 "Indemnified Party" has the meaning assigned in Section 8.4.
1.26 "Indemnifying Party" has the meaning assigned in Section 8.4.
1.27 "Intech Savings Plan" has the meaning assigned in Section
6.10.2.
1.28 "Intellectual Property" means all (i) patents, patent
applications, inventions (whether or not patentable and whether
or not reduced to practice), invention disclosures, and
improvements thereto, (ii) trademarks, service marks, trade
dress, logos, trade names and corporate names and registrations
and applications for registration thereof, (iii) copyrights and
registrations and applications for registration thereof, (iv)
mask works and registrations and applications for registration
thereof, (v) computer software, data and documentation, (vi)
trade secrets and confidential information and (vii) copies and
tangible embodiments of any of the foregoing (in whatever form
or medium).
1.29 "Liability" means any liability (whether known or unknown,
whether absolute or contingent, whether liquidated or
unliquidated, and whether due or to become due), including any
liability for Taxes, any damage or loss of any kind (including
consequential, special, punitive, and incidental), and any
judgment, settlement, expense or cost (including those relating
to any investigation or any defense or prosecution of any
proceedings).
1.30 "Most Recent Financial Statements" has the meaning assigned in
Section 3.6.
1.31 "Most Recent Month End" has the meaning assigned in Section
3.6.
1.32 "Most Recent Year End" has the meaning assigned in Section 3.6.
1.33 "Occurrence" means an event, incident, accident, or condition,
including without any limitation which results from an act or
omission (including without limitation the sale of products and
continuous or repeated exposure to conditions which result in
bodily injury, death or damage of any kind).
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1.34 "Ordinary Course" means the ordinary course of business
consistent with past custom and practice (including with
respect to quantity, quality and frequency).
1.35 "Peg Statement of Net Assets" has the meaning assigned in
Section 2.5.
1.36 "Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization, or any other form
of business or legal entity or government authority.
1.37 "Preliminary Closing Date Net Asset Value" has the meaning
assigned in Section 2.7.
1.38 "Preliminary Closing Balance Sheet" has the meaning assigned in
Section 2.8.
1.39 "Purchase Price" has the meaning assigned in Section 2.3.
1.40 "Regulated Materials" include any chemical, pollutant,
contaminant, petroleum or petroleum products, hazardous or
toxic substance, and any other substance, material or waste
defined as such or subject to regulation in any manner
whatsoever under any Environmental Law.
1.41 "Retained Assets" means all right, title and interest in and to
(i) the real estate and buildings constituting the Hudson
Facility, including any lease relating to and any leasehold
interest in such real estate and buildings, but excluding the
equipment and tangible personal property thereon or therein and
the items on Exhibit 1.5 other than those fixtures listed in
subparts (a) and (b) of such exhibit, (ii) the real estate
located at Hudson, Massachusetts identified as 33 Broad Street,
Hudson, Massachusetts; (iii) cash and cash equivalents
(including any "over draft" accounts) outstanding on the
Closing Date, (iv) repayment obligations outstanding on the
Closing Date arising from loans made prior to the date hereof
to shareholders, directors, officers, employees or other
related parties, (v) all Regulated Materials in, on, under or
relating to any of the foregoing or any of the Assets except to
the extent currently used by Seller in the conduct of the
Business in compliance with Environmental Laws, and (vi) any
life insurance policies (including any "key-man" life insurance
policy in the name of John Schwanbeck) for any shareholder of
Seller (including the cash surrender value of such policies and
any receivables for premiums in excess of the cash surrender
value of such policies).
1.42 "Retained Liabilities" means (i) all Liabilities relating to
the borrowing of money which are outstanding on the Closing
Date (including any related interest or deferred loan costs),
(ii) all Liabilities arising out of any of the Retained Assets,
whenever so arising, (iii) all Liabilities retained by the
Seller pursuant to Section 6.8 ("Environmental Matters"), and
(iv) all Liabilities retained by the Seller pursuant to Section
6.10.4 ("Certain Retained Liabilities of the Seller"), (v) all
Liabilities of Seller for income Taxes, (vi) those Liabilities
described in clauses (A) - (G) of the definition of "Assumed
Liabilities," and (vii) all other Liabilities (whenever
arising) of the Seller, its Affiliates, their predecessors or
otherwise relating to the Business arising from or relating to
any Occurrence or period on or before the Closing Date, except
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for any Assumed Liabilities.
1.43 "Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge or other lien.
1.44 "Seller's Indemnified Group" has the meaning assigned in
Section 8.3.
1.45 "Seller's Knowledge" or similar terms mean the knowledge after
reasonable investigation (including by consulting with
employees of the Seller with responsibility for the subject
matter) of (i) the officers and directors of the Seller, and
(ii) the following individuals: John Schwanbeck, Paul
Pendergrass, Stephen Cote, and with respect to Section 3.23,
Mauricio Silva and Guy Watson.
1.46 "Seller's Letter" has the meaning assigned in Section 2.9.
1.47 "Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of
the common stock or has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors.
1.48 "Tax" means any national, federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind, including any
interest or penalty, whether disputed or not.
1.49 "Tax Return" means any return, declaration, report, claim for
refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
1.50 "Transferred Employees" has the meaning assigned in Section
6.10.1.1.
2 PURCHASE AND SALE OF ASSETS
2.1. Basic Transaction. On and subject to the terms and conditions
of this Agreement, Buyer agrees to purchase from Seller, and
Seller agrees to sell, transfer, convey, assign and deliver to
Buyer, free of all Security Interests, all of the Assets at the
Closing, for the consideration (including the assumption of the
Assumed Liabilities) specified below in this Article 2.
2.2. Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, Buyer agrees to assume, pay,
honor and discharge when due, and become responsible for all of
the Assumed Liabilities at the Closing.
2.3. Purchase Price. In consideration for the transfer of the
Assets, Buyer shall deliver at Closing the following amounts:
(i) $1,056,209, the amount of the change in net assets value
from December 31, 1995 through June 30, 1996 (the
"Interim Net Asset Payment"), plus $17 million
(collectively, the "Closing Payment") to be paid to
Seller; and
(ii) $3 million (the "Escrow Amount") to be held by State
Street Bank and Trust Company (the "Escrow Agent") in an
escrow account pursuant to and in accordance with the
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terms of the Escrow Agreement to be executed in
substantially the form attached as Exhibit 2.3 A (the
"Escrow Agreement").
Thereafter, Buyer or Seller (as the case may be) shall pay the
Balance Sheet Payment (as defined in Section 2.4.). The Closing
Payment, the Escrow Amount, the Balance Sheet Payment and the
Assumed Liabilities constitute the "Purchase Price."
2.4 Balance Sheet Payment. Within five days following the date on
which the Final Closing Date Net Asset Value is determined
pursuant to Section 2.15, Buyer shall pay to Seller the
Positive Balance Sheet Adjustment Amount or Seller shall pay to
Buyer the Negative Balance Sheet Adjustment Amount. The Party
making such payment shall pay interest on the amount paid at
the rate equal to the average prime rate as shown in the Wall
Street Journal for the period of the Closing Date to the date
of payment. The payment covered by this Section 2.4 shall be
the "Balance Sheet Payment."
2.5 Determination of the Interim Net Asset Payment. The Interim
Net Asset Payment means the amount by which the Interim
Statement of Net Assets value is more than the Peg Statement of
Net Assets. The Interim Statement of Net Assets is the net
assets of the Seller reflected on the June 30, 1996 Balance
Sheet adjusted to exclude the Retained Assets and the Retained
Liabilities as set out in Exhibit 2.5A. The Peg Statement of
Net Assets is the net assets of the Seller reflected on the
audited December 31, 1995 Balance Sheet adjusted to exclude the
Retained Assets and the Retained Liabilities as set out in
Exhibit 2.5B.
2.6 Determination of Balance Sheet Payment Amount. The Balance
Sheet Payment Amount means the amount by which the Final
Closing Date Net Asset Value, determined pursuant to Section
2.15, is more (a "Positive Balance Sheet Adjustment Amount") or
less (a "Negative Balance Sheet Adjustment Amount") than
$8,870,363, the net asset value reflected on the Balance Sheet
set out on the Interim Statement of Net Assets.
2.7 Closing Balance Sheet. Seller shall prepare and deliver to
Buyer within 60 days following the Closing Date, a balance
sheet reflecting the net assets ("Preliminary Closing Date Net
Asset Value") of the Seller on the close of business on the
Closing Date (the "Preliminary Closing Balance Sheet"). The
Preliminary Closing Balance Sheet may be prepared by
Transferred Employees during normal business hours. The
Preliminary Closing Balance Sheet and Final Closing Balance
Sheet shall be prepared in accordance with the provisions of
this Section. Each Party understands that the objective in
deriving the Final Closing Balance Sheet is to measure actual
changes in the "net assets" of the Seller for the period
between June 30, 1996 and the Closing Date and, in so doing,
the final adjustment of the Purchase Price. The Parties have
agreed that in the event of a conflict or inconsistency between
Sections 2.7.1 and 2.7.2, Section 2.7.2 shall take precedence
over Section 2.7.1.
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2.7.1 The Preliminary Closing Balance Sheet and the Final
Closing Balance Sheet shall be prepared in accordance
with Seller's normal accounting principles, practices and
procedures which are the same as or consistent with those
employed in the preparation of the Peg Statement of Net
Assets.
2.7.2 Notwithstanding anything to the contrary in Section
2.7.1, the following specific accounting rules shall
control the preparation of the Preliminary Closing
Balance Sheet and the Final Closing Balance Sheet:
2.7.2.1 The Preliminary Closing Balance Sheet and the
Final Closing Balance Sheet amounts, with
respect to the inventories of the Seller, shall
be based upon the results of a physical count
of all inventories (including those located at
all stock representative locations) taken at
the close of business on the Closing Date in
accordance with procedures to be mutually
agreed to by the Parties. The following
procedures will apply to the physical count of
any damaged or defective inventory: (i) to the
extent such inventory cannot be reworked, it
will be excluded from the physical count; (ii)
to the extent such inventory can be reworked,
the value of such inventory will be reduced by
the estimated cost of placing such inventory
into saleable or usable condition. Any
subpart (i) inventory will be deemed a Retained
Asset. Seller will remove such inventory from
the Hudson Facility and the Charlotte Facility
as soon as practicable. With respect to the
Preliminary Closing Balance Sheet and Final
Closing Balance Sheet, the valuation of
inventory on hand shall be based on the First-
In-First-Out (FIFO) layering method of
accounting. For purposes of this Agreement,
the plant capacity used in the burden
calculation shall be 80%.
2.7.2.2 The Preliminary Closing Balance Sheet and the
Final Closing Balance Sheet will not include
any Retained Assets or Retained Liabilities.
2.7.2.3 "Certain Fixed Assets" means (i) any fixed
asset on the fixed assets listing having a net
book value greater than $10,000, or (ii) the
fixed assets on the Orderly Liquidation Value
Appraisals prepared by Joseph Finn Co., Inc. in
June 1996 having a fair value greater than
$10,000. The Preliminary Closing Balance Sheet
and the Final Closing Balance Sheet will not
include any amounts with respect to any
Certain Fixed Asset which cannot be located or
otherwise evidenced during a verification of
fixed assets that the Seller and Buyer will
conduct jointly as of the Closing Date.
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2.7.2.4 The Preliminary Closing Balance Sheet and The
Final Closing Balance Sheet shall include a
reserve of $575,000 for excess, obsolete and
slow moving inventory, which the Parties agree
is a mutually acceptable reserve and shall not
be subject to adjustment.
2.7.2.5 The Preliminary Closing Balance Sheet and the
Final Closing Balance Sheet shall include an
accrual for the defined contribution plan
discretionary payment provided in the Intech
Savings Plan computed as follows:
Annual Compensation of eligible
Participants x 2 1/2% x # days from 1/1/96 to Closing
divided by 365
Buyer will declare and distribute such
discretionary payment to the Intech Savings
Plan (or its equivalent) by February 1, 1997.
2.7.2.6 The Preliminary Closing Balance Sheet and the
Final Closing Balance Sheet shall not include
any accrual for postretirement medical
benefits.
2.7.2.7 The Preliminary Closing Balance Sheet and the
Final Closing Balance Sheet will not include
any amount for employee advances or receivables
that exceeds in the aggregate $15,000. To be
included, such advances and receivables must
also have been incurred in the Ordinary Course
(i.e., travel advances).
2.7.2.8 The Preliminary Closing Balance Sheet and the
Final Closing Balance Sheet shall not include
any amounts with respect to receivables or
rebates relating to workers' compensation.
2.7.2.9 The Preliminary Closing Balance Sheet and the
Final Closing Balance Sheet shall include a
vacation pay accrual for hourly personnel based
on the number of days earned through the
Closing Date less the number of days taken
multiplied by the hourly wage rate (which shall
be based on a work year of 2,080 hours). The
Preliminary Closing Balance Sheet and the Final
Closing Balance Sheet shall include a holiday
accrual for hourly personnel based on the total
holiday pay (the sum of each employee's wage
rate multiplied by the number of holiday hours)
multiplied by the number of holidays remaining
divided by the total number of holidays given
to employees in a year.
Any adjustment of the Purchase Price with respect to
valuation of inventory shall be only as set forth in Section
2.7.2.1 or 2.7.2.4.
2.8 Buyer's Review. Buyer will have 60 days following receipt of
the Preliminary Closing Balance Sheet from Seller to review the
balance sheet and to determine if in Buyer's judgement it has
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been prepared in accordance with Section 2.7. If in Buyer's
judgement adjustments are necessary for the Preliminary Closing
Balance Sheet to be so prepared, Buyer, within the 60-day
period, shall notify Seller in writing of its proposed
adjustments, including the amount, nature and basis for the
adjustments ("Buyer's Letter"). Buyer may have its auditors,
Ernst & Young, assist it in reviewing the Preliminary Closing
Balance Sheet. Should Seller not receive Buyer's Letter within
the 60-day period, the Preliminary Closing Balance Sheet
prepared by Seller shall be considered the Final Closing
Balance Sheet.
2.9 Seller's Review. Seller will then have 20 days following
receipt of Buyer's proposed adjustments, if any, to review
them. Within the 20-day period, Seller shall notify Buyer in
writing of Seller's position with respect to each of Buyer's
proposed adjustments ("Seller's Letter"). Should Buyer not
receive Seller's Letter within the 20-day period, the
Preliminary Closing Balance Sheet prepared by Seller as
adjusted by Buyer's Letter shall be considered the Final
Closing Balance Sheet.
2.10 Conference. Within ten days from the date of Seller's Letter
pursuant to Section 2.9, the Parties shall confer and endeavor
to resolve the adjustments, if any, which are in dispute.
2.11 Arbitrator. If the Parties do not confer or are unable to
resolve to their mutual satisfaction all of the proposed
adjustments after a conference to resolve Buyer's proposed
adjustments, then within the 20 days following the delivery of
Seller's Letter or the conference pursuant to Section 2.10,
whichever is later, the Parties shall jointly engage the
accounting firm of Coopers & Lybrand (or another accounting
firm mutually satisfactory to both Parties) to act as the
arbitrator (the "Arbitrator").
2.12 Scope of Arbitration. If the provisions of Section 2.11 become
operable, then the Arbitrator shall be furnished with a copy of
this Agreement, the Preliminary Closing Balance Sheet, Buyer's
Letter, Seller's Letter and any agreed upon accounting rules or
definitions. Each Party shall have the right, at the same
time, to submit supporting or explanatory material to the
Arbitrator copies of which shall be provided to the other
Party. The Arbitrator shall have 45 days to review this
material and such other information as it deems appropriate.
Within the 45-day period, the Arbitrator will furnish both
Parties with its written determination regarding each
unresolved adjustment of Buyer submitted for arbitration.
2.13 Arbitrator's Decision. The arbitration shall be conducted in
Boston, Massachusetts. The Arbitrator shall confine itself
only to unresolved adjustments. The Arbitrator, in reaching a
decision, shall provide a written explanation of its
conclusions to each Party, and its determination shall be
conclusive and binding upon the Parties. The submission of a
dispute to the Arbitrator and the rendering of his decision
shall be a condition precedent to either Party's commencing
legal action to pursue any claim arising under this Article 2.
The award or decision of the Arbitrator shall be deemed final
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and binding, and may be entered and enforced in any court of
competent jurisdiction. The Parties agree to submit to the
jurisdiction of any such court for the enforcement of such
award or decision. The fee and expenses of the Arbitrator
shall be borne equally by Seller and Buyer. Section 10.6
("Notices") shall apply to all communications made under this
Article 2.
2.14 Access. In preparing and reviewing the Preliminary Closing
Balance Sheet and in conducting the reviews by either Party and
the Arbitrator, each Party will grant the other and the
Arbitrator all reasonable access to the records of the Business
and any workpapers, including auditor workpapers, prepared with
respect to the Preliminary Closing Balance Sheet.
2.15 Final Closing Date Net Asset Value. The Preliminary Closing
Balance Sheet prepared by Seller pursuant to Section 2.7 will
be modified by any adjustments pursuant to Sections 2.9 and
2.10 and, to the extent applicable, by the determination of the
Arbitrator pursuant to Section 2.11 - 2.13. The Preliminary
Closing Balance Sheet after such adjustments will become the
Final Closing Balance Sheet. The net asset value as reflected
on the Final Closing Balance Sheet is the "Final Closing Date
Net Asset Value".
2.16 Payment. The Closing Payment shall be paid in immediately
available U.S. funds by wire transfer (against transfer of the
Assets) to accounts designated by Seller (to include direct
payments to lenders holding Security Interests in the Assets in
amounts sufficient to discharge such Security Interests in
full), of which Seller shall advise Buyer not later than two
(2) business days prior to the date the Closing Payment is to
be made. The Balance Sheet Payment shall be paid in
immediately available U.S. funds by wire transfer to Buyer's or
Seller's designated account in accordance with Section 2.4.
2.17 Closing Date. Subject to the fulfillment of the conditions
precedent specified in Article 7, the Closing shall take place
at 10:00 a.m., local time, on the later of the fifth business
day following the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR
Act") or the end of the month ("Closing Date") at the offices
of Goodwin, Procter & Hoar L.L.P., or at such other place, time
or date as the Parties may mutually agree. The Closing shall
be effective as of the close of business on that date.
2.18 Transfer Taxes. With respect to the transfer of the Assets or
the contemplated transactions, Seller will pay (i) any
transfer, conveyance or other similar Taxes, stamps, duties or
similar governmental charges imposed by any taxing
jurisdiction, (ii) all recording, filing fees or notarial fees
and (iii) other similar costs of Closing.
2.19 Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and
documents referred to in Section 7.1 below; (ii) the Buyer will
deliver to the Seller the various certificates, instruments,
and documents referred to in Section 7.2 below; (iii) each
Party will execute and deliver the Ancillary Agreements; (iv)
the Seller will execute, acknowledge (if appropriate), and
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deliver to the Buyer such other instruments of sale, transfer,
conveyance, and assignment as the Buyer and their counsel
reasonably may request; (v) the Buyer will execute,
acknowledge (if appropriate), and deliver to the Seller such
other instruments of assumption as the Seller and their counsel
reasonably may request; (vi) the Buyer will deliver to the
Seller the Closing Payment, and (vii) Buyer will deliver to the
Escrow Agent the Escrow Amount in accordance with the Escrow
Agreement.
2.20 Allocation. Prior to the Closing, the Parties agree to
allocate the Purchase Price among the Assets for all purposes
(including financial accounting and tax purposes), except for
purposes of the Hart-Scott-Rodino filing, in accordance with
the allocation schedule attached as Exhibit 2.20. Such
allocation schedule shall be prepared in accordance with
Section 1060 of the Code. The Parties agree to file IRS Form
8594 consistent with the foregoing and in accordance with
Section 1060 of the Code.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller represents and warrants to the Buyer that the
statements contained in this Article 3 are correct and complete
as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this
Agreement throughout this Article 3), except as set forth in
the disclosure schedules delivered by the Seller to the Buyer
on the date of this Agreement hereof and initialed by the
Parties (the "Disclosure Schedules" or "Schedules"). The
Disclosure Schedules will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this
Article 3.
3.1 Organization of the Seller. Seller is a corporation duly
organized, validly existing, and in good standing under the
laws of Massachusetts. The Seller does not have any
Subsidiaries or Affiliates. Seller is not a "foreign person"
within the meaning of Section 1445 of the Code and U.S.
Treasury Regulations Section 1.445.
3.2 Authorization of Transaction. The Seller has full power and
authority to execute and deliver this Agreement and the
Ancillary Agreements, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated
hereby and thereby. This Agreement and the Ancillary
Agreements constitute the valid and legally binding obligations
of the Seller, enforceable in accordance with their terms and
conditions.
3.3 Noncontravention. Except as disclosed in Schedule 3.3, neither
the execution and the delivery of this Agreement and the
Ancillary Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and
assumptions referred to in Article 2 above), will (i) violate
any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the
Seller is subject, or charter or bylaws of the Seller or (ii)
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conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice under, any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party
or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest
upon any of its assets), except where the violation, conflict,
breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest
would not have a material adverse effect on the business,
financial condition, operations or results of operation of the
Seller or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. Except for the
Hart-Scott-Rodino Notification and Report Form, the Seller does
not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Article 2 above),
except where the failure to give notice, make a filing, or
obtain authorization, consent or approval would not have a
material adverse effect on the business, financial condition,
operations or results of operation of the Seller or on the
ability of the Parties to consummate the transactions
contemplated by this Agreement.
3.4 Brokers' Fees. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
retained by the Seller with respect to the transactions
contemplated by this Agreement for which the Buyer could become
liable.
3.5 Assets. Except as disclosed in Schedule 3.5, the Seller has
good and marketable title to all of the Assets, free and clear
of any Security Interest or restriction on transfer. The
Assets (together with the Hudson Facility to be used by Buyer
pursuant to the Hudson Lease and the Charlotte Facility to be
used by Buyer pursuant to the Charlotte Lease Assignment),
taken as a whole, constitute all of the assets that are
necessary to permit the operation of the Business in
substantially the same manner as such operations are conducted
as of the date hereof.
3.6 Financial Statements. Attached as Schedule 3.6 are the
following financial statements (collectively the "Financial
Statements"): (i) audited Balance Sheets, Statements of Income,
Statement of Stockholders' Equity, and Cash Flow as of and for
the fiscal years ended December 31, 1993, December 31, 1994 and
December 31 , 1995 (the "Most Recent Year End") for the Seller;
and (ii) unaudited consolidated Balance Sheet and Statement of
Operations, Statements of Stockholders' Equity, and Statements
of Cash Flows as of and for the period ended June, 1996 (the
"Interim Financial Statements") and August, 1996, the "Most
Recent Month End," (collectively, the "Most Recent Financial
Statements") for the Seller. Except as disclosed on Schedule
3.6, the Financial Statements (including the notes thereto)
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INTECH CABLE, INC.
have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Seller as of such
dates and the results of operations of the Seller for such
periods, are correct and complete, and are consistent with the
books and records of Seller (which books and records are
correct and complete); provided, however, that the Most Recent
Financial Statements are subject to normal year-end adjustments
(which will not be material individually or in the aggregate)
and lack footnotes.
3.7 Events Subsequent to Most Recent Year End. Except as
disclosed on Schedule 3.7, since the Most Recent Year End,
there has not been any material adverse change in the business,
financial condition, operations, or results of operation of the
Seller. Without limiting the generality of the foregoing and
except as disclosed on Schedule 3.7, since that date the Seller
has not:
3.7.1 sold, leased, transferred, or assigned any of its assets,
tangible or intangible, other than for fair consideration
in the Ordinary Course;
3.7.2 entered into any agreement, lease, or license (or series
of related agreements, contracts, leases, and licenses)
either involving more than $100,000 or outside the
Ordinary Course;
3.7.3 accelerated, terminated, modified, or cancelled any
agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses), or
any other party to such agreements, contracts, leases or
licenses doing same, involving more than $100,000 to
which Seller is a party or by which Seller is bound;
3.7.4 made any capital expenditure (or series of related
capital expenditures) either involving more than $50,000
or outside the Ordinary Course;
3.7.5 made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans,
and acquisitions) either involving more than $50,000 or
outside the Ordinary Course;
3.7.6 issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation either
involving more than $10,000 individually or $20,000 in
the aggregate;
3.7.7 delayed or postponed the payment of accounts payable or
other Liabilities either beyond 45 days from the payment
due date or outside the Ordinary Course;
3.7.8 cancelled, compromised, waived, or released any right or
claim (or series of related rights and claims) either
involving more than $25,000 or outside the Ordinary
Course;
3.7.9 granted any license or sublicense of any rights under or
with respect to any Intellectual Property;
3.7.10 changed or authorized any change in its charter or
bylaws;
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3.7.11 experienced any damage, destruction, or loss
(whether or not covered by insurance) to its
property in excess of $25,000;
3.7.12 entered into any employment contract or collective
bargaining agreement, written or oral, or modified
the terms of any existing such contract or
agreement;
3.7.13 granted any increase in the compensation of any of
the directors, officers, and employees of the Seller
outside the Ordinary Course;
3.7.14 adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of
the directors, officers, and employees of the Seller
or taken any such action with respect to any other
Employee Benefit Plan;
3.7.15 made any other change in employment terms for any of
the directors, officers, and employees of the Seller
outside the Ordinary Course;
3.7.16 made or pledged to make any charitable or other
capital contribution outside the Ordinary Course;
3.7.17 made any distribution of cash or other property to
any of its stockholders; nor
3.7.18 committed to any of the foregoing.
3.8 Undisclosed Liabilities. To Seller's Knowledge and except as
disclosed on Schedule 3.8, Seller does not have any material
Liability except for (i) Liabilities set forth on the face of
the most recent balance sheet (rather than in any notes
thereof) of the Most Recent Month End, (ii) Liabilities which
have arisen after the Most Recent Month End in the Ordinary
Course (none of which results from, arises out of, relates to,
is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law),
and (iii) Liabilities arising out of matters disclosed on the
Disclosure Schedules.
3.9 Legal Compliance. Except as disclosed on Schedule 3.9, the
Seller is in material compliance with all applicable laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees and rulings) of federal, state,
local, and foreign governments (and all agencies thereof
applicable to the Business or Assets), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against it
alleging any failure so to comply, except where the failure to
comply would not have a material adverse effect on the
business, financial condition, operations, or results of
operation of the Seller.
3.10 Tax Matters.
3.10.1 The Seller has filed all Tax Returns that it was
required to file. All Taxes owed by the Seller
(whether or not shown on any Tax Return) have been
paid. There are no Security Interests on any of the
assets of the Seller that arose in connection with
any failure (or alleged failure) to pay any Tax.
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The Seller is not currently the beneficiary of any
extension of time to file any Tax Return.
3.10.2 The Seller has withheld and paid all Taxes required
to have been withheld and paid in connection with
amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third
party.
3.11 Real Property.
3.11.1 Schedule 3.11.1 lists and briefly describes all real
property owned by Seller.
3.11.2 Schedule 3.11.2 lists and describes briefly all real
property leased or subleased to or by the Seller.
The Seller has delivered to the Buyer correct and
complete copies of the leases and subleases listed
in Schedule 3.11.2 and as disclosed thereon. With
respect to each lease and sublease listed on
Schedule 3.11.2:
3.11.2.1 the lease or sublease is legal, valid,
binding, enforceable, and in full force
and effect in all material respects;
3.11.2.2 to Seller's Knowledge, no party to the
lease or sublease is in breach or
default, and no event has occurred which,
with notice or lapse of time, would
constitute a breach or default or
permit termination, modification, or
acceleration thereunder;
3.11.2.3 to Seller's Knowledge, no party to the
lease or sublease has repudiated any
provision thereof;
3.11.2.4 there are no material disputes, oral
agreements, or forbearance programs in effect
as to the lease or sublease;
3.11.2.5 the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or
subleasehold; and
3.11.2.6 to Seller's Knowledge, all facilities
leased or subleased thereunder have
received all material approvals of
governmental authorities (including
material licenses and permits) required
in connection with the operation
thereof and have been operated and maintained
in accordance with applicable laws, rules,
and regulations in all material respects.
3.12 Intellectual Property.
3.12.1 Except as disclosed on Schedule 3.12.1, (i) the
Seller owns or has the right to use pursuant to
license, sublicense, agreement, or permission all
Intellectual Property necessary for the operation of
the Business as presently conducted and as presently
proposed to be conducted and (ii) each item of
Intellectual Property owned or used by the Seller
immediately prior to the Closing hereunder will be
owned or available for use by the Buyer on identical
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INTECH CABLE, INC.
terms and conditions immediately subsequent to the
Closing hereunder.
3.12.2 Except as disclosed on Schedule 3.12.2, to Seller's
Knowledge, the Seller has not interfered with,
infringed upon or misappropriated any Intellectual
Property rights of third parties in any material
respect. The Seller has not received any complaint,
claim, demand, or notice alleging any such
interference, infringement, misappropriation, or
violation (including any claim that the Seller must
license or refrain from using any Intellectual
Property rights of any third party). Except as
disclosed on Schedule 3.12.2, to Seller's Knowledge,
no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict
with any Intellectual Property rights of the Seller
in any material respect.
3.12.3 Schedule 3.12.3 identifies each patent (including
issuing country, number, current assignee of record,
title and issue date), each trademark and service
mark registration (including issuing country,
number, description of mark, current owner of
record, classes of goods or services, and issue
date), each unregistered trademark and service mark
for which no application for registration is pending
(including a description of the mark and the goods
or services with which it is used) and each
copyright registration (including issuing country,
number, title or description of work, current owner
of record and issue date) currently in effect and
owned by the Seller; identifies each pending patent
application (including country of filing, serial
number, current owner of record, title and filing
date), application for registration of a trademark
or service mark (including country of filing, serial
number, description of mark, current owner of
record, classes of goods or services, and filing
date), which the Seller has made with respect to any
of its Intellectual Property; and identifies each
license, agreement, or other permission which the
Seller has granted to any third party with respect
to any of its owned Intellectual Property (together
with any exceptions). The Seller has delivered to
the Buyer correct and complete copies of all such
patents, registrations, applications, licenses,
agreements and permissions (as amended to date).
With respect to each item of Intellectual Property
that the Seller owns, except as disclosed on
Schedule 3.12.3:
3.12.3.1 the Seller possesses all right, title, and
interest in and to the item, free and
clear of any Security Interest, license,
or other restriction;
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3.12.3.2 the item is not subject to any outstanding
injunction, judgment, order, decree, or
ruling;
3.12.3.3 no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand is pending or, to Seller's
Knowledge, is threatened which challenges
the legality, validity, enforceability,
use, or ownership of the item; and
3.12.3.4 the Seller has not agreed to indemnify any
Person for or against any interference,
infringement, misappropriation, or other
conflict with respect to the item.
3.12.4 Schedule 3.12.4 identifies each item of Intellectual
Property that any third party owns
and that the Seller uses pursuant to license,
sublicense, agreement, or permission. The
Seller has delivered to the Buyer correct and
complete copies of all such licenses,
sublicenses, agreements, and permissions (as
amended to date). With respect to each item of
Intellectual Property required to be identified
on Schedule 3.12.4 and as disclosed thereon:
3.12.4.1 the license, sublicense, agreement, or
permission covering the item is legal,
valid, binding, enforceable, and in full
force and effect in all material respects;
3.12.4.2 to Seller's Knowledge, no party to the
license, sublicense, agreement, or
permission is in material breach or
default, and no event has occurred which
with notice or lapse of time would
constitute a material breach or default
or permit termination, modification, or
acceleration thereunder; and
3.12.4.3 the Seller has not granted any sublicense or
similar right with respect to the license,
sublicense, agreement, or permission.
3.13 Inventory. The inventory of the Seller consists of raw
materials, work in process, and finished goods.
3.14 Contracts. Schedule 3.14 lists the following contacts
and agreements to which the Seller is a party:
3.14.1 any agreement (or group of related agreements)
for the lease of personal property to or from
any Person providing for lease payments in
excess of $20,000 per annum;
3.14.2 any agreement (or group of related agreements)
for the purchase or sale of raw materials,
commodities, supplies, products, or other
personal property, or for the furnishing or
receipt of services, the performance of which
will extend over a period of more than one
year, result in a material loss to the Seller,
or involve consideration in excess of $75,000;
3.14.3 any agreement concerning a partnership or joint
venture;
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3.14.4 any agreement (or group of related agreements)
under which it has created, incurred, assumed,
or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation
under which it has imposed a Security Interest
on any of its assets, tangible or intangible;
3.14.5 any agreement concerning confidentiality or
noncompetition;
3.14.6 any profit sharing, stock option, stock
purchase, stock appreciation, deferred
compensation, severance, or other material plan
or arrangement for the benefit of the current
or former directors, officers, and employees of
the Seller;
3.14.7 any collective bargaining agreement;
3.14.8 any agreement for the employment of any
individual on a full-time, part-time,
consulting, or other basis;
3.14.9 any agreement under which the consequences of a
default or termination could have a material
adverse effect on the business, financial
condition, operations, or results of operation
of the Seller; and
3.14.10 any other agreement (or group of related
agreements) the performance of which involves
consideration in excess of $75,000.
The Seller has delivered to the Buyer a correct
and complete copy of each written agreement
listed in Schedule 3.14 (as amended to date) and a written
summary setting forth the terms and conditions of each
oral agreement referred to in Schedule 3.14. With respect
to each such agreement and except as disclosed on Schedule
3.14, (i) the agreement is legal, valid, binding,
enforceable, and in full force and effect in
all material respects; (ii) the Seller is not in material
breach or default, and to Seller's Knowledge no other party is
in breach or default, and no event has occurred which with
notice or lapse of time would constitute a material breach or
default, or permit termination, modification, or acceleration,
under the agreement; (iii) each such agreement will
continue to be valid, binding, enforceable and in full
force and effect on identical terms following the
consummation of the transactions contemplated hereby
(including the assignments and assumptions
referred to in Article 2 above).
3.15 Notes and Accounts Receivable. All notes and accounts
receivable of the Seller are reflected properly on its books
and records, are valid receivables, and to Seller's Knowledge
are subject to no setoffs or counterclaims and are current and
collectible, subject only to the reserve for bad debts set
forth on the face of the most recent balance sheet (rather
than in any notes thereto) as of the Most Recent Month End as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Seller.
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3.16 Insurance. Schedule 3.16 sets forth the following information
with respect to each material insurance policy (including
policies providing property, casualty, liability, and
workers' compensation coverage and bond and surety
arrangements) to which the Seller is a party, a named
insured, or otherwise the beneficiary of coverage:
3.16.1 the name, address, and telephone number of the
agent;
3.16.2 the name of the insurer, the name of the
policyholder, and the name of each covered
insured;
3.16.3 the policy number and the period of coverage;
3.16.4 the scope (including an indication of whether the
coverage was on a claims made, occurrence, or
other basis) and amount (including a
description of how deductibles and ceilings are
calculated and operate) of coverage; and
3.16.5 a description of any retroactive premium
adjustments or other loss-sharing arrangements.
Schedule 3.16 describes any material self-insurance
arrangements affecting the Seller.
3.17 Litigation. Schedule 3.17 sets forth each instance in which
the Seller (i) is subject to any outstanding injunction,
judgment, order, decree or ruling or (ii) is a party or, to
Seller's Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before
any arbitrator.
3.18 Product Warranty. Each product manufactured, sold, leased,
or delivered by Seller has been in material conformity with
all applicable commitments and warranties. Schedule 3.18
includes copies of the standard terms and conditions of
sale or lease for the Seller (containing applicable
guaranty, warranty, and indemnity provisions).
3.19 Product Liability. To Seller's Knowledge, the Seller does
not have any Liability arising out of any injury to
individuals or damage to property as a result of the
ownership, possession, or use of any product manufactured,
sold, leased, or delivered by the Seller.
3.20 Employees. To Seller's Knowledge, no executive or key
employee has any plans to terminate employment with the
Seller during the next twelve months. Except as listed in
Schedule 3.20, the Seller is not a party to or bound by any
collective bargaining agreement, nor has it experienced any
strikes, material grievances, claims of unfair labor
practices, or other collective bargaining disputes within the
past year. To Seller's Knowledge, the Seller has not
committed any material unfair labor practice. To Seller's
Knowledge, there is not any organizational effort presently
being made or threatened by or on behalf of any labor union
with respect to employees of the Seller.
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3.21 Employee Benefits.
3.21.1 Schedule 3.21.1 lists each Employee Benefit Plan
that the Seller maintains or to which the Seller
contributes.
3.21.1.1 Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund)
complies in form and operation in all material
respects with the applicable requirements of
ERISA, the Code, and other applicable laws.
3.21.1.2 All contributions (including all employer
contributions and employee salary reduction
contributions) which are due have been paid to
each such Employee Benefit Plan which is an
employee pension benefit plan or accrued and
all contributions for any period ending on or
before the Closing Date which are not yet due
have been paid to each such employee pension
benefit plan or accrued in accordance with the
past custom and practice of the Seller. All
premiums or other payments which are due for
all periods ending on or before the Closing
Date have been paid or accrued with respect to
each such Employee Benefit Plan which is an
employee welfare benefit plan.
3.21.2 Except as disclosed in Schedule 3.21.2, the Seller
does not maintain, has not maintained, does not
contribute, has not contributed, and has not been
required to contribute, to any employee welfare
benefit plan providing medical, health, or life
insurance or other welfare-type benefits for current
or future retired or terminated employees, their
spouses, or their dependents (other than in
accordance with Code Sec. 4980B or comparable state
law).
3.22 Guaranties. Except as listed in Schedule 3.22, the
Seller is not a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any
other Person. Schedule 3.22 also sets forth an accurate
and complete list showing the name and address of each
bank in which the Seller has an account or lockbox, the
number of any such account or lockbox, and the names of
all persons authorized to drawn thereon or have access
thereto.
3.23 Environment, Health, and Safety.
3.23.1 To Seller's Knowledge, Seller (i) has complied with
all Environmental Laws in all material respects (and
no action, suit, proceeding, hearing, formal
investigation (other than routine inspections),
complaint, claim, demand, or notice has been filed
or commenced against it alleging any failure so to
comply), (ii) has obtained and been in substantial
compliance with all of the terms and conditions of
all material permits, licenses, and other
authorizations which are required under
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Environmental Laws, and (iii) has complied in all
material respects with all other limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables
which are contained in all Environmental Laws.
3.23.2 To Seller's Knowledge, Seller does not have any
material Liability (and to Seller's Knowledge, none
of the Seller, its predecessors or its or their
Affiliates have handled or disposed of any
substance, arranged for the disposal of any
substance, exposed any employee or other individual
to any substance or condition, or owned or operated
any property or facility in any manner that could
give rise to any material Liability) for damage to
any site, location, or body of water (surface or
subsurface), for any illness of or personal injury
to any employee or other individual, or for any
reason under any Environmental Law.
3.24 Certain Business Relationships with Seller. To Seller's
Knowledge, no Affiliate or officer, director or employee of the
Seller has been involved in any material business arrangement
or relationship with the Seller within the past twelve months,
and no such Affiliate, officer, director or employee owns any
material asset, tangible or intangible, which is used in the
Business.
3.25 Tangible Assets. Each tangible asset is free from material
defect, has been maintained in accordance with normal industry
practice and is in good operating condition and repair (subject
to normal wear and tear).
3.26 Customers. To Seller's Knowledge, as of the date of this
Agreement, no customer of Seller intends to stop purchasing
products of the Business as a result of the Seller's completing
the transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
The Buyer represents and warrants to the Seller that the statements
contained in this Article 4 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article
4).
4.1 Organization of the Buyer. Buyer is a corporation duly
organized, validly existing, and in good standing under the
laws of Delaware.
4.2 Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and the
Ancillary Agreements, and to perform its obligations hereunder
and thereunder. This Agreement and the Ancillary Agreements
constitute the valid and legally binding obligations of the
Buyer, enforceable in accordance with their terms and
conditions.
4.3 Noncontravention. Neither the execution and the delivery of
this Agreement and the Ancillary Agreements, nor the
consummation of the transactions contemplated hereby and
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thereby (including the assignments and assumptions referred to
in Article 2 above), will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or
any provision of the charter or bylaws of the Buyer or (ii)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice under, any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party
or by which it is bound or to which any of its assets are
subject (or result in the imposition of any Security Interest
upon any of its assets), except where the violation, conflict,
breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest
would not have a material adverse effect on the business,
financial condition, operations or results of operation of
Buyer or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. The Buyer does
not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Article 2 above),
except where the failure to give notice, make a filing, or
obtain authorization, consent or approval would not have a
material adverse effect on the business, financial condition,
operations or results of operation of Buyer or on the ability
of the Parties to consummate the transactions contemplated by
this Agreement.
4.4 Brokers' Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
retained by the Buyer with respect to the transactions
contemplated by this Agreement for which the Seller could
become liable or obligated.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
5.1 General. Each Party will use its reasonable efforts to take
all action and to do all things necessary, proper or advisable
to consummate and make effective the transactions contemplated
by this Agreement (including satisfying the closing conditions
set forth in Article 7 below).
5.2 Notices and Consents.
5.2.1 As soon as practicable after the execution of this
Agreement, the Seller will give any required notices to
any person and will commence to take all reasonable
action required to obtain all consents and agreements
("Consents") of all parties necessary to authorize,
approve, or permit the full and complete grant, bargain,
sale, conveyance, assignment and transfer by the Seller
to the Buyer as contemplated by this Agreement. The
Seller will continue such efforts after the Closing Date,
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if required by the Buyer, at no additional cost to the
Buyer. If any Consent is not obtained by the Closing and
the Buyer nevertheless elects to close the transaction
contemplated by this Agreement, the Seller will cooperate
with the Buyer in any reasonable arrangement to provide
the Buyer with the benefits under or with respect to the
matter as to which the relevant Consents were not
obtained. Each Party will file any notification and
report forms and related material that such Party may be
required to file with any governmental authority, will
use its reasonable efforts to obtain the expiration or
early termination of the applicable waiting period (or
any extension thereof) for any required pre-acquisition
notice, and will make any further filings, including the
submission of any additional information or documentary
material, pursuant thereto that may be necessary, proper
or advisable. Buyer will bear the fee for filing its HSR
Act Notification Form with the government.
5.2.2 Notwithstanding the foregoing, neither the Seller nor
Buyer shall be required to:
(i) divest or hold separate any assets including assets
of any Affiliate;
(ii) agree to any limitation on their respective freedom
of action with respect to, or their ability to
retain, any of their (or their Affiliate's) other
assets or businesses;
(iii) contest any suit brought or threatened by the
U.S. Federal Trade Commission or the U.S.
Department of Justice or attempt to lift or
rescind any injunction or restraining order
obtained by the U.S. Federal Trade Commission
or the U.S. Department of Justice adversely
affecting the ability of the Parties to
consummate the transactions contemplated
hereby; or
(iv) provide additional information
pursuant to a formal "second request" made by
the U.S. Federal Trade Commission or U.S.
Department of Justice in connection with a
"Hart-Scott-Rodino pre-merger notice filing"
("HSR") made by a Party.
5.2.3 Each Party shall promptly inform the other of any
material communication from the U.S. Federal Trade
Commission, the U.S. Department of Justice or any other
government authority regarding any of the transactions
contemplated hereby.
5.2.4 Each Party will advise the other promptly in respect of
any understandings, undertakings or agreements (oral or
written) which such Party proposes to make or enter into
with the U.S. Federal Trade Commission, the U.S.
Department of Justice or any other government authority
in connection with the transactions contemplated hereby.
5.3 Operation of Business. The Seller will not engage in any
practice, take any action, embark on any course of inaction, or
enter into any transaction outside the Ordinary Course.
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INTECH CABLE, INC.
Without limiting the foregoing, the Seller will not engage in
any matter described in Section 3.7 above.
5.4 Preservation of Business. The Seller will use its reasonable
best efforts to keep the Business and Assets intact, including
its present operations, physical facilities, working conditions
and relationships with lessors, licensors, suppliers, customers
and employees.
5.5 Access. After reasonable prior notice delivered by Buyer, the
Seller will permit representatives of the Buyer to have access
at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Seller, to all
premises, properties, books, records, contracts, Tax records
and documents of or pertaining to the Seller in order to
conduct any investigation (including environmental assessments)
of the Seller.
5.6 Notice of Developments. The Seller will give prompt written
notice to the Buyer of any material development, of which it
becomes aware, affecting the assets, Liabilities, business,
financial condition, operations or results of operation of the
Seller. Each Party will give prompt written notice to the
other of any material development affecting the ability of the
Parties to consummate the transactions contemplated by this
Agreement. No disclosure by any Party pursuant to this Section
5.6 shall be deemed to amend or supplement any attachment
including the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
Seller shall have the right to revise the Disclosure Schedules,
subject to the Buyer's right to accept or reject such revisions
pursuant to Section 7.1.11.
5.7 Exclusivity. Until December 15, 1996, the Seller will not (and
the Seller will not cause or permit any of its Affiliates to)
(i) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating to any (A)
liquidation, dissolution or recapitalization, (B) merger or
consolidation, (C) acquisition or purchase of a substantial
portion of the assets, or (D) similar transaction or business
combination involving the Seller or (ii) participate in any
discussions or negotiations regarding, furnish any information
with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek
any of the foregoing. Seller will notify Buyer immediately if
any Person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
5.8 Bulk Sales or Transfer Laws. The Buyer has agreed to waive
Seller's compliance with any applicable bulk sales or transfer
laws. Accordingly, the Seller agrees to indemnify the Buyer
from any Liability arising from any failure to comply with
such laws in connection with the transfer of the Assets to
Buyer as contemplated hereby.
6 POST-CLOSING COVENANTS The Parties agree as follows with respect to
the period following the Closing.
6.1 General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of
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INTECH CABLE, INC.
this Agreement, each Party will take such further action
(including the execution and delivery of such further
instruments and documents and Buyer's providing reasonable
assistance to Seller in connection with Seller's administration
of any workers' compensation claims relating to the Business)
as the other Party reasonably may request, all at the sole cost
and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Article 8
below). The Seller acknowledges and agrees that from and after
the Closing the Buyer will be entitled to possession of all
documents, books, records, agreements and financial data of any
sort relating to the Business (other than information relating
to the Retained Assets or Retained Liabilities).
6.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any charge,
complaint, action, suit, proceeding, hearing, investigation,
claim or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving the
Business, the other Party will cooperate with such Party and
such Party's counsel in the contest or defense, make available
its personnel and provide such testimony and access to its
books and records as shall be reasonably necessary in
connection with the contest or defense, all at the sole cost
and expense of the contesting or defending party (unless the
contesting or defending Party is entitled to indemnification
therefor under Article 8 below).
6.3 Transition. The Seller will refer, and will cause its
Affiliates to refer, all customer inquiries relating to the
Business to the Buyer from and after the Closing.
6.4 Tax Matters. Seller and Buyer shall (i) each provide the other
with such assistance as may reasonably be requested by either
of them in connection with the preparation of any return,
audit, or other examination by any tax authority or judicial or
administrative proceedings relating to liability for Taxes,
(ii) each retain and provide the other with any records or
other information that may be relevant to such return, audit or
examination, proceeding or determination, and (iii) each
provide the other with any final determination of any such
audit or examination, proceeding or determination that affects
any amount required to be shown on any return of the other for
any period. Without limiting the generality of the foregoing,
Seller and Buyer shall retain until the applicable statutes of
limitation (including any extensions) have expired, copies of
all returns, supporting work schedules and other records or
information that may be relevant to such returns for all tax
periods or portions thereof ending before or including the
Closing Date and shall not destroy or otherwise dispose of any
such records without first providing the other party with a
reasonable opportunity to review and copy the same.
6.5 Confidentiality. The Seller will treat and hold as such all
confidential information relating to the Business, refrain from
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INTECH CABLE, INC.
using any of such confidential information except in connection
with this Agreement and deliver promptly to the Buyer or
destroy, at the request of the Buyer, all tangible embodiments
(and all copies) of such confidential information which are in
its possession. In the event the Seller is requested or
required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process) to disclose any
confidential information, the Seller will notify the Buyer
promptly of the request or requirement so that the Buyer may
seek an appropriate protective order or waive compliance with
the provisions of this Section 6.5. If, in the absence of a
protective order or the receipt of a waiver under this Section
6.5, the Seller is, on the advice of counsel, compelled to
disclose any confidential information to any tribunal or else
stand liable for contempt, the Seller may disclose the
confidential information to the tribunal. However, the Seller
shall use its reasonable best efforts to obtain, at the
reasonable request and expense of the Buyer, an order or other
assurance that confidential treatment will be accorded to such
portion of the confidential information required to be
disclosed as the Buyer shall designate. The foregoing
provisions shall not apply to any confidential information
which is generally available to the public immediately prior to
the time of disclosure.
6.6 Covenant Not to Compete. The Seller, on behalf of itself and
its Affiliates, in consideration of Buyer's purchase of the
Assets, agrees for a period of five years after the Closing
Date not to start up, acquire, operate or otherwise compete
with the Buyer or its Affiliates in a business that develops,
manufactures, markets or services the products or services of
the Business or any products having specifications similar to
such products in those countries throughout the world where the
products or services of the Business have been sold. To insure
the greatest likelihood of enforceability of this covenant, the
Parties agree that: (i) the duration and area for which the
covenant is to be effective are reasonable; (ii) if any court
determines that the time period or the area, or both of them,
are unreasonable, and that the covenant is to that extent
unenforceable, then the covenant shall remain in full force and
effect for the greatest time period, and in the greatest area
that would not render it unenforceable; and (iii) the covenant
shall be deemed to be a series of separate covenants, one for
each and every country where the products or services of the
Business have been sold.
6.7 Disclosures. Before Closing, no Party, without the prior
written consent of the other Party, will issue any press
release or any similar public announcement concerning the
transactions contemplated by this Agreement. However, if in
the opinion of counsel to any Party (which opinion shall be
confirmed in writing by such counsel and promptly delivered to
the other Party before disclosure), such disclosure is required
by law or regulations of a stock exchange, the Parties will
cooperate in preparing a press release or releases, and unless
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INTECH CABLE, INC.
the Parties otherwise agrees, such disclosures shall be limited
to the disclosures so required in the opinion of counsel.
6.8 Environmental Matters. The Buyer shall not assume, and the
Seller shall remain solely responsible for, the following
liabilities and obligations which shall be Retained
Liabilities: All Liabilities of any nature whatsoever whenever
arising under any Environmental Laws, based upon any events
occurring or conditions existing on or before the Closing Date
(whether or not there is a migration or spreading after the
Closing Date, except to the extent any such migration or
spreading is due to any act of the Buyer), relating in any
manner to (i) operations of the business conducted by the
Seller, its Affiliates or predecessors, or (ii) the Assets or
any facilities owned, leased or used by the Seller, its
Affiliates or predecessors (whether or not such facilities are
included in the Assets), whether such Liabilities relate to on-
site or to a location other than such facilities, including
without limitation any liability arising pursuant to the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C.sections 9601 et seq. or
similar state or local laws.
6.9 Change of Lockbox Accounts. The Seller shall take such steps
as Buyer may reasonably request to cause Buyer, effective as of
the Closing Date, to be substituted as the sole party having
control over any lockbox to which customers of the Seller make
payments, and to transfer to Buyer, effective as of the Closing
Date, the bank accounts associated with such lockboxes.
6.10 Employees and Employee Benefit Plans.
6.10.1 Employment of Transferred Employees.
6.10.1.1 On the Closing Date, Seller shall make available for
employment, and Buyer shall offer to employ, all
Active Employees. The Active Employees who accept
such offers shall become "Transferred Employees" as
of the Closing Date. Except for any limitation
imposed by a collective bargaining agreement, the
Parties agree that the employment relationship
between the Transferred Employees and the Buyer
shall be at will, that it shall be a new employment
relationship and that the Buyer is not intended to
be, and is not, successor to the Seller in any legal
sense with respect to the employment relationships
existing prior to the Closing Date between such
Transferring Employees and the Seller.
6.10.1.2 The employment offers referenced in Section 6.10.1.1
above shall be at a wage or salary level, whichever
is applicable, that is equivalent to the wage or
salary level, whichever is applicable, of each such
employee immediately prior to the Closing Date.
Each such offer of employment shall also include
employee benefit plans, programs and policies that
are substantially comparable in the aggregate to the
employee benefits of each such employee immediately
prior to the Closing Date (the "Prior Employee
Benefits"), except that coverage to Transferred
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INTECH CABLE, INC.
Employees shall not be subject to any waiting period
requirement, exceptions for pre-existing conditions
or gap period rule in addition to what was provided
by the Prior Employee Benefits. It is understood,
however, that the employee benefit plans included in
the offers of employment may not extend beyond (i) a
401(k) plan which is substantially comparable to the
Intech Savings Plan (as hereinafter defined), and
(ii) medical insurance, severance, disability
insurance, life insurance and dental insurance which
are substantially comparable to those that Seller
provides to its Active Employees at the date of this
Agreement. It is also understood that Buyer will
have no obligation to continue the discretionary
incentive compensation arrangement Seller has with
certain senior level employees or salaried
employees, nor will Buyer have any liability to such
employees for any amounts they may have earned under
such arrangement for which they will not have
received payment on or before the Closing. The
Buyer shall follow Exhibit 6.10.1.2 to determine
"prior service credit" for Transferred Employees for
purposes of eligibility, vesting and entitlements of
employees in all employee benefit plans or
arrangements covering such Transferred Employees.
Such Exhibit 6.10.1.2 is consistent with the "prior
service credit" for such employees currently
recognized by the Seller.
6.10.2 Intech Savings Plan. The Active Employees participate in
a 401(k) plan (the "Intech Savings Plan"), a qualified
defined contribution plan with a 401(k) feature, a copy
of which is attached as Exhibit 6.10.2A. Effective as of
the Closing, Buyer will either (i) adopt the Intech
Savings Plan for the benefit of the Transferred Employees
pursuant to the Assignment and Adoption Agreement
attached as Exhibit 6.10.2B and in accordance with
applicable law or (ii) establish a new 401(k) plan
substantially in the form of the Intech Savings Plan and
in accordance with applicable law. Should it elect to
establish a new plan, Buyer shall accept a direct
transfer of the account balance of each Transferred
Employee to the new plan from the Intech Savings Plan.
6.10.3 Employee Welfare Benefit Plans. Seller shall continue the
employee welfare benefit plans in effect on January 1,
1996 for all Active Employees through the Closing Date.
Buyer shall provide employee welfare benefits to the
Transferred Employees effective as of and after the
Closing Date which are substantially comparable to the
employee welfare benefits made available by Seller
immediately prior to the Closing Date.
6.10.4 Certain Retained Liabilities of the Seller. The Buyer
shall not assume, and the Seller shall remain solely
responsible for, the following Liabilities and
obligations which shall be Retained Liabilities:
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INTECH CABLE, INC.
6.10.4.1 Except as set forth in Section 6.10.7, all
Liabilities and obligations of whatever nature
arising out of, asserted by or relating to past,
present or retired employees of the Seller, its
Affiliates or predecessors who are not Transferred
Employees, whenever arising, including without
limitation (i) those pertaining to benefits, rights,
entitlements, expense reimbursements, salary,
payroll or other payments, and (ii) those arising by
reason of the transfer or non-transfer of employees
contemplated by this Section 6.10;
6.10.4.2 Except for those liabilities set out in Section
1.6.1 above and except as set forth in Section
6.10.7, all Liabilities and obligations of whatever
nature arising out of, asserted by or relating to
Transferred Employees, whenever arising, including
without limitation those pertaining to benefits,
rights, entitlements, expense reimbursements,
salary, payroll or other payments, to the extent
such Liabilities and obligations result from an
Occurrence taking place (or relating to a period) on
or before the Closing Date; provided, however, that
with respect to Liabilities resulting from workplace
conditions or exposures which continue after the
Closing Date and for which the initial claim is
asserted after the Closing Date, Seller shall remain
responsible for the proportion of such Liabilities
attributable to periods on or prior to the Closing
Date and Buyer shall be responsible for the
proportion of such Liabilities attributable to
periods after the Closing Date.
6.10.5 Nonduplication. Nothing in this Section 6.10 shall cause
duplicate contributions or benefits to be paid to or with
respect to any employee.
6.10.6 No Changes. Without the Buyer's prior written consent,
the Seller shall neither make nor permit any material
change to be made in salaries, wages, employee benefit
plans or other benefits from the date hereof through the
Closing Date.
6.10.7 Retiree Medical and COBRA Continuation Coverage.
Notwithstanding anything herein, subject to Buyer's
rights under Section 6.10.8.3 below, Buyer will provide
retiree medical benefit coverage for those retired
employees who are listed on Exhibit 6.10.7 A and for
those Active Employees who become Transferred Employees
in accordance with the plan for such coverage which is
attached as Exhibit 6.10.7 B. Buyer's obligation to
provide such coverage will not be subject to any
limitation regarding pre-existing conditions except as
provided in the plan. To the extent required by
applicable law, Buyer shall be responsible for providing
continuation healthcare coverage pursuant to an election
under Section 4980B of the Code or Sections 601-608 of
ERISA (a "COBRA election") made by any Transferred
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INTECH CABLE, INC.
Employee (or any individual who constitutes a qualified
beneficiary with respect to the Transferred Employee)
which relates to a qualifying event which occurs after
the Closing Date. The consummation of the transactions
contemplated by this Agreement shall not entitle
Transferred Employees to make a COBRA election with
respect to the group health plans of Seller nor otherwise
constitute a "qualifying event" within the meaning of
Code Section 4980B or Sections 601-608 of ERISA.
6.10.8 Certain Reservations of Rights by the Buyer.
6.10.8.1 Nothing herein expressed or implied shall confer
upon any Person (including any Transferred Employee
or any other past or present employees of the Seller
or its Affiliates) other than the Seller any rights
or remedies of any nature or kind whatsoever,
including any right to employment by the Buyer for
any period or under any particular terms and
conditions or any third-party beneficiary rights
hereunder.
6.10.8.2 Nothing herein shall prevent the Buyer at any time
or times after the Closing Date from terminating,
reassigning, promoting or demoting individual
personnel or changing adversely or favorably the
titles, powers, duties, responsibilities, functions,
locations, salaries, other compensation, or terms
and conditions of employment of officers and
employees of the Buyer.
6.10.8.3 Nothing herein shall restrict in any way the right
of the Buyer at any time or times after the Closing
Date to establish, amend or terminate any employee
benefit plan, arrangement, program, practice, policy
or procedure.
6.11 Discharge of Retained Liabilities. Seller shall discharge all
Retained Liabilities in a timely manner. No disclosure made by
Seller (including any set out in the Disclosure Schedules)
shall limit or modify any Retained Liability or Seller's
obligation to satisfy such Retained Liability.
6.12 Existence. The Seller agrees (i) to maintain its corporate
existence at least until the Escrow Agreement expires and to
notify Buyer in advance should it decide thereafter to
dissolve, (ii) to not remove any of the fixtures listed under
subparts (a), (b)(i) or (b)(ii) of Exhibit 1.5 prior to the
expiration of the term of the Hudson Lease, and (iii) promptly
after Closing, to change its corporate name to a different name
that is not confusingly similar to "Intech Cable, Inc.",
"Independent Cable, Inc." or "ICI".
7 CONDITIONS TO OBLIGATION TO CLOSE
7.1 Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in
connection with Closing is subject to satisfaction of the
following conditions (or their waiver in writing by the Buyer):
7.1.1 the representations and warranties set forth in Article 3
above shall be true and correct in all material respects
at and as of the Closing Date;
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INTECH CABLE, INC.
7.1.2 the Seller shall have performed and complied with all of
its covenants that it must perform prior to the Closing;
7.1.3 the Seller shall have procured all Consents (including
the lessor's consent with respect to the Charlotte
Facility) referred to in Section 5.2 above; 7.1.4no
action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign
jurisdiction wherein an unfavorable judgment, order,
decree, stipulation, injunction or charge would (i)
prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be
rescinded following consummation or (iii) affect
adversely the right of the Buyer to own, operate or
control the Assets or the Business (and no such judgment,
order, decree, stipulation, injunction or charge shall be
in effect);
7.1.5 the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in Sections 7.1.1 through 7.1.4 is
satisfied in all respects;
7.1.6 the Parties shall have received all authorizations,
consents and approvals of governments and governmental
agencies set forth in Exhibit 7.1.6;
7.1.7 the relevant Parties shall have entered into the
Ancillary Agreements in form and substance as set forth
in Exhibit 7.1.7, and the same shall be in effect;
7.1.8 all actions to be taken by the Seller in connection with
consummation of the contemplated transactions and all
certificates, opinions, instruments and other documents
required to effect the contemplated transactions will be
reasonably satisfactory in form and substance to the
Buyer;
7.1.9 on the Closing Date, there shall not exist any damage to
or destruction of any parts of the Business, the
restoration costs of which would exceed $25,000
individually or $100,000 in the aggregate;
7.1.10 at Buyer's request, the Seller shall have removed
and disposed of any Regulated Materials in storage
on any real property owned or leased by the Seller,
and the Seller shall have provided written
confirmation of such removal and disposal
satisfactory to the Buyer;
7.1.11 the Buyer in its discretion shall have found
acceptable any revisions of the Disclosure Schedules
made by Seller pursuant to Section 5.6; and
7.1.12 the Seller shall have provided written evidence
satisfactory to Buyer of the termination and release
of any Security Interest covering any of the Assets,
including letters from the lenders containing payoff
amounts and reasonable assurance covenants in favor
of Buyer.
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7.2 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions (or their waiver in writing by the
Seller):
7.2.1 the representations and warranties set forth in Article 4
above shall be true and correct in all material respects
at and as of the Closing Date;
7.2.2 the Buyer shall have performed and complied with all of
their covenants that they must perform prior to the
Closing;
7.2.3 no action, suit or proceedings shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or
foreign jurisdiction wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge would
(i) prevent consummation of any of the transactions
contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be
rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction or charge shall be
in effect);
7.2.4 the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in Sections 7.2.1 through 7.2.3 is
satisfied in all respects;
7.2.5 the Parties shall have received all authorizations,
consents and approvals of governments and governmental
agencies set forth in Exhibit 7.1.6;
7.2.6 the relevant parties shall have entered into the
Ancillary Agreements in form and substance as set forth
in Exhibit 7.1.7, and the same shall be in effect; and
7.2.7 all actions to be taken by the Buyer in connection with
consummation of the contemplated transactions and all
certificates, opinions, instruments and other documents
required to effect the contemplated transactions will be
reasonably satisfactory in form and substance to the
Seller.
8 REMEDIES FOR BREACHES OF THIS AGREEMENT
8.1 Survival. All representations, warranties, and covenants of
the Parties contained in this Agreement shall survive the
Closing and continue in effect for the following periods:
8.1.1 Each Party's covenants shall continue forever.
8.1.2 Seller's representations and warranties set forth in
Section 3 shall expire as follows:
(i) with respect to Sections 3.2 ("Authorization of
Transaction"), 3.5 ("Assets"), 3.21 ("Employer
Benefits"), and 3.23 ("Environment, Health &
Safety"), three years after the Closing Date; and
(ii) with respect to all others, 18 months after the
Closing Date.
8.1.3 The Buyer's representations and warranties shall expire
three years after the Closing Date.
Each Party must
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INTECH CABLE, INC.
assert any claim involving a representation, warranty or
covenant against the other Party before expiration of any
applicable survival period. Notwithstanding any contrary
provision, as long as the claim is asserted timely, the
claim will continue to be valid and assertible even
though the survival period may subsequently expire before
the claim is resolved.
8.2 Indemnification Provisions for Benefit of the Buyer. If the
Seller breaches any of its representations, warranties, or
covenants contained in this Agreement (or in any of the
Ancillary Agreements, Schedules or Exhibits referred to
herein), then the Seller agrees to defend, indemnify and save
harmless the Buyer, its Affiliates and its and their
directors, officers and employees ("Buyer's Indemnified Group")
from and against the entirety of any Liability that any of the
Buyer's Indemnified Group may suffer through and after the date
of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by the breach.
The Seller also agrees to defend, indemnify and save harmless
the Buyer's Indemnified Group from and against the entirety of
any Liability that any of the Buyer's Indemnified Group may
suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, or
in the nature of any of the Retained Liabilities.
8.3 Indemnification Provisions for Benefit of the Seller. If the
Buyer breaches any of its representations, warranties, or
covenants contained in this Agreement (or in any of the
Ancillary Agreements, Schedules or Exhibits referred to
herein), then the Buyer agrees to defend, indemnify and save
harmless the Seller, its Affiliates and its and their
directors, officers and employees ("Seller's Indemnified
Group") from and against the entirety of any liability that any
of the Seller' Indemnified Group may suffer through and after
the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by the
breach.
8.4 Matters Involving Third Parties. If any third party shall
notify any Party (the "Indemnified Party") with respect to any
matter which may give rise to a claim for indemnification
against the other Party (the "Indemnifying Party") under this
Section 8, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any liability or obligation hereunder unless (and then solely
to the extent) the Indemnifying Party thereby is damaged. In
the event any Indemnifying Party notifies the Indemnified Party
within 15 days after the Indemnified Party has given notice of
the matter that the Indemnifying Party is assuming the defense
thereof, (i) the Indemnifying Party will defend the Indemnified
Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (ii) the Indemnified
Party may retain separate co-counsel at its sole cost and
expense (except that the Indemnifying Party will be responsible
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INTECH CABLE, INC.
for the fees and expenses of the separate co-counsel to the
extent the Indemnified Party concludes reasonably that the
counsel the Indemnifying Party has selected has a conflict of
interest), (iii) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect
to the matter without the written consent of the Indemnifying
Party (not to be withheld unreasonably), and (iv) the
Indemnifying Party will not consent to the entry of any
judgment with respect to the matter, or enter into any
settlement which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified
Party from all Liability with respect thereto, without the
written consent of the Indemnified Party (not to be withheld
unreasonably). If the Indemnifying Party fails to notify the
Indemnified Party within 15 days after the Indemnified Party
has given notice of the matter that the Indemnifying Party is
assuming the defense thereof, the Indemnified Party may defend
against, or enter into any settlement with respect to, the
matter in any manner it reasonably may deem appropriate.
8.5 Limitations on Indemnification.
8.5.1 Basket. Notwithstanding any contrary provision in this
Section 8, Buyer shall not make any claim for
indemnification under Section 8.2 for any breach by
Seller of any representation or warranty in Section 3
until the aggregate amount of all such claims of the
Buyer exceeds $200,000 (the "Basket"), in which event the
Buyer's Indemnified Group shall be entitled to such
indemnification for all amounts, including all amounts
forming any part of the Basket.
8.5.2 Cap. Notwithstanding any contrary provision in this
Section 8, the Seller's liability under this Agreement,
except as noted below, shall not exceed $3 million (the
"Cap"). Notwithstanding the preceding sentence, the Cap
will not apply, and Seller's liability will not be so
limited, with respect to the following:
(i) Section 6.6 ("Covenant not to Compete");
(ii) Section 6.5 ("Confidentiality");
(iii)Section 6.8 ("Environmental Matters");
(iv) Section 6.10.4 ("Certain Retained Liabilities of the
Seller");
(v) Any of the representations and warranties noted in
Section 8.1.2 (i);
(vi) The Balance Sheet Payment, to the extent payable by
Seller; and
(vii) The indemnity covenant in Section 8.2 insofar
as it relates to any of the representations,
warranties or covenants noted above in subparts
(i) - (vi) of this Section 8.5.2.
9 TERMINATION.
9.1 Termination of Agreement. The Parties may terminate this
Agreement as provided below:
9.1.1 the Parties may terminate this Agreement by mutual
written consent of all the Parties at any time prior to
the Closing;
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INTECH CABLE, INC.
9.1.2 the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if
the Seller is in breach, and the Seller may terminate
this Agreement by giving written notice to the Buyer at
any time prior to the Closing if the Buyer is in breach,
of any material representation, warranty, or covenant
contained in this Agreement in any material respect;
9.1.3 the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if
the Closing shall not have occurred on or before December
15, 1996 by reason of the failure of any condition
precedent under Section 7.1 (unless the failure results
primarily from the Buyer's breaching any representation,
warranty, or covenant contained in this Agreement); or
9.1.4 the Seller may terminate this Agreement by
giving written notice to the Buyer at any time
prior to the Closing if the Closing shall not
have occurred on or before December 15, 1996 by
reason of the failure of any condition
precedent under Section 7.2 (unless the failure
results primarily from the Seller's breaching
any representation, warranty, or covenant
contained in this Agreement).
10 GENERAL MATTERS
10.1 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the Parties
and their respective successors and permitted assigns.
10.2 Entire Agreement. This Agreement and the Ancillary Agreements
(including any exhibits, schedules or attachments that are
referenced in such agreements) constitute the entire agreement
among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written
or oral, that relate to the subject matter.
10.3 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other Parties; provided, however, that the Buyer may (i)
assign any of its rights and interests under this Agreement to
one or more of its Affiliates and (ii) designate one or more of
its Affiliates to perform its obligations hereunder (in any or
all of which cases the Buyer nonetheless shall remain liable
and responsible for the performance of all of its obligations
hereunder).
10.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
10.5 Headings. The Article and section headings contained in this
Agreement and in the Schedules are inserted for convenience
only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.6 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given
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INTECH CABLE, INC.
(i) when actually delivered by hand or mail, (ii) when trans-
mitted by prepaid cable or telecopier, with confirmation of
receipt, provided that a copy is sent at about the same time by
registered or certified mail, return receipt requested, or
(iii) five days after being sent by Express Mail, Federal
Express or other express delivery service, to the addressee at
the following addresses or telecopier numbers (or to such other
address or telecopier number as a party may specify from time
to time by notice hereunder):
If to the Seller:
Mr. John Schwanbeck
Fox Hill Holdings, Inc.
Westwood Executive Center
200 Lowder Brook Drive, Suite 2400
Westwood, Massachusetts 02090-1159
Phone: (617) 461-0460
Fax: (617) 461-0467
with copy to: Stuart Cable
Goodwin, Procter & Hoar, L.L.P.
Exchange Place
Boston, MA 02109
Phone: (617) 570-1000
Fax: (617) 227-8591
If to the Buyer:
Belden Wire & Cable Company
c/o Belden Inc.
7701 Forsyth Boulevard
Suite 800
St. Louis, Missouri 63105
Attention: General Counsel
Telephone: 314-854-8000
Facsimile: 314-854-8001
10.7 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Seller. No waiver by any Party
of any default, misrepresentation, or breach of warranty or
covenant under this Agreement, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant under this
Agreement or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
10.8 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
ASSET PURCHASE AGREEMENT Page 38 <PAGE>
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INTECH CABLE, INC.
remaining terms and provisions of this Agreement or the
validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
10.9 Expenses. Each Party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with
this Agreement or the transactions contemplated by it. With
respect to any of its costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement or the
transactions contemplated by it, the Seller agrees that except
as disclosed in Exhibit 10.9 and except to the extent such
expenses are accrued on the Final Closing Balance Sheet, (i) it
has not paid any amount to any third party with respect to such
expenses, and (ii) it will not pay any amount to any third
party with respect to such expenses until after the Closing.
10.10 Construction. The language used in this Agreement will
be deemed to be the language chosen by the Parties to
express their mutual intent, and no rule of strict
construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules
and regulations promulgated under them, unless the
context requires otherwise. The Parties intend that each
representation, warranty, and covenant contained in this
Agreement shall have independent significance. If any
Party has breached any representation, warranty, or
covenant contained in this Agreement in any respect, that
there exists another representation, warranty, or
covenant relating to the same subject matter (regardless
of the relative levels of specificity) which the Party
has not breached shall not detract from or mitigate that
the Party is in breach of the first representation,
warranty, or covenant.
10.11 Incorporation of Schedules and Exhibits. The Schedules
and Exhibits identified in this Agreement are
incorporated by reference and made a part of this
Agreement.
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INTECH CABLE, INC.
10.12 Specific Performance. Each Party acknowledges and agrees
that the other Parties would be damaged irreparably in
the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or
otherwise are breached. Accordingly, each Party agrees
that the other Parties shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement
and the terms and provisions of it in any action
instituted in any court having jurisdiction over the
Parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.
10.13 Governing Law. The laws of Massachusetts shall govern
the interpretation of this Agreement.
11 DISPUTE RESOLUTION
11.1 Settlement Attempt. The Parties agree that, except as provided
in Section 2.10, any claim or dispute between them arising out
of or in connection with this Agreement or any alleged breach
of this Agreement (a "Claim") shall be submitted promptly to an
executive of Seller and Buyer who shall have authority to
settle the Claim, and who shall meet in Boston, Massachusetts,
within 30 days of such submission to seek in good faith an
amicable settlement. In seeking an amicable settlement, the
Parties may consult with a neutral third party mediator if both
agree in writing. Unless the Parties agree to the contrary in
writing, any advice or decision of the mediator shall not be
binding.
11.2 Litigation. Any Claim which is not settled by the Parties
within sixty (60) days of notice thereof first being given by
either Party to the other may be pursued by a Party in any
court having subject matter and personal jurisdiction. Seller
and Buyer irrevocably and unconditionally submit to the
exclusive jurisdiction (subject matter and personal) and waive
any objection as to venue (and any claims that any action or
proceeding has been brought in an inconvenient forum) of the
federal or state courts of the City of Boston, Commonwealth of
ASSET PURCHASE AGREEMENT Page 40 <PAGE>
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INTECH CABLE, INC.
Massachusetts. The Parties have executed this Agreement on the
date first above written.
BUYER: BELDEN WIRE & CABLE COMPANY
By: /s/ Kevin L. Bloomfield
Name: Kevin L. Bloomfield
Title: Secretary
SELLER: INTECH CABLE, INC.
By: /s/ John R. Schwanbeck
Name: John R. Schwanbeck
Title: Chairman of the Board
<PAGE>
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CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 16th day of August, 1996, by Belden Inc., a
Delaware corporation (the "Company"), and _________________ ("Executive").
R E C I T A L S
The Executive is an officer of the Company and is employed by Belden Wire &
Cable Company ("BWC"), a wholly-owned subsidiary of the Company, in a key
executive capacity. The Executive's services are valuable to the Company.
The Executive possesses intimate knowledge of the business and affairs of
the Company and has acquired certain confidential information with respect
to the Company.
The Company desires to insure that it will continue to have the benefit of
the Executive's services and to protect its confidential information and
goodwill. The Company recognizes that circumstances may arise in which a
change in control of the Company occurs, through acquisition or otherwise,
causing uncertainty about the Executive's future employment with the
Company without regard to the Executive's competence or past contributions.
Such uncertainty may result in the loss of valuable services of the
Executive to the detriment of the Company and its stockholders.
The Company and the Executive desire that any proposal for a change in
control or acquisition of the Company will be considered by the Executive
objectively and with reference only to the best interests of the Company
and its stockholders. The Executive will be in a better position to
consider the Company's best interests if the Executive is afforded
reasonable security, as provided in this Agreement, against altered
conditions of employment which could result from any such change in control
or acquisition.
NOW, the Company and the Executive (collectively the "Parties" or
individually a "Party"), agree as follows:
1. Certain Definitions.
1.1 Act. The term "Act" means the Securities Exchange Act of
1934, as amended.
1.2 A f filiate and Associate. The terms "Affiliate" and
"Associate" shall have the meanings given them in Rule 12b-2 of the General
Rules and Regulations of the Act.
1.3 Beneficial Owner. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(i) that such Person or any other Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, <PAGE>
<PAGE>
(A) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, or
(B) securities issuable upon exercise of Rights issued
pursuant to the terms of the Rights Agreement between the Company and First
Chicago Trust Company of New York (the "Rights Agreement"), dated at July
6, 1995, as amended from time to time (or any successor to such Rights
Agreement), at any time before the issuance of such securities;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Act), including pursuant to any
agreement, arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if the agreement,
arrangement or understanding:
(A) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and
(B) is not also then reportable on a Schedule 13D
under the Act (or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in Subsection 1.3 (ii) above) or
disposing of any voting securities of the Company; provided, however, that
nothing in this paragraph (iii) shall cause a Person engaged in the
business as an underwriter of securities to be deemed the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days (40) after the date of such acquisition.
1.4 Cause. "Cause" for termination by the Company of the
Executive's employment with the Company, BWC or any of their Affiliates
after a Change of Control of the Company shall, for purposes of this
Agreement, be limited to:
(i) the engaging by the Executive in intentional conduct
taken in bad faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by a determination in a binding and
final judgment, order or decree of a court or administrative agency of
competent jurisdiction, in effect after exhaustion or lapse of all rights
of appeal, in an action, suit or proceeding, whether civil, criminal,
administrative or investigative;
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(ii) conviction of a felony (as evidenced by a binding and
final judgment, order or decree of a court of competent jurisdiction, in
effect after exhaustion of all rights of appeal) which substantially
impairs the Executive's ability to perform his duties or responsibilities;
and
(iii) continuing willful and unreasonable refusal by the
Executive to perform the Executive's duties or responsibilities (unless
significantly changed without the Executive's consent).
1.5 Change in Control of the Company. A "Change in Control of
the Company" shall be deemed to have occurred if:
(i) any Person (other than any employee benefit plan of the
Company or any subsidiary of the Company, any entity holding securities of
the Company for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan) is or becomes the Beneficial
Owner of securities of the Company representing at least 30% of the
combined voting power of the Company's then outstanding securities (other
than acquisitions directly from the Company);
(ii) a Section 11(a)(ii) Event shall have occurred under the
Rights Agreement (or a similar event shall have occurred under any
successor to such Rights Agreement) at any time any Rights are issued and
outstanding thereunder;
(iii) one-third or more of the members of the Board are
not Continuing Directors; or
(iv) there shall be consummated any merger of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted
into cash, securities or other property, other than a merger of the Company
in which the holders of the Company's Common Stock immediately prior to the
merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger.
1.6 Code. The term "Code" means the Internal Revenue Code of
1986, as amended.
1.7 Continuing Director. The term "Continuing Director" means
(i) any member of the Board of Directors of the Company (the "Board") who
was a member of such Board on August 15, 1996, (ii) any successor of a
Continuing Director who is recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board, and (iii) any
appointee who is recommended by a majority of the Continuing Directors then
on the Board.
1.8 Covered Termination. The term "Covered Termination" means
any termination of the Executive's employment where the Termination Date is
any date prior to the end of the Employment Period.
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1.9 Employment Period. The term "Employment Period" means a
period beginning on the date of a Change in Control of the Company (as
defined in Section 1.5 above), and ending at 11:59 p.m. St. Louis Time on
the earlier of the third anniversary of such date or the Executive's Normal
Retirement Date.
1.10 Good Reason. The Executive shall have a "Good Reason" for
termination of employment after a Change in Control of the Company in the
event of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements contained in
S e c t ions 4 (Duties), 5 (Compensation) or 6 (Annual Compensation
Adjustments) hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held with the
Company, BWC or any of their affiliates on the date of the Change in
Control of the Company or any other positions with the Company, BWC or any
of their affiliates, to which the Executive shall thereafter be elected,
appointed or assigned, except when such removal or failure to reelect or
reappoint relates to the termination by the Company of the Executive's
employment for Cause or by reason of disability pursuant to Section 12;
(iii) a good faith determination by the Executive that
there has been a significant adverse change, without the Executive's
written consent, in the Executive's working conditions or status with the
Company, BWC or any of their affiliates from such working conditions or
status in effect immediately prior to the Change in Control of the Company,
including but not limited to;
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or responsibilities, or
(B) a significant reduction in the level of support
services, staff, secretarial and other assistance, office space and
accoutrements; or
(iv) failure by the Company to obtain the Agreement referred
to in Section 17.1 (Successors) below; or
(v) a n y voluntary termination of employment by the
Executive where the Notice of Termination is delivered within 30 days of
the first anniversary of the Effective Date (Window Period).
1.11 Normal Retirement Date. The term "Normal Retirement Date"
means the date Executive attains the age of 70.
1.12 Person. The term "Person" shall mean any individual, firm,
partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing
acting in concert.
1.13 Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10.2 (Death) and Section 17.1 (Successors),
the term "Termination Date" means:
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(i) if the Executive's employment is terminated by the
Executive's death, the date of death;
(ii) if the Executive's employment is terminated by reason
of voluntary early retirement, as agreed in writing by the Company and the
Executive, the date of such early retirement which is set forth in such
written agreement;
(iii) if the Executive's employment is terminated for
purposes of this Agreement by reason of disability pursuant to Section 12,
the earlier of thirty days after the Notice of Termination is given or one
day prior to the end of the Employment Period;
(iv) if the Executive's employment is terminated by the
Executive voluntarily (other than for Good Reason), the date the Notice of
Termination is given; and
(v) if the Executive's employment is terminated by the
Company (whether or not for Cause), or by the Executive for Good Reason,
the earlier of thirty days after the Notice of Termination is given or one
day prior to the end of the Employment Period. Notwithstanding the
foregoing;
(A) If termination is for Cause pursuant to Section
1.4(iii) of this Agreement and if the Executive has cured the conduct
constituting such Cause as described by the Company in its Notice of
Termination within such thirty day or shorter period, then the Executive's
employment under this Agreement shall continue as if the Company had not
delivered its Notice of Termination.
(B) If the Company shall give a Notice of Termination
for Cause or by reason of disability and the Executive in good faith
notifies the Company that a dispute exists concerning the termination
within the applicable period following receipt of notice, then the
Executive may elect to continue his employment (or, if the Executive ceased
performing his duties under this Agreement at the request of the Company at
the time of delivery of Notice of Termination, resume and continue
employment) during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is
thereafter determined that Cause or disability (as the case may be ) did
exist, the Termination Date shall be the earliest of (1) the date on which
the dispute is finally determined, either (x) by mutual written agreement
of the parties or (y) in accordance with Section 22 (Governing Law;
Resolution of Disputes), (2) the date of the Executive's death, or (3) one
day prior to the end of the Employment Period. If the Executive so elects
and it is subsequently determined that Cause or disability (as the case may
be ) did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues,
until the Termination Date, if any, as if the Company had not delivered the
Notice of Termination except that, if it is finally determined that the
Company properly terminated the Executive for the reason asserted in the
Notice of Termination, the Executive shall in no case be entitled to a
Termination Payment (as defined below) arising out of events occurring
after the Company delivered its Notice of Termination.
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(C) If the Executive shall in good faith give a Notice
of Termination for Good Reason and the Company notifies the Executive that
a dispute exists concerning the termination within the applicable period
following receipt of notice, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is subsequently
determined that Good Reason did exist, the Termination Date shall be the
earliest of (1) the date on which the dispute is finally determined, either
(x) by mutual written agreement of the parties or (y) in accordance with
Section 22 (Governing Law; Resolution of Disputes), (2) the date of the
Executive's death or (3) one day prior to the end of the Employment Period.
If the Executive so elects and it is subsequently determined that Good
Reason did not exist, then the employment of the Executive under this
Agreement shall continue after such determination as if the Executive had
not delivered the Notice of Termination asserting Good Reason and there
shall be no Termination Date arising out of such Notice. In either case,
this Agreement continues, until the Termination Date, if any, as if the
Company had not delivered the Notice of Termination except that, if it is
finally determined that Good Reason did exist, the Executive shall in no
case be denied the benefits described in Sections 8 and 9 (including a
Termination Payment) based on events occurring after the Executive
delivered his Notice of Termination.
(D) If an opinion is required to be delivered pursuant
to Section 9.2(ii) hereof and such opinion shall not have been delivered,
the Termination Date shall be the earlier of the date on which such opinion
is delivered or one day prior to the end of the Employment Period.
(E) Except as provided in Paragraphs (B) and (C)
above, if the party receiving the Notice of Termination notifies the other
Party that a dispute exists concerning the termination within the
appropriate period following receipt of notice and it is finally determined
that the reason asserted in such Notice of Termination did not exist, then
(1) if such Notice was delivered by the Executive, the Executive will be
deemed to have voluntarily terminated his employment and the Termination
Date shall be the earlier of the date thirty days after the Notice of
Termination is given or one day prior to the end of the Employment Period
and (2) if delivered by the Company, the Company will be deemed to have
terminated the Executive other than by reason of death, disability or
Cause.
2. Termination Prior to Change in Control. The Company and the
Executive shall each retain the right to terminate the employment of the
Executive at any time prior to a Change in Control of the Company. If the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and all rights and obligations
of the parties under it shall cease.
3. Employment Period. If a Change in Control of the Company occurs
when the Executive is employed by BWC, BWC will continue subsequently to
employ the Executive during the Employment Period, and the Executive will
remain in the employ of BWC, in accordance with and subject to the
provisions of this Agreement.
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4. Duties. During the Employment Period, the Executive shall, in
the same capacities and positions held by the Executive at the time of the
Change in Control of the Company or in such other capacities and positions
as may be agreed to by the Company and the Executive in writing, devote the
Executive's best efforts and all of the Executive's business time,
attention and skill to the business and affairs of the Company, as such
business and affairs now exist and as they may subsequently be conducted.
The services that are to be performed by the Executive under this Agreement
are to be rendered in the same metropolitan area in which the Executive was
employed at the time of such Change in Control of the Company, or in such
other place or places as shall be agreed upon in writing by the Executive
and the Company from time to time. Without the Executive's consent, the
Executive shall not be required to be absent from such metropolitan area
more than 45 days in any fiscal year of the Company.
5. Compensation. During the Employment Period, the Executive shall
be compensated as follows:
5.1 The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies
as may be in effect immediately prior to the Change in Control of the
Company, an annual base salary in cash equivalent of not less than the
Executive's annual base salary as in effect immediately prior to the Change
in Control of the Company (which base salary shall, unless otherwise agreed
in writing by the Executive, include the current receipt by the Executive
of any amounts that, prior to the Change in Control of the Company, the
Executive had elected to defer, whether such compensation is deferred under
Section 401(k) of the Code or otherwise), subject to adjustment as provided
below.
5.2 The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the
Change in Control of the Company, and shall be reimbursed, at such
intervals and in accordance with such standard policies as may be in effect
immediately prior to the Change in Control of the Company, for any monies
advanced in connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company, BWC
or their affiliates, including travel expenses.
5.3 The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's
salary grade or on any other requirement that excludes persons of
comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control
of the Company), in any plan providing benefits for the Company's salaried
employees in general of the Company, BWC or their Affiliates, including but
not limited to the Management Incentive Plan, the Long-Term Incentive Plan,
group life insurance, hospitalization, medical, dental, savings, profit
sharing and stock bonus plans. However, in no event shall the aggregate
level of benefits under such plans in which the Executive is included be
less than the aggregate level of benefits under plans of the Company, BWC
or their Affiliates of the type referred to in this Section 5.3 in which
the Executive was participating immediately prior to the Change in Control
of the Company.
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5.4 The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays
to which the Executive was entitled annually immediately prior to the
Change in Control of the Company or such greater amount of paid vacation
and number of paid holidays as may be made available annually to other
executives of the Company, BWC or their Affiliates of comparable status and
position to the Executive.
5.5 The Executive shall be included in all plans providing
additional benefits to executives of the Company, BWC or their Affiliates
of comparable status and position to the Executive, including deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans.
However, in no event shall the aggregate level of benefits under such plans
be less than the aggregate level of benefits under plans of the Company,
BWC or their Affiliates of the type referred to in this Section 5.5 in
which the Executive was participating immediately prior to the Change in
Control of the Company. Moreover, the obligation of the Company, BWC or
t h e ir Affiliates to include the Executive in bonus or incentive
compensation plans shall be determined by Subsection 5.6.
5.6 To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company, BWC or their
Affiliates that shall satisfy the standards described below (such plan, the
"Bonus Plan"). Bonuses under the Bonus Plan shall be payable with respect
to achieving such financial or other goals reasonably related to the
business of the Company as the Company shall establish (the "Goals"), all
of which Goals shall be attainable, prior to the end of the Employment
Period, with approximately the same degree of probability as the goals
under the bonus plan of the Company, BWC or their Affiliates as in effect
immediately prior to the Change in Control of the Company (the "Company
Bonus Plan") and in view of the Company's existing and projected financial
and business circumstances applicable at the time. The amount of the bonus
(the "Bonus Amount") that the Executive will be eligible to earn under the
Bonus Plan shall be no less than the amount of the Executive's maximum
award provided in such Company Bonus Plan (such bonus amount is referred to
as the "Targeted Bonus"). If the Goals are not achieved such that the
entire Targeted Bonus is not payable, the Bonus Plan shall provide for a
payment of a Bonus Amount equal to a portion of the Targeted Bonus
reasonably related to that portion of the Goals that were achieved.
Payment of the Bonus Amount shall not be affected by any circumstance
occurring subsequent to the end of the Employment Period, including
termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment Period,
the Board of Directors of the Company (or an appropriate committee or
officer thereof) will consider and review, at least annually, the
contributions of the Executive to the Company, BWC or their Affiliates and
in accordance with the practice of the Company, BWC or their Affiliates
prior to the Change in Control of the Company, due consideration shall be
given to the upward adjustment of the Executive's base compensation rate,
at least annually, (i) commensurate with increases generally given to other
executives of the Company, BWC or their Affiliates of comparable status and
position to the Executive, and (ii) as the scope of the operations of the
Company, BWC or their Affiliates or the Executive's duties expand.
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7. Termination For Cause or Without Good Reason. If there is a
Covered Termination for Cause or if the Executive voluntarily terminates
his employment other than for Good Reason (any such terminations to be
subject to the procedures set forth in Section 13), then the Executive
shall be entitled to receive only Accrued Benefits pursuant to Section 9.1.
8. Termination Giving Rise to a Termination Payment.
8.1 If there is a Covered Termination by the Executive for Good
Reason, or by the Company other than by reason of (i) death, (ii)
disability pursuant to Section 12, or (iii) Cause (any such terminations to
be subject to the procedures set forth in Section 13), then the Executive
shall be entitled to receive, and the Company shall promptly pay, Accrued
Benefits pursuant to Section 9.1 and, in lieu of further base salary for
p e riods following the Termination Date, as liquidated damages and
additional severance pay the Termination Payment pursuant to Section 9.2.
8.2 If there is Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the
Executive shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level of
service commensurate with the Executive's status with the Company, BWC or
their Affiliates immediately prior to the Change in Control of the Company
(or, if higher, immediately prior to the termination of the Executive's
employment), provided by a nationally recognized executive placement firm
selected by the Company.
(ii) For two years after the date of Termination, the
Executive shall continue to be covered, at the expense of the Company, by
the same or equivalent life insurance, hospitalization, medical and dental
coverage as was required under this Agreement with respect to the Executive
immediately prior to the date the Notice of Termination is given.
9. Payments Upon Termination.
9.1 Accrued Benefits. The Executive's "Accrued Benefits" shall
include the following amounts, payable as described in this Agreement:
(i) all base salary for the time period ending with the
Termination Date;
(ii) reimbursement for any monies advanced in connection
with the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Company, BWC or their Affiliates
for the time period ending with the Termination Date;
(iii) any other cash earned through the Termination Date
and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect;
(iv) a l ump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year in
which termination occurs under all bonus or incentive compensation plans in
which the Executive is a participant; and
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(v) all other payments and benefits to which the Executive
(or in the event of the Executive's death, the Executive's surviving spouse
or other beneficiary) may be entitled as compensatory fringe benefits or
under the terms of any benefit plan of the Company, BWC or their
Affiliates, and severance payments under the Company's severance policies
and practices as in effect immediately prior to the Change in Control of
the Company. Payment of Accrued Benefits shall be made promptly in
a c cordance with the Company's prevailing practice with respect to
Subsections (i) and (ii) or, with respect to Subsections (iii), (iv) and
(v), pursuant to the terms of the benefit plan or practice establishing
such benefits.
9.2 Termination Payment.
(i) Subject to the limits set forth in Subsection 9.2(ii),
the Termination Payment shall be an amount equal to (A) the Executive's
annual base salary, as in effect immediately prior to the Change in Control
of the Company, as adjusted upward, from time to time, pursuant to Section
6, plus (B) the amount of the highest annual bonus award (determined on an
annualized basis for any bonus award paid for a period of less than one
year) paid to the Executive with respect to the two complete fiscal years
preceding the Termination Date (the aggregate amount set forth in (A) and
(B) hereof shall be referred to as "Annual Cash Compensation"), times (C) a
factor of 2.99. The Termination Payment shall be paid to the Executive in
cash equivalent ten business days after the Termination Date. Such lump
sum payment shall not be reduced by any present value or similar factor,
and the Executive shall not be required to mitigate the amount of the
Termination Payment by securing other employment or otherwise, nor will
such Termination Payment be reduced by reason of the Executive's securing
other employment or for any other reason. The Termination Payment shall be
in addition to any other severance payments to which the Executive is
entitled under the Company's severance policies and practices as in effect
immediately prior to the Change in Control of the Company.
(ii) Notwithstanding any contrary provision, if any portion
of the Termination Payment would constitute an "excess parachute payment,"
then the Termination Payment shall be reduced such that the value of the
Termination Payment the Executive will receive shall be One Dollar ($1)
less than the maximum amount which the Executive may receive without
becoming subject to the tax imposed by Section 4999 of the Code (or any
successor provision) or which the Company may pay without loss of deduction
under Section 280G(a) of the Code (or any successor provision). The terms
"excess parachute payment" and "parachute payments" shall have the meanings
assigned to them in Section 280G of the Code (or any successor provision),
and such "parachute payments" shall be valued as provided therein. Present
value for purposes of this Agreement shall be calculated in accordance with
Section 1274(b)(2) of the Code (or any successor provision). If the
provisions of Sections 280G and 4999 of the Code (or any successor
provisions) are repealed without succession, then this Section 9.2(ii)
shall be of no further force or effect.
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<PAGE>
(iii) (A) If, notwithstanding the provisions of Subsection
(ii) of this Section 9.2, but subject to paragraph (B)below, it is
ultimately determined by a court or pursuant to a final determination by
the Internal Revenue Service that any portion of Total Payments (as defined
below) is subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any successor provision), the Company shall pay to the
Executive an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction of any Excise Tax and any
interest charges or penalties in respect of the imposition of such Excise
Tax (but not any federal, state or local income tax) on the Total Payments,
and any federal, state and local income tax and Excise Tax upon the payment
provided for by this Subsection (iii), shall be equal to the Total
Payments. As used in this Section 9.2(iii), the term Total Payments" means
the Termination Payment and any other payment payable to the Executive
under this Agreement or under any other agreement or plan of the Company or
any affiliate of the Company. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rates of taxation in the state
and locality of the Executive's domicile for income tax purposes on the
date the Gross-Up Payment is made, net of the maximum reduction in federal
income taxes which could be obtained from reduction of such state and local
taxes.
(B) If legislation is enacted that would require the
Company's stockholders to approve this Agreement, prior to a Change in
Control of the Company, due solely to the provision contained in paragraph
(A) of this Subsection 9.2(iii), then;
(1) from and after such time as stockholder approval would
be required, until stockholder approval is obtained as required by such
legislation, paragraph (A) shall be of no force and effect;
(2) the Company and the Executive shall use their best
efforts to consider and agree in writing upon an amendment to this
Subsection 9.2(iii) such that, as amended, this Subsection would provide
the Executive with the benefits intended to be afforded to the Executive by
paragraph (A) without requiring stockholder approval; and
(3) at the reasonable request of the Executive, the Company
shall seek stockholder approval of this Agreement at the next annual
meeting of stockholders of the Company.
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10. Death.
10.1 Except as provided in Section 10.2, in the event of a
Covered Termination due to the Executive's death, the Executive's estate,
heirs and beneficiaries shall receive all the Executive's Accrued Benefits
through the Termination Date.
10.2 I n the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled
to the benefits described in Section 10.1 hereof and, subject to the
provisions of this Agreement, to such Termination Payment as the Executive
would have been entitled to had the Executive lived. For purposes of this
Subsection 10.2, the Termination Date shall be the earlier of thirty days
following the giving of the Notice of Termination, subject to extension
pursuant to Section 1.14, or one day prior to the end of the Employment
Period.
11. Retirement. If, during the Employment Period, the Executive
and the Company shall execute an agreement providing for the early
retirement of the Executive from the Company, or the Executive shall
otherwise give notice that he is voluntarily choosing to retire early from
the Company, the Executive shall receive Accrued Benefits through the
Termination Date. However, if the Executive's employment is terminated by
the Executive for Good Reason or by the Company other than by reason of
death, disability or Cause and the Executive also, in connection with such
termination, elects voluntary early retirement, the Executive shall also be
entitled to receive a Termination Payment pursuant to Section 8.1 hereof.
12. Termination for Disability. If, during the Employment Period,
as a result of the Executive's disability due to physical or mental illness
or injury (regardless of whether such illness or injury is job-related),
the Executive shall have been absent from the Executive's duties under this
Agreement on a full-time basis for a period of six consecutive months and,
within thirty days after the Company notifies the Executive in writing that
it intends to terminate the Executive's employment (which notice shall not
constitute the Notice of Termination contemplated below), the Executive
shall not have returned to the performance of the Executive's duties under
this Agreement on a full-time basis, the Company may terminate the
Executive's employment for purposes of this Agreement pursuant to a Notice
of Termination given in accordance with Section 13. If the Executive's
employment is terminated on account of the Executive's disability in
accordance with this Section, the Executive shall receive Accrued Benefits
in accordance with Section 9.1 hereof and shall remain eligible for all
benefits provided by any long term disability programs of the Company, BWC
or its Affiliates in effect at the time of such termination.
13. Termination Notice and Procedure. Any Covered Termination by the
Company or the Executive shall be communicated by written Notice of
Termination to the Executive, if such Notice is given by the Company, and
to the Company, if such Notice is given by the Executive, all in accordance
with the following procedures and those set forth in Section 23:
13.1 If such termination is for disability, Cause or Good Reason,
the Notice of Termination shall indicate in reasonable detail the facts and
circumstances alleged to provide a basis for such termination.
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13.2 Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution
duly adopted by a majority of the directors of the Company (or any
successor corporation) then in office.
13.3 If the Notice is given by the Executive for Good Reason, the
Executive may cease performing his duties under this Agreement on or after
the date fifteen days after the delivery of Notice of Termination and shall
in any event cease employment on the Termination Date. If the Notice is
given by the Company, then the Executive may cease performing his duties
under this Agreement on the date of receipt of the Notice of Termination,
subject to the Executive's rights under this Agreement.
13.4 The Executive shall have thirty days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or act,
if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1.4(iii).
13.5 The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 23 written notice of any dispute
relating to such Notice of Termination to the party giving such Notice
within fifteen days after receipt thereof. However, if the Executive's
conduct or act alleged to provide grounds for termination by the Company
for Cause is curable, then such period shall be thirty days. After the
expiration of such period, the contents of the Notice of Termination shall
become final and not subject to dispute.
14. Further Obligations of the Executive. The Executive agrees
that, in the event of any Covered Termination where the Executive is
entitled to and receives Accrued Benefits and the Termination Payment, the
Executive shall not, for a period of one year after the Termination Date,
without the prior written approval of the Company's Board of Directors,
participate in the management of, be employed by or own any business
enterprise at a location within the United States that engages in
substantial competition with the Company or its subsidiaries, where such
enterprise's revenues from any competitive activities amount to 40% or more
of such enterprise's net revenues and sales for its most recently completed
fiscal year. However, nothing in this Section 14 shall prohibit the
Executive from owning stock or other securities of a competitor amounting
to less than five percent of the outstanding capital stock of such
competitor. The Executive also shall perform his obligations under the
"Secrecy Agreement" and the "Invention Assignment and Confidentiality
Agreement" entered into by the Company and the Executive.
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15. Expenses and Interest. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or (ii) any legal or arbitration
proceeding shall be brought to enforce or interpret any provision contained
in this Agreement or to recover damages for breach, in either case so long
as the Executive is not acting in bad faith, the Executive shall recover
from the Company any reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of such dispute, legal or arbitration
proceeding ("Expenses"), and prejudgment interest on any money judgment or
arbitration award obtained by the Executive calculated at the rate of
interest announced by Boatman's Bank, St. Louis, Missouri from time to time
as its prime or base lending rate from the date that payments to him should
have been made under this Agreement. Within ten days after the Executive's
written request, the Company shall pay to the Executive, or such other
person or entity as the Executive may designate in writing to the Company,
the Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make
the benefit and other arrangements provided in this Agreement shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any setoff, counterclaim, recoupment,
defense or other right which the Company may have against him or anyone
else. Except as provided in Section 15 of this Agreement, all amounts
payable by the Company hereunder shall be paid without notice or demand.
Each payment made under this Agreement by the Company shall be final, and
the Company will not seek to recover any part of such payment from the
Executive, or from whoever may be entitled to such payment, for any reason.
17. Successors.
17.1 I f the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or if the
Company merges into or consolidates or otherwise combines (where the
Company does not survive such combination) with any Person (any such event,
a "Sale of Business"), then the Company shall assign all of its right,
title and interest in this Agreement as of the date of such event to such
Person, and the Company shall cause such Person, by written agreement in
form and substance reasonably satisfactory to the Executive, to expressly
assume and agree to perform from and after the date of such assignment all
of the terms, conditions and provisions imposed by this Agreement upon the
Company. Failure of the Company to obtain such agreement prior to the
effective date of such Sale of Business shall be a breach of this Agreement
constituting "Good Reason" for termination hereunder, except that for
purposes of implementing the foregoing the date upon which such Sale of
Business becomes effective shall be deemed the Termination Date. In case
of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, "Company" shall subsequently mean such
Person which executes and delivers the agreement provided for in this
Section 17 or that otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law, and this Agreement shall inure to
the benefit of, and be enforceable by, such Person. The Executive shall,
in his discretion, be entitled to proceed against any of such Persons, any
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Person which theretofore was such a successor to the Company and the
Company (as so defined) in any action to enforce any rights of the
Executive under this Agreement. Except as provided in this Subsection,
this Agreement shall not be assignable by the Company. This Agreement
shall not be terminated by the voluntary or involuntary dissolution of the
Company.
17.2 This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All
amounts payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15
if the Executive had lived shall be paid, in the event of the Executive's
death, to the Executive's estate, heirs and representatives. However, the
foregoing shall not be construed to modify any terms of any benefit plan of
the Company, as such terms are in effect on the date of the Change in
Control of the Company, that expressly govern benefits under such plan in
the event of the Executive's death.
18. Severability. The provisions of this Agreement shall be regarded
as divisible, and if any provision or any part is declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts and the
applicability thereof shall not be so affected.
19. Amendment. This Agreement may not be amended or modified at
any time except by written instrument executed by the Company and the
Executive.
20. Withholding. The Company shall be entitled to withhold from
amounts to be paid to the Executive under this Agreement any federal, state
or local withholding or other taxes or charges which it is from time to
time required to withhold. However, the amount so withheld shall not
exceed the minimum amount required to be withheld by law. The Company
shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such
withholding shall arise.
21. Certain Rules of Construction. No Party shall be considered
as being responsible for the drafting of this Agreement for the purpose of
applying any rule construing ambiguities against the drafter or otherwise.
No draft of this Agreement shall be taken into account in construing this
Agreement. Any provision of this Agreement which requires an agreement in
writing shall be deemed to require that the writing in question be signed
by the Executive and an authorized representative of the Company.
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22. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations under it shall be governed by and construed in
accordance with the laws of the State of Delaware. Any dispute arising out
of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then in
effect (in which case both parties shall be bound by the arbitration award)
or by litigation. Whether the dispute is to be settled by arbitration or
litigation, the venue for the arbitration or litigation shall be St. Louis,
Missouri or, at the Executive's election, if the Executive is no longer
residing or working in the St. Louis, Missouri metropolitan area, in the
judicial district encompassing the city in which the Executive resides.
However, if the Executive is not then residing in the United States, the
election of the Executive with respect to such venue shall be either St.
Louis, Missouri or in the judicial district encompassing that city of the
United States among the thirty cities having the largest population (as
determined by the most recent United States Census data available at the
Termination Date) that is closest to the Executive's residence. The
Parties consent to personal jurisdiction in each trial court in the
selected venue having subject matter jurisdiction regardless of their
residence or situs, and each party irrevocably consents to service of
process in the manner provided in Section 23.
23. Notice. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13.4, shall be deemed
given when actually received by the Executive or actually received by the
Company's Secretary or any officer of the Company other than the Executive.
If mailed, such notices shall be mailed by United States registered or
certified mail, return receipt requested, addressee only, postage prepaid,
if to the Company, to Belden Inc., Attention: Secretary (or President, if
the Executive is then Secretary), 7701 Forsyth Blvd., Suite 800, St. Louis,
Missouri 63105, or if to the Executive, at the address set forth below the
Executive's signature to this Agreement, or to such other address as the
Party to be notified shall have given to the other Party in writing.
24. No Waiver. No waiver by either Party at any time of any
breach by the other Party of, or compliance with, any condition or
provision of this Agreement to be performed by the other Party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same time or any prior or subsequent time.
25. Headings. The headings are for reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first written above.
BELDEN INC.
By:_____________________________________
Attest:__________________________________
OFFICER
By:______________________________________
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<PAGE>
TRUST AGREEMENT
This Agreement is made this 3rd day of June 1996 by and between Belden Wire
& Cable Company ("Company") and Boatmen's Trust Company ("Trustee").
Introduction
The Company has adopted the nonqualified deferred compensation plans
("Plans") listed in Appendix A and has incurred or expects to incur
liabilities under the Plans to those individuals participating in them.
The Company wishes to establish a trust ("Trust") and to contribute to the
Trust assets which shall be held in trust, subject to the claims of the
Company's creditors in the event of the Company's Insolvency (as defined
below), until paid to Plan participants and their beneficiaries in the
manner and at the times specified in the Plans.
The parties intend that this Trust shall constitute an unfunded arrangement
and shall not affect the status of the Plans as unfunded plans maintained
to provide deferred compensation for a select group of management or highly
compensated employees for purposes of Title I of the Employee Retirement
Income Security Act of 1974.
The Company intends to make contributions to the Trust to provide itself
with a source of funds to help it meet its liabilities under the Plans.
NOW, the parties do establish the Trust in accordance with the following:
1. Establishment of Trust
1.1 The Company deposits with the Trustee in trust $500, the
principal of the Trust, to be held, administered and disposed of
by the Trustee as provided in this Agreement.
1.2 T h e Trust is revocable by the Company; it shall become
irrevocable upon a Change of Control (as defined in Section 13.4
below).
1.3 The Trust is intended to be a grantor trust. The Company is the
grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as
amended, and shall be construed accordingly.
1.4 The principal of the Trust, and any earnings thereon, shall be
held separate and apart from other funds of the Company and shall
b e used exclusively for the uses and purposes of Plan
participants and general creditors as noted below. Plan
participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plans and this Agreement
shall be mere unsecured contractual rights of Plan participants
and their beneficiaries against the Company. Any assets held by
the Trust will be subject to the claims of the Company's general
creditors under federal and state law in the event of Insolvency,
as defined in Section 3.1 below.
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<PAGE>
1.5 Within thirty days following a Change of Control (as defined below),
the Company shall make an irrevocable contribution to the Trust in
an amount that is sufficient to pay all Plan participants and their
beneficiaries the aggregate accrued benefits to which they would be
entitled pursuant to the Plans as of the date of the Change of
Control (whether or not they are then entitled to receive such
accrued benefits), and shall thereafter make further irrevocable
contributions to the Trust on a current basis as and in the amount
that such benefits accrue.
2. Payments to Plan Participants and Their Beneficiaries.
2.1 As and when payable pursuant to the Plans, the Company shall
promptly furnish to the Trustee a schedule ("Payment Schedule")
that shows (i) the amounts payable to each Plan participant (and
his or her beneficiaries), (ii) a formula or other instructions
acceptable to the Trustee for determining the amounts so payable,
(iii) the form in which such amounts are to be paid (as provided
for or available under the Plans), and (iv) the time of
commencement for payment of such amounts. Except as otherwise
provided in this Agreement, the Trustee shall make payments to
the Plan participants and their beneficiaries in accordance with
such Payment Schedule. The Trustee shall make provisions for the
reporting and withholding of any federal, state or local taxes
that may be required to be withheld with respect to the payment
of benefits pursuant to the Plans and shall pay amounts withheld
to the appropriate taxing authorities or determine that such
amounts have been reported, withheld and paid by the Company.
2.2 The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plans shall be determined by the Company or
such party as it shall designate under the Plans, and any claim
for such benefits shall be considered and reviewed under the
procedures set out in the Plans.
2.3 The Company may pay benefits directly to Plan participants or
their beneficiaries as they become due under the terms of the
Plans. The Company shall notify the Trustee of its decision to
pay benefits directly prior to the time amounts are payable to
participants or their beneficiaries. In addition, if the
principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the
terms of the Plans, the Company shall make the balance of each
such payment as it falls due. The Trustee shall notify the
Company when principal and earnings are not sufficient.
3. Trustee's Responsibilities to Trust Beneficiary When Company is
Insolvent.
3.1 The Trustee shall stop paying benefits to Plan participants and
their beneficiaries if the Company is Insolvent. The Company
shall be considered "Insolvent" for purposes of this Agreement if
(i) the Company is unable to pay its debts as they become due, or
(ii) the Company is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.
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3.2 At all times during the continuance of this Trust, as provided in
Section 1.4 above, the principal and income of the Trust shall be
subject to claims of general creditors of the Company under
federal and state law as set forth below:
3.2.1 The Board of Directors and the Chief Executive Officer
of the Company shall have the duty to inform the
Trustee in writing of their view that the Company is
Insolvent. If the Board of Directors of the Company,
the Chief Executive Officer or other employee of the
Company, or a person claiming to be a creditor of the
Company, alleges in writing to the Trustee that the
C o mpany has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending
such determination, the Trustee shall discontinue
payment of benefits to Plan participants or their
beneficiaries.
3.2.2. U n less the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the
Company or a person claiming to be a creditor alleging
that the Company is Insolvent, the Trustee shall have
no duty to inquire whether the Company is Insolvent.
The Trustee may in all events rely on such evidence
concerning the Company's solvency as may be furnished
to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning
the Company's solvency.
3.2.3 If, at any time, the Trustee has determined that the
Company is Insolvent, the Trustee shall discontinue
payments to Plan participants or their beneficiaries
and shall hold the assets of the Trust for the benefit
of the Company's general creditors. Nothing in this
Trust Agreement shall in any way diminish any rights of
Plan participants or their beneficiaries to pursue
their rights as general creditors of the Company with
respect to benefits due under the Plans or otherwise.
3.2.4 The Trustee shall resume the payment of benefits to
Plan participants or their beneficiaries in accordance
with Section 2 of this Agreement only after the Trustee
has determined that the Company is not Insolvent (or is
no longer Insolvent).
3.3 Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3.2 above and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to Plan participants or
their beneficiaries under the terms of the Plans for the period
of such discontinuance, less the aggregate amount of any payments
made to Plan participants or their beneficiaries by the Company
in lieu of the payments provided for under this Agreement during
any such period of discontinuance.
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<PAGE>
4. Payments to Company.
Except as provided in Section 3 above, after the Trust has become
irrevocable, the Company shall have no right or power to direct the
Trustee to return to the Company or to divert to others any of the
Trust assets before all payments of accrued benefits (present and
f u t u re) have been made to all Plan participants and their
beneficiaries pursuant to the terms of the Plans.
5. Investment Authority
In no event may the Trustee invest in securities (including stock or
rights to acquire stock) or obligations issued by the Company, other
than a de minimis amount held in common investment vehicles in which
the Trustee invests. All rights associated with assets of the Trust
shall be exercised by the Trustee or the person designated by the
Trustee, and shall in no event be exercisable by or rest with Plan
participants.
6. Disposition of Income.
During the term of this Trust, all of the income received by the
Trust, net of expenses and taxes, shall be accumulated and reinvested.
7. Accounting by Trustee.
T h e Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between the Company and the Trustee. Within 30
days following the close of each calendar year and within 30 days
after the removal or resignation of the Trustee, the Trustee shall
deliver to the Company a written account of its administration of the
Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held
in the Trust at the end of such year or as of the date of such removal
or resignation, as the case may be.
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8. Responsibility of Trustee.
8.1 The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims. However, the Trustee shall not incur any
liability to any person for any action taken pursuant to a
direction, request or approval given by the Company which is
contemplated by, and in conformity with, the terms of the Plans
or this Trust and is given in writing by the Company. In the
event of a dispute between the Company and a party, the Trustee
may apply to a court of competent jurisdiction to resolve the
dispute.
8.2 If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the
Trustee against the Trustee's costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses)
relating thereto and to be primarily liable for such payments.
If the Company does not pay such costs, expenses and liabilities
in a reasonably timely manner, the Trustee may obtain payment
from the Trust.
8.3 The Trustee may consult with legal counsel (who may also be
counsel for the Company generally) with respect to any of its
duties or obligations under this Agreement.
8.4 The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist
it in performing any of its duties or obligations under this
Agreement.
8.5 The Trustee shall have, without exclusion, all powers conferred
in Trustees by applicable law, unless this Agreement expressly
provides otherwise. However, if an insurance policy is held as
an asset of the Trust, the Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
8.6 Notwithstanding any powers granted to the Trustee pursuant to
this Agreement or to applicable law, the Trustee shall not have
any power that could give this Trust the objective of carrying on
a business and dividing the gains therefrom, within the meaning
of Section 301.7701-2 of the Procedure and Administrative
Regulations promulgated pursuant to the Internal Revenue Code.
9. Compensation and Expenses of Trustee.
The Company shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid from
the Trust.
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10. Resignation and Removal of Trustee.
10.1 The Trustee may resign at any time by written notice to the
Company, which shall be effective 30 days after receipt of such
notice unless the Company and Trustee agree otherwise.
10.2 The Trustee may be removed by the Company on 7 days' notice or
upon shorter notice accepted by the Trustee.
10.3 Upon a Change of Control, the Trustee may not be removed by the
Company for four years.
10.4 If the Trustee resigns within four years following a Change of
Control, the Trustee shall select a successor Trustee in
accordance with the provisions of Section 11.2 below prior to the
effective date of Trustee's resignation or removal.
10.5 Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred
to the successor trustee. The transfer shall be completed within
30 days after receipt of notice of resignation, removal or
transfer, unless the Company extends the time limit.
10.6 If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 below, by the effective
date of resignation or removal under paragraphs 10.1 or 10.2 of
this section. If no such appointment has been made, the Trustee
may apply to a court of competent jurisdiction for appointment of
a successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative
expenses of the Trust.
11. Appointment of Successor.
11.1 If the Trustee resigns or is removed in accordance with Sections
10.1 or 10.2 above, the Company may appoint any third party
which is a bank trust department or other entity that may be
granted corporate trustee powers under state law, as a successor
to replace the Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the
new Trustee, who shall have all of the rights and powers of the
former Trustee, including ownership rights in the Trust assets.
The former Trustee shall execute any instrument necessary or
reasonably requested by the Company or the successor Trustee to
evidence the transfer.
11.2 If the Trustee resigns pursuant to the provisions of Section 10.4
above and selects a successor Trustee, Trustee may appoint any
third party which is a bank trust department or other entity that
may be granted corporate trustee powers under state law. The
appointment of a successor Trustee shall be effective when
accepted in writing by the new Trustee. The new Trustee shall
have all the rights and powers of the former Trustee, including
ownership rights in Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by the
successor Trustee to evidence the transfer.
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11.3 The successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust
assets, subject to Sections 7 and 8 above. The successor Trustee
shall not be responsible for and the Company shall indemnify and
defend the successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or
from any other past event, or any condition existing at the time
it becomes successor Trustee.
12. Amendment or Termination.
12.1 The Agreement may be amended by a written instrument executed by
the Trustee and the Company. However, no such amendment shall
conflict with the Plans or shall make the Trust revocable after
it has become irrevocable in accordance with Section 1.2 above.
12.2 The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to
any accrued benefits (present or future) pursuant to the Plans,
unless sooner revoked in accordance with Section 1.2 above. Upon
termination of the Trust, any assets remaining in the Trust shall
be returned to Company.
12.3 Following a Change of Control, no provision of Sections 1, 2, 3,
4, 5, 6, 10 or 12 of this Agreement may be amended unless all
P l an participants (and their beneficiaries as applicable)
unanimously agree in writing to any such amendment.
13. Miscellaneous.
13.1 Any provision of this Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without
invalidating the remaining provisions of this Agreement.
13.2 Benefits payable to Plan participants and their beneficiaries
under this Agreement may not be anticipated, assigned (either at
law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or
equitable process.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of Delaware.
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13.4 For purposes of this Trust, the term "Change of Control" shall
mean (i) the occurrence of a Triggering Event under the Rights
Agreement of July 6, 1995 between Belden Inc. and the First
Chicago Trust Company of New York, as such Rights Agreement may
be assigned or amended, or (ii) the purchase or other acquisition
by any person, entity or group thereof, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Act) of 30 percent or more of either the outstanding shares of
common stock or the combined voting power of Company's then
outstanding voting securities entitled to vote generally, (iii)
t h e approval by the stockholders of the Company of a
reorganization, merger, or consolidation, in each case, with
respect to which persons who were stockholders of Company
immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated Company's
then outstanding securities, or (iv) a liquidation or dissolution
of Company or of the sale of all or substantially all of
Company's assets.
14. Effective Date.
The effective date of this Trust Agreement shall be June 3, 1996.
COMPANY:
BELDEN WIRE & CABLE COMPANY
By:______________________________
Name:____________________________
Title:_____________________________
TRUSTEE:
By:______________________________
Name:____________________________
Title:_____________________________
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<PAGE>
Appendix A
to the
Trust Agreement
between
Belden Wire& Cable Company
and
Boatmen's Trust Company
Schedule of Plans
Belden Wire & Cable Company Supplemental Excess Defined Benefit Plan
Belden Wire & Cable Company Supplemental Excess Defined Contribution Plan
Belden Wire & Cable Company Management Incentive Deferral Plan
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