<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THOMAS & BETTS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
TENNESSEE 3678 22-1326940
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
1555 LYNNFIELD ROAD
MEMPHIS, TENNESSEE 38119
(901) 682-7766
</TABLE>
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
------------------------
JERRY KRONENBERG, ESQ.
VICE PRESIDENT-GENERAL COUNSEL
THOMAS & BETTS CORPORATION
1555 LYNNFIELD ROAD
MEMPHIS, TENNESSEE 38119
(901) 682-7766
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
NEIL T. ANDERSON, ESQ. JOHN E. LYNCH, JR. ESQ. THOMAS E. NEELY, ESQ.
Sullivan & Cromwell Augat Inc. Hale and Dorr
125 Broad Street 89 Forbes Boulevard 60 State Street
New York, New York 10004 Mansfield, Massachusetts 02048 Boston, Massachusetts 02109
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PRICE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO PER SHARE OF AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED COMMON STOCK (2) OFFERING PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, no par value ("Common Stock")...... 18,945,010(1) $28.88 $547,060,481.50 $165,775.90(3)
</TABLE>
(1) Represents the maximum amount of Common Stock, no par value (the "T&B Common
Stock") of Thomas & Betts Corporation, ("T&B") estimated to be issuable upon
the consummation of the merger (the "Merger") of EG Acquisitions Corp., a
wholly-owned subsidiary of T&B, with and into Augat Inc. ("Augat") based on
an exchange ratio of 0.7969.
(2) Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of 1933, as
amended (the "Securities Act"), and estimated solely for the purpose of
calculating the registration fee, the proposed maximum aggregate offering
price is equal to the market value of the common stock, par value $.10 per
share, of Augat (the "Augat Common Stock") to be cancelled in the Merger and
is based upon $27.25, the average of the high and low sale prices of Augat
Common Stock on the New York Stock Exchange Composite Tape on November 4,
1996.
(3) Pursuant to Rule 457(b) under the Securities Act, the total registration fee
of $165,775.90 is offset by the filing fee of $120,959 paid on October 15,
1996 in connection with the filing of the preliminary proxy materials by T&B
and Augat on that date. The difference of $44,816.90 is being paid to the
Securities and Exchange Commission with the filing of this Registration
Statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
November 7, 1996
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders (the
"T&B Special Meeting") of Thomas & Betts Corporation ("T&B") to be held on
December 11, 1996 at 8:00 a.m., local time, at The Memphis Marriott, 2625
Thousand Oaks Boulevard, Memphis, Tennessee 38118.
At the T&B Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which EG Acquisitions Corp. ("Merger Sub"), a wholly-owned
subsidiary of T&B, will be merged (the "Merger") with and into Augat Inc.
("Augat"), and to approve the transactions contemplated thereby, including the
issuance of shares of common stock, no par value, of T&B ("T&B Common Stock")
pursuant to the Merger Agreement. Upon the Merger becoming effective, each share
of common stock, par value $.10 per share, of Augat will be converted into the
right to receive, and become exchangeable for, 0.68 of a share of T&B Common
Stock, subject to adjustment in certain circumstances as set forth in the Merger
Agreement and as described in the accompanying Joint Proxy Statement/Prospectus
(the "Exchange Ratio").
Shareholders of T&B may call toll free 1-800-944-6750 any time after
December 6, 1996 through and including December 11, 1996 for information
concerning the Exchange Ratio, as described in greater detail in the
accompanying Joint Proxy Statement/Prospectus.
The Board of Directors of T&B has carefully reviewed and considered the
terms and conditions of the Merger. In addition, the Board of Directors of T&B
has received a written opinion from its financial advisor, Morgan Stanley & Co.
Incorporated, to the effect that, as of the date hereof, the Exchange Ratio
pursuant to the Merger Agreement is fair from a financial point of view to T&B.
You are urged to and should read the opinion of Morgan Stanley & Co.
Incorporated, which is attached to the accompanying Joint Proxy
Statement/Prospectus as Appendix B, carefully and in its entirety.
T&B'S BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST
INTERESTS OF, T&B AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT ALL SHAREHOLDERS
VOTE FOR ITS APPROVAL AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE ISSUANCE OF THE SHARES OF T&B COMMON STOCK PURSUANT THERETO.
I urge you to review and consider carefully the accompanying Notice of
Special Meeting of Shareholders and Joint Proxy Statement/Prospectus, which
contain information about T&B and Augat and describe the Merger and certain
other matters.
The affirmative vote of a majority of the outstanding shares of T&B Common
Stock is necessary for approval of the Merger Agreement and approval of the
transactions contemplated thereby, including the issuance of shares of T&B
Common Stock pursuant to the Merger Agreement.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE T&B SPECIAL MEETING, YOU
ARE URGED PROMPTLY TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN
THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE T&B SPECIAL
MEETING. Prior to the voting of the Proxy at the T&B Special Meeting, any person
giving a proxy has the power to revoke it at any time, and shareholders who are
present at the T&B Special Meeting may withdraw their proxies and vote in
person.
Sincerely,
T. Kevin Dunnigan
Chairman of the Board and Chief
Executive Officer
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY RETURN YOUR PROXY CARD
<PAGE>
THOMAS & BETTS CORPORATION
1555 LYNNFIELD ROAD
MEMPHIS, TENNESSEE 38119
------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 11, 1996
------------------------------------------------------------------------
To the Shareholders of Thomas & Betts Corporation:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the "T&B
Special Meeting") of Thomas & Betts Corporation, a Tennessee corporation
("T&B"), has been called by the Board of Directors of T&B and will be held at
The Memphis Marriott, 2625 Thousand Oaks Boulevard, Memphis, Tennessee 38118 at
8:00 a.m., local time, on December 11, 1996, to consider and vote upon the
following matters described in the accompanying Joint Proxy
Statement/Prospectus:
1. To consider and vote upon a proposal to approve an Agreement and Plan
of Merger (the "Merger Agreement") among Augat Inc., a Massachusetts
corporation ("Augat"), T&B and EG Acquisitions Corp., a Delaware corporation
and a wholly-owned subsidiary of T&B ("Merger Sub"), dated as of October 7,
1996, and to approve the transactions contemplated by the Merger Agreement,
including the issuance of shares of common stock, no par value, of T&B ("T&B
Common Stock") pursuant to the Merger Agreement; and
2. To transact such other business as may properly come before the T&B
Special Meeting or any adjournments or postponements thereof.
Notwithstanding shareholder approval of the foregoing proposals, T&B
reserves the right to terminate the Merger Agreement and abandon the merger of
Merger Sub with and into Augat (the "Merger") at any time prior to the
consummation of the Merger, subject to the terms and conditions of the Merger
Agreement.
Holders of T&B Common Stock will not be entitled to dissenters' rights in
connection with the Merger.
The close of business on November 4, 1996, has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
T&B Special Meeting, and only shareholders of record at such time will be
entitled to notice of, and to vote at, the T&B Special Meeting.
Approval of the Merger Agreement and the transactions contemplated thereby,
including the issuance of shares of T&B Common Stock pursuant to the Merger
Agreement, requires the affirmative vote of a majority of the outstanding shares
of T&B Common Stock.
A form of Proxy and a Joint Proxy Statement/Prospectus containing more
detailed information with respect to the matters to be considered at the T&B
Special Meeting (including the Merger Agreement attached as Appendix A thereto)
accompany and form a part of this notice.
In order that your shares may be represented at the T&B Special Meeting, you
are urged promptly to complete, sign, date and return the accompanying Proxy in
the enclosed envelope, whether or not you plan to attend the T&B Special
Meeting. Prior to the voting of the Proxy at the T&B Special Meeting, any person
giving a proxy has the power to revoke it at any time, and shareholders who are
present at the T&B Special Meeting may withdraw their proxies and vote in
person.
------------------------
THE BOARD OF DIRECTORS OF T&B UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN
FAVOR OF THE APPROVAL OF THE MERGER AGREEMENT AND APPROVAL OF THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE ISSUANCE OF SHARES OF T&B COMMON STOCK
PURSUANT TO THE MERGER AGREEMENT.
By Order of the Board of Directors
[SIG]
Janice H. Way
Corporate Secretary
Memphis, Tennessee
November 7, 1996
The Proxy Solicitor For T&B:
Hill and Knowlton Inc./Proxy Solicitation Group
466 Lexington Avenue
New York, New York 10017
Call Toll Free 1-800-755-3002
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY RETURN YOUR PROXY CARD
<PAGE>
[LOGO]
November 7, 1996
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the
"Augat Special Meeting") of Augat Inc. ("Augat") to be held on December 11,
1996, at 9:00 a.m., local time, at the offices of Hale and Dorr, 60 State
Street, 26th Floor, Boston, Massachusetts 02109.
At the Augat Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which EG Acquisitions Corp. ("Merger Sub"), a wholly-owned
subsidiary of Thomas & Betts Corporation ("T&B"), will be merged (the "Merger")
with and into Augat, and to approve the transactions contemplated thereby. Upon
the Merger becoming effective, each share of common stock, par value $.10 per
share, of Augat ("Augat Common Stock") will be converted into the right to
receive, and become exchangeable for, 0.68 of a share of common stock, no par
value, of T&B, subject to adjustment in certain circumstances as set forth in
the Merger Agreement and as described in the accompanying Joint Proxy
Statement/Prospectus (the "Exchange Ratio").
You may call toll free 1-800-944-6750 any time after December 6, 1996
through and including December 11, 1996 for information concerning the Exchange
Ratio, as described in greater detail in the accompanying Joint Proxy
Statement/Prospectus.
The Board of Directors of Augat has carefully reviewed and considered the
terms and conditions of the Merger. In addition, the Board of Directors of Augat
has received a written opinion from its financial advisor, Merrill Lynch & Co.,
to the effect that as of the date thereof, and based upon the assumptions made,
matters considered and limits of review as set forth therein, the Exchange Ratio
is fair to the holders of Augat Common Stock, other than T&B and its affiliates,
from a financial point of view.
The Augat Board of Directors believes that the Merger will provide existing
and potential customers of Augat with a broader range of products and services
and will allow the combined company to take advantage of economies of scale and
operational synergies and thereby enhance shareholder value.
AUGAT'S BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST
INTERESTS OF, AUGAT AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT ALL STOCKHOLDERS
VOTE FOR ITS APPROVAL AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED THEREBY.
I urge you to review and consider carefully the accompanying Notice of
Special Meeting of Stockholders and Joint Proxy Statement/Prospectus, which
contain information about Augat and T&B and describe the Merger and certain
other matters.
The affirmative vote of the holders of at least two-thirds of all of the
outstanding shares of Augat Common Stock is necessary for approval of the Merger
Agreement and approval of the transactions contemplated thereby.
If the Merger Agreement is approved and the Merger is consummated, you will
be sent a letter of transmittal with instructions for surrendering your
certificates representing shares of Augat Common Stock. PLEASE DO NOT SEND YOUR
SHARE CERTIFICATES UNTIL YOU RECEIVE THESE MATERIALS.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE AUGAT SPECIAL MEETING,
YOU ARE URGED PROMPTLY TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE AUGAT SPECIAL
MEETING. If you attend the Augat Special Meeting and desire to revoke your Proxy
in writing and vote in person, you may do so; in any event, a Proxy may be
revoked in writing at any time before it is exercised. Your prompt cooperation
will be appreciated.
Sincerely,
John N. Lemasters
Chairman of the Board and
Chief Executive Officer
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY RETURN YOUR PROXY CARD
<PAGE>
AUGAT INC.
89 FORBES BOULEVARD
MANSFIELD, MASSACHUSETTS 02048
------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 11, 1996
------------------------------------------------------------------------
To the Stockholders of Augat Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the "Augat
Special Meeting") of Augat Inc., a Massachusetts corporation ("Augat"), has been
called by the Board of Directors of Augat and will be held at the offices of
Hale and Dorr, 60 State Street, 26th Floor, Boston, Massachusetts at 9:00 a.m.,
local time, on December 11, 1996, to consider and vote upon the following
matters described in the accompanying Joint Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve an Agreement and
Plan of Merger (the "Merger Agreement") among Augat, Thomas & Betts
Corporation, a Tennessee corporation ("T&B"), and EG Acquisitions Corp., a
Delaware corporation and a wholly-owned subsidiary of T&B ("Merger Sub"),
dated as of October 7, 1996, and to approve the transactions contemplated
thereby; and
2. To transact such other business as may properly come before the
Augat Special Meeting or any adjournments or postponements thereof.
Notwithstanding stockholder approval of the foregoing proposal, Augat
reserves the right to abandon the merger of Merger Sub with and into Augat (the
"Merger") at any time prior to the consummation of the Merger, subject to the
terms and conditions of the Merger Agreement.
If the Merger Agreement is approved at the Augat Special Meeting and
effected by Augat, any stockholder of Augat (i) who files with Augat before the
taking of the vote on the approval of the Merger Agreement, written objection to
the Merger Agreement stating that such stockholder intends to demand payment for
such stockholder's shares of Augat Common Stock if the Merger occurs and (ii)
whose shares of Augat Common Stock are not voted in favor of the Merger
Agreement at the Augat Special Meeting, has or may have the right to demand in
writing from Augat (as the surviving corporation in the Merger), within twenty
days after the date of mailing to such stockholder of notice in writing that the
Merger has become effective, payment for such stockholder's shares of Augat
Common Stock and an appraisal of the value thereof. Augat (as the surviving
corporation in the Merger) and any such stockholder will have the rights and
duties and will follow the procedures set forth in sections 88 to 98, inclusive,
of chapter 156B of the General Laws of Massachusetts, which are attached as
Appendix D to the accompanying Joint Proxy Statement/Prospectus. It is not
enough to simply vote against the Merger; you must also follow the other
procedures to perfect your appraisal rights.
Augat has fixed the close of business on November 4, 1996, as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Augat Special Meeting, and only stockholders of record at such time will
be entitled to notice of, and to vote at, the Augat Special Meeting.
Approval of the Merger Agreement and of the transactions contemplated
thereby requires the affirmative vote of at least two-thirds of the outstanding
shares of Augat Common Stock.
A form of Proxy and a Joint Proxy Statement/Prospectus containing more
detailed information with respect to the matters to be considered at the Augat
Special Meeting (including the Merger Agreement attached as Appendix A thereto)
accompany and form a part of this notice.
In order that your shares may be represented at the Augat Special Meeting,
you are urged promptly to complete, sign, date and return the accompanying Proxy
in the enclosed envelope, whether or not you plan to attend the Augat Special
Meeting. If you attend the Augat Special Meeting and desire to revoke your Proxy
in writing and vote in person, you may do so; in any event, a Proxy may be
revoked in writing at any time before it is exercised.
--------------------------
THE BOARD OF DIRECTORS OF AUGAT UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE IN FAVOR OF THE APPROVAL OF THE MERGER AGREEMENT AND APPROVAL OF THE
TRANSACTIONS CONTEMPLATED THEREBY.
By Order of the Board of Directors
[LOGO]
Thomas E. Neely
Clerk
Mansfield, Massachusetts
November 7, 1996
The Proxy Solicitor For Augat:
Hill and Knowlton Inc./Proxy Solicitation Group
466 Lexington Avenue
New York, New York 10017
Call Toll Free 1-800-755-3002
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY RETURN YOUR PROXY CARD
<PAGE>
THOMAS & BETTS CORPORATION AUGAT INC.
JOINT PROXY STATEMENT
------------------------
PROSPECTUS OF THOMAS & BETTS CORPORATION
------------------------
This Joint Proxy Statement/Prospectus is being furnished to the shareholders
of Thomas & Betts Corporation, a Tennessee corporation ("T&B"), in connection
with the solicitation of proxies by T&B's Board of Directors (the "T&B Board")
from holders of outstanding shares of common stock, no par value, of T&B ("T&B
Common Stock"), for use at a special meeting of shareholders of T&B to be held
on December 11, 1996 and at any adjournments or postponements thereof (the "T&B
Special Meeting"). This Joint Proxy Statement/Prospectus is also being furnished
to the stockholders of Augat Inc., a Massachusetts corporation ("Augat"), in
connection with the solicitation of proxies by Augat's Board of Directors (the
"Augat Board") from holders of outstanding shares of common stock, par value
$.10 per share, of Augat ("Augat Common Stock"), for use at a special meeting of
stockholders of Augat to be held on December 11, 1996 and at any adjournments or
postponements thereof (the "Augat Special Meeting," and, together with the T&B
Special Meeting, the "Special Meetings").
At the Special Meetings, shareholders of T&B and stockholders of Augat will
be asked to consider and vote upon proposals, at their respective Special
Meetings, to approve an Agreement and Plan of Merger, dated as of October 7,
1996, among T&B, Augat and EG Acquisitions Corp., a Delaware corporation and a
wholly-owned subsidiary of T&B ("Merger Sub"), (as it may be amended,
supplemented or otherwise modified from time to time, the "Merger Agreement"),
which is attached as Appendix A to this Joint Proxy Statement/Prospectus and is
incorporated herein by reference, and to approve the transactions contemplated
by the Merger Agreement, including, in the case of T&B, the issuance of shares
of T&B Common Stock pursuant to the Merger Agreement. The Merger Agreement
provides for the merger of Merger Sub with and into Augat (the "Merger"), with
Augat being the corporation surviving the Merger (sometimes hereinafter referred
to as the "Surviving Corporation"). Upon the Merger becoming effective, each
share of Augat Common Stock issued and outstanding immediately prior to such
time (other than shares of Augat Common Stock owned by T&B, Merger Sub or any
other direct or indirect subsidiary of T&B, shares of Augat Common Stock owned
by Augat or any direct or indirect subsidiary of Augat, and in each case held on
behalf of third parties, or shares of Augat Common Stock owned by stockholders
of Augat who have dissented (a "Dissenting Stockholder") from the Merger by
filing a written objection to the Merger prior to the taking of the vote to
approve the Merger Agreement at the Augat Special Meeting, stating that such
stockholder intends to demand payment for such stockholder's shares if the
Merger Agreement is approved by the stockholders of Augat, and who does not vote
in favor of such approval ("Excluded Augat Common Stock")) will be converted
into the right to receive, and become exchangeable for, 0.68 of a share of T&B
Common Stock, subject to adjustment as described in the next sentence (such
share amount as it may be adjusted, the "Exchange Ratio"). In the event that the
average of the per share closing prices of T&B Common Stock as reported on the
New York Stock Exchange, Inc. ("NYSE") Composite Transaction reporting system
(as reported in the New York City edition of THE WALL STREET JOURNAL) for the 20
trading days ending on the third trading day prior to the Augat Special Meeting
(the "Average Closing Price") is (i) less than $37.50, the Exchange Ratio will
be equal to $25.50 divided by the Average Closing Price or (ii) more than
$41.50, the Exchange Ratio will be equal to $28.22 divided by the Average
Closing Price. See "The Merger--Terms of the Merger." T&B's shareholders and
Augat's stockholders may call toll free 1-800-944-6750 any time after December
6, 1996 through and including December 11, 1996 to obtain the Exchange Ratio.
T&B has filed a Registration Statement (including exhibits and amendments
thereto, the "Registration Statement") pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), covering the 18,945,010 shares of T&B Common
Stock registered to potentially be issued in connection with the Merger. This
Joint Proxy Statement/Prospectus constitutes the respective Proxy Statements of
T&B and Augat relating to the solicitation of proxies for use at their
respective Special Meetings and the Prospectus of T&B filed as part of the
Registration Statement. This Joint Proxy Statement/Prospectus and the proxies
are first being provided to shareholders of T&B and stockholders of Augat on or
about November 8, 1996.
THE SECURITIES TO BE ISSUED PURSUANT TO THIS JOINT PROXY STATEMENT/PROSPECTUS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Joint Proxy Statement/Prospectus is November 7, 1996
<PAGE>
AVAILABLE INFORMATION
Each of T&B and Augat is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC"). The reports, proxy
statements and other information filed by T&B and Augat with the SEC can be
inspected and copied at the SEC's public reference room located at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
public reference facilities in the SEC's regional offices located at: 7 World
Trade Center, 13th Floor, New York, New York 10048, and Suite 1400, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates by writing to the Securities and
Exchange Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, each of T&B and Augat files electronically
with the SEC. The SEC maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. The address of the SEC's Web site is
"http://www.sec.gov." The shares of T&B Common Stock and Augat Common Stock are
each listed on the New York Stock Exchange (the "NYSE"). As such, the periodic
reports, proxy statements and other information filed by T&B and Augat with the
SEC may be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
This Joint Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement covering the securities
offered hereby which T&B has filed with the SEC, certain portions of which have
been omitted pursuant to the rules and regulations of the SEC, and to which
portions reference is hereby made for further information with respect to T&B,
Augat and the securities offered hereby. Statements contained herein concerning
any documents are not necessarily complete and, in each instance, reference is
made to the copies of such documents filed as exhibits to the Registration
Statement. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS RELATING TO T&B,
EXCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED HEREIN, ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO OFFICE OF THE
CORPORATE SECRETARY, THOMAS & BETTS CORPORATION, 1555 LYNNFIELD ROAD, MEMPHIS,
TENNESSEE 38119. TELEPHONE REQUESTS MAY BE DIRECTED TO OFFICE OF THE CORPORATE
SECRETARY AT (901) 682-7766. DOCUMENTS RELATING TO AUGAT, EXCLUDING EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED HEREIN, ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST TO CHIEF FINANCIAL OFFICER, AUGAT INC., 89
FORBES BOULEVARD, MANSFIELD, MASSACHUSETTS 02048. TELEPHONE REQUESTS MAY BE
DIRECTED TO CHIEF FINANCIAL OFFICER AT (508) 543-4300. IN ORDER TO ENSURE TIMELY
DELIVERY OF ANY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY DECEMBER 4,
1996.
The following documents filed with the SEC by T&B or its predecessor
corporation (File No. 1-4682) are incorporated herein by reference: (a) T&B's
Annual Report on Form 10-K for the year ended December 31, 1995 (the "1995 T&B
10-K"); (b) T&B's Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1996, June 30, 1996 and September 29, 1996; (c) T&B's Current Reports
on Form 8-K, dated January 17, 1996, February 12, 1996, and October 7, 1996 and
on Form 8-K/A dated January 22, 1996; (d) the portions of the T&B Proxy
Statement for the Annual Meeting of its Shareholders held on May 1, 1996, that
have been incorporated by reference in the T&B 10-K for the year ended December
31, 1995; (e) the portions of the T&B Annual Report to T&B shareholders for year
ended December 31, 1995 that have been incorporated by reference in the T&B 10-K
for the year ended December 31, 1995; and (f) T&B's Registration Statement,
including the description of T&B Common Stock, on Form 8-B, dated May 2, 1996.
ii
<PAGE>
The following documents filed with the SEC by Augat (File No. 1-6176) are
incorporated herein by reference: (a) Augat's Annual Report on Form 10-K for the
year ended December 31, 1995 (the "1995 Augat 10-K"); (b) Augat's Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 1996, June 30,
1996 and September 30, 1996; (c) Augat's Current Reports on Form 8-K, dated July
26, 1996 and October 10, 1996; (d) the description of Augat Common Stock
contained in Augat's Registration Statement on Form S-1 (Registration No.
33-53600), dated April 26, 1993 (as amended); (e) the portions of the Augat
Proxy Statement for the Annual Meeting of Stockholders held on April 23, 1996,
that have been incorporated by reference in the 1995 Augat 10-K; and (f) Augat's
Registration Statement on Form 8-A, dated August 2, 1988, together with
amendments thereto.
All documents filed by either T&B or Augat pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
date of their respective Special Meetings shall be deemed to be incorporated
herein by reference and to be a part hereof from the date of such filing. Any
statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part
hereof, except as so modified or superseded.
No person is authorized to give any information or to make any
representations not contained in this Joint Proxy Statement/Prospectus or in the
documents incorporated herein by reference in connection with the solicitation
and the offering made hereby and, if given or made, such information or
representation should not be relied upon as having been authorized by T&B or
Augat. This Joint Proxy Statement/ Prospectus does not constitute an offer to
sell, or a solicitation of an offer to purchase, the securities offered by this
Joint Proxy Statement/Prospectus or the solicitation of a proxy from any person
in any jurisdiction in which it is unlawful to make such offer, solicitation of
an offer or proxy solicitation. Neither the delivery of this Joint Proxy
Statement/Prospectus nor any distribution of the securities made under this
Joint Proxy Statement/Prospectus shall, under any circumstances, create an
implication that there has been no change in the affairs of T&B or Augat since
the date of this Joint Proxy Statement/Prospectus other than as set forth in the
documents incorporated herein by reference.
iii
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TABLE OF CONTENTS
<TABLE>
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PAGE
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Available Information........................... ii
Incorporation of Certain Information by
Reference..................................... ii
Summary......................................... 1
The Companies................................. 1
The Special Meetings.......................... 3
The Merger.................................... 3
Certain Federal Income Tax Consequences....... 12
Certain Effects of the Merger on the Rights of
Holders of Augat Common Stock............... 12
Comparative Stock Prices...................... 13
Selected Historical and Pro Forma Consolidated
Financial Data.............................. 14
Historical, Pro Forma and Equivalent Per Share
Data........................................ 15
The Companies................................... 16
T&B........................................... 16
Augat......................................... 16
Merger Sub.................................... 17
The Special Meetings............................ 18
General....................................... 18
Date, Place and Time.......................... 18
Record Dates.................................. 18
Votes Required................................ 19
Voting and Revocation of Proxies.............. 20
Solicitation of Proxies....................... 21
Dissenters' Rights of Appraisal................. 21
The Merger...................................... 24
General....................................... 24
The Exchange Ratio............................ 25
Background of the Merger...................... 25
Reasons for the Merger;
Recommendations of the Boards of
Directors................................... 27
Opinions of Financial Advisors................ 29
DLJ Engagement Letter......................... 38
Cautionary Statement Concerning
Forward-Looking Statements.................. 38
Terms of the Merger........................... 39
Effective Time; Closing....................... 40
Representations and Warranties................ 40
Conduct of Business Prior to Effective Time;
Certain Covenants; Acquisition Proposals.... 41
Certain Regulatory Matters.................... 42
Employee Benefits............................. 43
Indemnification and Insurance................. 43
Conditions.................................... 44
Modification or Amendment; Waiver of
Conditions.................................. 45
Termination................................... 45
Certain Termination Fees...................... 46
Expenses...................................... 46
Accounting Treatment.......................... 47
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Resale of T&B Capital Stock................... 47
Interests of Certain Persons in the Merger.... 47
Appraisal Rights.............................. 49
Exchange of Certificates...................... 50
Augat Dividends............................... 51
New York Stock Exchange Listing; De-Listing of
Augat Common Stock.......................... 51
Certain Federal Income Tax Consequences of the
Merger........................................ 51
General....................................... 51
Consequences to Augat Stockholders............ 52
Fractional Shares............................. 52
Dissenters' Shares............................ 52
Consequences to Augat and T&B................. 53
Unaudited Pro Forma Condensed Consolidated
Financial Statements of Thomas & Betts
Corporation and Augat Inc..................... 54
Description of T&B Capital Stock................ 62
T&B Common Stock.............................. 62
T&B Preferred Stock........................... 62
Comparison of Certain Rights of Shareholders of
T&B and Stockholders of Augat................. 62
General....................................... 62
Size of the Board of Directors................ 63
Classification of the Board of Directors...... 63
Removal of Directors.......................... 64
Filling Vacancies on the Board of Directors... 64
Action by Written Consent..................... 64
Meetings of Shareholders...................... 65
Shareholder Proposals and Shareholder
Nominations of Directors.................... 65
Required Vote for Authorization of Mergers.... 66
Amendment of Corporate Charter................ 66
Amendment of Bylaws........................... 67
Appraisal and Dissenters' Rights.............. 67
Anti-Greenmail Provisions..................... 68
Business Combination Statutes................. 68
Control Share Acquisition Statutes............ 69
Takeover Bid Disclosure Statutes.............. 70
Limitation on Directors' Liability............ 70
Indemnification of Officers and Directors..... 71
Cumulative Voting............................. 72
Conflict-of-Interest Transactions............. 72
Dividends and Other Distributions............. 73
Shareholder Inspection Rights................. 73
Rights Plans.................................. 73
Experts......................................... 74
Validity of Shares.............................. 75
Shareholder Proposals........................... 75
</TABLE>
<TABLE>
<S> <C>
APPENDIX A: Agreement and Plan of Merger among Augat Inc., Thomas & Betts Corporation and EG Acquisitions
Corp., dated as of October 7, 1996
APPENDIX B: Opinion of Morgan Stanley & Co. Incorporated, dated as of November 7, 1996
APPENDIX C: Opinion of Merrill Lynch & Co., dated as of November 7, 1996
APPENDIX D: Sections 85 to 98, inclusive, of chapter 156B of the General Laws of Massachusetts
</TABLE>
iv
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS JOINT PROXY STATEMENT/ PROSPECTUS, AND DOES NOT PURPORT TO BE COMPLETE AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THIS JOINT PROXY
STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES ATTACHED HERETO AND THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. THE INFORMATION CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS WITH RESPECT TO T&B AND MERGER SUB HAS BEEN SUPPLIED BY
T&B, AND THE INFORMATION WITH RESPECT TO AUGAT HAS BEEN SUPPLIED BY AUGAT.
THE COMPANIES
T&B
T&B designs, manufactures and markets, on a global basis, electrical and
electronic connectors and components as well as other related products and
accessories, with manufacturing facilities and marketing activities in North
America, Europe and the Far East. T&B's products are sold worldwide through
electrical, electronic and HVAC distributors, mass merchandisers, catalogs and
home centers, and directly to original equipment manufacturer ("OEM") markets.
In North America, T&B is one of the largest manufacturers of electrical
components and accessories for industrial, commercial and residential
construction, renovation and maintenance applications, and is a leading supplier
of utility poles, transmission towers and industrial lighting products to the
utility and telecommunications industries. On a worldwide basis, T&B designs and
manufactures electronic connectors and flat cable, which are sold primarily to
OEMs in the automotive, computer, office equipment, test equipment,
instrumentation, industrial automation and telecommunications industries.
T&B operates in three business segments. ELECTRICAL CONSTRUCTION AND
MAINTENANCE COMPONENTS are sold primarily in North America, and manufactured and
assembled at facilities located in the United States, Puerto Rico, Canada and
Mexico. ELECTRONIC/OEM COMPONENTS are sold in North America, Europe and the Far
East, and manufactured at facilities in the United States, Europe, Mexico, Japan
and Singapore. OTHER PRODUCTS AND COMPONENTS--principally heaters,
heating/ventilation systems, components for transmission and distribution of
electric power, utility poles and transmission towers, and telecommunications
products--are sold primarily in North America, Europe and the Far East and
manufactured in the United States, Europe, Mexico and the Far East.
T&B's objective is to continue to achieve profitable growth by offering its
distributors and its OEM and end-user customers a broad family of high-quality
products and state-of-the-art physical distribution services and by maintaining
leadership positions in the markets that it serves. Its strategy for achieving
this objective consists of the following elements:
-- DESIGNING CONTINUOUS IMPROVEMENTS AND MAKING CUSTOMER-SPECIFIC MODIFICATIONS
IN WIDELY USED PRODUCTS--allowing value to be added to mature product lines;
-- SELECTIVELY ACQUIRING PRODUCT LINES THAT COMPLEMENT T&B'S EXISTING PRODUCT
LINES--allowing T&B to reduce significantly the time required to bring new
products to its markets;
-- EXPANDING THE USE AND FEATURES OF T&B'S STATE-OF-THE-ART DISTRIBUTOR/
MANUFACTURER INTEGRATION ("DMI") SYSTEM--allowing T&B to provide its
distributors with an inventory and distribution management system that
achieves significant transaction cost savings for both T&B and its
distributors; and
-- GLOBALLY LOCATING AND COORDINATING MANUFACTURING FACILITIES AND MARKETING
PERSONNEL--allowing T&B to achieve low-cost manufacturing and to provide
worldwide service to those of its OEM customers with globally dispersed
operations.
<PAGE>
Thomas & Betts was established in 1898 as a sales agency for electric wires
and raceways and was incorporated in New Jersey in 1917 under the name The
Thomas & Betts Co. In 1968, it changed its name to Thomas & Betts Corporation.
On May 2, 1996, Thomas & Betts Corporation reincorporated in Tennessee.
The mailing address of T&B's principal executive offices is 1555 Lynnfield
Road, Memphis, Tennessee 38119, and its telephone number is (901) 682-7766.
AUGAT
Augat designs, manufactures and markets products for the communications,
automotive and information processing industries through its three divisions:
Communications Products Business, Automotive Wiring Systems and Components
Business, and Interconnection Products Business. Augat's products principally
relate to interconnecting and mounting components and to testing or controlling
the flow of electricity among components, boards and/or other assemblies within
electronic equipment or systems.
Products manufactured for the telecommunications industry are used in
central office distribution, remote-switching applications and cross-connect
applications. Augat is also a leading supplier of coaxial connector, fiber optic
and broadband products for the cable television and local area network markets.
Augat's Automotive Wiring Systems and Components Business is a major
supplier of connectors and electronic packaging modules and wire harnesses to
two major U.S. automotive manufacturers and is actively participating in the
development of interconnection components for future automotive model years.
Augat's Interconnection Products Business focuses on four primary
businesses--sockets, switches, connectors and terminal blocks. Products include
integrated circuit sockets and miniature and subminiature control switches.
Augat also designs and manufactures complex, high-density electronic connectors
to solve specific customer needs and is a manufacturer of high-density discrete
connectors for both conventional board mounting and surface mounting. Augat also
manufactures a wide range of interconnection hardware accessories generally used
on or in conjunction with printed circuit boards.
Augat sells to a broadly diversified group of customers located primarily in
the United States, Western Europe, the Far East and Canada. Sales are made to
industrial and commercial customers within computer, computer-aided engineering
and manufacturing, industrial electronics, test equipment, telecommunications,
aerospace, automotive and broadband communications markets.
Augat markets its products and services through independent sales
representatives and direct company sales personnel working throughout the United
States and abroad, including wholly-owned marketing subsidiaries in the United
Kingdom, France, Germany, Switzerland, Sweden, Italy, Japan, Canada and
Australia. Augat also sells its products through a network of industrial
electronic component distributors.
Augat is a Massachusetts corporation, which was organized in 1946.
The mailing address of Augat's principal executive offices is 89 Forbes
Boulevard, Mansfield, Massachusetts 02048, and its telephone number is (508)
543-4300.
MERGER SUB
Merger Sub, a Delaware corporation and a wholly-owned subsidiary of T&B, was
formed by T&B solely for the purpose of effecting the Merger. The mailing
address of Merger Sub's principal executive offices is 1555 Lynnfield Road,
Memphis, Tennessee 38119, and its telephone number is (901) 682-7766.
2
<PAGE>
THE SPECIAL MEETINGS
T&B
The T&B Special Meeting to consider and vote on approval of the Merger
Agreement and approval of the transactions contemplated thereby, including the
issuance of the shares of T&B Common Stock pursuant to the Merger Agreement,
will be held on December 11, 1996 at 8:00 a.m., local time, at The Memphis
Marriott, 2625 Thousand Oaks Boulevard, Memphis, Tennessee 38118. Only holders
of record of T&B Common Stock at the close of business on November 4, 1996 (the
"T&B Record Date") will be entitled to vote at the T&B Special Meeting. At
October 31, 1996, there were 40,443,364 shares of T&B Common Stock outstanding
and entitled to vote. Each share of T&B Common Stock is entitled to one vote.
The affirmative vote of a majority of the outstanding shares of T&B Common
Stock is necessary for the approval of the Merger Agreement and approval of the
transactions contemplated thereby, including the issuance of the shares of T&B
Common Stock pursuant to the Merger Agreement.
As of October 31, 1996, directors and executive officers of T&B and their
affiliates beneficially owned an aggregate of 488,963 shares of T&B Common Stock
(including shares which may be acquired within 60 days upon exercise of stock
options) or less than 1.3% of the shares of T&B Common Stock outstanding on such
date. The directors and executive officers of T&B have indicated their intention
to vote their shares of T&B Common Stock in favor of approval of the Merger
Agreement and approval of the transactions contemplated thereby, including the
issuance of the shares of T&B Common Stock pursuant to the Merger Agreement.
AUGAT
The Augat Special Meeting to consider and vote on approval of the Merger
Agreement and approval of the transactions contemplated thereby will be held on
December 11, 1996 at 9:00 a.m., local time, at the offices of Hale and Dorr, 60
State Street, 26th Floor, Boston, Massachusetts 02109. Only holders of record of
Augat Common Stock at the close of business on November 4, 1996 (the "Augat
Record Date") will be entitled to vote at the Augat Meeting. At October 31,
1996, there were 20,075,614 shares of Augat Common Stock outstanding and
entitled to vote. Each share of Augat Common Stock is entitled to one vote.
Approval of the Merger Agreement and approval of the transactions
contemplated thereby require the affirmative vote of at least two-thirds of the
outstanding shares of Augat Common Stock.
As of October 31, 1996, directors and executive officers of Augat and its
affiliates owned beneficially an aggregate of 556,647 shares of Augat Common
Stock (including shares which may be acquired within 60 days upon exercise of
stock options) or less than 2.8% of the shares of Augat Common Stock outstanding
on such date. The directors and executive officers of Augat have indicated their
intention to vote their shares of Augat Common Stock in favor of approval of the
Merger Agreement and approval of the transactions contemplated thereby.
For additional information relating to the Special Meetings, see "The
Special Meetings."
THE MERGER
The Merger Agreement provides for a business combination of T&B and Augat in
which, subject to the satisfaction of the conditions therein, Merger Sub will be
merged with and into Augat and the holders of shares of Augat Common Stock
(other than Excluded Augat Common Stock) will be issued T&B Common Stock in a
transaction intended to qualify as a "pooling of interests" for accounting
purposes and as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), for federal income tax
purposes. In the Merger, each issued and outstanding share
3
<PAGE>
of Augat Common Stock will be converted into the right to receive, and become
exchangeable for, 0.68 (the "Exchange Ratio") of a share of T&B Common Stock,
PROVIDED THAT, if the average of the per share closing prices of T&B Common
Stock as reported on the New York Stock Exchange, Inc. (the "NYSE") Composite
Transaction reporting system (as reported in the New York City edition of THE
WALL STREET JOURNAL) for the 20 trading days ending on the third trading day
prior to the Augat Special Meeting (the "Average Closing Price") is less than
$37.50, the Exchange Ratio will be equal to $25.50 divided by the Average
Closing Price, and if the Average Closing Price is more than $41.50, the
Exchange Ratio will be equal to $28.22 divided by the Average Closing Price (the
Exchange Ratio, whether 0.68 or as adjusted in accordance with the terms of the
Merger Agreement, shall be referred to as the "Exchange Ratio"). See "The
Merger--Terms of the Merger." Each outstanding share of T&B Common Stock will
remain outstanding and be unaffected by the Merger. As a result of the Merger,
holders of Augat Common Stock immediately prior to the Merger will own
approximately 26.6% of the outstanding T&B Common Stock after the Merger (based
on the number of shares of T&B Common Stock and Augat Common Stock outstanding
as of October 31, 1996 and assuming the Exchange Ratio is equal to 0.68). If the
Average Closing Price (i) is equal to or greater than $37.50, but less than or
equal to $41.50, the Exchange Ratio will be fixed at 0.68, and stockholders of
Augat will receive 0.68 of a share of T&B Common Stock for each share of Augat
Common Stock; (ii) is less than $37.50, the Exchange Ratio will be greater than
0.68 and stockholders of Augat will receive more than 0.68 of a share of T&B
Common Stock for each share of Augat Common Stock, as specified above; or (iii)
is greater than $41.50, the Exchange Ratio will be less than 0.68 and
stockholders of Augat will receive less than 0.68 of a share of T&B Common Stock
for each share of Augat Common Stock, as specified above. See "The Merger--The
Exchange Ratio."
If the Average Closing Price is less than $32.00, pursuant to the Merger
Agreement, T&B has the right to terminate the Merger Agreement and abandon the
Merger. See "The Merger--Termination." In lieu of terminating the Merger
Agreement and abandoning the Merger, T&B could waive such termination right and
proceed with the Merger pursuant to the terms and conditions of the Merger
Agreement, or T&B could attempt to renegotiate the terms and conditions of the
Merger Agreement with Augat. T&B has not yet determined its course of action in
the event that the Average Closing Price is less than $32.00. T&B will make that
determination when and if such occasion arises based on the facts and
circumstances existing at such time.
No fractional shares of T&B Common Stock will be issued in the Merger.
Instead, the Merger Agreement provides that each holder of Augat Common Stock
who would otherwise be entitled to receive a fractional share of T&B Common
Stock will be entitled to receive a cash payment, in lieu thereof, representing
such holder's proportionate interest in a share of T&B Common Stock based on the
Average Closing Price.
4
<PAGE>
THE EXCHANGE RATIO
The chart below sets forth a range of possible Average Closing Prices and
the corresponding Exchange Ratios. The Average Closing Prices set forth below
are for illustrative purposes and are not intended to be an exhaustive list of
possible Average Closing Prices.
AVERAGE CLOSING PRICE AND EXCHANGE RATIO
<TABLE>
<CAPTION>
AVERAGE CLOSING PRICE EXCHANGE RATIO
--------------------- ---------------
<S> <C> <C>
$ 32.00 0.7969
32.50 0.7846
33.00 0.7727
33.50 0.7612
34.00 0.7500
34.50 0.7391
35.00 0.7286
35.50 0.7183
36.00 0.7083
36.50 0.6986
37.00 0.6892
- ------------------------------------------------------------------------------------------------
Fixed Exchange Ratio 37.50 0.6800
38.00 0.6800
38.50 0.6800
39.00 0.6800
39.50 0.6800
40.00 0.6800
40.50 0.6800
41.00 0.6800
41.50 0.6800
- ------------------------------------------------------------------------------------------------
42.00 0.6719
42.50 0.6640
43.00 0.6563
43.50 0.6487
44.00 0.6414
44.50 0.6342
45.00 0.6271
45.50 0.6202
</TABLE>
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
T&B
The T&B Board has unanimously determined that the Merger Agreement and the
transactions contemplated thereby, including the issuance of shares of T&B
Common Stock pursuant to the Merger Agreement, are fair to, and in the best
interests of, T&B and its shareholders. Accordingly, the T&B Board unanimously
recommends that the shareholders of T&B vote FOR approval of the Merger
Agreement and approval of the transactions contemplated thereby, including the
issuance of the shares of T&B Common Stock pursuant to the Merger Agreement. The
recommendation of the T&B Board is based on a number of strategic, operating and
financial factors as described in "The Merger--Reasons for the Merger;
Recommendations of the Boards of Directors--T&B."
5
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AUGAT
The Augat Board has unanimously determined that the terms of the Merger
Agreement and the transactions contemplated thereby are fair to, and in the best
interests of, Augat and its stockholders. The Augat Board of Directors believes
that the merger will provide existing and potential customers of Augat with a
broader range of products and services and will allow the combined company to
take advantage of economies of scale and operational synergies and thereby
enhance shareholder value. Accordingly, the Augat Board has unanimously approved
the Merger Agreement and unanimously recommends that the stockholders of Augat
vote FOR approval of the Merger Agreement and approval of the transactions
contemplated thereby. The recommendation of the Augat Board is based on a number
of strategic, operating and financial factors as described in "The
Merger--Reasons for the Merger; Recommendations of the Boards of
Directors--Augat."
OPINIONS OF FINANCIAL ADVISORS
T&B
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has delivered written
opinions, dated as of October 7, 1996 and the date of this Joint Proxy
Statement/Prospectus, to the T&B Board, to the effect that, as of such dates,
the Exchange Ratio pursuant to the Merger Agreement is fair from a financial
point of view to T&B. See "The Merger--Opinions of Financial Advisors--T&B." A
copy of the opinion of Morgan Stanley, dated as of the date of this Joint Proxy
Statement/Prospectus, which sets forth the assumptions made, procedures
followed, matters considered and limitations on the scope of the review by
Morgan Stanley in rendering such opinion, is attached as Appendix B to this
Joint Proxy Statement/ Prospectus. HOLDERS OF T&B COMMON STOCK ARE URGED TO, AND
SHOULD, READ MORGAN STANLEY'S OPINION CAREFULLY AND IN ITS ENTIRETY.
AUGAT
Merrill Lynch & Co. ("Merrill Lynch") has delivered written opinions, dated
as of October 7, 1996 and the date of this Joint Proxy Statement/Prospectus, to
the Augat Board to the effect that, as of such dates, and based upon the
assumptions made, matters considered and limits of review set forth therein, the
Exchange Ratio is fair to the holders of Augat Common Stock, other than T&B and
its affiliates, from a financial point of view. See "The Merger--Opinions of
Financial Advisors--Augat." A copy of the opinion of Merrill Lynch, dated as of
the date of this Joint Proxy Statement/Prospectus, which sets forth the
assumptions made, procedures followed, matters considered and limits of review
by Merrill Lynch in rendering such opinion, is attached as Appendix C to this
Joint Proxy Statement/Prospectus. HOLDERS OF AUGAT COMMON STOCK SHOULD READ
MERRILL LYNCH'S OPINION CAREFULLY AND IN ITS ENTIRETY.
EFFECTIVE TIME
The Merger will become effective at the time when Articles of Merger have
been duly filed with the Secretary of State of Massachusetts, a Certificate of
Merger has been duly filed with the Secretary of State of Delaware and Articles
of Merger have become effective with the Secretary of State of Tennessee (the
"Effective Time"). See "The Merger--Effective Time; Closing."
EXCHANGE OF CERTIFICATES
Promptly after the Effective Time, the Exchange Agent (as defined herein
under "The Merger-- Exchange of Certificates") will mail a letter of transmittal
and instructions for surrender to each stockholder of record of Augat Common
Stock (other than holders of Excluded Augat Common Stock), advising such
stockholder of the procedure for surrendering Augat Common Stock certificates
(each, an "Augat Certificate") in exchange for T&B Common Stock certificates
(each, a "T&B Certificate") and
6
<PAGE>
obtaining any unpaid dividends and other distributions and any cash in lieu of
any fractional share of T&B Common Stock. See "The Merger--Exchange of
Certificates" and "The Merger--Terms of the Merger."
CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME;
CERTAIN COVENANTS; ACQUISITION PROPOSALS
OPERATIONAL COVENANTS--AUGAT
The Merger Agreement provides that, during the period from the date of the
Merger Agreement until the Effective Time, except as otherwise contemplated by
the Merger Agreement, or unless T&B otherwise approves in writing, each of Augat
and its subsidiaries will conduct its business in the ordinary and usual course
and use all reasonable best efforts to preserve its business organization
intact, keep available the services of its integral officers, employees and
consultants and maintain its existing relations and goodwill with customers,
suppliers, distributors, creditors and lessors, and Augat will not declare, set
aside or pay any dividend payable in cash, stock or property in respect of any
capital stock, other than regular quarterly cash dividends of $0.04 per share of
Augat Common Stock. See "The Merger--Conduct of Business Prior to Effective
Time; Certain Covenants; Acquisition Proposals--Operational Covenants--Augat."
OPERATIONAL COVENANTS--T&B
The Merger Agreement provides that, during the period from the date of the
Merger Agreement until the Effective Time, except as otherwise contemplated by
the Merger Agreement, or unless Augat otherwise approves in writing, each of T&B
and its subsidiaries will conduct its business in the ordinary and usual course
and use its respective reasonable best efforts to preserve its business
organization intact, keep available the services of its integral officers,
employees and consultants and maintain its relations and goodwill with
customers, suppliers, distributors, creditors and lessors, and will not declare,
set aside or pay any dividend payable in cash, stock or property in respect of
any capital stock, except that T&B may declare and pay dividends consistent with
past practice. See "The Merger--Conduct of Business Prior to Effective Time;
Certain Covenants; Acquisition Proposals--Operational Covenants--T&B."
ACQUISITION PROPOSALS
The Merger Agreement provides that neither Augat nor any of its subsidiaries
nor any of its or its subsidiaries' respective officers and directors will, and
it will use its best efforts to cause it and its subsidiaries' employees, agents
and representatives not to, directly or indirectly (i) initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of, all or any significant
portion of the assets or any equity securities of it or any of its subsidiaries
(any such proposal or offer being an "Acquisition Proposal") or (ii) have any
discussion with or provide any confidential information or data to any person
relating to an Acquisition Proposal or engage in any negotiations concerning an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. The Merger Agreement does not, however,
prohibit Augat from engaging in any discussions or negotiations with, or
providing any information to, any person in response to an unsolicited bona fide
written Acquisition Proposal by any such person, or recommending such an
unsolicited bona fide written Acquisition Proposal to the stockholders, if
certain prerequisite determinations are made by the Augat Board. The Merger
Agreement provides that Augat will notify T&B promptly, but in no event more
than 24 hours, after any such inquiries, proposals or offers are received by,
any such information is requested from, or any such discussions or negotiations
are sought to be initiated or continued with, any of its representatives and
thereafter will keep T&B informed, on a current basis, of the status of any such
proposals or offers and the status of any discussions or negotiations. See "The
Merger-- Conduct of Business Prior to Effective Time; Acquisition Proposals."
7
<PAGE>
CERTAIN REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules promulgated thereunder, certain transactions,
including the Merger, may not be consummated unless certain waiting period
requirements have been satisfied. T&B and Augat each filed a Premerger
Notification and Report Form (a "Notification and Report Form") pursuant to the
HSR Act with the Antitrust Division of the Department of Justice ("DOJ") and the
Federal Trade Commission ("FTC") on October 15, 1996. Early termination of the
waiting period was granted on November 5, 1996. At any time before or after the
Effective Time, the FTC, the DOJ or others could take action under the antitrust
laws with respect to the Merger, including seeking to enjoin the consummation of
the Merger, to rescind the Merger or to require divestiture of substantial
assets of T&B or Augat. There can be no assurance that a challenge to the Merger
on antitrust grounds will not be made or, if such a challenge is made, that it
would not be successful. See "The Merger--Certain Regulatory Matters."
EMPLOYEE BENEFITS
Pursuant to the Merger Agreement, at the Effective Time, each outstanding
option to purchase shares of Augat Common Stock (an "Augat Option") under
Augat's 1996 Stock Plan, 1996 Stock Bonus Plan for Senior Executives, 1994 Stock
Plan, 1989 Stock Plan, 1987 Stock Option and Appreciation Right Plan, Augat Inc.
Savings and Retirement Plan and 1984 Stock Option and Appreciation Right Plan
(collectively the "Augat Stock Plans"), whether vested or unvested, will be
deemed to constitute an option to acquire the same number of shares of T&B
Common Stock equal to the result of multiplying (w) the number of shares subject
to an Augat Option that the holder of such Augat Option would have been entitled
to receive pursuant to the Merger had such holder exercised such option in full
immediately prior to the Effective Time by (x) the Exchange Ratio at a price per
share equal to (y) the exercise price per share of Augat Common Stock for the
shares of Augat Common Stock otherwise purchasable pursuant to such Augat Option
divided by (z) the Exchange Ratio. At the Effective Time, T&B will assume the
unexercised Augat Options in accordance with the terms of the Augat Stock Plan
under which it was issued and the stock option agreement by which it is
evidenced.
Pursuant to the Merger Agreement, T&B will, for a period of one year after
the Effective Time, provide the employees of Augat with benefits under employee
benefit plans which in the aggregate are substantially comparable to those
provided by T&B (as of the date of the Merger Agreement) to employees of T&B
holding comparable positions. Employees of Augat will have the same rights as
other employees of T&B to participate in T&B's stock option plans in accordance
with the terms thereof, subject to certain appropriate transitional provisions.
CONDITIONS
The respective obligation of T&B, Merger Sub and Augat to effect the Merger
is subject to the satisfaction or waiver at or prior to the Effective Time of a
number of conditions, including, among others: (a) approval by the stockholders
of Augat of the matters required to be approved by such stockholders at the
Augat Special Meeting, (b) approval by the shareholders of T&B of the matters
required to be approved by such shareholders at the T&B Special Meeting, (c)
expiration or termination of the waiting period applicable to the Merger under
the HSR Act, (d) there being in effect no provision of any applicable statute,
rule or regulation that would restrain or otherwise prohibit the consummation of
the Merger, (e) the effectiveness of the Registration Statement, of which this
Joint Proxy Statement/Prospectus is a part, and no stop order suspending such
effectiveness being in effect and no proceedings for such purpose having been
initiated or threatened by the SEC, (f) approval for listing on the NYSE,
subject to official notice of issuance, of T&B's Common Stock to be issued in
the Merger, (g) receipt by T&B of an opinion from its independent public
accounting firm to the effect that the Merger will qualify for "pooling of
interests" accounting treatment and receipt by Augat of an opinion from its
independent public accounting firm to the effect that, with respect only to
matters relating to Augat, the Merger will qualify for
8
<PAGE>
pooling of interests accounting treatment, and (h) receipt by T&B and Augat of
opinions from their respective legal counsel to the effect that the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. See "The Merger--Conditions."
MODIFICATION OR AMENDMENT; WAIVER OF CONDITIONS
The Merger Agreement provides that, subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties to the Merger
Agreement may modify or amend the Merger Agreement by written agreement. The
Merger Agreement also provides that the conditions to each party's obligation to
consummate the Merger may be waived by such party in whole or in part to the
extent permitted by applicable law. See "The Merger--Modification or Amendment;
Waiver of Conditions."
TERMINATION
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time (a) by mutual written consent of T&B,
Merger Sub and Augat, or (b) by action of either the T&B Board or the Augat
Board if: (i) the Merger has not been consummated by March 31, 1997; (ii) the
stockholders of Augat fail to approve the matters required to be approved by
such stockholders at the Augat Special Meeting; (iii) the shareholders of T&B
fail to approve the matters required to be approved by such shareholders at the
T&B Special Meeting; or (iv) any Order as (defined under "The
Merger--Conditions") permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger has become final and non-appealable.
Further, the Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time by Augat (a) if (i) Augat is
not in material breach of any of the terms of the Merger Agreement, (ii) the
Augat Board authorizes Augat to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal (as defined under
"The Merger--Conduct of Business Prior to Effective Time; Certain Covenants;
Acquisition Proposals") and Augat notifies T&B in writing that Augat intends to
enter into such agreement and sets forth the material terms of the proposed
transaction (Augat has also agreed that it will not enter into any such
transaction until at least 24 hours after it has provided notice to T&B) and
(iii) Augat, prior to such termination, pays to T&B any required termination
fees (as described under "The Merger--Certain Termination Fees"); or (b) if (i)
the T&B Board has withdrawn or adversely modified its approval or recommendation
of the Merger Agreement, or (ii) there has been a material breach by T&B or
Merger Sub of any representation, warranty, covenant or agreement contained in
the Merger Agreement that is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by Augat to T&B or Merger Sub.
In addition, the Merger Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time by T&B if (i) the Augat Board has
withdrawn or adversely modified its approval or recommendation of the Merger
Agreement, (ii) there has been a material breach by Augat of any representation,
warranty, covenant or agreement contained in the Merger Agreement that is not
curable or, if curable, is not cured within 30 days after written notice of such
breach is given by T&B to Augat; or (iii) the Average Closing Price is below
$32.00. See "The Merger--Termination."
If the Merger is terminated under certain specified circumstances, certain
termination fees are payable by Augat to T&B.
ACCOUNTING TREATMENT
T&B and Augat believe that the Merger will qualify as a "pooling of
interests" for accounting and financial reporting purposes, and have been so
advised by their respective independent public accountants, Augat having been so
advised with respect only to matters relating to Augat. Under this method of
accounting, T&B's consolidated financial statements from the Effective Time will
include the assets,
9
<PAGE>
liabilities, and results of operations of Augat and all prior periods presented
will be restated on a combined basis.
Consummation of the Merger is conditioned upon the receipt by T&B of a
letter from its independent public accountants stating that the Merger, in its
opinion, will qualify as a "pooling of interests" for accounting purposes and
upon receipt by Augat of a letter from its independent public accounting firm
stating that, with respect only to matters relating to Augat, the Merger will
qualify for pooling of interests accounting treatment. See "The
Merger--Accounting Treatment" and "-- Conditions" and "Unaudited Pro Forma
Condensed Consolidated Financial Information."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of Augat's Board, stockholders should be
aware that certain members of management of Augat and of the Augat Board have
certain interests in the Merger that are in addition to the interests of
stockholders generally. See "The Merger--Interests of Certain Persons in the
Merger."
EMPLOYEE BENEFITS
As of December 11, 1996, options to purchase 444,077 shares of Augat Common
Stock held by 15 officers and six directors with exercise prices ranging from
$11.75 to $23.25 will vest. In addition, as of December 11, 1996, options to
purchase 92,436 shares of Augat Common Stock held by 13 officers will vest
pursuant to the Change in Control Agreement (as defined under "The
Merger--Interests of Certain Persons in the Merger"), under certain
circumstances. After taking the foregoing into consideration, the directors and
executive officers of Augat will hold vested options for 731,100 shares of Augat
Common Stock with exercise prices ranging from $9.375 to $23.75. The
consummation of the Merger will cause the removal of restrictions on 60,500
shares of Augat Common Stock and the issuance of approximately 36,000 shares of
Augat Common Stock pursuant to the Directors Deferred Compensation Plan.
The Merger will constitute a "Change in Control" for purposes of the Augat
Change in Control Agreements. Each executive officer of Augat other than John N.
Lemasters and Marcel P. Joseph whose employment is terminated after the
occurrence of a Change in Control for a reason other than "Cause" (as defined in
the Change in Control Agreements) or disability or who terminates employment for
"Good Reason" (as defined in the Change in Control Agreements) during the
thirty-six month period following the Change in Control will receive severance
benefits. In addition, all options vest and become fully exercisable and all
restrictions on restricted stock lapse upon the occurrence of a Change in
Control in the event of termination of employment by the Company without Cause
or by the executive officer for Good Reason during the thirty-six month period
following the Change in Control. Messrs. Lemasters and Joseph have similar
contracts, except that the amount received by each of them upon termination of
employment after the occurrence of a Change in Control for reasons other than
Cause or disability or by them for Good Reason will be approximately $450,000.
The severance payments are payable without regard to whether the deductibility
of such payments is limited by Section 280G of the Code or whether the payments
would subject the executive officer to an excise tax under Section 4999 of the
Code, except that severance benefits will be reduced if reduction will increase
the after-tax value of such payments (taking into account the excise tax and all
other federal taxes).
The Augat Executive Deferred Compensation Plan and the Augat Supplemental
Employee Retirement Plan will be terminated effective as of the Effective Time.
This will result in the payment of approximately $5,559,254 to 13 executive
officers. In addition, the Augat 1996 Bonus Plan has been amended to provide
that any eligible employee who is employed at the Effective Time will be
eligible to receive a bonus for 1996.
The Augat Directors' Pension Plan will terminate automatically upon the
consummation of the Merger, causing the present value of benefits payable under
that plan to become payable immediately in a
10
<PAGE>
lump sum in cash. This will result in the payment of approximately $490,000 to a
total of 4 current directors. In addition, amounts deferred under the Augat
Deferred Compensation Plan for Directors will become payable to directors who
cease to be director as a result of the Merger.
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
Pursuant to the Merger Agreement, from and after the Effective Time, T&B
will indemnify, defend and hold harmless each present and former director and
officer of Augat against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or investigation whether
civil, criminal, administrative or investigative arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, to the fullest
extent that Augat would have been permitted under Massachusetts law and its
articles of organization or by-laws in effect on the date of the Merger
Agreement to indemnify such person. The Surviving Corporation is obligated to
maintain Augat's policy of directors' and officers' liability insurance ("D&O
Insurance") for a period of six years after the Effective Time so long as the
annual premium is not in excess of the last annual premium paid prior to the
date of the Merger Agreement subject to customary increases in accordance with
industry practice (the "Current Premium"); PROVIDED, HOWEVER, if the existing
D&O Insurance expires, is terminated or cancelled during such six-year period,
the Surviving Corporation will use its reasonable efforts to obtain D&O
Insurance for the remainder of such period for a premium not in excess of 1.5
times the Current Premium. See "The Merger--Interests of Certain Persons in the
Merger--Director and Officer Indemnification and Insurance."
BOARD OF DIRECTORS
Pursuant to the Merger Agreement, T&B has agreed to increase promptly the
size of the T&B Board at the Effective Time in order to enable Thomas C.
McDermott and John N. Lemasters to be appointed to the T&B Board and to use its
best efforts to cause Messrs. McDermott and Lemasters to be elected as directors
of T&B by T&B's shareholders for at least one year after the next annual meeting
of shareholders of T&B following their appointment to the T&B Board.
APPRAISAL RIGHTS
The Merger Agreement provides that appraisal rights will be available to
holders of Augat Common Stock in connection with the Merger. Under the
Massachusetts Business Corporation Law ("MBCL"), holders of Augat Common Stock
issued and outstanding immediately prior to the Effective Time who file with
Augat before the taking of the vote on the Merger written objection to the
Merger together with a statement that such stockholder intends to demand payment
if the Merger is approved and who do not vote in favor of the Merger
("Dissenting Stockholders") will be entitled, in accordance with the provisions
of the MBCL, to seek an appraisal of the fair value of such holders' Augat
Common Stock. Such stockholders will not have their Augat Common Stock converted
in the Merger into shares of T&B Common Stock. All shares of Augat Common Stock
for which Dissenting Stockholders have failed to perfect their appraisal rights
or for which the demand for appraisal has been withdrawn shall be converted into
shares of T&B Common Stock in accordance with the terms of the Merger Agreement.
See "Dissenters' Rights of Appraisal" and "The Merger--Appraisal Rights."
Sections 85 through 98 of the MBCL, inclusive, which describe appraisal rights
are attached as Appendix D to this Joint Proxy Statement/Prospectus and are
incorporated herein by reference. Holders of T&B Common Stock will not be
entitled to dissenters' rights of appraisal rights under the Tennessee Business
Corporation Act ("TBCA") as a result of the matters to be voted upon at the T&B
Special Meeting. See "The Merger-- Appraisal Rights."
11
<PAGE>
DIVIDENDS
Pursuant to the Merger Agreement, Augat has agreed to coordinate with T&B
the declaration, setting of record dates and payment dates of dividends on Augat
Common Stock so that holders of shares of Augat Common Stock do not receive
dividends both on shares of Augat Common Stock and T&B Common Stock which will
be received in the Merger in respect of any calendar quarter or fail to receive
a dividend either on shares of Augat Common Stock or T&B Common Stock which will
be received in the Merger in respect of any calendar quarter.
NYSE LISTING
Pursuant to the Merger Agreement, T&B has agreed to use its best efforts to
cause the shares of T&B Common Stock to be issued in the Merger to be approved
for listing on the NYSE, subject to official notice of issuance, prior to the
Closing Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. Assuming the
Merger so qualifies as a reorganization within the meaning of Section 368(a) of
the Code, in general no gain or loss will be recognized by holders of Augat
Common Stock with respect thereto on the surrender of their Augat Common Stock
in exchange for T&B Common Stock, except with respect to cash received in lieu
of fractional shares, and no gain or loss will be recognized by T&B or Augat.
Under the Merger Agreement, it is a condition precedent to the respective
obligations of T&B and Augat to consummate the Merger that each of T&B and Augat
will have received an opinion of its respective counsel dated the Closing Date
to the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and that each of Augat, T&B and Merger Sub
will be a party to the reorganization within the meaning of Section 368(b) of
the Code. For a further discussion of the federal income tax consequences of the
Merger, see "Certain Federal Income Tax Consequences of the Merger."
CERTAIN EFFECTS OF THE MERGER ON THE RIGHTS OF HOLDERS OF AUGAT COMMON STOCK
Upon consummation of the Merger, holders of shares of Augat Common Stock
will become shareholders of T&B. The internal affairs of T&B are governed by the
TBCA, T&B's Charter (the "T&B Charter") and Bylaws (the "T&B Bylaws"), and will
no longer be governed by the Augat Articles of Organization (the "Augat
Articles") and the Augat By-laws (the "Augat By-laws"). The Merger will result
in certain differences in the rights of holders of Augat Common Stock. See
"Description of T&B Capital Stock" and "Comparison of Certain Rights of
Shareholders of T&B and Stockholders of Augat."
12
<PAGE>
COMPARATIVE STOCK PRICES
T&B Common Stock and Augat Common Stock are each listed on the NYSE. T&B is
listed under the symbol "TNB" and Augat is listed under the symbol "AUG." The
following table sets forth, for the periods indicated, the high and low sale
prices per share of T&B Common Stock and Augat Common Stock as reported on the
NYSE Composite Transactions Tape.
<TABLE>
<CAPTION>
T&B
COMMON STOCK(A) AUGAT
COMMON STOCK
-------------------- --------------------
<S> <C> <C> <C> <C>
CALENDAR QUARTER HIGH LOW HIGH LOW
- ------------------------------------------------------------------------------- --------- --------- --------- ---------
1994
First Quarter................................................................ $34 $29 1/8 $23 3/4 $17 1/2
Second Quarter............................................................... 33 30 5/8 21 3/4 18 3/4
Third Quarter................................................................ 34 1/8 30 1/2 24 3/8 20 1/4
Fourth Quarter............................................................... 35 5/8 32 5/8 21 3/8 16
1995
First Quarter................................................................ 34 3/8 32 3/8 19 1/4 14 1/2
Second Quarter............................................................... 34 1/4 31 3/8 21 3/4 18
Third Quarter................................................................ 35 1/8 32 1/4 24 1/2 17 5/8
Fourth Quarter............................................................... 37 5/8 31 1/4 19 3/8 15
1996
First Quarter................................................................ 40 35 7/16 19 7/8 15 1/4
Second Quarter............................................................... 40 1/2 36 5/8 22 17 1/2
Third Quarter................................................................ 41 1/2 33 1/4 22 1/8 15 1/8
Fourth Quarter (through November 6, 1996).................................... 43 1/4 37 3/4 27 1/2 19 3/4
</TABLE>
- ------------------------
(a) T&B effected a two-for-one split of the T&B Common Stock to shareholders of
record at the close of business on March 8, 1996. Market prices have been
adjusted to reflect such split.
On October 4, 1996, the last trading day before the public announcement of
the Merger Agreement, the closing prices of T&B Common Stock and Augat Common
Stock as reported on the NYSE Composite Transactions Tape were $39 3/4 per share
and $20 7/8 per share, respectively. Assuming an Exchange Ratio of 0.68, the pro
forma equivalent per share value of Augat Common Stock on October 4, 1996 was
$27.03 per share. The pro forma equivalent per share value of Augat Common Stock
on any date, assuming an Exchange Ratio of 0.68, equals the closing sale price
of T&B Common Stock on such date, as reported on the NYSE Composite Transactions
Tape, multiplied by 0.68.
Pursuant to the Merger Agreement, T&B has the right to terminate the Merger
Agreement and abandon the Merger if the Average Closing Price is less than
$32.00.
On November 6, 1996, the closing sale prices of T&B Common Stock and Augat
Common Stock as reported on the NYSE Composite Transactions Tape were $43 1/4
per share and $27 1/8 per share ($28.22 on a pro forma equivalent per share
basis, using an Exchange Ratio of 0.6524), respectively.
Stockholders of Augat and shareholders of T&B are urged to obtain current
quotations for the market prices of T&B Common Stock and Augat Common Stock.
No assurance can be given as to the market prices of T&B Common Stock or
Augat Common Stock at the Effective Time. The Exchange Ratio may vary based on
the market price of only the T&B Common Stock. At the time an Augat stockholder
receives shares of the T&B Common Stock pursuant to the Merger Agreement, the
shares of T&B Common Stock may have a value less than, equal to, or greater than
the Average Closing Price.
13
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth certain historical data on T&B and Augat
including unaudited interim financial data and certain unaudited pro forma
financial data giving effect to the Merger as if it had been consummated at the
beginning of the periods presented for the statements of earnings data and as of
the date of each balance sheet for balance sheet data in accordance with pooling
of interests accounting principles. The summary financial data should be read in
conjunction with the separate historical consolidated financial statements and
notes thereto of T&B and Augat, which are incorporated herein by reference. See
"Incorporation of Certain Information By Reference."
The financial data for T&B and Augat for the interim periods are not
necessarily indicative of the operating results or financial position of T&B or
Augat for their fiscal years. The unaudited pro forma financial data do not give
effect to any cost savings which may result from the integration of T&B's and
Augat's operations. Additionally, the unaudited pro forma financial statement of
earnings data do not include any transaction costs relating to the Merger or
consider any reorganization costs that might occur as a result of the Merger.
The unaudited pro forma financial data have been included for comparative
purposes only and do not purport to be indicative of the results of operations
or financial position which actually would have been obtained if the Merger had
been effected at the beginning of the periods presented or of the financial
position or results of operations which may be obtained in the future.
<TABLE>
<CAPTION>
AS OF AND FOR THE FISCAL YEARS
AS OF AND FOR THE 9 MONTHS ENDED -----------------------------------------------------
------------------------------------------ 1995
SEPTEMBER 30, PRO FORMA
SEPTEMBER 30, 1995(A); PRO FORMA FOR AMERACE
1996(A) FOR AMERACE(B) (B) 1995 1994(A) 1993(A)
-------------------- -------------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
T&B
Net Sales(c).......... $ 1,042,288 $ 1,015,843 $ 1,355,568 $ 1,198,495 $ 1,042,896 $ 929,183
Earnings from
Continuing
Operations.......... 68,668 62,252 86,004 80,902 1,887(e) 43,589
Total Assets.......... 1,648,261 1,524,430 1,524,129 1,259,382 1,208,212 1,133,182
Long-Term Debt........ 586,288 544,427 519,086 327,812 319,519 393,502
Earnings per share
from continuing
operations.......... $ 1.70 $ 1.56 $ 2.15 $ 2.02 $ 0.05 $ 1.16
Cash dividends per
share............... $ 0.84 $ 0.84 $ 1.12 $ 1.12 $ 1.12 $ 1.12
AUGAT
Net Sales............. $ 441,271 $ 396,999 -- $ 534,873 $ 530,706 $ 420,263
Earnings (loss) from
Continuing
Operations.......... 22,000 17,070 -- 7,600(f) 26,200 15,600
Total Assets.......... 454,227 392,415 -- 407,476 357,958 317,860
Long-Term Debt........ 74,578 25,801 -- 25,854 35,033 45,797
Earnings (loss) per
share from
continuing
operations.......... $ 1.10 $ 0.87 -- $ 0.39 $ 1.36 $ 0.83
Cash dividends per
share............... $ 0.12 $ 0.12 -- $ 0.16 $ 0.08 --
T&B AND AUGAT PRO FORMA
CONSOLIDATED
Net Sales............. $ 1,483,559 $ 1,412,842 $ 1,890,441 $ 1,733,368 $ 1,573,602 $ 1,349,446
Earnings from
Continuing
Operations(g)....... 90,668 79,322 93,604 88,502 28,087 59,189
Total Assets.......... 2,102,488 1,916,845 1,931,605 1,666,858 1,566,170 1,451,042
Long-Term Debt........ 660,866 570,228 544,940 353,666 354,552 439,299
<CAPTION>
1992 1991
----------- ---------
<S> <C> <C>
T&B
Net Sales(c).......... $ 911,362 $ 457,411
Earnings from
Continuing
Operations.......... 40,580 40,512
Total Assets.......... 1,117,063 599,672
Long-Term Debt........ 420,345 68,270
Earnings per share
from continuing
operations.......... $ 1.09 $ 1.19
Cash dividends per
share............... $ 1.12 $ 1.11
AUGAT
Net Sales............. $ 361,718 $ 281,602
Earnings (loss) from
Continuing
Operations.......... 6,586 (22,062)(f)
Total Assets.......... 295,448 293,229
Long-Term Debt........ 56,939 50,236
Earnings (loss) per
share from
continuing
operations.......... $ 0.36 $ (1.21)
Cash dividends per
share............... -- $ 0.40
T&B AND AUGAT PRO FORMA
CONSOLIDATED
Net Sales.............
Earnings from
Continuing
Operations(g).......
Total Assets..........
Long-Term Debt........
</TABLE>
- ------------------------------
(a) In 1993 T&B adopted a fiscal year policy which resulted in the following
year-ends: for 1993--January 2, 1994; for 1994--January 1, 1995; and for
1995--December 31, 1995. and the following third quarter-ends: for
1995--October 1, 1995 and for 1996--September 29, 1996.
(b) Effective January 2, 1996, T&B acquired the outstanding stock of Amerace
Corporation ("Amerace") in exchange for cash of approximately $212.5 million
(originally $220.6 million, subsequently reduced through post-closing
adjustments), which acquisition has been accounted for as a purchase
business combination. The 1995 pro forma financial information of T&B
assumes that the Amerace acquisition had occurred on October 1, 1995 and
December 31, 1995 for balance sheet data and January 2, 1995 for statement
of earnings data. The pro forma amounts include the effects of the debt
incurred to finance this transaction, and exclude the results in 1995 of
Amerace's Hendrix Wire and Cable Division, which was sold by T&B in May
1996.
(c) T&B net sales amounts for 1995 and prior periods have been adjusted to
reclassify outbound freight expense as a reduction of sales rather than as
marketing, general and administrative expense, conforming to the
presentation being used in 1996 and a practice more prevalent in the
industry.
(d) The T&B Board effected a two-for-one split of the T&B Common Stock to
shareholders of record as of the close of business on March 8, 1996. The
share data included herein has been adjusted to reflect such stock split.
(e) Earnings from continuing operations in 1994 include the effects of
restructuring charges totaling approximately $79 million.
(f) Earnings (loss) from continuing operations in 1995 and 1991 include the
effects of restructuring charges of $19 million and $22 million,
respectively.
(g) Excludes estimated transaction costs of $11 million. See also Note J to the
"Unaudited Pro Forma Condensed Consolidated Financial Statements of Thomas &
Betts Corporation and Augat Inc."
14
<PAGE>
HISTORICAL, PRO FORMA AND EQUIVALENT PER SHARE DATA
The following table presents selected T&B and Augat historical per share
data and unaudited pro forma per share data giving effect to the Merger as if it
had been consummated at the beginning of the periods presented for the statement
of earnings data and as of December 31, 1995, 1994 and 1993 and September 30,
1996 and September 30, 1995 for balance sheet data in accordance with pooling of
interests accounting principles. The data should be read in conjunction with the
separate historical consolidated financial statements of T&B and Augat which are
incorporated herein by reference. See "Incorporation of Certain Information By
Reference." The unaudited pro forma data have been included for comparative
purposes only and do not purport to be indicative of the results of operations
or financial position which actually would have been obtained if the Merger had
been effected at the beginning of the periods presented or of the financial
position or results of operations which may be obtained in the future.
The unaudited equivalent pro forma per share amounts are calculated by
multiplying the T&B pro forma share amounts by an Exchange Ratio of 0.68 of a
share of T&B Common Stock for each share of Augat Common Stock.
<TABLE>
<CAPTION>
AS OF AND FOR THE
9 MONTHS ENDED
---------------------------- AS OF AND FOR THE FISCAL YEARS
SEPTEMBER 30, ---------------------------------
1995 1995
SEPTEMBER 30, INCLUDING INCLUDING
1996 AMERACE AMERACE 1994 1993
------------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
HISTORICAL T&B
Earnings from continuing operations.................... $ 1.70 $ 1.56 $ 2.15 $ 0.05 $ 1.16
Book value............................................. 15.89 14.54 14.99 14.10 12.74
Dividends.............................................. 0.84 0.84 1.12 1.12 1.12
HISTORICAL AUGAT
Earnings from continuing operations.................... $ 1.10 $ 0.87 $ 0.39 $ 1.36 $ 0.83
Book value............................................. 13.60 13.11 12.63 12.21 10.60
Dividends.............................................. 0.12 0.12 0.16 0.08 --
PRO FORMA COMBINED T&B
Earnings from continuing operations.................... $ 1.68 $ 1.49 $ 1.75 $ 0.54 $ 1.17
Book value............................................. 16.72 15.53 15.68 15.08 13.47
Dividends.............................................. 0.84 0.84 1.12 1.12 1.12
EQUIVALENT PRO FORMA AUGAT
Earnings from continuing operations.................... $ 1.14 $ 1.01 $ 1.19 $ 0.37 $ 0.80
Book value............................................. 11.37 10.56 10.66 10.25 9.16
Dividends.............................................. 0.57 0.57 0.76 0.76 0.76
</TABLE>
15
<PAGE>
THE COMPANIES
T&B
T&B designs, manufactures and markets, on a global basis, electrical and
electronic connectors and components as well as other related products and
accessories, with manufacturing facilities and marketing activities in North
America, Europe and the Far East. T&B's products are sold worldwide through
electrical, electronic and HVAC distributors, mass merchandisers, catalogs and
home centers, and directly to OEM markets. In North America, T&B is one of the
largest manufacturers of electrical components and accessories for industrial,
commercial and residential construction, renovation and maintenance
applications, and is a leading supplier of utility poles, transmission towers
and industrial lighting products to the utility and telecommunications
industries. On a worldwide basis, T&B designs and manufactures electronic
connectors and flat cable, which are sold primarily to OEMs in the automotive,
computer, office equipment, test equipment, instrumentation, industrial
automation and telecommunications industries.
T&B operates in three business segments. ELECTRICAL CONSTRUCTION AND
MAINTENANCE COMPONENTS are sold primarily in North America, and manufactured and
assembled at facilities located in the United States, Puerto Rico, Canada and
Mexico. ELECTRONIC/OEM COMPONENTS are sold in North America, Europe and the Far
East, and manufactured at facilities in the United States, Europe, Mexico, Japan
and Singapore. OTHER PRODUCTS AND COMPONENTS--principally heaters,
heating/ventilation systems, components for transmission and distribution of
electric power, utility poles and transmission towers, and telecommunications
products--are sold primarily in North America, Europe and the Far East and
manufactured in the United States, Europe, Mexico and the Far East.
T&B's objective is to continue to achieve profitable growth by offering its
distributors and its OEM and end-user customers a broad family of high-quality
products and state-of-the-art physical distribution services and by maintaining
leadership positions in the markets that it serves. Its strategy for achieving
this objective consists of the following elements:
-- DESIGNING CONTINUOUS IMPROVEMENTS AND MAKING CUSTOMER-SPECIFIC
MODIFICATIONS IN WIDELY USED PRODUCTS--allowing value to be added to
mature product lines;
-- SELECTIVELY ACQUIRING PRODUCT LINES THAT COMPLEMENT T&B'S EXISTING
PRODUCT LINES--allowing T&B to reduce significantly the time required to
bring new products to its markets;
-- EXPANDING THE USE AND FEATURES OF T&B'S STATE-OF-THE-ART
DISTRIBUTOR/MANUFACTURER INTEGRATION ("DMI") SYSTEM--allowing T&B to
provide its distributors with an inventory and distribution management
system that achieves significant transaction cost savings for both T&B
and its distributors; and
-- GLOBALLY LOCATING AND COORDINATING MANUFACTURING FACILITIES AND
MARKETING PERSONNEL--allowing T&B to achieve low-cost manufacturing and
to provide worldwide service to those of its OEM customers with globally
dispersed operations.
AUGAT
Augat designs, manufactures and markets products for the communications,
automotive and information processing industries through its three divisions:
Communications Products Business, Automotive Wiring Systems and Components
Business, and Interconnection Products Business. Augat's products principally
relate to interconnecting and mounting components and to testing or controlling
the flow of electricity among components, boards and/or other assemblies within
electronic equipment or systems.
16
<PAGE>
Products manufactured for the telecommunications industry are used in
central office distribution, remote-switching applications and cross-connect
applications. Augat is also a leading supplier of coaxial connector, fiber optic
and broadband products for the cable television and local area network markets.
Augat's Automotive Wiring Systems and Components Business is a major
supplier of connectors and electronic packaging modules and wire harnesses to
two major U.S. automotive manufacturers and is actively participating in the
development of interconnection components for future automotive model years.
Augat's Interconnection Products Business focuses on four primary
businesses--sockets, switches, connectors and terminal blocks. Products include
integrated circuit sockets and miniature and subminiature control switches.
Augat also designs and manufactures complex, high-density electronic connectors
to solve specific customer needs and is a manufacturer of high-density discrete
connectors for both conventional board mounting and surface mounting. Augat also
manufactures a wide range of interconnection hardware accessories generally used
on or in conjunction with printed circuit boards.
Augat sells to a broadly diversified group of customers located primarily in
the United States, Western Europe, the Far East and Canada. Sales are made to
industrial and commercial customers within computer, computer-aided engineering
and manufacturing, industrial electronics, test equipment, telecommunications,
aerospace, automotive and broadband communications markets.
Augat markets its products and services through independent sales
representatives and direct company sales personnel working throughout the United
States and abroad, including wholly-owned marketing subsidiaries in the United
Kingdom, France, Germany, Switzerland, Sweden, Italy, Japan, Canada and
Australia. Augat also sells its products through a network of industrial
electronic component distributors.
MERGER SUB
Merger Sub, a Delaware corporation and a wholly-owned subsidiary of T&B, was
formed by T&B solely for the purpose of effecting the Merger.
17
<PAGE>
THE SPECIAL MEETINGS
GENERAL
T&B
This Joint Proxy Statement/Prospectus is being furnished to T&B shareholders
in connection with the solicitation of proxies by the T&B Board for use at the
T&B Special Meeting, to be held on December 11, 1996, and any adjournments or
postponements thereof to consider and vote upon the approval of the Merger
Agreement and approval of the transactions contemplated thereby, including the
issuance of T&B Common Stock pursuant to the Merger Agreement, and to transact
such other business as may properly come before the T&B Special Meeting or any
adjournments or postponements thereof.
THE T&B BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT THE T&B SHAREHOLDERS VOTE FOR THE APPROVAL OF THE MERGER
AGREEMENT AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
ISSUANCE OF SHARES OF T&B COMMON STOCK PURSUANT TO THE MERGER AGREEMENT.
AUGAT
This Joint Proxy Statement/Prospectus is also being furnished to Augat
stockholders in connection with the solicitation of proxies by the Augat Board
for use at the Augat Special Meeting, to be held on December 11, 1996, and any
adjournments or postponements thereof, to consider and vote upon the approval of
the Merger Agreement and approval of the transactions contemplated thereby and
to transact such other business as may properly come before the Augat Special
Meeting or any adjournments or postponements thereof.
THE AUGAT BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
UNANIMOUSLY RECOMMENDS THAT THE AUGAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED THEREBY.
Each copy of this Joint Proxy Statement/Prospectus mailed to holders of
Augat Common Stock is accompanied by a form of proxy for use at the Augat
Special Meeting, and each copy of this Joint Proxy Statement/Prospectus mailed
to holders of T&B Common Stock is accompanied by a form of proxy for use at the
T&B Special Meeting.
This Joint Proxy Statement/Prospectus is also furnished to Augat
stockholders as a prospectus in connection with the issuance by T&B of shares of
T&B Common Stock in connection with the Merger.
DATE, PLACE AND TIME
The T&B Special Meeting will be held at The Memphis Marriott, 2625 Thousand
Oaks Boulevard, Memphis, Tennessee 38118 on December 11, 1996, at 8:00 a.m.,
local time.
The Augat Special Meeting will be held at the offices of Hale and Dorr, 60
State Street, 26th Floor, Boston, Massachusetts on December 11, 1996 at 9:00
a.m., local time.
RECORD DATES
T&B
The close of business on November 4, 1996 has been fixed as the T&B Record
Date for the determination of the holders of T&B Common Stock entitled to
receive notice of and to vote at the T&B Special Meeting and at any adjournments
or postponements thereof.
18
<PAGE>
AUGAT
The close of business on November 4, 1996 has been fixed as the Augat Record
Date for the determination of the holders of Augat Common Stock entitled to
receive notice of and to vote at the Augat Special Meeting and at any
adjournments or postponements thereof.
VOTES REQUIRED
T&B
As of October 31, 1996, there were 40,443,364 shares of T&B Common Stock
issued and outstanding. Each share of T&B Common Stock outstanding on the T&B
Record Date is entitled to one vote upon each matter properly submitted at the
T&B Special Meeting. Under the Tennessee Business Corporation Act ("TBCA"), the
affirmative vote of a majority of the outstanding shares of T&B Common Stock is
necessary for the approval of the Merger Agreement and approval of the
transactions contemplated thereby, including the issuance of the shares of T&B
Common Stock pursuant to the Merger Agreement.
The presence in person or by proxy at the T&B Special Meeting of the holders
of a majority of the outstanding shares of T&B Common Stock is necessary to
constitute a quorum for action to approve the Merger. Abstentions will be
counted as present for the purposes of determining whether a quorum is present.
Under the rules of the NYSE, brokers who hold shares in street name for
customers will not have the authority to vote on the Merger unless they receive
specific instructions from beneficial owners. Any shares of T&B Common Stock
which are not voted at the T&B Special Meeting (whether by abstention, broker
non-vote or otherwise) will have the effect of a vote against the approval of
the Merger Agreement and the transactions contemplated thereby, including the
issuance of shares of T&B Common Stock pursuant to the Merger Agreement.
As of October 31, 1996, directors and executive officers of T&B and their
affiliates beneficially owned an aggregate of 488,963 shares of T&B Common Stock
(including shares which may be acquired within 60 days upon exercise of employee
stock options) or less than 1.3% of the shares of T&B Common Stock outstanding
on such date. The directors and executive officers of T&B have indicated their
intention to vote their shares of T&B Common Stock in favor of approval of the
Merger Agreement and approval of the transactions contemplated thereby,
including the issuance of the shares of T&B Common Stock pursuant to the Merger
Agreement.
As of October 31, 1996, the directors and executive officers of Augat owned
2 shares of T&B Common Stock.
See "The Merger -- Interests of Certain Persons in the Merger."
AUGAT
As of October 31, 1996, there were 20,075,614 shares of Augat Common Stock
issued and outstanding. Each share of Augat Common Stock outstanding on the
Augat Record Date is entitled to one vote upon each matter properly submitted at
the Augat Special Meeting. The affirmative vote of at least two-thirds of the
outstanding shares of Augat Common Stock is required to approve the Merger
Agreement and to
approve the transactions contemplated thereby.
The presence in person or by proxy at the Augat Special Meeting of the
holders entitled to vote a majority of the outstanding shares of Augat Common
Stock is necessary to constitute a quorum for the transaction of business.
Abstentions will be counted as present for the purposes of determining whether a
quorum is present. Under the rules of the NYSE, brokers who hold shares in
street name for customers will not have the authority to vote on the Merger
unless they receive specific instructions from beneficial owners. Any shares of
Augat Common Stock which are not voted at the Augat Special Meeting (whether
19
<PAGE>
by abstention, broker non-vote or otherwise) will have the effect of a vote
against the approval of the Merger Agreement and the transactions contemplated
thereby.
As of October 31, 1996, directors and executive officers of Augat and their
affiliates beneficially owned an aggregate of 556,647 shares of Augat Common
Stock (including shares which may be acquired within 60 days upon exercise of
employee stock options) or less than 2.8% of the shares of Augat Common Stock
outstanding on such date. The directors and executive officers of Augat have
indicated their intention to vote their shares of Augat Common Stock in favor of
approval of the Merger Agreement and approval of the transactions contemplated
thereby.
As of October 31, 1996, directors and executive officers of T&B owned 2,400
shares of Augat Common Stock.
See "The Merger -- Interests of Certain Persons in the Merger."
VOTING AND REVOCATION OF PROXIES
Shares of T&B Common Stock and Augat Common Stock represented by a proxy
properly signed and received at or prior to the appropriate Special Meeting,
unless subsequently revoked, will be voted in accordance with the instructions
thereon. IF A PROXY IS SIGNED AND RETURNED WITHOUT INDICATING ANY VOTING
INSTRUCTIONS, SHARES OF T&B COMMON STOCK REPRESENTED BY THE PROXY WILL BE VOTED
FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT AND TO APPROVE THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE ISSUANCE OF SHARES OF T&B COMMON STOCK
PURSUANT TO THE MERGER AGREEMENT, AND SHARES OF AUGAT COMMON STOCK REPRESENTED
BY THE PROXY WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT AND
TO APPROVE THE TRANSACTIONS CONTEMPLATED THEREBY. Any proxy given pursuant to
this solicitation may be revoked by the person giving it at any time before the
proxy is voted by filing a duly executed revocation or a duly executed proxy
bearing a later date with T&B's Inspector of Elections, for T&B shareholders, or
with the Clerk of Augat, for Augat stockholders, prior to or at the appropriate
Special Meeting, or, by voting in person at the appropriate Special Meeting,
although attendance at the respective Special Meeting will not in and of itself
constitute revocation of a proxy. All written notices of revocation and other
communications with respect to revocation of T&B proxies should be addressed as
follows: Inspector of Elections, First Chicago Trust Company of New York, P.O.
Box 8711, Edison, New Jersey 08818-9180. In addition, all such communications
for T&B between December 1, 1996 and December 9, 1996 may be sent by Federal
Express Priority Overnight delivery service at the expense of T&B to: Inspector
of Elections, First Chicago Trust Company of New York, 118 Fernwood Avenue,
Edison, NJ 08837, Attention: Peter Paige. All written notices of revocation and
other communications with respect to revocation of Augat proxies should be
addressed as follows: Augat Inc., 89 Forbes Boulevard, Mansfield, Massachusetts
02048, Attention: Clerk. In addition, all such communications for Augat between
December 1, 1996 and December 9, 1996 may be sent by Federal Express Priority
Overnight delivery service at the expense of Augat to: Augat Inc., 89 Forbes
Boulevard, Mansfield, Massachusetts 02048, Attention: Clerk.
For more information on the use of Federal Express Priority Overnight
delivery service for notices of revocation and other communications with respect
to revocations of proxies, shareholders of T&B and stockholders of Augat should
call Hill & Knowlton, Inc. ("H&K") at 1-800-755-3002.
The T&B Board and the Augat Board are not currently aware of any business to
be acted upon at their respective Special Meetings, other than as described
herein. If, however, other matters are properly brought before either Special
Meeting or any adjournments or postponements thereof the persons appointed as
proxies will have discretion to vote or act thereon according to their best
judgment.
Shareholders of T&B and stockholders of Augat will not be entitled to
present any matter for consideration at either of the Special Meetings.
20
<PAGE>
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees of
T&B and Augat, none of whom will be specifically compensated for such services,
may solicit proxies from the shareholders of T&B and stockholders of Augat,
respectively, personally or by telephone, telecopy or telegram or other forms of
communication. Brokerage houses, nominees, fiduciaries and other custodians will
be requested to forward soliciting materials to beneficial owners and will be
reimbursed for their reasonable expenses incurred in sending proxy materials to
beneficial owners.
In addition, T&B and Augat have jointly retained H&K to assist in the
distribution of proxy materials and in the solicitation of proxies from their
shareholders or stockholders, respectively. The fees to be paid to H&K for such
services by each of T&B and Augat are not expected to exceed $5,500 and $4,500,
respectively, plus in each case reasonable out-of-pocket costs and expenses. T&B
and Augat each will bear its own expenses in connection with the solicitation of
proxies for its Special Meeting, except that each will pay one-half of all
printing, filing and mailing costs and expenses incurred in connection with the
Registration Statement and this Joint Proxy Statement/Prospectus.
AUGAT STOCKHOLDERS SHOULD NOT SEND AUGAT COMMON
STOCK CERTIFICATES WITH THEIR PROXY CARDS.
DISSENTERS' RIGHTS OF APPRAISAL
Holders of record of shares of Augat Common Stock are entitled to appraisal
rights under the MBCL. Pursuant to Sections 85 through 98, inclusive, of the
MBCL (the full text of which is reprinted in its entirety as Appendix D to this
Joint Proxy Statement/Prospectus), any stockholder of Augat who files a written
objection to the Merger prior to the taking of the vote concerning the Merger at
the Augat Special Meeting, and who does not consent to or vote in favor of the
Merger is entitled to demand in writing that Augat pay to such stockholder in
cash the fair value of the shares of Augat Common Stock held by such stockholder
(exclusive of any element of value arising from the expectation or
accomplishment of the Merger).
ANY STOCKHOLDER WHO WISHES TO MAKE A DEMAND FOR APPRAISAL IS URGED TO REVIEW
CAREFULLY THE PROVISIONS OF SECTIONS 85 THROUGH 98 OF THE MBCL, PARTICULARLY THE
PROCEDURAL ACTIONS REQUIRED TO PERFECT DISSENTERS' APPRAISAL RIGHTS THEREUNDER
("APPRAISAL RIGHTS"). APPRAISAL RIGHTS WILL BE LOST IF SUCH PROCEDURAL
REQUIREMENTS ARE NOT FULLY SATISFIED.
Holders of Augat Common Stock wishing to exercise Appraisal Rights should
keep in mind that the fair value of their shares of Augat Common Stock
determined under the MBCL could be more than, the same as, or less than the
value of the consideration they will be entitled to receive under the Merger
Agreement if they do not seek to exercise their Appraisal Rights. Stockholders
of Augat should also keep in mind that opinions of investment banking firms as
to fairness from a financial point of view are not necessarily opinions as to
fair value under the MBCL.
SET FORTH BELOW IS A SUMMARY OF THE PROCEDURES RELATING TO THE EXERCISE OF
APPRAISAL RIGHTS. THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF THE PROVISIONS OF SECTIONS 85 THROUGH 98, INCLUSIVE, OF THE MBCL
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX D TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AND TO ANY AMENDMENTS TO SUCH SECTIONS AS MAY BE ADOPTED
AFTER THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
Before the stockholders' vote is taken at the Augat Special Meeting on the
proposal to approve the Merger Agreement, a stockholder of record who intends to
exercise Appraisal Rights must deliver to Augat a written objection to the
proposed Merger, stating that such stockholder intends to demand payment for the
shares of Augat Common Stock held by such stockholder if the Merger is
consummated. Such written objection should be sent to Augat Inc., 89 Forbes
Boulevard, P.O. Box 448, Mansfield,
21
<PAGE>
Massachusetts 02048, Attention: Clerk. Merely voting against approval and
adoption of the Merger Agreement (or abstaining from voting) is not sufficient
to satisfy the requirement of delivering a written objection to Augat.
In addition to filing a written objection, shares of Augat Common Stock for
which appraisal is sought must not be voted in favor of the Merger, and a
stockholder voting in favor of the proposal to approve the Merger Agreement at
the Augat Special Meeting will be deemed to have waived his rights to an
appraisal under Massachusetts law. A signed proxy that is returned but which
does not contain any instructions as to how it should be voted will be voted in
favor of the proposal to approve the Merger Agreement and will be deemed a
waiver of the right to an appraisal under Massachusetts law. Failure to vote
against the proposal to approve the Merger Agreement or abstaining from voting,
however, will not constitute a waiver of Appraisal Rights.
If the Merger Agreement is approved at the Augat Special Meeting and the
Merger becomes effective, Augat, as the Surviving Corporation, will, within 10
days after the Effective Time, notify each Dissenting Stockholder that the
Merger has become effective. The giving of such notice will not be deemed to
create any rights in the Dissenting Stockholder to demand payment for such
holder's shares of Augat Common Stock. The notice will be sent by registered or
certified mail, addressed to the Dissenting Stockholder at such Dissenting
Stockholder's last known address as it appears on the records of Augat
immediately prior to the Effective Time.
Within 20 days after the mailing of notice described above by Augat, any
Dissenting Stockholder may demand in writing from Augat an appraisal and payment
for the fair value of such holder's shares of Augat Common Stock. Such written
demand should be addressed to Augat Inc., 89 Forbes Boulevard, P.O. Box 448,
Mansfield, Massachusetts 02048, Attention: Clerk. If Augat, as the Surviving
Corporation, and the Dissenting Stockholder shall have agreed as to the fair
value of such shares of Augat Common Stock, Augat, as the Surviving Corporation,
will pay to the Dissenting Stockholder the fair value of such shares of Augat
Common Stock within 30 days after the expiration of the twenty-day period during
which such written demand may be made.
If, after the thirty-day period described in the previous paragraph expires,
Augat and any Dissenting Stockholder have not agreed on the fair value of such
holder's shares of Augat Common Stock, then within four months following the end
of such thirty-day period, any such Dissenting Stockholder who has complied with
Section 86 of the MBCL, or Augat, may, by filing a bill in equity with the
Massachusetts Superior Court in Norfolk County, Massachusetts (the "Court"),
demand a determination of the fair value of the shares of Augat Common Stock of
all Dissenting Stockholders with whom agreements as to the value of their shares
have not been reached. If no such bill is filed within such four-month period,
no holder of shares of Augat Common Stock will be entitled to Appraisal Rights.
If a bill is filed by Augat, all Dissenting Stockholders, other than those who
have reached agreement with Augat as to the value of their shares of Augat
Common Stock, must be named as parties to such proceeding. If a bill is filed by
a Dissenting Stockholder, he or she must bring the bill on his or her own behalf
and on the behalf of all other Dissenting Stockholders who have demanded payment
for their shares and with whom agreements as to the value of their shares have
not been reached, and service of the bill must be made upon Augat by subpoena
with a copy of the bill annexed thereto. Augat must file with its answer a duly
verified list of all Dissenting Stockholders who have not reached agreement with
Augat as to the value of their shares of Augat Common Stock, and such Dissenting
Stockholders will thereupon be deemed to have been added as parties to the bill.
Augat must give notice of the time and place fixed by the Court for a hearing,
in such form and returnable on such date as the Court shall order, to each
Dissenting Stockholder party to the bill by registered or certified mail,
addressed to the last known address of such Dissenting Stockholder as shown in
the records of Augat, and the Court may order such additional notice by
publication or otherwise as it deems advisable. Each Dissenting Stockholder who
makes written demand for an appraisal and payment of his shares of Augat Common
Stock as provided above will be deemed to have consented to the giving of notice
in such manner, and the giving of notice to any such Dissenting Stockholder in
compliance
22
<PAGE>
with the order of the Court will be sufficient service on him or her. Failure to
give notice to any Dissenting Stockholder making such demand will not invalidate
the proceedings as to other Dissenting Stockholders to whom notice was properly
given, and the Court may at any time before the entry of a final decree make
supplementary orders of notice.
After a hearing, the Court will enter a decree determining the fair value of
the shares of Augat Common Stock of those Dissenting Stockholders who have
become entitled to the valuation thereof and payment therefor. The full value of
such shares of Augat Common Stock will be determined as of the date preceding
the date of the vote approving the Merger Agreement and shall be exclusive of
any element of value arising from the accomplishment or expectation of the
Merger. When the value is so determined, the Court will order the payment by
Augat of such value, with interest thereon, determined as provided below, to the
Dissenting Stockholders entitled to receive the same upon the transfer by them
to Augat of the certificates representing their shares of Augat Stock.
The costs of the bill, including the reasonable compensation and expenses of
any master appointed by the Court, but exclusive of fees of counsel or of
experts retained by any party, will be determined by the Court and assessed
against the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders must be paid
by Augat. Interest shall be paid upon any award from the date of the Augat
Special Meeting, and the Court may, upon application of any interested party,
determine the amount of interest to be paid in the case of any Dissenting
Stockholder.
ANY AUGAT STOCKHOLDER WHO DESIRES TO EXERCISE APPRAISAL RIGHTS SHOULD
CAREFULLY REVIEW THE MBCL AND IS ADVISED TO CONSULT HIS, HER OR ITS LEGAL
ADVISOR BEFORE EXERCISING OR ATTEMPTING TO EXERCISE SUCH RIGHTS.
23
<PAGE>
THE MERGER
This section of the Joint Proxy Statement/Prospectus describes certain
aspects of the Merger. To the extent that it relates to the Merger Agreement,
the following description does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, which is attached as Appendix
A to this Joint Proxy Statement/Prospectus and is incorporated herein by
reference. All shareholders of T&B and stockholders of Augat are urged to read
the Merger Agreement in its entirety.
GENERAL
The Merger Agreement provides for a business combination between T&B and
Augat in which, subject to the satisfaction of the conditions therein, Merger
Sub will be merged with and into Augat and the holders of Augat Common Stock
(other than Excluded Augat Common Stock) will be issued T&B Common Stock in a
transaction intended to qualify as a "pooling of interests" for accounting
purposes and as a reorganization within the meaning of Section 368(a) of the
Code for federal income tax purposes. In the Merger, each outstanding share of
Augat Common Stock (other than Excluded Augat Common Stock) will be converted
into the right to receive, and become exchangeable for, a fraction of a share of
T&B Common Stock equal to the Exchange Ratio and the right, if any, to receive a
cash payment in lieu of any fractional share. The Exchange Ratio may be adjusted
in the event that the Average Closing Price is less than $37.50 or more than
$41.50, as described herein under "--The Exchange Ratio" and "--Terms of the
Merger." Dissenting Stockholders who do not have a bill dismissed against them
or who do not withdraw their demand to be paid the fair value of their shares of
Augat Common Stock will have the rights specified in Sections 85 through 98,
inclusive, of the MBCL. See "Dissenters' Rights of Appraisal," "The Merger--
Appraisal Rights" and Appendix D to this Joint Proxy Statement/Prospectus. Each
outstanding share of T&B Common Stock will remain outstanding and be unaffected
by the Merger. As a result of the Merger, holders of Augat Common Stock
immediately prior to the Merger will own approximately 26.6% of the outstanding
T&B Common Stock after the Merger (based on the number of shares of T&B Common
Stock and Augat Common Stock outstanding as of October 31, 1996 and assuming the
Exchange Ratio is equal to 0.68). If the Average Closing Price (i) is equal to
or greater than $37.50, but less than or equal to $41.50, the Exchange Ratio
will be fixed at 0.68, and stockholders of Augat will receive 0.68 of a share of
T&B Common Stock for each share of Augat Common Stock; (ii) is less than $37.50,
the Exchange Ratio will be greater than 0.68 and stockholders of Augat will
receive more than 0.68 of a share of T&B Common Stock for each share of Augat
Common Stock, as specified above; or (iii) is greater than $41.50, the Exchange
Ratio will be less than 0.68 and stockholders of Augat will receive less than
0.68 of a share of T&B Common Stock for each share of Augat Common Stock, as
specified above. See "The Merger--The Exchange Ratio."
If the Average Closing Price is less than $32.00, pursuant to the Merger
Agreement, T&B has the right to terminate the Merger Agreement and abandon the
Merger. See "The Merger--Termination." In lieu of terminating the Merger
Agreement and abandoning the Merger, T&B could waive such termination right and
proceed with the Merger pursuant to the terms and conditions of the Merger
Agreement, or T&B could attempt to renegotiate the terms and conditions of the
Merger Agreement with Augat. T&B has not yet determined its course of action in
the event that the Average Closing Price is less than $32.00. T&B will make that
determination when and if such occasion arises based on the facts and
circumstances existing at such time.
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<PAGE>
THE EXCHANGE RATIO
The chart below sets forth a range of possible Average Closing Prices and
the corresponding Exchange Ratios. The Average Closing Prices set forth below
are for illustrative purposes and are not intended to be an exhaustive list of
possible Average Closing Prices.
AVERAGE CLOSING PRICE AND EXCHANGE RATIO
<TABLE>
<CAPTION>
AVERAGE CLOSING PRICE EXCHANGE RATIO
--------------------- ---------------
<S> <C> <C>
$ 32.00 0.7969
32.50 0.7846
33.00 0.7727
33.50 0.7612
34.00 0.7500
34.50 0.7391
35.00 0.7286
35.50 0.7183
36.00 0.7083
36.50 0.6986
37.00 0.6892
- ------------------------------------------------------------------------
Fixed Exchange Ratio 37.50 0.6800
38.00 0.6800
38.50 0.6800
39.00 0.6800
39.50 0.6800
40.00 0.6800
40.50 0.6800
41.00 0.6800
41.50 0.6800
- ------------------------------------------------------------------------
42.00 0.6719
42.50 0.6640
43.00 0.6563
43.50 0.6487
44.00 0.6414
44.50 0.6342
45.00 0.6271
45.50 0.6202
</TABLE>
BACKGROUND OF THE MERGER
Beginning in the latter half of 1995, T&B began to consider opportunities to
strengthen the Electronic/OEM Components ("Electronics") segment of its business
through strategic business combinations or alliances. In connection with this
effort, T&B and Morgan Stanley commenced a preliminary analysis in late 1995 of
several electronics-related strategic opportunities, including the acquisition
of Augat.
In December of 1995, T. Kevin Dunnigan, Chairman and Chief Executive Officer
of T&B, telephoned William R. Fenoglio, then President and Chief Executive
Officer of Augat, to suggest a meeting. On January 3, 1996 Messrs. Dunnigan and
Fenoglio met and discussed various matters, including a possible alliance
between the two companies. Mr. Fenoglio subsequently sent a letter to Mr.
Dunnigan, dated
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<PAGE>
January 30, 1996, indicating that Augat was engaged in executing a previously
announced restructuring program, and did not wish to continue discussions at
that time.
During the first half of 1996, T&B management discussed with the T&B Board
at a strategic planning session in March and at a T&B Board meeting in June the
logic for increasing its presence in the Electronics segment of its business,
and received T&B Board approval to pursue the strategy of expanding that segment
by means of an acquisition or business combination.
On June 27, 1996, T&B and Morgan Stanley met and reviewed the strategic
rationale for a business combination with Augat. Subsequently, Clyde R. Moore,
President and Chief Operating Officer of T&B, called Mr. Fenoglio and again
expressed an interest in discussing an alliance between T&B and Augat.
On July 17, 1996, Augat announced the resignation of Mr. Fenoglio as
President and Chief Executive Officer and the appointments of John N. Lemasters
as Chairman and Chief Executive Officer and Marcel P. Joseph as President and
Chief Operating Officer. Shortly thereafter, Mr. Moore telephoned Mr. Lemasters
to request a meeting, which took place in Memphis on July 24, 1996, among
Messrs. Lemasters, Dunnigan and Moore. During that meeting Messrs. Dunnigan and
Moore explained T&B's strategy of expanding its Electronics segment and inquired
as to whether Augat might be interested in discussing a business combination or
other transaction with T&B. Mr. Lemasters indicated he would respond in August.
At a telephonic meeting of the Augat Board on August 22, 1996, Mr. Lemasters
discussed strategic alternatives with Augat's directors and sought advice on a
future strategy. The Augat Board authorized him to hold discussions regarding a
possible business combination with T&B.
On August 26, 1996, Mr. Lemasters called Mr. Dunnigan and indicated that he
was prepared to meet with Messrs. Dunnigan and Moore. On August 30, 1996,
Messrs. Dunnigan, Moore, Lemasters and F. Gordon Bitter, Augat's Chief Financial
Officer, met. At this meeting, Mr. Dunnigan indicated that he would be willing
to present a proposal to Augat within a specified time period, subject to
receiving certain financial and other information relating to Augat's latest
financial projections and an opportunity to discuss that information with
Augat's management.
On September 4, 1996, at a regularly scheduled T&B Board meeting, Mr.
Dunnigan briefed the T&B Board on the status of the Augat discussions, presented
a framework for a transaction, and received approval from the T&B Board to
pursue a transaction.
On September 6, 1996, the Augat Board met to discuss the alternative
strategies available to Augat. At this meeting the Augat Board authorized the
engagement of Merrill Lynch as its financial advisor in connection with such
strategic alternatives.
In mid-September Augat commenced its due diligence review of T&B and
conducted a telephonic question-and-answer session with members of T&B's senior
management.
Representatives of T&B and its co-financial advisors, Morgan Stanley and
Donaldson, Lufkin & Jenrette ("DLJ"), met with representatives of Augat and its
financial advisor, Merrill Lynch, along with T&B's and Augat's respective legal
advisors in Boston on September 11, 1996 to discuss the framework for T&B's
review of Augat and the timetable for the completion of that review. Each of
Augat and T&B made a brief presentation reviewing its respective businesses. On
this date, T&B and Augat entered into a confidentiality agreement, pursuant to
which information was provided to T&B.
During the period commencing on September 16 and concluding September 29,
1996, various members of T&B's management, including Mr. Moore and Fred R.
Jones, T&B's Chief Financial Officer, and various members of Augat's management
held discussions. In addition, Augat provided access to a number of its
facilities for inspection by T&B management and made available to T&B various
documents concerning legal, environmental, employee and other matters.
26
<PAGE>
On September 24, 1996, Messrs. Dunnigan, Moore and Jones met with Messrs.
Lemasters, Joseph and Bitter to discuss certain of the preliminary terms
(including the concept of a stock-for-stock exchange) of a possible transaction
which T&B would be prepared to discuss, the benefits of such a transaction, and
whether such a transaction warranted further review. On September 30, the group
met again, together with their respective financial advisors, and Mr. Dunnigan
presented a term sheet outlining a transaction, the terms of which were
subsequently modified pursuant to negotiations between T&B and Morgan Stanley on
the one hand, and Augat and Merrill Lynch on the other, held between October 1
and October 3, 1996.
On October 1, 1996, Augat received an unsolicited letter from a third party
expressing interest in a possible combination with Augat. Such proposal
contemplated a purchase price payable either in cash in the range of $26-28 per
share of Augat Common Stock in a taxable transaction or in such third party's
common stock in the range of $22-24 per share of Augat Common Stock in a
tax-free transaction. Mr. Lemasters indicated to such third party that the Augat
Board would consider such third party's indication of interest at its meeting on
October 4, 1996.
On October 3, 1996, Mr. Lemasters called Mr. Dunnigan to indicate he was
prepared to present the proposed transaction, as negotiated, to Augat's Board
for its consideration at a special board meeting to be held on October 4, 1996.
At the October 4, 1996 meeting, the Augat Board reviewed the proposed
transaction. The Augat Board also considered the letter previously received from
a third party and determined that the T&B proposal was in the best interests of
the Augat stockholders and superior to such third party's proposal, considering,
among other factors, the financing, due diligence and other contingencies and
uncertainties of such third party's proposal as well as the taxable aspect of
such third party's cash proposal and the lower stock value of such third party's
stock proposal. The Augat Board approved Augat's management's continued
negotiations with T&B and further due diligence relating to T&B.
The T&B Board met on October 4, 1996 to review the proposed transaction. At
that meeting, the T&B Board received an update on business due diligence and
reviewed the proposed terms of the transaction. Morgan Stanley presented
additional information and delivered its oral opinion that the Exchange Ratio
was fair to T&B from a financial point of view. Morgan Stanley subsequently
confirmed its oral opinion by delivery of its written opinions dated as of
October 7, 1996 and the date of this Joint Proxy Statement/Prospectus. The T&B
Board approved the terms of the Merger Agreement, subject to satisfactory
negotiation within parameters discussed and agreed upon by the T&B Board.
Representatives of T&B and Augat completed negotiations within the
parameters approved by the T&B Board, subject only to the completion of
satisfactory due diligence of T&B by Augat and the final approval of the
transaction by the Augat Board. On October 5 and 6, 1996, Augat completed its
due diligence review of T&B.
The Augat Board met again on the evening of October 6, 1996 and approved the
Merger Agreement and the transactions contemplated thereby. At the meeting, the
Augat Board received an update on due diligence issues and reviewed the proposed
terms of the transaction. Merrill Lynch presented additional information and
delivered its oral opinion, which it subsequently confirmed in writing on
October 7, 1996 and as of the date hereof, to the effect that, as of such dates,
and based upon assumptions made, matters considered and limits of review as set
forth therein, the Exchange Ratio is fair to the holders of Augat Common Stock,
other than T&B and its affiliates, from a financial point of view. Following
such meeting T&B, Merger Sub, and Augat executed the Merger Agreement on October
7, 1996.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
T&B
The T&B Board has unanimously determined that the terms of the Merger
Agreement and the transactions contemplated thereby, including the issuance of
shares of T&B Common Stock pursuant to the Merger Agreement, are fair to and in
the best interests of T&B and its shareholders and has approved
27
<PAGE>
the Merger Agreement and the transactions contemplated thereby, including the
issuance of shares of T&B Common Stock pursuant to the Merger Agreement.
Accordingly, the T&B Board unanimously recommends that the shareholders of T&B
vote FOR approval of the Merger Agreement and approval of the transactions
contemplated thereby, including the issuance of T&B Common Stock pursuant to the
Merger Agreement. In reaching its determination, the T&B Board consulted with
T&B's management, as well as its financial advisors and legal counsel, and
considered a number of reasons and factors, including the following:
(i) The Merger will substantially broaden T&B's product mix in the
Electronic/OEM Components segment of its business, providing T&B with
better access to top original equipment manufacturer customers and
gaining T&B access to high growth markets not currently served;
(ii) The Merger will increase T&B's presence in international markets;
(iii) The combined company should be able to achieve significant cost
savings through consolidation of administrative and marketing staffs,
rationalization of operations and certain insourcing opportunities. These
savings will enable the combined company to compete more effectively in
the domestic and international Electronic Components markets;
(iv) The combined company will have a substantially stronger balance sheet
and substantially larger cash flows than T&B currently has, which will
give the combined company greater financial flexibility to make
investments in new capacity and/or new regions;
(v) The presentation of Morgan Stanley delivered to the T&B Board, including
the oral opinion of Morgan Stanley rendered on October 4, 1996,
(confirmed in writing on October 7, 1996) that the Exchange Ratio is fair
to T&B from a financial point of view;
(vi) The Exchange Ratio and the historical market prices and trading
information with respect to the T&B Common Stock and Augat Common Stock;
and
(vii) The terms and conditions of the Merger Agreement, which were viewed as
providing an equitable basis for the Merger from the standpoint of T&B.
The foregoing discussion of the information and factors considered and given
weight by the T&B Board is not intended to be exhaustive. In view of the variety
of factors considered in connection with its evaluation of the Merger, the T&B
Board did not find it practicable to and did not quantify or otherwise assign
relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the T&B Board may have given
different weights to different factors.
THE T&B BOARD UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF T&B COMMON STOCK VOTE
FOR APPROVAL OF THE MERGER AGREEMENT AND APPROVAL OF THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE ISSUANCE OF SHARES OF T&B COMMON STOCK
PURSUANT TO THE MERGER AGREEMENT.
AUGAT
The Augat Board has unanimously determined that the terms of the Merger
Agreement and the transactions contemplated thereby are fair to, and in the best
interest of, Augat and its stockholders and has approved the Merger Agreement
and the transactions contemplated thereby. Accordingly, the Augat Board
unanimously recommends that the stockholders of Augat vote in favor of approval
of the Merger Agreement and approval of the transactions contemplated thereby.
In reaching its determination, the Augat Board gave significant consideration to
a number of factors, including, without limitation, the factors referred to
below and the opinion of Merrill Lynch to the effect that as of October 7, 1996,
and based upon assumptions made, matters considered and limits of review as set
forth therein, the Exchange Ratio is fair to the holders of Augat Common Stock,
other than T&B and its affiliates, from a financial point of view. The Augat
Board also considered the oral and written presentations made to it by Merrill
Lynch. See "--Opinions of Financial Advisors--Augat." A copy of Merrill Lynch's
written opinion to the Augat Board, dated as of the date of this Joint Proxy
Statement/Prospectus, is attached as Appendix C to this Joint Proxy
Statement/Prospectus.
28
<PAGE>
In arriving at its unanimous decision to approve the Merger Agreement and
the transactions contemplated thereby, the Augat Board considered a number of
factors, including:
(i) The Merger will result in a combined company with a substantially
broader product mix in the Electronics/OEM Components segment with
better access to top OEM customers and strengthened access to other
distribution channels;
(ii) The ability of the combined company to realize cost savings through
economies of scale and operational synergies in engineering and design,
materials procurement, manufacturing and marketing of products;
(iii) The competitive challenges facing the company on a stand-alone basis;
(iv) The period of time required to find and integrate a new chief executive
officer into the Augat organization as well as the new strategic
direction and demonstrated success offered by the management of T&B;
(v) The opportunity of the combined company to provide existing and
potential customers with a broader range of integrated products and
services;
(vi) The opportunity to form a company with a more significant international
presence and access to more substantial financial resources;
(vii) The terms and conditions of the Merger Agreement, which were viewed as
providing an equitable basis for the Merger from the standpoint of
Augat; and
(viii) The presentation of Merrill Lynch delivered to the Augat Board,
including the oral opinion of Merrill Lynch rendered on October 6, 1996
(confirmed in writing on October 7, 1996) that the Exchange Ratio is
fair to the holders of Augat Common Stock, other than T&B and its
affiliates, from a financial point of view.
The foregoing discussion of the information and factors considered and given
weight by the Augat Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Merger,
the Augat Board did not find it practicable to and did not quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Augat Board may have given
different weights to different factors.
THE AUGAT BOARD UNANIMOUSLY RECOMMENDS THAT AUGAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE MERGER AGREEMENT AND APPROVAL OF THE TRANSACTIONS CONTEMPLATED
THEREBY.
OPINIONS OF FINANCIAL ADVISORS
T&B
In August 1996, T&B retained Morgan Stanley to act as its co-financial
advisor (along with DLJ) in connection with the potential acquisition of Augat.
At the October 4, 1996 meeting of the T&B Board, Morgan Stanley rendered to
the T&B Board an oral opinion that, as of such date and based upon and subject
to the various considerations set forth in its opinion, the Exchange Ratio was
fair from a financial point of view to T&B. Morgan Stanley subsequently
confirmed its oral opinion by delivery to the T&B Board of its written opinions
dated as of October 7, 1996 and the date of this Joint Proxy
Statement/Prospectus.
The full text of the written opinion of Morgan Stanley dated the date of
this Joint Proxy Statement/ Prospectus, which sets forth, among other things,
assumptions made, procedures followed, matters considered, and limitations on
the scope of review by Morgan Stanley in rendering its opinion, is attached
29
<PAGE>
as Appendix B to this Joint Proxy Statement/Prospectus. Morgan Stanley's opinion
is directed to the T&B Board and the fairness of the Exchange Ratio to T&B from
a financial point of view to T&B and it does not address any other aspect of the
Merger nor does it constitute a recommendation as to how the shareholders of T&B
should vote at the T&B Special Meeting. The summary of the opinion of Morgan
Stanley set forth in this Joint Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of such opinion. HOLDERS OF T&B COMMON
STOCK ARE URGED TO, AND SHOULD, READ MORGAN STANLEY'S OPINION CAREFULLY AND IN
ITS ENTIRETY.
In rendering its opinion, Morgan Stanley, among other things: (i) analyzed
certain publicly available financial statements and other information of Augat
and T&B, respectively; (ii) analyzed certain internal financial statements and
other financial and operating data concerning Augat prepared by the management
of Augat; (iii) analyzed certain financial projections for Augat prepared by the
managements of Augat and T&B, respectively; (iv) discussed the past and current
operations and financial condition and the prospects of Augat with senior
executives of Augat; (v) discussed the past and current operations and financial
condition and the prospects of T&B with senior executives of T&B, and analyzed
the pro forma impact of the Merger on T&B's earnings per share and consolidated
capitalization; (vi) reviewed the reported prices and trading activity for Augat
Common Stock and T&B Common Stock; (vii) compared the financial performance of
Augat and T&B and the prices and trading activity of Augat Common Stock and T&B
Common Stock with that of certain other comparable publicly-traded companies and
their securities; (viii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions; (ix) discussed with
senior executives of Augat and T&B their views of the strategic rationale for
the Merger and their estimates of the cost savings and other benefits of the
Merger to T&B; (x) participated in discussions and negotiations among
representatives of Augat and T&B and their financial and legal advisors; (xi)
reviewed the Merger Agreement and certain related documents; (xii) reviewed this
Joint Proxy Statement/Prospectus and; (xiii) performed such other analyses and
considered such other factors as Morgan Stanley, in its sole judgment, has
deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by Morgan Stanley for purposes of its opinion. With respect to the
financial projections referred to above, Morgan Stanley assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of Augat and T&B. Morgan
Stanley relied upon, with T&B's consent, the assumptions of management of T&B
regarding cost savings and other benefits that will result from the Merger.
Morgan Stanley assumed that the Merger will be treated as a
"pooling-of-interests" business combination in accordance with U.S. generally
accepted accounting principles. Morgan Stanley also assumed that the Merger will
be consummated in accordance with the terms set forth in the Merger Agreement.
Morgan Stanley did not make any independent valuation or appraisal of the assets
or liabilities of Augat or T&B, nor was it furnished with any such appraisals.
Morgan Stanley's opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to it as of,
October 7, 1996 and the date of this Joint Proxy Statement/Prospectus.
The following is a brief summary of certain analyses performed by Morgan
Stanley in connection with the rendering of its October 4, 1996 oral opinion.
Morgan Stanley utilized substantially the same analysis in rendering its written
opinions dated as of October 7, 1996 and the date of this Joint Proxy Statement/
Prospectus:
T&B COMMON STOCK PERFORMANCE. Morgan Stanley's analysis of the T&B Common
Stock performance consisted of an historical analysis of closing prices and
trading volumes from January 1, 1995 to October 3, 1996. During this period,
based on closing prices on the NYSE, the T&B Common Stock achieved a high of
$41.50 per share and a low of $31.25 per share. The T&B Common Stock closed at a
price of $39.875 per share on October 3, 1996.
30
<PAGE>
AUGAT COMMON STOCK PERFORMANCE. Morgan Stanley's analysis of the Augat
Common Stock performance consisted of an historical analysis of closing prices
and trading volumes from December 30, 1993 to October 3, 1996. During this
period, based on closing prices on the NYSE, Augat Common Stock achieved a high
of $24.50 and a low of $14.50 per share. Augat Common Stock closed at a price of
$20.625 per share on October 3, 1996.
COMPARABLE COMPANY ANALYSIS. Comparable company analysis examines a
company's trading performance relative to a group of publicly traded peers.
Morgan Stanley performed a comparable public company trading analysis pursuant
to which it compared certain publicly available financial and operating data,
projections of future financial performance and market statistics (based upon
closing stock prices on October 3, 1996) of Amphenol Corporation, AMP, Inc.,
Berg Electronics Corporation, Cooper Industries, Inc., Hubbell, Inc. and Molex,
Inc. (collectively, the "Selected Comparable Companies"). Historical financial
information used in connection with the ratios provided below with respect to
the Selected Comparable Companies was as of the date of the most recent
financial statements publicly available for each company. Morgan Stanley
compared (i) the closing stock prices as a multiple of estimated 1996 and 1997
earnings per share ("EPS") and (ii) the aggregate value (consisting of market
capitalization plus total debt less cash and marketable securities) as a
multiple of estimated 1996 earnings before interest, taxes, depreciation and
amortization ("EBITDA") (provided by Smith Barney research, Value Line, Morgan
Stanley research and management of T&B) and earnings before interest and taxes
("EBIT") (provided by Smith Barney research, Value Line, Morgan Stanley research
and management of T&B). EPS estimates for the Selected Comparable Companies were
estimates provided by Institutional Brokers Estimates System ("IBES").
For the Selected Comparable Companies, such analysis indicated: (i) median
price to estimated 1996 EPS multiple of 18.0x, (ii) median price to estimated
1997 EPS multiple of 15.1x, (iii) median aggregate value to estimated 1996
EBITDA multiple of 7.4x and (iv) median aggregate value to estimated 1996 EBIT
multiple of 10.5x. Using the financial information and forecasts provided by
management of Augat and T&B, Morgan Stanley derived an implied equity value
range per share of Augat Common Stock upon application of the financial
multiples from the Selected Comparable Companies. This analysis indicated that
the implied equity value of Augat ranged from $22.50 to $26.50 per fully diluted
share of Augat Common Stock.
No company utilized as a comparison in the comparable companies analysis is
identical to Augat. In evaluating the Selected Comparable Companies, Morgan
Stanley made judgments and assumptions with regard to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Augat, such as the impact of competition
on Augat and the industry generally, industry growth and the absence of any
adverse material change in the financial condition and prospects of Augat or the
industry or in the financial markets in general.
COMPARABLE TRANSACTION ANALYSIS. Using publicly available information,
Morgan Stanley performed an analysis of selected transactions (collectively, the
"Augat Comparable Transactions") from 1985 to 1996 and for each transaction
calculated the aggregate value as a multiple of last twelve months' revenues,
EBITDA and EBIT. Such analysis indicated that the aggregate value as a multiple
of last twelve months' revenues, EBITDA and EBIT, respectively, ranged from (i)
1.0x to 1.5x, (ii) 7.0x to 10.0x and (iii) 10.0x to 12.0x. Using the financial
information and forecasts provided by management of Augat and T&B, Morgan
Stanley derived an implied equity value range for Augat upon application of the
financial multiples from the Augat Comparable Transactions. This analysis
indicated that the implied equity value of Augat ranged from $24.50 to $30.50
per fully diluted share.
No transaction utilized as a comparison in the comparable transaction is
identical to the Merger. In evaluating the precedent transactions, Morgan
Stanley made judgments and assumptions with regard to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Augat, such as the impact of competition
on Augat and the
31
<PAGE>
industry generally, industry growth and the absence of any adverse material
change in the financial condition and prospects of Augat or the industry or in
the financial markets in general. Mathematical analysis (such as determining the
average or median) is not in itself a meaningful method of using comparable
transaction data.
DISCOUNTED CASH FLOW ANALYSIS. Morgan Stanley conducted a discounted cash
flow analysis of Augat for the fiscal years ended 1997 through 2006 to estimate
the present value of the stand-alone unlevered free cash flows that Augat is
expected to generate if Augat performs in accordance with scenarios based upon
certain financial forecasts. The discounted cash flow analysis for Augat was
based upon certain discussions with management of Augat and T&B as well as upon
certain financial forecasts prepared by management of Augat and T&B. Unlevered
free cash flows of Augat were calculated as net income plus depreciation and
amortization plus deferred tax plus minority interest plus other noncash
expenses plus after-tax net interest expense less investment working capital
less capital expenditures less other noncash income. Morgan Stanley calculated
terminal values for Augat by applying a range of perpetual growth rates
("Terminal Perpetual Growth Rate Methodology") to the free cash flow in fiscal
year 2006 of 1.0% to 3.0% representing estimated long-term growth rates of free
cash flow. The unlevered free cash flow streams and terminal values were then
discounted to the present using a range of discount rates from 11.0% to 13.0%.
The discount rate ranges were selected based upon a weighted average cost of
capital analysis of Augat. Using the financial information and forecasts
provided by management of Augat and T&B, Morgan Stanley derived an implied
equity value range for Augat. This analysis, which does not consider any
benefits derived from combining Augat and T&B, indicated that the implied equity
value of Augat ranged from $21.35 to $23.72 per fully diluted share. Morgan
Stanley also derived an implied equity value range for Augat based on identical
financial forecasts and including estimated synergies ("Synergies Case")
prepared by the management of T&B. The Terminal Perpetual Growth Rate
Methodology and discount rates were held constant in the Synergies Case. The
Synergies Case indicated that the implied equity value of Augat ranged from
$27.28 to $30.30 per fully diluted share.
HISTORICAL MARKET PRICE RATIO ANALYSIS. Morgan Stanley analyzed the
historical ratios between the market prices per share of Augat Common Stock and
per share of T&B Common Stock ("Historical Exchange Ratios"). The Historical
Exchange Ratios were analyzed from January 1, 1995 to October 3, 1996. During
this period, the Historical Exchange Ratios ranged from 71.2% to 40.8%. On
October 3, 1996, the ratio of the market prices for Augat Common Stock and T&B
Common Stock was 51.7%.
PRO FORMA ANALYSIS OF THE MERGER ON T&B. Morgan Stanley analyzed certain
pro forma effects of the Merger based upon the Exchange Ratio, including the
impact of the Merger on the EPS of T&B in fiscal years 1997 through 1999. Such
analysis was based on earnings estimates and base synergies projections provided
by the management of T&B for the fiscal years ended 1997 through 1999. Morgan
Stanley observed that, if the Merger were treated as a pooling of interests for
accounting purposes and if T&B-estimated synergies were realized, the issuance
of the T&B Common Stock in the Merger would have an accretive effect on pro
forma earnings per share to T&B of approximately 1.7% in fiscal year 1997 and
3.7% in fiscal year 1998.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at this opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, selecting any
portions of Morgan Stanley's analyses, without considering all analyses, would
create an incomplete view of the process underlying its opinion. In addition,
Morgan Stanley may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting for any particular
analysis described above should not be taken to be Morgan Stanley's view of the
actual value of Augat.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the
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<PAGE>
control of Augat or T&B. The analyses performed by Morgan Stanley are not
necessarily indicative of actual values, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely as
a part of Morgan Stanley's analysis of the fairness of the Exchange Ratio from a
financial point of view to T&B and were provided to the T&B Board in connection
with the delivery of the Morgan Stanley written opinion. The analyses do not
purport to be appraisals or to reflect the prices at which Augat Common Stock
might actually be sold. Because such estimates are inherently subject to
uncertainty, none of Augat, T&B, Morgan Stanley or any other person assumes
responsibility for their accuracy. In addition, as described above, the Morgan
Stanley opinion and presentation to the T&B Board were among the many factors
taken into consideration by the T&B Board in making its determination to approve
the Merger.
T&B retained Morgan Stanley based upon its experience and expertise. Morgan
Stanley is an internationally recognized investment banking and financial
advisory firm. Morgan Stanley, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Morgan Stanley is a
full-service securities firm engaged in securities trading and brokerage
activities, as well as providing investment banking and financial advisory
services. In the ordinary course of its trading and brokerage activities, Morgan
Stanley or its affiliates may at any time hold long or short positions, and may
trade or otherwise effect transactions, for its own account or the accounts of
customers, in securities of Augat or T&B. In the past, Morgan Stanley and its
affiliates have provided financial advisory and financing services to T&B and
have received customary fees for the rendering of these services.
FINANCIAL ADVISOR FEES. Pursuant to a letter agreement dated as of August
30, 1996, T&B, has agreed to pay Morgan Stanley (i) an advisory fee estimated to
be between $150,000 and $250,000 in the event the Merger is not consummated,
(ii) an exposure fee of $1.0 million which is currently payable, and (iii) a
total fee equal to $3.2 million (against which any previously paid fees would be
credited) if the Merger is consummated. In addition to the foregoing
compensation, T&B has agreed to reimburse Morgan Stanley for its expenses,
including reasonable fees and expenses of its counsel, and to indemnify Morgan
Stanley for liabilities and expenses arising out of the engagement and the
transactions in connection therewith, including liabilities under federal
securities laws.
AUGAT
On October 6, 1996, Merrill Lynch delivered its oral opinion, which it
subsequently confirmed in writing on October 7, 1996 and on the date hereof (the
opinion dated as of the date hereof, the "Merrill Lynch Opinion"), to the Augat
Board to the effect that, as of such dates, and based upon the assumptions made,
matters considered and limits of review as set forth in such opinion, the
Exchange Ratio is fair to the holders of Augat Common Stock, other than T&B and
its affiliates, from a financial point of view.
A copy of the Merrill Lynch Opinion, which sets forth the assumptions made,
matters considered and limitations on the scope of review undertaken by Merrill
Lynch, is attached as Appendix C to this Joint Proxy Statement/Prospectus. The
Merrill Lynch Opinion is directed only to the fairness of the Exchange Ratio
from a financial point of view and does not constitute a recommendation to any
Augat stockholder as to how such stockholder should vote at the Augat Special
Meeting. The summary of the Merrill Lynch Opinion set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by reference to the full text
of the Merrill Lynch opinion attached as Appendix C hereto.
In arriving at the Merrill Lynch Opinion, Merrill Lynch (i) reviewed Augat's
Annual Reports, Forms 10-K and related financial information for the five fiscal
years ended December 31, 1995 and Augat's Forms 10-Q and the related unaudited
financial information for the quarterly periods ended March 31, 1996 and June
30, 1996; (ii) reviewed T&B's annual reports, Forms 10-K and related financial
information
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for the five fiscal years ended December 31, 1995 and T&B's Forms 10-Q and the
related unaudited financial information for the quarterly periods ended March
31, 1996 and June 30, 1996; (iii) reviewed certain information, including
financial forecasts, relating to the business, earnings, cash flow, assets and
prospects of Augat and T&B furnished to Merrill Lynch by Augat and T&B,
respectively, and reviewed certain projected synergies resulting from the Merger
prepared by Augat's management (the "Synergies"); (iv) conducted discussions
with members of senior management of Augat and T&B concerning their respective
businesses and prospects; (v) reviewed the historical market prices and trading
activity for Augat Common Stock and T&B Common Stock and compared them with that
of certain publicly traded companies which Merrill Lynch deemed to be reasonably
similar to Augat and T&B, respectively; (vi) compared the results of operations
of Augat and T&B with that of certain companies which Merrill Lynch deemed to be
reasonably similar to Augat and T&B, respectively; (vii) compared the proposed
financial terms of the transactions contemplated by the Merger Agreement with
the financial terms of certain other mergers and acquisitions which Merrill
Lynch deemed to be relevant; (viii) reviewed the Merger Agreement; (ix) reviewed
this Joint Proxy Statement/Prospectus; and (x) reviewed such other financial
studies and analyses and performed such other investigations and took into
account such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.
In preparing the Merrill Lynch Opinion, Merrill Lynch relied on the accuracy
and completeness of all information supplied or otherwise made available to it
by Augat and T&B, and did not independently verify such information or undertake
an independent appraisal of the assets or liabilities of Augat or T&B. With
respect to the financial forecasts furnished by Augat, including, without
limitation, the projected Synergies, Merrill Lynch assumed that they were
reasonably prepared and reflect the best currently available estimates and
judgment of Augat's management as to the expected future financial performance
of Augat and that such forecasts will be realized in the amount and at the times
contemplated thereby. With respect to the financial forecasts furnished by T&B,
Merrill Lynch assumed that they were reasonably prepared and reflect the best
currently available estimates of T&B's management as to the expected future
financial performance of T&B and that such forecasts will be realized in the
amounts and at the times contemplated thereby. Merrill Lynch also assumed, with
Augat's consent, that the Merger will be accounted for as a pooling of interests
under generally accepted accounting principles and that, for federal income tax
purposes, the Merger will qualify as a reorganization under the provisions of
Section 368(a) of the Code. The Merrill Lynch Opinion is necessarily based upon
market, economic and other conditions as they exist on, and can be evaluated as
of, the date of the Merrill Lynch Opinion. The matters considered by Merrill
Lynch in arriving at the Merrill Lynch Opinion are based on numerous
macroeconomic, operating and financial assumptions with respect to industry
performance, general business and economic conditions, many of which are beyond
Augat's or T&B's control. Merrill Lynch noted in the Merrill Lynch Opinion that
on October 1, 1996 Augat received an unsolicited proposal from a third party
concerning a possible acquisition of Augat. The proposal contemplated a purchase
price payable in either cash in the range of $26-28 per share of Augat Common
Stock or such third party's common stock having a market value in the range of
$22-24 per share of Augat Common Stock, which transaction would be subject to a
satisfactory due diligence investigation by the third party and a number of
other conditions.
The following is a summary of the material financial analyses presented by
Merrill Lynch to the Augat Board at their meetings on October 4, 1996 and
October 6, 1996, which analyses were considered by Merrill Lynch in arriving at
its opinion, dated October 7, 1996. Merrill Lynch utilized substantially the
same types of financial analyses in arriving at the Merrill Lynch Opinion.
EXCHANGE RATIO/IMPLIED MULTIPLE ANALYSIS. Merrill Lynch analyzed the impact
of fluctuations in the market price per share of T&B Common Stock on the
exchange ratio in the Merger, the nominal value per share of Augat Common Stock
and various transaction multiples. Using a price per share of T&B Common Stock
of $39.75 (the closing price per share of T&B Common Stock on October 2, 1996)
and applying an exchange ratio of 0.680, Merrill Lynch calculated (i) the
nominal value per share of Augat
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Common Stock to be $27.03 (which represented a premium of 34.3% to the $20.125
price per share of Augat Common Stock on such date), (ii) the implied offer
value for Augat (defined to be the consideration per share multiplied by the
fully diluted number of shares) to be $555.1 million based on approximately
19.967 million shares of Augat Common Stock outstanding, adjusted for
approximately 1.474 million option shares at an average exercise price of
$16.57, (iii) the implied transaction value for Augat (defined to be the implied
offer value plus total debt and minority interests less cash, cash equivalents
and other investments) to be $584.6 million, (iv) the implied transaction value
for Augat as a multiple of Augat's (1) 1996 projected sales to be 0.98x and 1997
projected sales to be 0.95x, and (2) 1996 projected EBITDA to be 7.6x and 1997
projected EBITDA to be 6.6x, (v) the implied offer value for Augat as a multiple
of Augat's 1996 projected net income to be 17.7x and 1997 projected net income
to be 15.1x, and (vi) the percentage ownership of Augat stockholders of T&B
Common Stock following the Merger to be 25.2%. Merrill Lynch performed the same
analysis for a market price per share of T&B Common Stock ranging from $32.00
(the price at which T&B could terminate the Merger pursuant to the terms of the
Merger Agreement) to $47.70. All of the financial projections for Augat used in
the foregoing analysis were supplied by Augat's management.
STOCK TRADING HISTORY. Merrill Lynch reviewed the performance of the
per-share market price and trading volume of Augat Common Stock for the period
from September 3, 1993 through September 30, 1996. The analysis indicated that
for the latest year, the closing market price per share of Augat Common Stock
ranged from $15.00 to $22.13 and that for the latest three years, the closing
market price per share of Augat Common Stock ranged from $15.00 to $24.50.
Merrill Lynch also reviewed the performance of the per-share market price
and trading volume of T&B Common Stock for the period from September 3, 1993 to
September 30, 1996. The analysis indicated that for the latest year, the
intraday market price per share of T&B Common Stock ranged from $31.00 to $41.50
and that for the latest three years, the intraday market price per share of T&B
Common Stock ranged from $28.50 to $41.50.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPARABLE COMPANIES. Merrill Lynch
compared certain financial and operating information and projected financial
performance for Augat with the following seven publicly traded companies that
compete in its industry (the "Public Comparables"). The Public Comparables were:
AMP Incorporated, Amphenol Corporation, Berg Electronics Corp., Hubbell
Incorporated, Methode Electronics, Inc., Molex Incorporated, and T&B. Earnings
estimates for the Public Comparables were based on First Call data (except for
AMP Incorporated and Methode Electronics, Inc. whose earnings were based on
Merrill Lynch research), earnings estimates for Augat were based on management's
projections, and, where applicable, earnings estimates were adjusted to reflect
a calendar year end. First Call is an on-line data service which monitors and
publishes a compilation of earnings estimates produced by selected research
analysts on certain public companies. Merrill Lynch analyzed, among other
things, the market price per share of common stock of each Public Comparable and
Augat as of October 2, 1996 as a multiple of 1996 and 1997 projected earnings
per share ("EPS") and market capitalization (defined to be the market value of
the common stock plus total debt and minority interests less cash, cash
equivalents and other investments) as a multiple of earnings before interest and
taxes ("EBIT") and EBITDA for the latest twelve months ("LTM") reported results.
Applying a range of multiples (which multiples were derived from Augat's
historical and projected financial results and the Public Comparable information
analyzed by Merrill Lynch) of 12.0x to 14.0x to Augat's 1996 projected EPS,
10.0x to 12.0x to Augat's 1997 projected EPS, 7.0x to 8.0x to Augat's LTM EBITDA
and 11.0x to 12.0x to Augat's LTM EBIT, Merrill Lynch estimated the implied
equity value of a share of Augat Common Stock to range between $18.00 and
$22.00.
SELECTED COMPARABLE ACQUISITIONS ANALYSIS. Merrill Lynch also reviewed
certain publicly available information relating to the following nine business
combination transactions: T&B's acquisition of
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Amerace Corporation, Vishay Intertechnology, Inc.'s acquisition of Vitramon,
Incorporated, Berg Electronics Corp.'s acquisition of the connector business of
AT&T, Hicks, Muse, Tate & Furst Inc.'s acquisition of Berg Electronics Corp.,
Vishay Intertechnology, Inc.'s acquisition of Sprague Technologies Inc., Augat's
acquisition of National Industries, Inc., Citicorp Venture Capital Ltd.'s
acquisition of KEMET Electronics Corporation, Kyocera Corporation's acquisition
of AVX Corp. and Eagle Industries, Inc.'s acquisition of Amerace Corporation
(collectively, the "Comparable Acquisitions"). For each such transaction,
Merrill Lynch reviewed the offer value of each such transaction as a multiple of
LTM net income and cash flow of the target company and the transaction value of
each such transaction as a multiple of LTM EBIT, EBITDA and sales of the target
company. Applying a range of multiples (which multiples were derived from the
Comparable Acquisitions information analyzed by Merrill Lynch) of 17.0x to 20.0x
to Augat's LTM and projected 1996 net income, 8.0x to 10.0x to Augat's LTM and
1996 projected cash flow, 6.5x to 7.5x to Augat's LTM and 1996 projected EBITDA,
9.0x to 11.0x to Augat's LTM and 1996 projected EBIT, and 0.9x to 1.0x to
Augat's LTM and 1996 projected sales, Merrill Lynch estimated the implied equity
value per share of Augat Common Stock to range between $23.00 and $27.00.
DISCOUNTED CASH FLOW ANALYSIS. Merrill Lynch performed a discounted cash
flow analysis of Augat based upon estimates of projected financial performance
prepared by Augat's management for the years 1996 to 2001. Utilizing these
projections, Merrill Lynch calculated a range of present values for Augat based
upon the discounted net present value of the sum of (i) the projected stream of
after-tax unlevered free cash flows of Augat (defined as operating cash flow
available after working capital, capital spending and tax requirements) to the
year 2001 and (ii) the projected terminal value of Augat at such year based upon
a range of multiples of Augat's projected EBITDA in such year. Merrill Lynch
performed its analysis utilizing two different sets of projections, both of
which were provided by Augat's management. The "Base Case" was based on Augat's
long term business plan and the "Adjusted Case" was based on Augat's long term
business plan adjusted for the hypothetical loss of Augat's automotive wiring
cash flow in 2001. Applying discount rates ranging from 12.0% to 13.0% and
multiples of terminal EBITDA ranging from 6.5x to 7.5x, Merrill Lynch estimated
the equity value per share of Augat Common Stock to range between (i) $26.00 and
$30.00 per share in the Base Case and (ii) $23.50 and $27.50 per share in the
Adjusted Case.
HISTORICAL EXCHANGE RATIO ANALYSIS. Merrill Lynch compared the historical
ratio of the market price per share of Augat Common Stock to the market price
per share of T&B Common Stock for the period from September 27, 1991 through
October 1, 1996. Merrill Lynch calculated the mean historical ratio between such
market prices for (i) the period from September 1995 to September 1996 to be
0.495, (ii) the period from September 1994 to September 1996 to be 0.539, (iii)
the period from September 1993 to September 1996 to be 0.581 and (iv) the period
from September 1991 to September 1996 to be 0.510.
IMPLIED EXCHANGE RATIOS. Utilizing a discounted cash flow analysis, Merrill
Lynch compared the implied equity values per share of Augat Common Stock to the
implied equity values per share of T&B Common Stock. In connection with this
analysis, Merrill Lynch calculated the implied equity value per share of Augat
Common Stock based on the above described discounted cash flow analysis (e.g.,
the Base Case and the Adjusted Case) under the following three scenarios
relating to the amount of Synergies attributable to Augat's valuation: (i) in
the "No Synergy Case," Augat's value is calculated without credit for any of the
Synergies; (ii) in the "50% Case," Augat is credited with 50% of the Synergies;
and (iii) in the "100% Case", Augat is credited with 100% of the Synergies. All
of the financial projections for Augat relating to the Base Case and the
Adjusted Case (and the related assumptions as to realization of Synergies) were
supplied by Augat's management. In addition, in connection with this analysis,
Merrill Lynch performed a discounted cash flow analysis of T&B based upon
estimates of projected financial performance for T&B prepared by T&B's
management for the years 1996 to 1999 (and extrapolated by Merrill Lynch for the
years 2000 to 2001) and utilizing discount rates ranging from 9.5% to 11.5% and
terminal EBITDA multiples of 8.5x to 9.5x. Utilizing this methodology, Merrill
Lynch calculated the range of implied exchange ratios (i) for the Base Case to
be (a) 0.559 to 0.577 in the No Synergy Case, (b) 0.643 to 0.663 in the 50%
Synergy Case, and (c) 0.728 to 0.749 in the 100% Synergy Case and (ii) for the
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Adjusted Case to be (a) 0.500 to 0.517 in the No Synergy Case, (b) 0.585 to
0.603 in the 50% Synergy Case, and (c) 0.670 to 0.689 in the 100% Synergy Case.
CONTRIBUTION ANALYSIS. Merrill Lynch analyzed and compared the respective
contribution of revenues, EBITDA, EBIT and net income of Augat and T&B (based on
their respective management forecasts) to the combined companies. This analysis
did not take into account any synergies realizable following the Merger. This
analysis indicated that Augat would contribute (i) 23.4% and 24.2%,
respectively, to 1996 and 1997 projected EBITDA of the combined companies and
(ii) 24.1% and 24.3%, respectively, to 1996 and 1997 projected net income of the
combined companies. Using a price per share of T&B Common Stock of $39.75 (the
closing price of T&B Common Stock on October 2, 1996) and applying an exchange
ratio of 0.680, Merrill Lynch calculated that existing stockholders of Augat
would own approximately 25.2% of the combined companies.
PRO FORMA ANALYSIS. Utilizing an exchange ratio of 0.680, projections of
Augat's and T&B's management as to their respective projected financial
performance, and estimates of Augat's management as to the timing and magnitude
of synergies realizable from the transaction, Merrill Lynch reviewed certain pro
forma effects resulting from the Merger, including the projected capitalization
and interest coverage ratio of the combined companies and the accretion or
dilution to Augat's and T&B's stand alone EPS for the years 1997 through 2001.
Assuming that the combined companies realize 50% of the estimated Synergies for
the Merger, Merrill Lynch calculated that the Merger would be accretive to T&B's
stand-alone EPS in amounts ranging from 0.9% to 6.4% for the years 1997 through
2001. Further, Merrill Lynch's analysis indicated that the pro forma earnings of
the combined companies attributable to one share of Augat Common Stock would be
accretive to Augat's stand-alone EPS in amounts ranging from 7.5% to 17.6% for
the years 1997 through 2001.
ANALYSIS OF VALUE TO AUGAT STOCKHOLDERS. Merrill Lynch also analyzed the
implied equity value of a share of Augat Common Stock on a stand-alone basis as
compared to the implied equity value of 0.680 of a share of common stock of the
combined companies. Assuming 50% of the Synergies are realized in the Merger and
applying a multiple of (i) 13.0x to Augat management's EPS projections, Merrill
Lynch estimated the implied equity value per share of Augat Common Stock on a
stand-alone basis for the years 1996 through 1999 to range between $20.28 and
$30.56 and (ii) 16.0x to Augat management's EPS projections for the combined
companies on a pro forma basis, Merrill Lynch estimated the implied equity value
per 0.680 of a share of common stock of the combined companies to range between
$26.87 and $41.56. Merrill Lynch did not address in its opinion the price at
which a share of T&B Common Stock will actually trade subsequent to the
consummation of the Merger.
The summary set forth above does not purport to be a complete description of
the analyses performed by Merrill Lynch. The preparation of a fairness opinion
is a complex process not necessarily susceptible to partial or summary
description. Merrill Lynch believes that its analyses must be considered as a
whole and that selecting portions of its analyses and of the factors considered
by it, without considering all such factors and analyses, could create a
misleading view of the process underlying its analyses set forth in the Merrill
Lynch Opinion. Any estimates incorporated in the analyses performed by Merrill
Lynch and the ranges of valuations resulting from any particular analysis are
not necessarily indicative of actual past or future results or values, which may
be significantly more or less favorable than such estimates or those suggested
by such analysis. Estimated values do not purport to be appraisals and do not
necessarily reflect the prices at which businesses or companies may be sold in
the future. No company in the Public Comparables is identical to Augat.
Accordingly, an analysis of publicly traded comparable companies is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
comparable companies and other factors that could affect the public trading
value of the comparable companies or company to which they are being compared.
The Augat Board selected Merrill Lynch to render a fairness opinion because
Merrill Lynch is an internationally recognized investment banking firm with
substantial expertise in transactions similar to the
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Merger and because it is familiar with Augat and its business. As part of its
investment banking business, Merrill Lynch is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions. Merrill Lynch has provided, in the past, various financial
advisory and/or financial services to Augat, T&B and to the third party acquiror
referenced above that made an unsolicited proposal to acquire Augat and has
received fees for the rendering of such services. In the ordinary course of
Merrill Lynch's business, Merrill Lynch may actively trade the securities of
Augat, T&B and such third party acquiror for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or short
position in such securities.
With respect to Merrill Lynch's services as financial advisor in connection
with the Merger, Augat (i) paid Merrill Lynch a retainer of $100,000, (ii) paid
Merrill Lynch a fee, upon execution of the Merger Agreement, of $1,000,000 and
(iii) has agreed to pay Merrill Lynch a fee, upon consummation of the Merger, of
.75% of the aggregate fair market value of any securities issued and any other
consideration (cash or non-cash) paid to Augat or its stockholders in connection
with the Merger (approximately $4.1 million, assuming a value of $27.03 for
0.680 of a share of T&B Common Stock) against which the fees set forth in
clauses (i) and (ii) of this sentence will be credited. Pursuant to the terms of
an engagement letter dated September 18, 1996, Augat has also agreed to
reimburse Merrill Lynch for its reasonable out-of-pocket expenses, including all
reasonable fees and disbursements of its legal counsel, and to indemnify Merrill
Lynch and certain related persons against certain liabilities, including certain
liabilities under the federal securities laws, arising out of its engagement.
STOCKHOLDERS OF AUGAT SHOULD READ THE OPINION OF MERRILL LYNCH CAREFULLY AND
IN ITS ENTIRETY.
DLJ ENGAGEMENT LETTER
Pursuant to a letter agreement dated September 24, 1996 (the "DLJ Engagement
Letter"), T&B engaged DLJ to act as its co-financial advisor (along with Morgan
Stanley) in connection with the acquisition of Augat. Pursuant to the terms of
the DLJ Engagement Letter, T&B has agreed to pay DLJ upon consummation of the
Merger a transaction fee of $1,000,000. T&B has agreed to reimburse DLJ for its
reasonable out-of-pocket expenses, including reasonable attorney's fees, and to
indemnify DLJ against certain liabilities, including certain liabilities under
the federal securities laws.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements that involve
risks and uncertainties. Forward-looking statements include the information
concerning possible or assumed future results of operations of T&B and Augat set
forth under "-- Opinions of Financial Advisors." To that extent, T&B and Augat
claim the protection of the disclosure liability safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
Readers are cautioned that the following important factors, in addition to those
discussed elsewhere herein and the documents incorporated by reference herein,
could affect the future results of T&B and Augat and cause those results to
differ materially from those expressed in such forward-looking statements:
changes in customer demand for various products that could affect T&B's and
Augat's overall product mixes, margins, plant utilization levels and asset
valuations; economic slowdown in the United States or economic slowdowns in
major offshore markets; effects of significant changes in monetary and fiscal
policies in the United States and abroad which could result in currency
fluctuations; inflationary pressures which could raise interest rates and the
cost of funds to T&B and Augat; unforeseen difficulties in completing identified
restructuring actions begun by T&B in 1994, including disposal of idle
facilities, geographic shifts of production locations and integration of new
distribution facilities; availability and pricing of commodities and materials
needed for the production of products of T&B and Augat; increased downward
pressure on selling prices for products of T&B and Augat; unforeseen
difficulties arising from the integration of the businesses of T&B and Augat;
failure to achieve synergistic results anticipated by combining T&B and Augat
through
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consolidation of administrative and marketing staffs, rationalization of
manufacturing operations and certain insourcing opportunities; changes in
financial results and consequently in equity income from equity investments;
changes in environmental regulations and policies that could impact projections
of remediation expenses; significant changes in governmental policies
domestically and abroad that could create trade restrictions; patent enforcement
issues; tax rate changes and changes in tax treatment of such items as tax
credits, withholding taxes, transfer and other income and expense recognition;
cancellation of contracts between Augat and large OEMs which have a contractual
right to terminate either at their sole discretion or on a change of control of
Augat; and the loss of key Augat personnel due to uncertainties relating to the
consummation of the Merger.
TERMS OF THE MERGER
At the Effective Time, T&B, Merger Sub and Augat will consummate the Merger
in which Merger Sub will be merged with and into Augat and the separate
corporate existence of Merger Sub will thereupon cease. Augat will be the
Surviving Corporation in the Merger, will be a wholly-owned subsidiary of T&B
and will continue to be governed by the laws of the Commonwealth of
Massachusetts. The Merger Agreement provides that the Augat Articles as in
effect immediately prior to the Effective Time will be amended as contemplated
by the Merger Agreement, and such Articles of Organization, as so amended, will
be the Articles of Organization of the Surviving Corporation. The Merger
Agreement provides that the Augat By-laws in effect at the Effective Time will
continue as the by-laws of the Surviving Corporation following the Merger.
Pursuant to the Merger Agreement, at the Effective Time, each share of Augat
Common Stock issued and outstanding immediately prior to the Effective Time
(other than Excluded Augat Common Stock) will be converted into the right to
receive, and become exchangeable for, a fraction of a share of T&B Common Stock
equal to the Exchange Ratio. In the event that the Average Closing Price is less
than $37.50, the Exchange Ratio will be equal to $25.50 divided by the Average
Closing Price, and in the event that the Average Closing Price is more than
$41.50, the Exchange Ratio will be equal to $28.22 divided by the Average
Closing Price.
At the Effective Time all shares of Augat Common Stock will no longer be
outstanding, will be cancelled and retired and will cease to exist, and each
Augat Certificate formerly representing any of such Augat Common Stock (other
than Excluded Augat Common Stock) will thereafter represent only the right to
receive the number of shares of T&B Common Stock determined in accordance with
the Exchange Ratio and the right, if any, to receive cash in lieu of fractional
shares into which such shares of Augat Common Stock have been converted (as
described below) and any distribution or dividend with a record date after the
Effective Time, in each case without interest. Following the Effective Time,
Augat Certificates held by Dissenting Stockholders will, unless such Dissenting
Stockholder's demand for appraisal has been dismissed or withdrawn, represent
only the right to payment of the fair value of the Augat Common Stock formerly
represented by such stockholder's Augat Certificates under the provisions of the
MBCL. See "Dissenters' Rights of Appraisal," "--Appraisal Rights" and Appendix D
to this Joint Proxy Statement/Prospectus.
If at any time during the period between the date of the Merger Agreement
and the Effective Time there is a change in the number of shares of T&B Common
Stock or securities convertible or exchangeable into or exercisable for shares
of T&B Common Stock issued and outstanding as a result of a reclassification,
stock split, stock dividend or distribution, recapitalization, merger,
subdivision, issuer tender or exchange offer or other similar transactions, the
Exchange Ratio will be equitably adjusted.
No fractional shares of T&B Common Stock will be issued in the Merger.
Instead, the Merger Agreement provides that each holder of Augat Common Stock
who would otherwise have been entitled to receive a fractional share of T&B
Common Stock will be entitled to receive a cash payment in lieu thereof,
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in an amount equal to the fraction of a share to which such holder would
otherwise have been entitled multiplied by the Average Closing Price.
EFFECTIVE TIME; CLOSING
The Merger will become effective at the Effective Time. The Merger Agreement
provides that the closing of the Merger (the "Closing") will take place on the
first business day on which the last to be fulfilled or waived of the conditions
set forth in the Merger Agreement is satisfied or waived in accordance with the
Merger Agreement, or on such other date as T&B and Augat may agree. The date
upon which the Closing will occur is herein called the "Closing Date."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Augat, T&B and Merger Sub, certain of which are qualified as to materiality.
Augat represents and warrants to T&B and Merger Sub regarding the following
matters, among others: (i) corporate existence and the capitalization of it and
its subsidiaries; (ii) corporate power and authority to execute, deliver and
perform its obligations under the Merger Agreement and to consummate the Merger;
(iii) that the Merger Agreement and the consummation of the Merger will not
result in a violation of any contract or agreement to which it is a party, or
violate any law, order, regulation, any governmental or non-governmental license
or permit or the organizational documents of it or of its subsidiaries; (iv)
consents, registrations, approvals, permits or authorizations required by any
governmental or regulating authority, agency, commission or body or other
governmental entity ("Governmental Entity"); (v) its financial statements; (vi)
the conduct of its and its subsidiaries' businesses since December 31, 1995;
(vii) any pending or threatened civil, criminal or administrative actions, suits
or proceedings and undisclosed liabilities; (viii) bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, employment,
termination, severance, compensation, medical, health or other plan, agreement,
policy or arrangement that covers employees, directors, former employees or
former directors of Augat and its subsidiaries; (ix) compliance with laws; (x)
environmental matters; (xi) tax matters; (xii) it having taken all necessary
action with respect to all of the outstanding Augat Rights (as defined below
under "Comparison of Certain Rights of Shareholders of T&B and Stockholders of
Augat-- Rights Plans--Augat") so that neither a Stock Acquisition Date nor a
Distribution Date (as each is defined in the Augat Rights Plan (as defined below
under "Comparison of Certain Rights of Shareholders of T&B and Stockholders of
Augat--Rights Plans--Augat")) will occur as a result of the Merger; (xiii) the
absence of any action that would prevent T&B from accounting for the Merger as a
"pooling of interests" or prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code; (xiv)
compliance with laws relating to employment and labor and the absence of any
labor controversies; (xv) intellectual property rights; (xvi) the absence of
product liability claims and recalls; (xvii) its accounts receivable and
inventory; and (xviii) the absence of any liability to any undisclosed person
for any brokerage fees, commissions or finders' fees.
T&B and Merger Sub each represent and warrant to Augat regarding the
following matters, among others: (i) corporate existence and the capitalization
of T&B and its respective subsidiaries; (ii) corporate power and authority to
execute, deliver and perform T&B's obligations under the Merger Agreement and to
consummate the Merger; (iii) that the Merger Agreement and the consummation of
the Merger will not result in a violation of the organizational documents of T&B
or of its subsidiaries; (iv) consents, registrations, approvals, permits or
authorizations required by any Governmental Entity; (v) T&B's financial
statements; (vi) the conduct of its and its subsidiaries' businesses since
December 31, 1995; (vii) the absence of any action that would prevent T&B from
accounting for the Merger as a "pooling of interests" or prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code; (viii) the absence of any liability to any undisclosed person for any
brokerage fees, commissions or finders' fees; and (ix) environmental matters.
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CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME; CERTAIN COVENANTS; ACQUISITION
PROPOSALS
OPERATIONAL COVENANTS
AUGAT
The Merger Agreement provides that, during the period from the date of the
Merger Agreement until the Effective Time, except as otherwise contemplated by
the Merger Agreement, or unless T&B otherwise approves in writing: (i) each of
Augat and its subsidiaries will conduct its business in the ordinary and usual
course and, to the extent consistent therewith, it and its subsidiaries will use
all reasonable best efforts to preserve its business organization intact, to
keep available the services of its integral officers, employees and consultants
and maintain its existing relations, and goodwill with customers, suppliers,
distributors, creditors and lessors; (ii) Augat will not (A) issue, sell,
pledge, dispose of or encumber any capital stock owned by it and any of its
subsidiaries; (B) amend the Augat Articles or Augat By-laws, or amend, modify or
terminate the Augat Rights Plan; (C) split, combine or reclassify its
outstanding shares of capital stock; (D) declare, set aside or pay any dividend
payable in cash, stock or property in respect of any capital stock, other than
its regular quarterly cash dividend of $0.04 per share of Augat Common Stock; or
(E) repurchase, redeem or otherwise acquire, except in connection with the Augat
Stock Plans, or permit any of its subsidiaries to purchase or otherwise acquire,
any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock; (iii) Augat and
its subsidiaries will not (A) issue, sell, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable or exercisable for
options, warrants, calls, commitments or rights or any kind to acquire, any
shares of its capital stock (other than shares of Augat Common Stock issuable
pursuant to options or other rights outstanding on the date of the Merger
Agreement under the Augat Stock Plans and except for shares of Augat Common
Stock to be issued pursuant to Augat's 1993 Employee Stock Purchase Plan, as
amended); (B) other than in the ordinary and usual course of business or in
amounts less than $250,000 individually or $2,000,000 in the aggregate,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any property or assets, or incur or modify any material indebtedness or
other liability; (C) other than in the ordinary and usual course of business,
make any commitments for, make or authorize any capital expenditures, other than
in amounts less than $250,000 individually and $2,000,000 in the aggregate; or
(D) by any means, make any acquisition of, or investment in, assets or stock;
(iv) Augat and its subsidiaries will not terminate, establish, adopt, enter
into, make any new grants or awards under, amend or otherwise modify, any Augat
Compensation and Benefit Plans or increase the salary or wage of any employees
except increases occurring in the ordinary and usual course of business; (v)
Augat and its subsidiaries will not settle or compromise any material claims or
litigation or, except in the ordinary and usual course of business, modify,
amend or terminate any of its material contracts or waive, release or assign any
material rights or claims; (vi) Augat and its subsidiaries will not make any tax
election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be cancelled or terminated except in the ordinary and
usual course of business; and (vii) Augat and its subsidiaries will not take any
action or omit to take any action that would prevent the Merger from qualifying
for "pooling of interests" accounting treatment or as a "reorganization" within
the meaning of Section 368(a) of the Code.
T&B
The Merger Agreement also provides that, during the period from the date of
the Merger Agreement until the Effective Time, except as otherwise contemplated
by the Merger Agreement, or unless Augat otherwise approves in writing, each of
T&B and its subsidiaries will: (i) conduct its business in the ordinary and
usual course and, to the extent consistent therewith, use its respective
reasonable best efforts to preserve its business organization intact, to keep
available the services of its integral officers, employees and consultants and
to maintain its relations and goodwill with customers, suppliers, distributors,
creditors and lessors; and (ii) not (A) amend the T&B Charter or the T&B
By-laws, or (B) declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock, except that T&B may declare and pay
dividends consistent with past practice.
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ACQUISITION PROPOSALS
The Merger Agreement provides that neither Augat nor any of its subsidiaries
nor any of its or its subsidiaries' respective officers and directors will, and
it will use its best efforts to cause it and its subsidiaries' employees, agents
and representatives not to, directly or indirectly (i) initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any Acquisition
Proposal or (ii) have any discussion with or provide any confidential
information or data to any person relating to an Acquisition Proposal or engage
in any negotiations concerning an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal. The Merger
Agreement does not prohibit, however, Augat (A) from complying with Rule 14e-2
under the Exchange Act with regard to an Acquisition Proposal, (B) engaging in
any discussions or negotiations with or providing any information to, any person
in response to an unsolicited bona fide written Acquisition Proposal by any such
person or (C) recommending such an unsolicited bona fide written Acquisition
Proposal to the stockholders, if and only to the extent that, in such case
referred to in clause (B) or (C), (x) the Augat Board concludes in good faith
(after consultation with outside legal counsel) that such action is necessary
for its directors to fulfill their fiduciary duties, and (y) in such case
referred to in clause (C) the Augat Board concludes in good faith (after
consultation with its financial advisor) that such Acquisition Proposal is
reasonably likely to be completed, and would, if consummated, result in a
transaction more favorable to Augat's stockholders than the transaction
contemplated by the Merger Agreement (any such more favorable Acquisition
Proposal being a "Superior Proposal") and (z) prior to providing any information
or data to any person in connection with an Acquisition Proposal by any such
person, the Augat Board receives from such person an executed confidentiality
agreement in terms substantially similar to those contained in the
confidentiality agreement previously entered into between Augat and T&B in
connection with their consideration of the Merger. The Merger Agreement provides
that Augat will notify T&B promptly, but in no event more than 24 hours after
any such inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its representatives, and thereafter will
keep T&B informed, on a current basis, of the status of any such proposals or
offers and the status of any such discussions or negotiations.
CERTAIN REGULATORY MATTERS
HSR
Under the HSR Act and the rules promulgated thereunder, certain
transactions, including the Merger, may not be consummated unless certain
waiting period requirements have been satisfied. T&B and Augat each filed a
Notification and Report Form pursuant to the HSR Act with the DOJ and the FTC on
October 15, 1996. Early termination of the waiting period was granted on
November 5, 1996. At any time before or after the Effective Time, the FTC, the
DOJ or others could take action under the antitrust laws with respect to the
Merger, including seeking to enjoin the consummation of the Merger, to rescind
the Merger or to require divestiture of substantial assets of T&B or Augat.
There can be no assurance that a challenge to the Merger on antitrust grounds
will not be made or, if such a challenge is made, that it would not be
successful.
In addition, the Merger Agreement requires that Augat and T&B each keep the
other apprised of the status of matters relating to completion of the
transactions contemplated by the Merger Agreement, including promptly furnishing
the other with copies of notice or other communications received by T&B or
Augat, as the case may be, from any third party and/or any Governmental Entity
with respect to the Merger. Pursuant to the terms of the Merger Agreement, each
of Augat and T&B shall give prompt notice to the other of any change that is
reasonably likely to result in a material adverse effect on it.
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EMPLOYEE BENEFITS
Pursuant to the Merger Agreement, at the Effective Time each outstanding
Augat Option under the Augat Stock Plans, whether vested or unvested, will be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such Augat Option, that number of shares of T&B Common
Stock equal to the result (rounded down to the nearest whole number), of
multiplying (w) the number of shares of Augat Common Stock subject to an Augat
Option, as the holder of such Augat Option would have been entitled to receive
pursuant to the Merger had such holder exercised such option in full immediately
prior to the Effective Time by (x) the Exchange Ratio at a price per share
(rounded up to the nearest whole cent) equal to (y) the exercise price per share
of Augat Common Stock for the shares of Augat Common Stock otherwise purchasable
pursuant to such Augat Option divided by (z) the Exchange Ratio. The Merger
Agreement further provides that in the case of any Augat Option which is an
incentive stock option under Section 422 of the Code, the option price, the
number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in accordance with the
foregoing, subject to such adjustments as are necessary in order to satisfy the
requirements of Section 424(a) of the Code. At the Effective Time, T&B will
assume the unexercised Augat Options in accordance with the terms of Augat Stock
Plan under which it was issued and the stock option agreement by which it is
evidenced. Approval of the Merger Agreement by the stockholders of Augat and the
T&B shareholders will constitute approval of such assumption of the unexercised
Augat Options, including options issued to directors and executive officers. See
"Interests of Certain Persons in the Merger-- Employee Benefits."
Pursuant to the Merger Agreement, T&B will file a registration statement on
Form S-3 or Form S-8 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the T&B Common Stock subject to the Augat
Options, and will use its best efforts to maintain the effectiveness of such
registration statement.
Pursuant to the Merger Agreement, T&B will for a period of one year after
the Effective Time provide the employees of Augat with benefits under employee
benefit plans which in the aggregate are substantially comparable to those
provided by T&B (as of the date of the Merger Agreement) to employees of T&B
holding comparable positions. Employees of Augat will have the same rights as
other employees of T&B to participate in T&B's stock option plans in accordance
with the terms thereof but subject to certain appropriate transitional
provisions which will be designed (i) to adjust to T&B's annual grant cycle and
(ii) to take into account grants made by Augat in the twelve months prior to the
Effective Time. In addition, pursuant to the Merger Agreement, T&B has agreed to
honor all employee benefit obligations and all employment and severance
agreements entered into prior to the date of the Merger Agreement and identified
to T&B by Augat.
INDEMNIFICATION AND INSURANCE
Pursuant to the Merger Agreement, from and after the Effective Time, T&B
will indemnify, defend and hold harmless each present and former director and
officer of Augat against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, to the
fullest extent that Augat would have been permitted under Massachusetts law and
its articles of organization or by-laws in effect on the date of the Merger
Agreement to indemnify such person. In addition, T&B is obligated to advance
expenses as incurred to the fullest extent permitted under applicable law,
provided that the person to whom expenses are advanced agrees to reimburse T&B
if it is ultimately determined that such person is not entitled to
indemnification by T&B. The Surviving Corporation is obligated to maintain
Augat's D&O Insurance in existence as of the date of the Merger Agreement for a
period of six years after the Effective Time so long as the annual premium
therefor is not in excess of the last annual premium paid prior to the date of
the Merger Agreement, subject to customary increases in
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accordance with industry practice (the "Current Premium"); PROVIDED, HOWEVER, if
the existing D&O Insurance expires, is terminated or cancelled during such
six-year period, the Surviving Corporation will use its reasonable efforts to
obtain D&O Insurance for the remainder of such period for a premium not in
excess of 1.50 times the Current Premium.
CONDITIONS
The respective obligation of T&B, Merger Sub and Augat to effect the Merger
is subject to the satisfaction or waiver at or prior to the Effective Time of
each of the following conditions: (a) the Merger Agreement has been duly
approved by holders of Augat Common Stock, holders of T&B Common Stock and has
been duly approved by the sole stockholder of Merger Sub, and the issuance of
T&B Common Stock pursuant to the Merger has been duly approved by the holders of
T&B Common Stock; (b) the shares of T&B Common Stock issuable to Augat
stockholders pursuant to the Merger Agreement have been authorized for listing
on the NYSE upon official notice of issuance; (c) the waiting period applicable
to the consummation of the Merger under the HSR Act has expired or been
terminated and all filings required to be made prior to the Effective Time and
all consents, approvals, and authorizations required to be obtained prior to the
Effective Time from any Governmental Entity (collectively, "Governmental
Consents") in connection with the execution and delivery of the Merger Agreement
and the transactions contemplated thereby have been made or obtained; (d) no
court or Governmental Entity of competent jurisdiction has enacted, issued,
promulgated, enforced or entered any statute, rule or regulation, judgment,
decree or injunction that is in effect and restrains, enjoins or otherwise
prohibits consummation of the transactions contemplated by the Merger Agreement
(collectively, an "Order"), and no Governmental Entity has instituted any
proceeding or threatened to institute any proceeding seeking any such Order; (e)
the Registration Statement, of which this Joint Proxy Statement/Prospectus is a
part, has become effective under the Securities Act, and no stop order
suspending such effectiveness will have been issued, and no proceedings for that
purpose will have been initiated or be threatened by the SEC; and (f) T&B has
received all state securities and "blue sky" permits and approvals necessary to
consummate the transactions contemplated by the Merger Agreement.
In addition, the obligations of T&B and Merger Sub to effect the Merger are
also subject to the satisfaction or waiver by T&B at or prior to the Effective
Time of the following conditions: (a) the representations and warranties of
Augat set forth in the Merger Agreement are true and correct in all material
respects as of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date, and T&B has received a certificate signed on behalf of Augat by an
executive officer of Augat to such effect; (b) Augat has performed in all
material respects all obligations required to be performed by it under the
Merger Agreement at or prior to the Closing Date, and T&B has received a
certificate signed on behalf of Augat by an executive officer of Augat to such
effect; (c) Augat has obtained the consent or approval of each person whose
consent or approval will be required under any material contract to which Augat
or any of its subsidiaries is a party, except those for which the failure to
obtain such consent or approval, individually or in the aggregate, is not
reasonably likely to have a material adverse effect on Augat or is not
reasonably likely to materially adversely affect the ability of Augat to
consummate the transactions contemplated by the Merger Agreement; (d) T&B has
received the opinion of Sullivan & Cromwell, special counsel to T&B, dated the
Closing Date, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code, and that each of T&B, Merger Sub and Augat will be a party to that
reorganization within the meaning of Section 368(b) of the Code; (e) the rights
issued under the Augat Rights Agreement will have expired; (f) T&B will have
received a letter from each person identified as an affiliate of Augat pursuant
to the Merger Agreement to the effect specified in the Merger Agreement; and (g)
T&B will have received from KPMG Peat Marwick LLP a customary "comfort" letter
as well as a letter to the effect that the Merger will qualify for "pooling of
interests" accounting treatment and will have received a copy of the "pooling of
interests" letter to be delivered to Augat by Deloitte & Touche LLP.
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Further, the obligation of Augat to effect the Merger is also subject to the
satisfaction or waiver by Augat at or prior to the Effective Time of the
following conditions: (a) the representations and warranties of T&B and Merger
Sub set forth in the Merger Agreement are true and correct in all material
respects as the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date, and Augat has received a certificate signed on behalf of T&B and Merger
Sub by an executive officer of T&B to such effect; (b) each of T&B and Merger
Sub has performed in all material respects all obligations required to be
performed by it under the Merger Agreement at or prior to the Closing Date, and
Augat has received a certificate signed on behalf of T&B and Merger Sub by an
executive officer of T&B to such effect; (c) Augat has received the opinion of
Hale and Dorr, counsel to Augat, dated the Closing Date, to the effect that the
Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that each of T&B, Merger
Sub and Augat will be a party to that reorganization within the meaning of
Section 368(b) of the Code; and (d) Augat will have received from Deloitte &
Touche LLP a customary "comfort" letter as well as a letter to the effect that,
with respect to matters relating to Augat, the merger will qualify for "pooling
of interests" accounting treatment and will have received a copy of the "pooling
of interests" letter to be delivered to T&B by KPMG Peat Marwick LLP.
MODIFICATION OR AMENDMENT; WAIVER OF CONDITIONS
The Merger Agreement provides that, subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties to the Merger
Agreement may modify or amend the Merger Agreement by written agreement executed
and delivered by duly authorized officers of the respective parties. The Merger
Agreement also provides that the conditions to each of the parties' obligations
to consummate the Merger are for the sole benefit of each such party and may be
waived by such party in whole or in part to the extent permitted by applicable
law.
TERMINATION
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time (a) whether before or after any requisite
approval by the shareholders of T&B or the stockholders of Augat, by mutual
written consent of T&B, Merger Sub and Augat, by action of the T&B Board, the
Merger Sub Board and the Augat Board, or (b) by action of either the T&B Board
or the Augat Board if (i) the Merger has not been consummated by March 31, 1997,
unless the party seeking to terminate has materially breached its obligations
under the Merger Agreement in any manner that proximately contributed to the
Merger not being consummated by such date; (ii) the stockholders of Augat fail
to approve the matters required to be approved by such stockholders at the Augat
Special Meeting; (iii) the shareholders of T&B fail to approve the matters
required to be approved by such shareholders at the T&B Special Meeting; or (iv)
any Order permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger has become final and non-appealable.
Further, the Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time by action of the Augat Board
if (i) Augat is not in material breach of any of the terms of the Merger
Agreement, (ii) the Augat Board authorizes Augat to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal and
Augat notifies T&B in writing that Augat intends to enter into such agreement
and sets forth the material terms of the proposed transaction and (iii) Augat,
prior to such termination pays to T&B any required termination fees (as
described under "--Certain Termination Fees"). Augat has agreed that it will not
enter into any such binding written agreement until twenty-four hours after
providing the required notice to T&B. The Merger Agreement may also be
terminated and the Merger abandoned at any time prior to the effective time by
action of the Augat Board if the T&B Board has withdrawn or adversely modified
its approval or recommendation of the Merger Agreement, or there has been a
material breach by T&B or Merger Sub of any representation, warranty, covenant
or agreement contained in the Merger Agreement that is not
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curable or, if curable, is not cured within 30 days after written notice of such
breach is given by Augat to T&B or Merger Sub.
In addition, the Merger Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time by action of the T&B Board if (i) the
Augat Board has withdrawn or adversely modified its approval or recommendation
of the Merger Agreement; (ii) there has been a material breach by Augat of any
representation, warranty, covenant or agreement contained in the Merger
Agreement that is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by T&B to Augat; or (iii) if the Average
Closing Price is below $32.00.
In the event of termination of the Merger Agreement, the Merger Agreement
(other than certain provisions of the Merger Agreement relating to expenses and
confidentiality and other than as described below under "--Certain Termination
Fees") will become void and of no effect with no liability on the part of any
party thereto (or of any of their respective directors, offices, employees,
agents, legal and financial advisors or other representatives); PROVIDED,
HOWEVER, that no such termination shall relieve any party thereto from any
liability for any breach of the Merger Agreement.
CERTAIN TERMINATION FEES
The Merger Agreement provides that in the event that at a time when T&B is
not in material breach of the Merger Agreement (i) an Acquisition Proposal is
made to Augat or its stockholders or any person publicly announces an intention
to make an Acquisition Proposal with respect to Augat and thereafter the Merger
Agreement is terminated pursuant to either (A) the right of either party to
terminate for the failure of Augat's stockholders to approve the matters
required to be approved by such stockholders at the Augat Special Meeting or (B)
the right of T&B to terminate because the Augat Board has withdrawn or adversely
modified its approval or recommendation of the Merger Agreement and, within nine
months following such termination, (x) Augat enters into an agreement with
respect to an Acquisition Proposal with any person or entity other than T&B
(such person being an "Other Acquiror") or (y) an Other Acquiror becomes the
beneficial owner (as such term is defined in Rule 13d-3 of the Exchange Act) of
a majority of the outstanding shares of capital stock entitled to vote in the
election of directors of Augat (each such transaction set forth being an "Other
Transaction"), in either case at a per-share price of Augat Common Stock of
$25.50 (subject to equitable adjustment) or more; then Augat will within two
business days after the occurrence of an Other Transaction pay T&B a termination
fee of $15,000,000 (the "Termination Fee") and will promptly, but in no event
later than two business days after being notified of such by T&B, pay all of the
documented out-of-pocket charges and expenses, including those of the Exchange
Agent, incurred by T&B or Merger Sub in connection with the Merger Agreement and
the transactions contemplated by the Merger Agreement (together, the "T&B
Expenses") up to a maximum amount of $1,500,000. In addition, if the Merger
Agreement is terminated by the Augat Board, pursuant to its right to terminate
when Augat is not in material breach of the terms of the Merger Agreement, and
the Augat Board authorizes Augat to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal, then Augat will
promptly, but in no event later than two business days after the date of such
termination, pay T&B the Termination Fee and shall promptly, but in no event
later than two business days after being notified of such by T&B, pay all of the
T&B Expenses up to a maximum amount of $1,500,000.
EXPENSES
Except as provided above under "--Certain Termination Fees," pursuant to the
Merger Agreement, whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Merger Agreement and the Merger will be
paid by the party incurring such cost or expense, except that expenses incurred
in connection with the filing fee for the Registration Statement and printing
and mailing this Joint Proxy Statement/Prospectus and the Registration Statement
will be shared equally by T&B and Augat.
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ACCOUNTING TREATMENT
T&B and Augat believe that the Merger will qualify as a "pooling of
interests" for accounting and financial reporting purposes, and have been so
advised by KPMG Peat Marwick LLP and Deloitte & Touche LLP (Augat having been so
advised with respect only to matters relating to Augat), their respective
independent public accountants. Under this method of accounting, T&B's
consolidated financial statements from the Effective Time will include the
assets, liabilities and results of operations of Augat and all prior periods
will be restated on a combined basis. It is anticipated that upon consummation
of the Merger, the fiscal year of the combined company will end on the Sunday
closest to December 31 each year.
Consummation of the Merger is conditioned upon the receipt by T&B of a
letter from KPMG Peat Marwick LLP, stating that the Merger, in its opinion, will
qualify as a "pooling of interests" for accounting purposes. Consummation of the
Merger is also conditioned upon receipt by Augat of a letter from Deloitte &
Touche LLP to the effect that, with respect to matters relating only to Augat,
the Merger will qualify for pooling of interests accounting treatment. See "--
Conditions" and "Unaudited Pro Forma Condensed Consolidated Financial
Statements."
RESALE OF T&B CAPITAL STOCK
The shares of T&B Common Stock issuable to stockholders of Augat in
connection with the Merger have been registered under the Securities Act. Such
shares may be traded freely and without restriction by those stockholders not
deemed to be "affiliates" of T&B or Augat as that term is defined in the rules
under the Securities Act and Accounting Series Releases 130 and 135, as amended,
of the SEC. "Affiliates" are generally defined as persons who control, are
controlled by or are under common control with Augat at the time of the Augat
Special Meeting. Shares of T&B Common Stock received by those stockholders of
Augat who are deemed to be "affiliates" of Augat may be resold without
registration as provided for by Rules 144 or 145, or as otherwise permitted,
under the Securities Act. This Joint Proxy Statement/Prospectus does not cover
any resales of T&B Common Stock received by affiliates of Augat, or by certain
of their family members or related interests.
Pursuant to the Merger Agreement, each of T&B and Augat will, prior to the
Augat Special Meeting, deliver to the other a list of names and addresses of
those persons whom such party believes to be, as of the time of the Augat
Special Meeting, "affiliates" of such party within the meaning of Rule 145 under
the Securities Act and for the purposes of applicable interpretations regarding
the "pooling of interests" method of accounting. Each of T&B and Augat has
agreed to exercise its best efforts to deliver or cause to be delivered to the
other, prior to the date of the Augat Special Meeting, from each affiliate
identified by T&B or Augat, as the case may be, a letter dated as of the date of
the Augat Special Meeting in which such person will agree not to sell, pledge,
transfer or otherwise dispose of the shares of T&B Common Stock to be received
by such person in the Merger or otherwise owned by such person, except in
compliance with the applicable provisions of the Securities Act and, if the
Merger qualifies for "pooling of interests" accounting treatment, until such
time as financial results covering at least 30 days of combined operations of
T&B and Augat have been published.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of Augat's Board, stockholders should be
aware that certain members of Augat's management and of the Augat Board have
certain interests in the Merger that are in addition to the interests of
stockholders generally and which may create potential conflicts of interest.
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EMPLOYEE BENEFITS
As discussed under "-- Employee Benefits," Augat Options will be converted
into options to acquire T&B Common Stock and employees of Augat who become
employees of T&B will have certain rights to participate in the employee benefit
plans of T&B.
In addition, the stock option agreements previously entered into with
officers and directors of Augat pursuant to the Augat 1989 Stock Plan, the Augat
1994 Stock Plan and the Augat 1996 Stock Plan, provide that all unexercised
options will vest and be immediately exercisable upon the consummation of the
Merger. As of December 11, 1996, options to purchase 444,077 shares of Augat
Common Stock held by 15 officers and six directors with exercise prices ranging
from $11.75 to $23.25 will vest pursuant to these plans. In addition, as
described more fully below, 15 officers have entered into agreements with Augat
(the "Change in Control Agreements") which provide under certain circumstances
for the vesting of all options and the removal of restrictions on restricted
stock in the event of a "Change of Control" (as defined in the Change in Control
Agreements). As of December 11, 1996, options to purchase 92,436 shares of Augat
Common Stock held by 13 officers with exercise prices ranging from $11.75 to
$23.75 will vest pursuant to the Change in Control Agreements, under certain
circumstances. After taking this vesting into consideration, the directors and
executive officers of Augat will hold vested options for 731,100 shares of Augat
Common Stock with exercise prices ranging from $9.375 to $23.75. The
consummation of the Merger will cause the removal of restrictions on 60,500
shares of Augat Common Stock and the issuance of approximately 36,000 shares of
Augat Common Stock pursuant to the Directors Deferred Compensation Plan.
The Change in Control Agreements provide certain benefits upon the
occurrence of a Change in Control. The Merger will constitute a Change in
Control for purposes of the Change in Control Agreements. Each executive officer
of Augat, other than Messrs. Lemasters and Joseph, whose employment is
terminated after the occurrence of a Change in Control for a reason other than
"Cause" (as defined in the Change in Control Agreements) or disability or who
terminates employment for "Good Reason" (as defined in the Change in Control
Agreements), during the thirty-six month period following the Change in Control,
will receive severance benefits determined by multiplying (a) the number of full
calendar months remaining after the date of termination of employment of the
executive officer in the thirty-six month period that commenced with the date of
the Change in Control, but not less than 12, by (b) the sum of (i) one-twelfth
of the executive officer's base pay in effect upon the occurrence of the Change
in Control or the date of termination of employment, whichever is larger, and
(ii) one-twelfth of the aggregate cash bonuses paid or awarded to the executive
officer in respect of the fiscal year of Augat, out of the five fiscal years of
Augat immediately preceding the date of termination, as to which the aggregate
cash bonuses paid or awarded were the largest. In addition, all options vest and
become fully exercisable and all restrictions on restricted stock lapse upon the
occurrence of a Change in Control in the event of termination of employment by
the Company without Cause or by the executive officer for Good Reason during the
thirty-six month period following the Change in Control. Also, life, disability,
accident and health insurance benefits will be continued for 12 months. No
mitigation of amounts received will be required except that the benefit
continuation is not required if such benefits are received from another
employer. Messrs. Lemasters and Joseph have similar contracts, except that the
amount received by each of them upon termination of employment after the
occurrence of a Change in Control for reasons other than Cause or disability or
by them for Good Reason will be $450,000. The severance payments are payable
without regard to whether the deductibility of such payments is limited by
Section 280G of the Code or whether the payments would subject the executive
officer to an excise tax under Section 4999 of the Code, except that severance
benefits will be reduced if reduction will increase the after-tax value of such
payments (taking into account the excise tax and all other federal taxes).
The Augat Executive Deferred Compensation Plan and the Augat Supplemental
Employee Retirement Plan will be terminated effective as of the Effective Time.
This will result in the payment of approximately $5,559,254 to 13 executive
officers. In addition, the Augat 1996 Bonus Plan has been
48
<PAGE>
amended to provide that any eligible employee who is employed at the Effective
Time will be eligible to receive a bonus for 1996.
The Augat Directors' Pension Plan will terminate automatically upon the
consummation of the Merger, causing the present value of benefits payable under
that plan to become payable immediately in a lump sum in cash. This will result
in the payment of approximately $490,000 to a total of 4 current directors. In
addition, amounts deferred under the Augat Deferred Compensation Plan for
Directors will become payable to directors who cease to be directors as a result
of the Merger. Amounts deferred under the Augat Deferred Compensation Plan for
Directors are credited in the form of notional stock units, each such unit
having the value of one share of Augat Common Stock. The number of notional
stock units deferred for these 4 current directors is 35,147. Amounts deferred
will be paid in the form of T&B Common Stock. The number of shares of T&B Common
Stock to be paid will be determined by multiplying the number of shares of Augat
Common Stock payable to each such current or former director by the Exchange
Ratio.
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
Pursuant to the Merger Agreement, from and after the Effective Time, T&B
will indemnify, defend and hold harmless each present and former director and
officer (when acting in such capacity) of Augat against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, to the fullest extent that Augat would have been
permitted under Massachusetts law and the Augat Articles or Augat By-laws in
effect on the date of the Merger Agreement to indemnify such person. The
Surviving Corporation is obligated to maintain Augat's D&O Insurance for a
period of six years after the Effective Time so long as the annual premium
therefor is not in excess of the Current Premium; PROVIDED, HOWEVER, if the
existing D&O Insurance expires, is terminated or cancelled during such six-year
period, the Surviving Corporation will use its reasonable efforts to obtain D&O
Insurance for the remainder of such period for a premium not in excess of 1.50
times the Current Premium.
BOARD OF DIRECTORS
Pursuant to the Merger Agreement, T&B has agreed to promptly increase the
size of the T&B Board at the Effective Time in order to enable Thomas C.
McDermott and John N. Lemasters to be appointed to the T&B Board and to use its
best efforts to cause Messrs. McDermott and Lemasters to be elected as directors
by the shareholders of T&B for at least one year after the next annual meeting
of the shareholders of T&B following their appointment to the T&B Board.
APPRAISAL RIGHTS
Pursuant to the Merger Agreement, no Dissenting Stockholder will be entitled
to shares of T&B Common Stock or cash in lieu of fractional shares thereof or
any dividends or other distributions unless and until the holder thereof fails
to perfect or effectively withdraws or loses such holder's right to dissent from
the Merger under the MBCL, and any Dissenting Stockholder will be entitled to
receive only the payment provided by either Section 89 or Section 92 of the MBCL
with respect to Augat Common Stock owned by such Dissenting Stockholder. If any
person who otherwise would be deemed a Dissenting Stockholder fails to properly
perfect or effectively withdraws or loses the right to dissent with respect to
any Augat Common Stock, such Augat Common Stock will thereupon be treated as
though such Augat Common Stock had been converted into shares of T&B Common
Stock pursuant to the Merger Agreement. Pursuant to the Merger Agreement, Augat
has agreed to provide T&B with (i) prompt notice of any written demands for
appraisal, attempted withdrawals of such demands, and any other instruments
served pursuant to applicable law received by Augat relating to stockholders'
rights of appraisal and (ii) the
49
<PAGE>
opportunity to direct all negotiations and proceedings with respect to demand
for appraisal under the MBCL. Augat has agreed not to, except with the prior
written consent of T&B, voluntarily make any payment with respect to any demands
for appraisals of Dissenting Stockholders, offer to settle or settle any such
demands or approve any withdrawal of any such demands. See "Dissenters' Rights
of Appraisal." Holders of T&B Common Stock will not be entitled to appraisal
rights with respect to the matters to be voted on at the T&B Special Meeting.
EXCHANGE OF CERTIFICATES
The Merger Agreement provides that promptly after the Effective Time (but in
no event more than five days thereafter), the Surviving Corporation will cause
an exchange agent selected by T&B with Augat's prior approval (the "Exchange
Agent") to mail to each holder of record of Augat Common Stock (other than
holders of Excluded Augat Common Stock) (i) a letter of transmittal specifying
that delivery shall be effected only upon delivery of the Augat Certificates to
the Exchange Agent and (ii) instructions for exchanging the Augat Certificates
for (A) certificates representing shares of T&B Common Stock and (B) any unpaid
dividends and other distributions and cash in lieu of fractional shares. Upon
surrender of an Augat Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, the holder of such Augat Certificate
will be entitled to receive in exchange therefor (x) a certificate representing
that number of whole shares of T&B Common Stock that such holder is entitled to
receive pursuant to the terms of the Merger Agreement and (y) a check in the
amount (after giving effect to any required tax withholdings) of (A) any cash in
lieu of a fractional share plus (B) any unpaid non-stock dividends and any other
dividends or other distributions that such holder has the right to receive
pursuant to the terms of the Merger Agreement, and the Augat Certificate so
surrendered will be cancelled. No interest will be paid or accrued on any amount
payable upon due surrender of the Augat Certificates.
The Merger Agreement further provides that whenever a dividend or other
distribution is declared by T&B in respect of T&B Common Stock, the record date
for which is at or after the Effective Time, that declaration shall include
dividends or other distributions in respect of all shares issuable pursuant to
the Merger Agreement. No dividends or other distributions in respect of the T&B
Common Stock will be paid to any holder of any unsurrendered Augat Certificate
until such Augat Certificate is surrendered for exchange in accordance with the
Merger Agreement. Subject to the effect of applicable laws, following surrender
of any such Augat Certificate, there shall be issued and/or paid to the holder
of the certificates representing whole shares of T&B Common Stock issued in
exchange therefor, without interest, (A) at the time of such surrender, the
dividends or other distributions with a record date after the Effective Time
which are payable at such time with respect to such whole shares of T&B Common
Stock and which have not been previously paid and (B) at the appropriate payment
date, the dividends or other distributions payable with respect to such whole
shares of T&B Common Stock with a record date after the Effective Time but with
a payment date subsequent to surrender. For purposes of dividends or other
distributions in respect of shares of T&B Common Stock, all shares of T&B Common
Stock to be issued pursuant to the Merger shall be deemed issued and outstanding
as of the Effective Time.
In addition, pursuant to the Merger Agreement, holders of unsurrendered
Augat Certificates shall be entitled to vote at any meeting of T&B shareholders
after the Effective Time the number of whole shares of T&B Common Stock
represented by such Augat Certificates, regardless of whether such holders have
exchanged their Augat Certificates.
After the Effective Time, there will be no transfers on the stock transfer
books of Augat of shares of Augat Common Stock.
Pursuant to the Merger Agreement, in the event any Augat Certificate is
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Augat Certificate to be lost, stolen or destroyed and the
posting by such person of a bond in the form customarily required by T&B as
indemnity against any claim that may be made against it with respect to such
Augat Certificate, the
50
<PAGE>
Exchange Agent will issue in exchange for such lost, stolen or destroyed Augat
Certificate the shares of T&B Common Stock, any unpaid dividends or other
distributions and any cash payment in lieu of a fractional share in respect
thereof issuable and/or payable upon due surrender of and deliverable in respect
of Augat Common Stock represented by such Augat Certificate pursuant to the
Merger Agreement, in each case, without interest.
AUGAT DIVIDENDS
Pursuant to the Merger Agreement, Augat has agreed to coordinate with T&B
the declaration, setting of record dates and payment dates of dividends on Augat
Common Stock so that holders of shares of Augat Common Stock do not receive
dividends on both shares of Augat Common Stock and T&B Common Stock which will
be received in the Merger in respect of any calendar quarter or fail to receive
a dividend on either shares of Augat Common Stock or T&B Common Stock which will
be received in the Merger in respect of any calendar quarter.
NEW YORK STOCK EXCHANGE LISTING; DELISTING OF AUGAT COMMON STOCK
Pursuant to the Merger Agreement, T&B will use its best efforts to cause the
shares of T&B Common Stock to be issued in the Merger to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the Closing Date.
The Surviving Corporation shall use its best efforts to cause Augat Common Stock
to be delisted from the NYSE and deregistered under the Exchange Act as soon as
practicable following the Effective Time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following summary discusses the material federal income tax consequences
of the Merger. The summary is based upon the Code, applicable Treasury
Regulations thereunder and administrative rulings and judicial authority as of
the date hereof. All of the foregoing are subject to change, possibly with
retroactive effect, and any such change could affect the continuing validity of
the discussion. The discussion assumes that holders of shares of Augat Common
Stock hold such shares as a capital asset. Further, the discussion does not
address the tax consequences that may be relevant to a particular stockholder
subject to special treatment under certain federal income tax laws, including,
without limitation, dealers in securities, banks, insurance companies, tax
exempt organizations, non-United States persons, stockholders who acquired
shares of Augat Common Stock through the exercise of options or otherwise as
compensation or through a tax qualified retirement plan, and holders of options
and performance share units granted under Augat's benefit plans. This discussion
does not address any consequences arising under the laws of any state, locality
or foreign jurisdiction.
Neither Augat nor T&B has requested a ruling from the Internal Revenue
Service ("IRS") with regard to any of the federal income tax consequences of the
Merger, and the opinions of counsel as to such federal income tax consequences
set forth below will not be binding on the IRS.
GENERAL
As of the date hereof, it is intended that the Merger will constitute a
reorganization pursuant to Section 368(a) of the Code and that, for federal
income tax purposes, no gain or loss will be recognized by T&B, Augat or Merger
Sub as a result of the Merger. The respective obligations of the parties to
consummate the Merger are conditioned on (i) the receipt by T&B of an opinion of
Sullivan & Cromwell dated the Closing Date confirming that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code and
that each of T&B, Augat and Merger Sub will be a party to the reorganization
within the meaning of Section 368(b) of the Code and (ii) the receipt by Augat
of an opinion of Hale and Dorr dated the Closing Date confirming that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Code and that each of T&B, Augat and Merger Sub will
51
<PAGE>
be a party to the reorganization within the meaning of Section 368(b) of the
Code. Such opinions will be based upon, among other things, (i) representations
of Augat and T&B customarily given in transactions of this type and (ii) the
assumption that the Merger will be consummated in accordance with the terms of
the Merger Agreement.
The discussion below summarizes the material federal income tax consequences
of the Merger, assuming that the Merger will qualify as a reorganization within
the meaning of Section 368(a) of the Code.
CONSEQUENCES TO AUGAT STOCKHOLDERS
Under the reorganization provisions of the Code, no gain or loss will be
recognized by holders of Augat Common Stock with respect thereto as a result of
the surrender of their shares of Augat Common Stock solely in exchange for
shares of T&B Common Stock pursuant to the Merger (except as discussed below
with respect to cash received in lieu of fractional shares). The aggregate tax
basis of the shares of T&B Common Stock received in the Merger (including any
fractional shares of T&B Common Stock deemed received) will be the same as the
aggregate tax basis of the shares of Augat Common Stock surrendered in exchange
therefor in the Merger. The holding period of the shares of T&B Common Stock
received in the Merger (including the holding period of fractional shares of T&B
Common Stock deemed received) will include the holding period of shares of Augat
Common Stock surrendered in exchange therefor.
FRACTIONAL SHARES
If a holder of shares of Augat Common Stock receives cash in lieu of a
fractional share interest in T&B Common Stock in the Merger, such fractional
share interest will be treated as having been distributed to the holder, and
such cash amount will be treated as having been received in redemption of the
fractional share interest. Under Section 302 of the Code, if such redemption is
"not essentially equivalent to a dividend" after giving effect to the
constructive ownership rules of the Code, the holder will generally recognize
capital gain or loss equal to the cash amount treated as having been received
for the fractional share of T&B Common Stock reduced by the portion of the
holder's tax basis in shares of Augat Common Stock surrendered that is allocable
to the fractional share interest in T&B Common Stock. Under these rules, a
minority stockholder of Augat should recognize capital gain or loss on the
receipt of cash in lieu of a fractional share interest in T&B Common Stock. The
capital gain or loss will be long-term capital gain or loss if the holder's
holding period in the fractional share interest is more than one year.
DISSENTERS' SHARES
Holders of Augat Common Stock who exercise appraisal rights will be treated
as receiving the proceeds of the appraisal procedures in redemption of the
shares of Augat Common Stock. This deemed redemption will be governed by Section
302 of the Code, with the result that the difference between the amount realized
and the holder's adjusted federal income tax basis in the shares of Augat Common
Stock should be treated as capital gain or loss if, under Section 302 of the
Code, such deemed redemption is "substantially disproportionate" with respect to
the holder that exercises the appraisal rights or is "not essentially equivalent
to a dividend." Each holder of Augat Common Stock who contemplates exercising
appraisal rights should consult a tax advisor as to the possibility that all or
a portion of the payment received pursuant to the appraisal procedures would be
treated as dividend income.
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<PAGE>
CONSEQUENCES TO AUGAT AND T&B
None of Augat, T&B or Merger Sub will recognize gain or loss as a result of
the Merger.
THE PRECEDING DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT TO THE MERGER. THUS, AUGAT
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS,
THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.
53
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THOMAS &
BETTS CORPORATION AND AUGAT INC.
The following statements present certain unaudited historical data of T&B as
of September 29, 1996 and for the nine months ended September 29, 1996 and
October 1, 1995 and for Augat as of September 30, 1996 and for the nine months
ended September 30, 1996 and 1995, and certain historical data for both
companies for each of the fiscal years in the three-year period ended December
31, 1995. The unaudited interim financial data, and certain unaudited pro forma
financial data give effect to the Merger as if it had been consummated at the
beginning of the periods presented for the statements of earnings and as of
September 29, 1996 for balance sheet purposes, in accordance with pooling of
interests accounting principles. Transaction costs associated with the Merger
are reflected only in the pro forma consolidated balance sheet and have been
excluded from the pro forma consolidated statements of earnings. The summary
financial data should be read in conjunction with the separate historical
consolidated financial statements and notes thereto of T&B and Augat, which are
incorporated herein by reference. See "Incorporation of Certain Information By
Reference." The unaudited pro forma data have been included for comparative
purposes only and do not purport to be indicative of the results of operations
or financial position which actually would have been obtained if the Merger had
been effected at the beginning of the periods presented or of the financial
position or results of operations which may be obtained in the future.
On January 2, 1996, T&B acquired all the outstanding stock of Amerace for
$212.5 million in cash (originally $220.6 million, subsequently reduced through
post-closing adjustments). Amerace is a manufacturer of electrical products for
utility and industrial markets. This acquisition was accounted for using the
purchase method of accounting. On May 6, 1996, T&B sold the trade name, product
lines and certain other assets of the Hendrix Wire & Cable business, all of
which had been acquired with the Amerace acquisition. The results of Amerace,
excluding Hendrix, have been included on a pro forma basis in the following 1995
financial statements.
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<PAGE>
THOMAS & BETTS CORPORATION AND AUGAT INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996 (A)
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THOMAS & BETTS AUGAT(B) PRO FORMA
--------------- ---------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 59,884 $ 45,494 $ 105,378
Marketable securities............................................... 72,083 -- 72,083
Receivables, net.................................................... 273,035 97,882 370,917
Inventories......................................................... 256,406 102,947 359,353
Other current assets................................................ 23,727 9,972 33,699
--------------- ---------- ------------
Total current assets.............................................. 685,135 256,295 941,430
--------------- ---------- ------------
Net property, plant and equipment..................................... 407,197 139,695 546,892
Intangible assets, net................................................ 457,746 37,800 495,546
Investments and other assets.......................................... 98,183 20,437 118,620
--------------- ---------- ------------
Total assets.......................................................... $ 1,648,261 $ 454,227 $2,102,488
--------------- ---------- ------------
--------------- ---------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings and current maturities of
long-term debt.................................................... $ 58,070 $ 10,015 $ 68,085
Accounts payable.................................................... 123,073 41,739 164,812
Accrued liabilities................................................. 119,970 36,607 167,577(g)
Income taxes........................................................ 14,107 4,277 18,384
Dividends payable................................................... 11,307 -- 11,307
--------------- ---------- ------------
Total current liabilities......................................... 326,527 92,638 430,165
--------------- ---------- ------------
Long-term debt, net................................................... 586,288 74,578 660,866
Other long-term liabilities........................................... 88,748 -- 88,748
Deferred income taxes................................................. 4,375 14,436 18,811
Shareholders' equity:
Common stock........................................................ 193,894 86,251 280,145
Retained earnings................................................... 446,720 167,596 603,316(g)(j)
Unrealized gain on marketable securities............................ 577 -- 577
Foreign currency translation adjustment............................. 1,132 19,768 20,900
Other............................................................... -- (1,040) (1,040)
--------------- ---------- ------------
Total shareholders' equity........................................ 642,323 272,575 903,898
--------------- ---------- ------------
Total liabilities and shareholders' equity............................ $ 1,648,261 $ 454,227 $2,102,488
--------------- ---------- ------------
--------------- ---------- ------------
</TABLE>
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<PAGE>
THOMAS & BETTS CORPORATION AND AUGAT INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (A)
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------
<S> <C> <C> <C>
THOMAS & BETTS(F) AUGAT(B) PRO FORMA(J)
----------------- ---------- ------------
Net sales........................................................... $ 1,042,288 $ 441,271 $1,483,559
Costs and expenses:
Cost of sales..................................................... 703,240 334,849 1,038,089
Marketing, general and administrative............................. 183,764 54,509 238,273
Research and development.......................................... 21,361 14,104 35,465
Amortization of intangibles....................................... 10,048 1,350 11,398
----------------- ---------- ------------
918,413 404,812 1,323,225
----------------- ---------- ------------
Earnings from operations............................................ 123,875 36,459 160,334
Other expense, net.................................................. 20,848 3,059 23,907
----------------- ---------- ------------
Earnings before income taxes........................................ 103,027 33,400 136,427
Income taxes........................................................ 34,359 11,400 45,759
----------------- ---------- ------------
Net earnings........................................................ $ 68,668 $ 22,000 $ 90,668
----------------- ---------- ------------
----------------- ---------- ------------
Share Data:
Earnings per share(i)............................................... $ 1.70 $ 1.10 $ 1.68(h)
Average shares outstanding.......................................... 40,300 19,965 53,876(h)
</TABLE>
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<PAGE>
THOMAS & BETTS CORPORATION AND AUGAT INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (A)
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
THOMAS & BETTS
PRO FORMA HISTORICAL
WITH AMERACE(F) AUGAT(B) PRO FORMA
----------------- ---------- ------------
<S> <C> <C> <C>
Net sales(c)........................................................ $ 1,015,843 $ 396,999 $ 1,412,842
Costs and expenses:
Cost of sales..................................................... 692,350 303,035 995,385
Marketing, general and administrative(c).......................... 174,919 48,318 223,237
Research and development.......................................... 20,483 15,878 36,361
Amortization of intangibles....................................... 10,959 1,119 12,078
----------------- ---------- ------------
898,711 368,350 1,267,061
----------------- ---------- ------------
Earnings from operations............................................ 117,132 28,649 145,781
Other expense, net.................................................. 24,362 2,473 26,835
----------------- ---------- ------------
Earnings before income taxes........................................ 92,770 26,176 118,946
Income taxes........................................................ 30,518 9,106 39,624
----------------- ---------- ------------
Earnings from continuing operations................................. $ 62,252 $ 17,070 $ 79,322
----------------- ---------- ------------
----------------- ---------- ------------
Share Data(d):
Earnings per share(i)............................................... $ 1.56 $ 0.87 $ 1.49(h)
Average shares outstanding.......................................... 39,934 19,711 53,337(h)
</TABLE>
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<PAGE>
THOMAS & BETTS CORPORATION AND AUGAT INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
THOMAS & BETTS
PRO FORMA HISTORICAL
WITH AMERACE(F) AUGAT(B) PRO FORMA
--------------- ---------- ------------
<S> <C> <C> <C>
Net sales(c)........................................................... $ 1,355,568 $ 534,873 $ 1,890,441
Costs and expenses:
Cost of sales........................................................ 921,726 409,768 1,331,494
Marketing, general and administrative(c)............................. 232,903 67,026 299,929
Research and development............................................. 27,306 21,385 48,691
Amortization of intangibles.......................................... 13,928 1,518 15,446
Provision for restructuring charges.................................. -- 18,700 18,700
--------------- ---------- ------------
1,195,863 518,397 1,714,260
--------------- ---------- ------------
Earnings from operations............................................... 159,705 16,476 176,181
Other expense, net..................................................... 31,407 4,716 36,123
--------------- ---------- ------------
Earnings before income taxes........................................... 128,298 11,760 140,058
Income taxes........................................................... 42,294 4,160 46,454
--------------- ---------- ------------
Net earnings........................................................... $ 86,004 $ 7,600 $ 93,604
--------------- ---------- ------------
--------------- ---------- ------------
Share Data (d):
Earnings per share(i).................................................. $ 2.15 $ 0.39 $ 1.75(h)
Average shares outstanding............................................. 39,956 19,727 53,370(h)
</TABLE>
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<PAGE>
THOMAS & BETTS CORPORATION AND AUGAT INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994 (A)
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------
<S> <C> <C> <C>
THOMAS & BETTS AUGAT(B) PRO FORMA
--------------- ---------- ------------
Net sales(c)........................................................... $ 1,042,896 $ 530,706 $ 1,573,602
Costs and expenses:
Cost of sales........................................................ 710,864 407,116 1,117,980
Marketing, general and administrative(c)............................. 196,628 58,689 255,317
Research and development............................................. 20,787 19,756 40,543
Amortization of intangibles.......................................... 11,040 1,305 12,345
Provision for restructuring charges.................................. 79,011 -- 79,011
--------------- ---------- ------------
1,018,330 486,866 1,505,196
--------------- ---------- ------------
Earnings from operations............................................... 24,566 43,840 68,406
Other expense, net..................................................... 24,072 4,140 28,212
--------------- ---------- ------------
Earnings before income taxes........................................... 494 39,700 40,194
Income taxes (benefit)................................................. (1,393) 13,500 12,107
--------------- ---------- ------------
Earnings from continuing operations.................................... 1,887 26,200 $ 28,087
------------
------------
Earnings from discontinued operations, net of tax(e)................... 7,350 --
Gain on sale of discontinued operations, net of tax(e)................. 58,583 --
--------------- ----------
Net earnings........................................................... $ 67,820 $ 26,200
--------------- ----------
--------------- ----------
Share Data (d):
Earnings per share from continuing operations(i)....................... $ 0.05 $ 1.36 $ 0.54(h)
Average shares outstanding............................................. 38,608 19,280 51,718(h)
</TABLE>
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THOMAS & BETTS CORPORATION AND AUGAT INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1993 (A)
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------
<S> <C> <C> <C>
THOMAS & BETTS AUGAT(B) PRO FORMA
--------------- ---------- ------------
Net sales(c)........................................................... $ 929,183 $ 420,263 $ 1,349,446
Costs and expenses:
Cost of sales........................................................ 628,577 316,037 944,614
Marketing, general and administrative(c)............................. 183,104 56,615 239,719
Research and development............................................. 18,664 18,512 37,176
Amortization of intangibles.......................................... 11,780 1,292 13,072
--------------- ---------- ------------
842,125 392,456 1,234,581
--------------- ---------- ------------
--------------- ---------- ------------
Earnings from operations............................................... 87,058 27,807 114,865
Other expense, net..................................................... 27,116 4,207 31,323
--------------- ---------- ------------
Earnings before income taxes from continuing operations................ 59,942 23,600 83,542
Income taxes........................................................... 16,353 8,000 24,353
--------------- ---------- ------------
Earnings from continuing operations.................................... 43,589 15,600 $ 59,189
------------
------------
Earnings from discontinued operations, net of tax...................... 11,322 --
--------------- ----------
Earnings before cumulative effect of change in accounting for income
tax.................................................................. 54,911 15,600
Cumulative effect of change in accounting for income tax............... 1,628 --
--------------- ----------
Net earnings........................................................... $ 56,539 $ 15,600
--------------- ----------
--------------- ----------
Share Data (d):
Earnings per share from continuing operations(i)....................... $ 1.16 $ 0.83 $ 1.17(h)
Average shares outstanding............................................. 37,674 18,789 50,451(h)
</TABLE>
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NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) In 1993 T&B adopted a fiscal year policy which resulted in the following
year-ends: for 1993-- January 2, 1994; for 1994--January 1, 1995; and for
1995--December 31, 1995; and the following third quarter-ends: for
1995--October 1, 1995 and for 1996--September 29, 1996.
(b) Reflects certain reclassifications made to the Augat financial statements to
conform them to the T&B presentation. These had no effect on earnings.
(c) Net sales of T&B for 1995, 1994 and 1993 have been reclassified to reflect
outbound freight expense as a reduction of sales rather than as marketing,
general and administrative expense, conforming to the presentation being
used in 1996 and a practice more prevalent in the industry.
(d) Per share data has been adjusted to reflect a two-for-one stock split of T&B
Common Stock to shareholders of record as of the close of business on March
8, 1996.
(e) Reflects the sale in July 1994 of T&B's ceramic chip capacitor subsidiary,
Vitramon Incorporated.
(f) Includes the results of Amerace, acquired January 2, 1996, excluding the
results of the Hendrix business sold in May 1996, on a pro forma basis using
the purchase accounting method.
(g) Reflects an estimated liability for transaction costs associated with the
Merger, including $8.2 million for investment banking fees, $1.8 million for
legal fees, and $1.0 million for other transaction costs. Such amounts,
which are not tax deductible, have not been included on the pro forma
statement of earnings.
(h) Reflects the Exchange Ratio of 0.68 of a share of T&B Common Stock per share
of Augat Common Stock.
(i) Additional dilution arising in the fully-diluted calculation is not material
and therefore has not been presented.
(j) Assuming consummation of the Merger, T&B currently anticipates recording
charges during the fourth quarter ending December 29, 1996 for the following
items: (a) Merger-related expenses, including the fees of financial advisors
and legal counsel; (b) Merger-related restructuring, including expenses for
the integration of operations; (c) adjustments to accounting estimates for
potential liabilities of Augat such as environmental remediation and related
costs, litigation and employee benefit accruals, based upon the development
of additional information during the fourth quarter; and (d)
non-Merger-related restructuring and other expenses which T&B may incur if
the Merger is consummated, primarily for rationalization of operations. Such
restructuring actions are anticipated to produce future savings and
synergies for the combined operations of T&B and Augat. The amount of the
above charges has not yet been determined; however, T&B currently
anticipates that such pre-tax charges will be more than $90 million but less
than $100 million. These charges are consistent with estimates developed by
T&B during its due diligence process with Augat prior to negotiation of the
Merger. On an after-tax basis, roughly one-half of these charges represent
anticipated cash impacts over time. Approximately one-third of such cash
impact is expected to occur in each of 1996 and 1997, respectively. The
remaining cash flow impacts will likely be spread over a number of years.
For example, the environmental portion of the charges, which is expected to
be less than 7% of the total, includes estimated remediation expenses over
periods ranging up to 15 years which, in accordance with generally accepted
accounting principles, are to be recognized in the current period.
Otherwise, such environmental remediation costs would impact future periods'
earnings. None of the anticipated charges for the actions described above
has been included in the pro forma statements of earnings.
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DESCRIPTION OF T&B CAPITAL STOCK
The following description of certain terms of the capital stock of T&B does
not purport to be complete and is qualified in its entirety by reference to the
T&B Charter, incorporated herein by reference.
The authorized capital stock of T&B currently consists of 80,000,000 shares
of T&B Common Stock, and 500,000 shares of preferred stock, no par value,
issuable in series (the "T&B Preferred Stock"). As of October 31, 1996, there
were outstanding 40,443,364 shares of T&B Common Stock. There are no shares of
T&B Preferred Stock outstanding.
T&B COMMON STOCK
The holders of T&B Common Stock are entitled to one vote per share for each
share held of record on all matters voted on by shareholders, including the
election of directors, and are entitled to participate equally in dividends when
and as such dividends may be declared by the T&B Board out of funds legally
available therefor. As a Tennessee corporation, T&B is subject to statutory
limitations on the declaration and payment of dividends. In the event of a
liquidation, dissolution or winding up of T&B, holders of T&B Common Stock have
the right to a ratable portion of assets remaining after satisfaction in full of
the prior rights of creditors, including holders of T&B's indebtedness, all
liabilities and the aggregate liquidation preferences of any outstanding shares
of T&B Preferred Stock. The holders of T&B Common Stock have no conversion,
redemption, preemptive or cumulative voting rights. All outstanding shares of
T&B Common Stock are, and the shares of T&B Common Stock to be issued in the
Merger will be, validly issued, fully paid and non-assessable. As of of October
31, 1996 there were 3,632 holders of record of T&B Common Stock.
TRANSFER AGENT
The transfer agent and registrar for T&B Common Stock is First Chicago Trust
Company of New York, P.O. Box 2534, Suite 4694, Jersey City, New Jersey
07303-2534.
T&B PREFERRED STOCK
The T&B Charter provides that T&B Preferred Stock may be issued from time to
time in one or more series. The T&B Board is specifically authorized to
establish the number of shares in any series and the designations, relative
rights, preferences and limitations of all shares of each series of T&B
Preferred Stock. The holders of T&B Preferred Stock will have no preemptive
rights.
COMPARISON OF CERTAIN RIGHTS OF SHAREHOLDERS
OF T&B AND STOCKHOLDERS OF AUGAT
GENERAL
As a result of the Merger, holders of Augat Common Stock will become holders
of T&B Common Stock and the rights of all such former holders of Augat Common
Stock will thereafter be governed by the T&B Charter, the T&B Bylaws, the TBCA
and other Tennessee corporation-related laws. The rights of the holders of Augat
Common Stock are presently governed by the Augat Articles, the Augat By-laws,
the MBCL and other Massachusetts corporation-related laws. The following
summary, which does not purport to be a complete statement of the general
differences among the rights of the shareholders of T&B and stockholders of
Augat, sets forth certain differences between the TBCA and the MBCL, between the
T&B Charter and the Augat Articles and between the T&B Bylaws and the Augat
By-laws. Certain provisions of the MBCL treat corporations differently depending
on whether or not a corporation is subject to the periodic reporting
requirements of the Exchange Act (a "Reporting Company") and whether or not it
has a classified board of directors. As Augat is a Reporting Company with a
classified board, the discussion of
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the rights of stockholders of Augat will summarize only the provision of the
MBCL as they apply to such a company. This summary is qualified in its entirety
by reference to the full text of each of the Augat Articles, the Augat By-laws,
the T&B Charter, the T&B Bylaws, the TBCA, the MBCL and other
corporation-related laws of Tennessee and Massachusetts insofar as they relate
to corporations organized in such states. The Augat Articles and the Augat
By-laws have been filed as exhibits to materials filed by Augat with the SEC;
similarly, the T&B Charter and T&B Bylaws have been filed as exhibits to
materials filed by T&B with the SEC. For information as to how documents may be
obtained, see "Available Information."
SIZE OF THE BOARD OF DIRECTORS
T&B
Tennessee law provides that a board of directors must consist of one or more
individuals, with the number specified in or fixed in accordance with the
charter or bylaws. The charter or bylaws may provide that the board of directors
has the power to fix or change the number of directors, and may establish a
variable range for the size of the board by fixing a minimum and maximum number
of directors. If a variable range is established, the number of directors may be
fixed or changed from time to time, within the minimum and maximum, by the
shareholders or the board; PROVIDED, HOWEVER, that unless the charter or bylaws
provide otherwise, only the shareholders may vary the range or change from a
variable range to a fixed-size board. The T&B Bylaws provide that the T&B Board
shall be composed of not less than seven nor more than fifteen members as may be
determined by the T&B Board.
AUGAT
Section 50A of the MBCL applies to Reporting Companies and provides that,
notwithstanding anything to the contrary contained in the articles of
organization or bylaws, only the directors of a Reporting Company with a
classified based of directors have the power to set the number of directors. The
Augat Articles and Augat By-laws provide that the Augat Board will consist of
not less than five nor more than twelve directors, as fixed by the stockholders
of Augat from time to time or the Augat Board. As Augat is a Reporting Company
with a classified board of directors, the Augat Board and not the stockholders
of Augat may set, from time to time, the number of members that will comprise
the Augat Board.
CLASSIFICATION OF THE BOARD OF DIRECTORS
T&B
Tennessee law provides that a corporation's charter may allow for staggering
the terms of directors into two or three classes. The T&B Charter has no such
provision.
AUGAT
Section 50A of the MBCL provides that, notwithstanding any provision of the
articles of organization or bylaws, a three-class classified board of directors
is mandatory for Reporting Companies, unless (1) the board of directors or (2)
two-thirds ( 2/3) of the stockholders at a meeting called for such purpose vote
to exempt such company from such provision. If the stockholders do so vote, then
another two-thirds ( 2/3) stockholder vote is required to re-adopt such
provision. If the board of directors elects to exempt a company from this
section of the MBCL, a vote of such board is necessary to re-subject such
company to the section. If a company opts out of this section, it is permitted,
but not required, to have a classified board of directors of up to five classes.
Augat currently has a three-class classified board of directors.
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REMOVAL OF DIRECTORS
T&B
Tennessee law provides that the shareholders may remove a director with or
without cause, unless the charter provides that such removal can only be for
cause. The TBCA further provides that, if so provided in a corporation's
charter, a majority of a corporation's directors may remove any director for
cause. Any director being removed by shareholders may only be removed if the
votes in favor of such director's removal exceed the votes against such removal,
unless a corporation has authorized cumulative voting, in which case he cannot
be removed if the number of votes sufficient to elect him are voted against his
removal.
The T&B Charter provides that a director may be removed, either with or
without cause, at any time, by the affirmative vote of at least 50% of the total
number of votes entitled to be cast at a special meeting of shareholders called
for that purpose and any director may be removed for cause, at any time, by a
majority vote of the entire board of directors at a meeting called for that
purpose.
AUGAT
Massachusetts law provides that, notwithstanding anything to the contrary in
the articles of organization or bylaws of a Reporting Company with a classified
board, the stockholders may remove a director for cause only by a majority vote
of the shares entitled to elect such person.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
T&B
Tennessee law provides that, unless the charter provides otherwise, if a
vacancy occurs on the board of directors, including a vacancy resulting from an
increase in the number of directors, either the shareholders or the board of
directors, even if the remaining directors do not constitute a quorum, may fill
the vacancy. If the vacant office was held by a director elected by a voting
group of shareholders, only the holders of shares of that voting group are
entitled to fill the vacancy if it is filled by shareholders. The T&B Charter
provides that any vacancy in T&B's Board arising at any time and for any cause,
may be filled by the vote of a majority of the directors remaining in office.
Any vacancy not filled by the T&B Board may be filled by the shareholders of T&B
at an annual meeting or at a special meeting of T&B Shareholders called for that
purpose.
AUGAT
Massachusetts law provides that, notwithstanding anything to the contrary in
the articles of organization or bylaws of a Reporting Company with a classified
board of directors, any vacancy in the board of directors, including a vacancy
resulting from the enlargement of the board, may be filled only by vote of the
remaining directors.
ACTION BY WRITTEN CONSENT
T&B
Under the TBCA, shareholders can take any action required or permitted to be
taken at a shareholders' meeting without a meeting if all shareholders entitled
to vote on the action consent in writing.
AUGAT
Under the MBCL, any action required or permitted to be taken at any meeting
of the stockholders may be taken without a meeting if all stockholders entitled
to vote consent in writing. However, for both
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T&B and Augat, which are both publicly traded corporations, the unanimity
requirement essentially precludes use of these provisions.
MEETINGS OF SHAREHOLDERS
T&B
The TBCA provides that a special meeting may be called by the board of
directors or the persons authorized to do so by the charter or bylaws. In
addition, the TBCA provides that, unless the charter provides otherwise, the
holders of 10% of the votes entitled to be cast on an issue proposed to be
considered at the special meeting also may call a special meeting. The T&B
Charter provides that only the Chairman of the Board or the President or a
majority of the entire T&B Board, disregarding a vacancy, acting by resolution,
may call a special meeting. Therefore, shareholders of T&B are not permitted to
call special meetings.
AUGAT
The MBCL provides that the President or board of directors of any
Massachusetts company may call a special meeting. The MBCL further provides
that, unless otherwise provided in the articles of organization or bylaws, the
holders of 40% of the capital stock of a Reporting Company may call a special
meeting. If the officers of a Reporting Company are unable or unwilling to call
a special meeting, the holders of 40% (or such other percentage as is specified
in the articles or bylaws) of the capital stock of a Reporting Company may
petition a court to order that a special meeting be held. The Augat By-laws
provide that holders of 10% of the voting capital stock of Augat may call a
special meeting of stockholders.
SHAREHOLDER PROPOSALS AND SHAREHOLDER NOMINATIONS OF DIRECTORS
T&B
The T&B Bylaws provide for shareholder nominations of persons for election
to the T&B Board and any proposal of business to be considered by the
shareholders of T&B at an annual meeting of shareholders by any shareholder of
T&B who was a shareholder of record at the time of giving of notice referred to
below, who is entitled to vote at the meeting and who complied with the notice
procedures set forth below.
The shareholder must have given timely notice to T&B, which is generally
between 60 and 90 days prior to the first anniversary of the preceding year's
annual meeting. Such shareholder's notice shall set forth all information
relating to any director nominee that is required to be disclosed in a
solicitation of proxies pursuant to Regulation 14A under the Exchange Act. As to
any other proposed business, the shareholder must provide a brief description of
the matter, the reasons for conducting such business at the meeting, any
material interest the shareholder has in the matter, the beneficial owner on
whose behalf the proposal is made (if different from the shareholder) and the
name and address of and the number of shares owned by the shareholder and any
beneficial owner on whose behalf the shareholder is acting.
In addition, shareholders may nominate directors at a special meeting at
which directors are to be elected pursuant to the notice of meeting by giving
notice not earlier than 90 days prior to such meeting or later than the later of
the 60th day prior to such meeting or the 10th day following the day on which
public announcement of such meeting is made.
AUGAT
Augat has no similar provision.
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REQUIRED VOTE FOR AUTHORIZATION OF MERGERS
T&B
Except as noted below, Tennessee law generally requires a merger, share
exchange, consolidation or sale of substantially all of a corporation's assets
to be approved by the corporation's board of directors and by a majority of the
outstanding shares of the corporation entitled to vote thereon. Tennessee law
further provides that submission by a board of directors may be conditioned on
any basis.
With respect to a merger, no vote of the shareholders of a Tennessee
corporation is required if the corporation's separate corporate existence does
not cease as the result of the merger and (1) its charter would remain unchanged
after the merger, subject to certain exceptions, (2) each shareholder of the
corporation immediately before the merger would hold an identical number of
shares, with identical designations, preferences, limitations and relative
rights, after the merger, (3) the voting power of shares outstanding immediately
after the merger plus the shares issuable as a result of the merger will not
exceed by more than 20% the voting power of shares of the corporation
outstanding immediately before the merger and (4) the number of participating
shares outstanding immediately after the merger plus the number of participating
shares issuable as a result of the merger, will not exceed by more than 20% the
total number of participating shares outstanding immediately before the merger.
AUGAT
Massachusetts law provides that a vote of two-thirds ( 2/3) of the shares of
each class of stock outstanding and entitled to vote thereon is required to
authorize a merger, consolidation or sale of substantially all of a
corporation's assets, except that the articles of organization may provide that
the vote of a greater or lesser proportion, but not less than a majority of the
outstanding shares of each class, is required. Under Massachusetts law, the
articles of organization or bylaws may provide that all outstanding classes of
stock shall vote as a single class, but, in the case of a merger or
consolidation, the separate vote of all classes of stock, the rights of which
would be adversely affected by the transaction, is also required.
Additionally, the Augat Articles provide that any agreement for the merger
of the Company with or into another company must be approved by the vote of
holders of at least 75% of the outstanding shares of the Augat Stock if the
other person is, on the record date of the determination of the stockholders
entitled to vote on such matter, the owner of 10% or more of the outstanding
Augat Stock entitled to vote. The 75% provision will not apply if the
transaction is approved by the Augat Board prior to the time such person becomes
the beneficial owner of 10% or more of such shares or if, at any time prior to
its consummation, 75% of the Augat Directors approve the transaction.
AMENDMENT OF CORPORATE CHARTER
T&B
Tennessee law provides that, unless the charter provides otherwise, the
directors can amend a corporation's charter, without shareholder action, for
certain changes including changing the initial registered agent or registered
office or changing the principal office of the corporation. A corporation can
also amend its charter by director proposal which is then submitted to the
shareholders. Unless certain provisions of the TBCA, the charter, or the board
require a greater vote, the amendment must be approved by a majority of the
votes entitled to be cast by any voting group with respect to which the
amendment would create dissenters' rights. Otherwise, a plurality vote is
required.
AUGAT
Under Massachusetts law, amendments to a corporation's articles of
organization relating to certain changes in capital stock, including increasing
or decreasing the number of shares, or changes in the corporate name require the
vote of at least a majority of each class of stock outstanding and entitled to
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vote thereon. Amendments relating to other matters require a vote of at least
two-thirds ( 2/3) of each class outstanding and entitled to vote thereon or, if
the articles of organization so provide, a greater or lesser proportion but not
less than a majority of the outstanding shares of each class. Massachusetts law
further states that the articles of organization or bylaws may provide that all
outstanding classes of stock shall vote as a single class, but any class
adversely affected must separately approve any amendment by a two-thirds vote.
All amendments to the articles must be authorized at a meeting called for that
purpose. Massachusetts law does not require that the board of directors propose
or approve any amendments to the articles. The Augat Articles provide for a 75%
vote for certain business acquisitions and for amendment of such provision and
for amendment of the provisions relating to the number of directors and removal
of directors.
AMENDMENT OF BYLAWS
T&B
Tennessee law provides that a corporation's bylaws may be amended or
repealed or new bylaws may be adopted by the vote of a majority of all
shareholders or by the majority vote of the board of directors, except to the
extent the power is reserved to the shareholders under the TCBA, the charter or
the particular bylaw at the time it is adopted by shareholders. The T&B Charter
provides that the T&B Board may amend the T&B Bylaws, but any bylaw made,
altered or amended by the T&B Board may be altered, amended or repealed by a
majority of the votes cast at any annual or special meeting of shareholders,
provided prior notice of the proposed alteration, amendment or repeal is given.
AUGAT
Under Massachusetts law, the power to make, amend or repeal bylaws lies in
the stockholders; provided that if authorized by the articles of organization,
the bylaws may provide that the directors may also make, amend or repeal the
bylaws, except with respect to any provision which by law, the articles of
organization or the bylaws requires action by the stockholders. The Augat
Articles provide that the board of directors may amend any bylaw of the
corporation, other than those which by law, the Augat Articles or Augat By-laws
requires action by the stockholders of Augat. The Augat-Bylaws provide that, if
authorized by the Augat Articles, a majority of the directors in office my amend
the current Augat By-laws, except with respect to (1) bylaws governing the
removal of directors, indemnification of directors and the provision regarding
amendments of the bylaws and (2) any provision which by law, the Augat Articles
or the Augat By-laws requires action by the stockholders of Augat. The Augat
By-laws also state that, except as provided in the Augat Articles, the Augat
By-laws may be amended by a majority vote of the shares of each class entitled
to vote at the annual stockholders meeting. Additionally, under Massachusetts
law any bylaw adopted by the directors may be amended by a majority of the
shares entitled to vote on amending the Augat By-laws.
APPRAISAL AND DISSENTERS' RIGHTS
T&B
Tennessee law generally provides dissenters' rights for (1) mergers and
share exchanges that would require shareholder approval, (2) sales of
substantially all the assets (other than sales that are in the usual and regular
course of business and certain liquidations and court-ordered sales), (3)
certain amendments to the charter that materially and adversely affect rights in
respect of a dissenter's shares and (4) actions taken pursuant to a shareholder
vote to the extent the charter, bylaws or a resolution of the board of directors
provides that shareholders are entitled to dissenters' rights. Unlike
Massachusetts, dissenters' rights are not available as to any shares which are
listed on an exchange registered under Section 6 of the Exchange Act or are
"national market system securities" as defined in rules promulgated pursuant to
the Exchange Act. To perfect such appraisal rights, the shareholder must (x)
file a written objection with the
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corporation, prior to the vote, stating that such shareholder intends to demand
payment for his shares if the action is taken and (y) not vote in favor of the
proposed action. T&B Common Stock is listed on the New York Stock Exchange and
therefore dissenters' rights are not available to the T&B Shareholders with
respect to the Merger.
AUGAT
Under Massachusetts law, a properly dissenting stockholder is entitled to
receive the appraised value of his shares when the corporation votes (1) to
sell, lease, or exchange all or substantially all of its property and assets,
(2) to adopt an amendment to its articles of organization which adversely
affects the rights of the stockholder or (3) to merge or consolidate with
another corporation, unless a vote of the stockholders was not required to
approve such transaction. To preserve such appraisal rights, the stockholder
must (x) file a written objection with the corporation, prior to the vote,
stating that such stockholder intends to demand payment for his shares if the
action is taken and (y) not vote in favor of the proposed action. To perfect
such rights, shareholders must comply with Chapter 156B, SectionSection85
through 90, inclusive, of the General Laws of Massachusetts. See "Dissenters'
Rights of Appraisal" and Appendix D to this Joint Proxy Statement/Prospectus.
ANTI-GREENMAIL PROVISIONS
T&B
The Tennessee Greenmail Act ("TGA") applies to any corporation organized
under the laws of Tennessee which has a class of voting stock registered or
traded on a national securities exchange or registered with the Commission
pursuant to Section 12(g) of the Exchange Act. The TGA provides that it is
unlawful for any corporation or subsidiary to purchase, either directly or
indirectly, any of its shares at a price above the market value, as defined in
the TGA, from any person who holds more than 3% of the class of the securities
purchased if such person has held such shares for less than two (2) years,
unless either the purchase is first approved by the affirmative vote of a
majority of the outstanding shares of each class of voting stock issued or the
corporation makes an offer of at least equal value per share to all holders of
shares of such class.
AUGAT
Massachusetts has no similar provision.
BUSINESS COMBINATION STATUTES
T&B
Tennessee's Business Combination Act (the "Tennessee Business Combination
Act") provides that an interested shareholder (defined as a person beneficially
owning 10% or more of the voting securities in such Tennessee corporation)
cannot engage in a business combination with such corporation unless the
transaction takes place at least five years after the interested shareholder
first became such, and unless either the transaction (a) is approved by at least
2/3 of the shares of the corporation not beneficially owned by an interested
shareholder or (b) satisfies certain fairness conditions specified in the
Tennessee Business Combination Act relating to the price to be paid to the
non-interested shareholders in such transactions.
These provisions apply to Tennessee corporations unless one of two events
occurs. A business combination with an entity can proceed without the five-year
moratorium if the business combination or the transaction resulting in the
shareholder becoming an interested shareholder is approved by the target
corporation's board of directors before that entity becomes an interested
shareholder, or the corporation may enact a charter amendment or bylaw to remove
itself entirely from the Tennessee Business Combination Act. This charter
amendment or bylaw must be approved by a majority of the shareholders who have
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held shares for more than one year prior to the vote and may not take effect for
at least two years after the vote. T&B has not adopted such a provision in the
T&B Charter or T&B Bylaws removing T&B from coverage under the Tennessee
Business Combination Act.
AUGAT
The Massachusetts business combination statute (the "Massachusetts Business
Combination Act") prohibits any business combination with an interested
stockholder (defined as owning 5%) for three years after that person becomes an
interested stockholder unless (1) the board of directors gives prior approval to
the purchase making such person an interested stockholder or the proposed
business combination, (2) at the time of the transaction that makes it an
interested shareholder, the acquiror owns at least 90 percent of the voting
stock, excluding shares held by directors who are also officers, and certain
employee stock plans or (3) subsequent to the acquiror's becoming an interested
stockholder, the board of directors and two-thirds ( 2/3) of the shares not
owned by the interested stockholder approve the business combination. Although a
Massachusetts corporation may opt out of this statute, Augat has not done so and
therefore is subject to the Massachusetts Business Combination Act.
The Augat Articles provide for additional voting requirements for business
combinations with 10% stockholders. See "--Required Vote for Authorization of
Mergers."
CONTROL SHARE ACQUISITION STATUTES
T&B
The Tennessee Control Share Acquisition Act ("TCSAA") takes away the voting
rights of a purchaser's shares any time an acquisition of shares in a Tennessee
corporation brings the purchaser's voting power to 20%, 33 1/3% or more than 50%
of all voting power in such corporation (a "control share"). The purchaser's
voting rights can be maintained or re-established only by a majority vote of all
votes entitled to be cast by all shareholders other than the acquiror and the
officers and inside directors of the corporation. Exempted from the TCSAA is an
acquisition of shares pursuant to a merger or share exchange if the company is a
party to the merger agreement, similar to the Massachusetts statute. After
acquiring a control share, the TCSAA provides a procedure by which a purchaser
may demand a special meeting of shareholders to conduct such a vote. The
purchaser can demand such a meeting before acquiring a control share, but,
unlike Massachusetts, can do so only if it holds at least 10% of outstanding
shares and announces a good faith intention to make the control share
acquisition. The TCSAA applies only to a corporation that has adopted a
provision in its charter or bylaws declaring that the TCSAA will apply. T&B has
not adopted any such provision in the T&B Charter or T&B Bylaws electing
protection under the TCSAA and therefore is not subject to the TCSAA.
AUGAT
Under the Massachusetts control share acquisition statute, a person who
makes a bona fide offer to acquire, or acquires, shares of stock of a
Massachusetts corporation that when combined with shares already owned, would
increase the acquiror's ownership to at least 20%, 33 1/3%, or a majority of the
voting stock of the corporation, must obtain the approval of a majority of
shares held by all stockholders except the acquiror and the officers and inside
directors of the corporation, in order to vote the shares acquired. The statute
exempts an acquisition of shares pursuant to a tender offer or merger if the
company is a party to the merger agreement. The statute permits a corporation to
opt out of these provisions by including such an election in its articles of
organization or bylaws. The Augat Articles provide that the control share
provisions of Massachusetts law will apply to Augat.
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TAKEOVER BID DISCLOSURE STATUTES
T&B
The Tennessee Investor Protection Act provides that unless a Tennessee
corporation's board of directors has recommended a takeover offer to
shareholders, no offeror beneficially owning 5% or more of any class of equity
securities of the offeree company, any of which was purchased within one year
prior to the proposed takeover offer, may offer to acquire any class of equity
security of the offeree company pursuant to a tender offer if after the
acquisition thereof the offeror would be directly or indirectly a beneficial
owner of more than 10% ("takeover offer") of any class of outstanding equity
securities of the company unless the offeror, before making such purchase, (i)
makes a public announcement of his or her intention with respect to changing or
influencing the management or control of the offeree company, (ii) makes a full,
fair and effective disclosure of such intention to the person from whom he or
she intends to acquire such securities and (iii) files with the Tennessee
Commissioner of Commerce and Insurance (the "Commissioner") and the offeree
company a statement signifying such intentions and containing such additional
information as may be prescribed by the Commissioner. Such an offeror must
provide that any equity securities of an offeree company deposited or tendered
pursuant to a takeover offer may be withdrawn by an offeree at any time within
seven days from the date the offer has become effective following filing with
the Commissioner and the offeree company and public announcement of the terms or
after 60 days from the date the offer has become effective. If the takeover
offer is for less than all the outstanding equity securities of any class, such
an offeror also must accept securities pro rata if the number of securities
tendered is greater than the number the offeror has offered to accept and pay
for. If such an offeror varies the terms of the takeover offer before its
expiration date by increasing the consideration offered to offerees, the offeror
must pay the increased consideration for all equity securities accepted, whether
accepted before or after the variation in the terms of the offer.
Any person making a takeover offer involving a Tennessee corporation shall
file a registration statement with the Commissioner, with a copy sent by
certified mail to the offeree company. The registration statement shall contain
such information as set forth in the statute.
The Tennessee Investor Protection Act does not apply to an offer involving a
vote by holders of equity securities of the offeree company, pursuant to its
charter, on a merger, consolidation or sale of corporate assets in consideration
of the issuance of securities of another corporation, or on a sale of its
securities in exchange for cash or securities of another corporation.
AUGAT
The Massachusetts Takeover Bid Act requires notice of, and allows for
hearings on, the adequacy of disclosure in connection with takeover bids for
corporations incorporated in Massachusetts. A takeover bid is defined as the
acquisition of or offer to acquire equity securities if, after such acquisition,
the acquiror would own more than 10% of the target company. The definition
exempts (1) any acquisition in which the consideration to be paid consists
primarily of securities covered by a prospectus which is part of an effective
registration statement and (2) any acquisition which the target company's board
of directors approves and whose terms have been provided to the stockholders.
Massachusetts law further provides that an offeror is also prohibited from
making a takeover bid if it owns 5% or more of the equity securities of the
target company and the offeror did not disclose its intention to make a takeover
bid before such acquisition.
LIMITATION ON DIRECTORS' LIABILITY
T&B
The T&B Charter provides that no director shall be personally liable to T&B
or the shareholders of T&B for monetary damages for breach of fiduciary duty as
a director, other than (1) breach of his duty of
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loyalty, (2) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law or (3) for unlawful distributions under
the TBCA. In addition, the TBCA provides that an action alleging breach of a
director's fiduciary duty must be brought within one year of the date of the
breach.
AUGAT
The MBCL permits the elimination of the liability of a director to the
corporation and its shareholders for monetary damages for breach of fiduciary
duty as a director, except (1) for any breach of the director's duty of loyalty
to Augat or the stockholders of Augat, (2) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (3)
for any transaction from which the director derived an improper personal benefit
or (4) for liability under Massachusetts law for authorizing illegal dividends,
loans or stock repurchases. The Augat Articles provide for the limitation of
liability for breach of fiduciary duty to the fullest extent permitted by
Massachusetts law.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
T&B
The TBCA permits indemnification of directors and officers for expenses
(including attorneys' fees) incurred in a proceeding and amounts paid or
incurred in satisfaction of judgments, fines and settlements of any proceedings
(other than derivative actions) if such person acted in good faith and
reasonably believed that his conduct was in the best interest of the corporation
(or, in some circumstances, not opposed to its best interests) and, if criminal,
had no reasonable cause to believe his conduct was unlawful. A corporation may
not, under this statute, indemnify a director if he was adjudged liable to the
corporation in a derivative action or if he was adjudged liable on the basis
that he received an improper personal benefit.
Unless limited by its charter, the TBCA requires indemnification of a
director or officer for his reasonable expenses if he is wholly successful in
defense of a proceeding brought because he was a director or officer. The TBCA
states that a company can provide for additional indemnification in its charter
or bylaws, except that no indemnification may be made if a final adjudication
adverse to the director or officer establishes his liability (1) for any breach
of loyalty to the corporation or its shareholders, (2) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law or (3) for unlawful distributions under the TBCA. The T&B Bylaws provide
indemnification for officers and directors to the fullest extent permitted by
the TBCA against all expense, liability and loss, unless the proceeding was
instituted by the director or officer without authorization of the T&B Board.
AUGAT
Massachusetts law generally permits indemnification of directors and
officers for expenses incurred by them by reason of their position with the
corporation, if such person has acted in good faith and with the reasonable
belief that his conduct was in the best interest of the corporation. The Augat
By-laws provide for the indemnification of each director and officer against all
liabilities and expenses incurred by him in connection with his being a director
or officer of Augat, except in relation to matters as to which he is finally
adjudged to have been liable for negligence or misconduct in the performance of
his duty as such director or officer. In addition, Augat will not indemnify any
officer or director with respect to the amount paid in compromise or settlement
by consent unless the Augat Board determines in good faith that the director or
officer was not liable for negligence or misconduct in the performance of his
duty in connection with the matter.
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CUMULATIVE VOTING
In an election of directors under cumulative voting, each share of stock
normally having one vote is entitled to a number of votes equal to the number of
directors to be elected. A shareholder may then cast all such votes for a single
nominee or may allocate among as many nominees as the shareholder may choose.
Without cumulative voting, the holders of a majority of shares present at an
annual meeting or any special meeting held to elect directors would have the
power to elect all of the directors to be elected at that meeting and no nominee
could be elected without the support of a majority of the shares voting at such
meeting.
T&B
The TBCA states that there is no right to cumulate votes for directors
unless the charter so provides. However, the T&B Charter does not so provide.
Therefore, the shareholders of T&B currently do not have cumulative voting.
AUGAT
The MBCL provides that each share of stock shall have one vote. Therefore,
there can be no cumulative voting for a Massachusetts corporation.
CONFLICT-OF-INTEREST TRANSACTIONS
T&B
Tennessee law provides that a transaction with the corporation where a
director or officer has an interest is not voidable by the corporation solely
because of the director's or officer's interest if (1) the material facts of the
transaction and director or officer interest was disclosed to or known by the
board of directors and the transaction is authorized or ratified by a majority
of the disinterested directors, (2) the material facts of the transaction and
director or officer interest was disclosed to or known by the board of directors
and the transaction is authorized or ratified by a majority of the disinterested
shares entitled to vote or (3) the transaction is fair to the corporation.
Additionally, a corporation generally may not lend money to or guarantee the
obligation of a director or officer unless either the loan or guarantee is
approved by a majority of the disinterested shares or by the directors after
determining that it benefits the corporation.
AUGAT
Massachusetts law provides that the directors who vote for any loan of any
assets of a corporation to any of its officers or directors shall be jointly and
severally liable to the corporation for any portion of such loan which is not
repaid unless a majority of the disinterested directors or a majority of the
disinterested shares entitled to vote for directors approve or ratify such loan.
The Augat By-laws provide that, in the absence of fraud, no contract or other
transaction between Augat and any other entity or person shall be affected by
the fact that any director of the corporation has an interest in such entity,
provided that he disclose such interest before the Augat Board votes to approve
the transaction, and it is approved by a majority of the disinterested
directors.
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DIVIDENDS AND OTHER DISTRIBUTIONS
T&B
Under Tennessee law, a corporation generally may make dividends or other
distributions to its shareholders unless after giving effect to the distribution
either the corporation would not be able to pay its debts as they become due in
the usual course of business or its assets would be less than the sum of its
total liabilities plus (unless the charter permits otherwise) the amount that
would be needed, if the company were to be dissolved at the time of the
distribution, to satisfy the preferential dissolution rights of any shareholders
whose preferential rights are superior to those receiving the distribution.
Additionally, under the TBCA, the corporation's charter could further restrict
its ability to make distributions, however the T&B Charter contains no such
provision.
AUGAT
Under Massachusetts law, distributions by the corporation to its
shareholders, whether by the payment of dividends or otherwise, are generally
permissible if such actions are not taken when the corporation is insolvent, do
not render the corporation insolvent, and do not violate the corporation's
articles of organization.
SHAREHOLDER INSPECTION RIGHTS
T&B
Under Tennessee law, a corporation's shareholders are also entitled to
inspect and copy, during regular business hours at the corporation's principal
office, the minutes of shareholder meetings, charter, bylaws, the most recent
annual report, and certain other records of the corporation, provided the
shareholder gives the corporation written notice of his demand at least 5
business days before the date on which he wishes to inspect and copy the
records.
In addition, a shareholder who makes a demand in good faith, for a proper
purpose, and describes with reasonable particularity his purpose and the records
he desires to inspect, and if the records are directly connected with his
purpose, may also, upon 5 business days' written notice, inspect and copy
certain additional records. These additional records include accounting records
of the corporation, the records of shareholders, excerpts from minutes of any
meeting of the corporation's board of directors, records of any action of a
committee of the corporation's board of directors while acting in place of the
board, minutes of any meeting of the shareholders and records of action taken by
the shareholders or board of directors without a meeting. These shareholder
rights cannot be limited by a corporation's charter or bylaws.
AUGAT
Under Massachusetts law, a corporation's stockholders have the right for a
proper purpose to inspect the corporation's articles of organization, bylaws,
records of all meetings of incorporators and stockholders, and stock and
transfer records, including the stockholder list. In addition, stockholders of a
Massachusetts business corporation have a qualified common law right under
certain circumstances to inspect other books and records of the corporation.
RIGHTS PLANS
T&B
T&B does not have a Rights Agreement.
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AUGAT
The Augat Board declared a dividend distribution of rights ("Augat Rights")
to holders of outstanding Augat Common Stock on August 2, 1988 pursuant to its
Rights Agreement (the "Augat Rights Agreement"). After the Distribution Date (as
defined below), each Augat Right entitles the holder to purchase from Augat a
unit (a "Unit") consisting of one-fifth of a share of Augat Common Stock and a
note in principal amount equal to 80% of the then-current market price of a
share of Augat Common Stock at a price of $60 per Unit, subject to adjustment
for dilution. The Augat Rights are not exercisable or separate from the Augat
Common Stock until the distribution date (the "Distribution Date") which occurs
ten days following a public announcement that a person has become the beneficial
owner of 20% or more of the Augat Common Stock (an "Acquiring Person") (such
date of public announcement being a "Stock Acquisition Date") or ten business
days following the commencement of a tender or exchange offer which would result
in the offeror having beneficial ownership of 30% or more of the Augat Common
Stock. As of October 6, 1996, the definition of Acquiring Person was amended to
exclude T&B from such definition solely in connection with the transactions
contemplated by the Merger Agreement, thereby ensuring that neither a
Distribution Date nor Stock Acquisition Date would occur as a result of entering
into the Merger Agreement or any of the transactions contemplated thereby. In
addition, the Rights Agreement has been amended to provide that the Rights
Agreement will terminate immediately prior to the Effective Time.
Upon the occurrence of certain events specified in the Rights Agreement,
holders of Augat Rights will have the opportunity to purchase either shares of
Augat Common Stock or an acquiror's common stock having a market value of twice
the purchase price of an Augat Right for the purchase price of an Augat Right.
Subject to the terms of the Augat Rights Agreement, at any time until ten
days following a Stock Acquisition Date, Augat may redeem the Augat Rights at a
redemption price of $.02 per Augat Right.
The Augat Rights will expire on August 23, 1998, unless an earlier
expiration date occurs.
The description of the Augat Rights Agreement specifying the terms of the
Augat Rights is incorporated herein by reference. See "Incorporation of Certain
Information by Reference." The foregoing description of the Augat Rights is
qualified in its entirety by reference to the Augat Rights Agreement.
EXPERTS
The consolidated financial statements and schedules of T&B at December 31,
1995 and January 1, 1995, and for the years ended December 31, 1995, January 1,
1995 and January 2, 1994, have been incorporated by reference in this Joint
Proxy Statement/Prospectus and in the Registration Statement of which this Joint
Proxy Statement/Prospectus forms a part in reliance upon the audit report of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated
herein by reference and upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements and the related financial statement
schedule of Augat incorporated in this Joint Proxy Statement/Prospectus and in
the Registration Statement of which this Joint Proxy Statement/Prospectus forms
a part by reference from Augat's 1995 Form 10-K have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of Amerace at December 31, 1994 and
for the years ended December 31, 1994 and 1993, incorporated by reference in
this Joint Proxy Statement/Prospectus and in the Registration Statement of which
this Joint Proxy Statement/Prospectus forms a part have been audited by Arthur
Andersen LLP, independent accountants, as set forth in their reports thereon,
which are incorporated herein by reference. Such consolidated financial
statements are incorporated herein by
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reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
VALIDITY OF SHARES
The validity of the T&B Common Stock to be issued pursuant to the Merger
will be passed upon for T&B by Wyatt, Tarrant & Combs, Louisville, Kentucky.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at T&B's 1997 annual meeting
of shareholders, in addition to meeting certain eligibility requirements
established by the SEC, must be in writing and received by the Corporate
Secretary of T&B at T&B's principal executive offices by November 21, 1996, to
be considered for inclusion in T&B's proxy statement and form of proxy for T&B's
1997 annual meeting of shareholders.
Stockholder proposals for inclusion in proxy materials for the Augat 1997
Annual Meeting (if the Merger has not been consummated prior to the date the
meeting is to be held) should be addressed to Augat's Clerk, 89 Forbes
Boulevard, P.O. Box 448, Mansfield, Massachusetts 02048 and must be received by
Augat on or before November 25, 1996.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
AUGAT INC.,
THOMAS & BETTS CORPORATION
AND
EG ACQUISITIONS CORP.
DATED AS OF OCTOBER 7, 1996
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "AGREEMENT"), dated as
of October 7, 1996, among AUGAT INC., a Massachusetts corporation (the
"COMPANY"), THOMAS & BETTS CORPORATION, a Tennessee corporation ("PARENT"), and
EG ACQUISITIONS CORP., a Delaware corporation and a wholly-owned subsidiary of
Parent ("MERGER SUB"; the Company and Merger Sub sometimes being hereinafter
collectively referred to as the "CONSTITUENT CORPORATIONS").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "MERGER") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE");
WHEREAS, for financial accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling-of-interests"; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the respective
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "SURVIVING
CORPORATION"), and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article II. The Merger shall have the
effects specified in the Massachusetts Business Corporation Law, as amended (the
"MBCL") and the Delaware General Corporation Law (the "DGCL").
1.2. CLOSING. The closing of the Merger (the "CLOSING") shall take place
(i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York
at 9:00 A.M. on the first business day on which the last to be fulfilled or
waived of the conditions set forth in Article VII (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be satisfied or waived in
accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the Company and Parent may agree in writing (the "CLOSING
DATE").
1.3. EFFECTIVE TIME. As soon as practicable following the Closing, the
Company and Parent will cause an Articles of Merger (the "MASSACHUSETTS ARTICLES
OF MERGER") to be executed and filed with the Secretary of State of
Massachusetts as provided in Section 79 of the MBCL. As soon as practicable
following the Closing, the Company and Parent will cause a Certificate of Merger
(the "DELAWARE CERTIFICATE OF MERGER") to be executed and filed with the
Secretary of State of Delaware as provided in Section 252 of the DGCL. As soon
as practicable following the Closing, Parent will cause an Articles of Merger
(the "TENNESSEE ARTICLES OF MERGER") to be executed and filed with the Secretary
of State of Tennessee as provided in Section 48-21-107 of the Tennessee Business
Corporation Act. The Merger shall
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become effective at the time when the Massachusetts Articles of Merger and the
Delaware Certificate of Merger have been duly filed with the Secretary of State
of Massachusetts and the Secretary of State of Delaware, respectively, and at
the time that the Tennessee Articles of Merger have become effective (the
"EFFECTIVE TIME").
ARTICLE II
Articles of Organization and By-Laws
of the Surviving Corporation
2.1. THE ARTICLES OF ORGANIZATION. The articles of organization of the
Company as in effect immediately prior to the Effective Time shall be the
articles of organization of the Surviving Corporation (the "CHARTER"), until
duly amended as provided therein or by applicable law, except that Article 3 of
the Charter shall be amended to provide in the column for shares of stock with
par value that the number of shares of common stock shall be 1,000. The purpose
of the Surviving Corporation shall be the purpose as set forth in Article 2 of
the Company's articles of organization in effect immediately prior to the
Effective Time.
2.2. THE BY-LAWS. The by-laws of the Company in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "BY-LAWS"), until
thereafter amended as provided therein or by applicable law.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. DIRECTORS. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
3.2. OFFICERS. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. EFFECT ON CAPITAL STOCK. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) MERGER CONSIDERATION. Each share of the Common Stock, par value
$.10 per share, of the Company (the "SHARES") issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Merger Sub or any other direct or indirect subsidiary of Parent
(collectively, the "PARENT COMPANIES") or Shares that are owned by the
Company or any direct or indirect subsidiary of the Company and in each case
not held on behalf of third parties or Shares ("DISSENTING SHARES") that are
owned by stockholders ("DISSENTING STOCKHOLDERS") exercising appraisal
rights pursuant to Section 86 of the MBCL (collectively, "EXCLUDED SHARES"))
shall be converted into, and become exchangeable for (the "MERGER
CONSIDERATION"), 0.680 shares (the "EXCHANGE RATIO") of Common Stock, no par
value, of Parent ("PARENT COMMON STOCK"); PROVIDED, THAT, if the average of
the per share
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closing prices of Parent Common Stock as reported on the New York Stock
Exchange, Inc. (the "NYSE") composite transactions reporting system (as
reported in the New York City edition of THE WALL STREET JOURNAL or, if not
reported thereby, another authoritative source) for 20 trading days ending
on the third trading day prior to the Stockholders Meeting (as defined in
Section 6.5) (the "AVERAGE CLOSING PRICE") is less than $37.50, the Exchange
Ratio shall be equal to $25.50 divided by the Average Closing Price; and
(ii) in the event that the Average Closing Price is more than $41.50, the
Exchange Ratio shall be equal to $28.22 divided by the Average Closing
Price. At the Effective Time, all Shares shall no longer be outstanding and
shall be cancelled and retired and shall cease to exist, and each
certificate (a "CERTIFICATE") formerly representing any of such Shares
(other than Excluded Shares) shall thereafter represent only the right to
the Merger Consideration and the right, if any, to receive pursuant to
Section 4.2(e) cash in lieu of fractional shares into which such Shares have
been converted pursuant to this Section 4.1(a) and any distribution or
dividend pursuant to Section 4.2(c).
(b) COMPANY OPTIONS. At the Effective Time, all outstanding Company
Options (as defined in Section 6.12(a)) will be assumed by Parent in
accordance with Section 6.12(a).
(c) CANCELLATION OF SHARES. Each Share issued and outstanding
immediately prior to the Effective Time and owned by any of the Parent
Companies or owned by the Company or any direct or indirect subsidiary of
the Company (other than Shares that are in each case owned on behalf of
third parties), shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, shall be cancelled and
retired without payment of any consideration therefor and shall cease to
exist.
(d) MERGER SUB. At the Effective Time, each share of common stock,
without par value, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
4.2. EXCHANGE OF CERTIFICATES FOR SHARES.
(a) EXCHANGE AGENT. As of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with an exchange agent selected by Parent with
the Company's prior written approval, which shall not be unreasonably
withheld (the "EXCHANGE AGENT"), for the benefit of the holders of Shares,
certificates representing the shares of Parent Common Stock and, after the
Effective Time, if applicable, any cash, dividends or other distributions
with respect to the Parent Common Stock to be issued or paid pursuant to the
last sentence of Section 4.1(a) in exchange for outstanding Shares upon due
surrender of the Certificates (or affidavits of loss in lieu thereof)
pursuant to the provisions of this Article IV (such certificates for shares
of Parent Common Stock, together with the amount of any dividends or other
distributions payable with respect thereto, being hereinafter referred to as
the "EXCHANGE FUND").
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time (but in no
event more than five (5) business days thereafter), the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of record
of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates
(or affidavits of loss in lieu thereof) to the Exchange Agent, such letter
of transmittal to be in such form and have such other provisions as Parent
and the Company may reasonably agree, and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for (A) certificates
representing shares of Parent Common Stock and (B) any unpaid dividends and
other distributions and cash in lieu of fractional shares. Subject to
Section 4.2(h), upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor
(x) a certificate representing that number of whole shares of Parent Common
Stock that such holder is entitled to receive pursuant to this Article IV,
(y) a check in the amount (after giving effect to any required tax
withholdings) of (A) any cash in lieu of fractional shares plus (B) any
unpaid non-
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stock dividends and any other dividends or other distributions that such
holder has the right to receive pursuant to the provisions of this Article
IV, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any amount payable upon due surrender of
the Certificates. In the event of a transfer of ownership of Shares that is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock, together
with a check for any cash to be paid upon due surrender of the Certificate
and any other dividends or distributions in respect thereof, may be issued
and/or paid to such a transferee if the Certificate formerly representing
such Shares is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. If any certificate for
shares of Parent Common Stock is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Person (as defined below)
requesting such exchange shall pay any transfer or other taxes required by
reason of the issuance of certificates of shares of Parent Common Stock in a
name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of Parent or the
Exchange Agent that such tax has been paid or is not applicable.
For the purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section
5.1(d)) or other entity of any kind or nature.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING. (i) All
shares of Parent Common Stock to be issued pursuant to the Merger shall be
deemed issued and outstanding as of the Effective Time and whenever a
dividend or other distribution is declared by Parent in respect of the
Parent Common Stock, the record date for which is at or after the Effective
Time, that declaration shall include dividends or other distributions in
respect of all shares issuable pursuant to this Agreement. No dividends or
other distributions in respect of the Parent Common Stock shall be paid to
any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Article IV. Subject to the
effect of applicable laws, following surrender of any such Certificate,
there shall be issued and/or paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (A) at the time of such surrender, the dividends
or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of Parent Common Stock
and not paid and (B) at the appropriate payment date, the dividends or other
distributions payable with respect to such whole shares of Parent Common
Stock with a record date after the Effective Time but with a payment date
subsequent to surrender.
(ii) Holders of unsurrendered Certificates shall be entitled to vote
after the Effective Time at any meeting of Parent stockholders the number of
whole shares of Parent Common Stock represented by such Certificates,
regardless of whether such holders have exchanged their Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(e) FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Common Stock will be issued and
any holder of Shares entitled to receive a fractional share of Parent Common
Stock but for this Section 4.2(e) shall be entitled to receive a cash
payment in lieu thereof, which payment shall represent such holder's
proportionate interest in the shares of Parent Common Stock based on the
Average Closing Price.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund and
cash specified to be paid in lieu of fractional shares (including the
proceeds of any investments thereof and any Parent Common Stock) that
remains unclaimed by the stockholders of the Company for 180 days after the
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Effective Time shall be paid to Parent. Any stockholders of the Company who
have not theretofore complied with this Article IV shall thereafter look
only to Parent for payment of their shares of Parent Common Stock and any
cash, dividends and other distributions in respect of the Parent Common
Stock payable and/or issuable pursuant to Section 4.1 and Section 4.2(c)
upon due surrender of their Certificates (or affidavits of loss in lieu
thereof), in each case, without any interest thereon. Notwithstanding the
foregoing, none of Parent, the Surviving Corporation, the Exchange Agent or
any other Person shall be liable to any former holder of Shares for any
amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person
of a bond in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the shares
of Parent Common Stock and any cash payable and any unpaid dividends or
other distributions in respect of Parent Common Stock pursuant to Section
4.2(c) upon due surrender of and deliverable in respect of the Shares
represented by such Certificate pursuant to this Agreement.
(h) AFFILIATES. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined
pursuant to Section 6.9) of the Company shall not be exchanged until Parent
has received a written agreement from such Person as provided in Section 6.9
hereof.
4.3. DISSENTERS' RIGHTS. No Dissenting Stockholder shall be entitled to
shares of Parent Common Stock or cash in lieu of fractional shares thereof or
any dividends or other distributions pursuant to this Article IV unless and
until the holder thereof shall have failed to perfect or shall have effectively
withdrawn or lost such holder's right to dissent from the Merger under the MBCL,
and any Dissenting Stockholder shall be entitled to receive only the payment
provided by either Section 89 or Section 92 of the MBCL with respect to Shares
owned by such Dissenting Stockholder. If any Person who otherwise would be
deemed a Dissenting Stockholder shall have failed to properly perfect or shall
have effectively withdrawn or lost the right to dissent with respect to any
Shares, such Shares shall thereupon be treated as though such Shares had been
converted into shares of Parent Common Stock pursuant to Section 4.1 hereof. The
Company shall give Parent (i) prompt notice of any written demands for
appraisal, attempted withdrawals of such demands, and any other instruments
served pursuant to applicable law received by the Company relating to
stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demand for appraisal under the
MBCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
4.4. ADJUSTMENTS TO PREVENT DILUTION. In the event that Parent changes the
number of Shares or shares of Parent Common Stock or securities convertible or
exchangeable into or exercisable for Shares or shares of Parent Common Stock
issued and outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or exchange
offer, or other similar transaction, the Merger Consideration and the Exchange
Ratio shall be equitably adjusted.
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ARTICLE V
Representations and Warranties
5.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the corresponding sections or subsections of the disclosure letter delivered to
Parent by the Company on or prior to entering into this Agreement (the "COMPANY
DISCLOSURE LETTER"), the Company hereby represents and warrants to Parent and
Merger Sub that:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the Company
and its Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization and has all requisite corporate or similar
power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and is qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where
the ownership or operation of its properties or conduct of its business
requires such qualification, except where the failure to be so qualified or
in good standing, when taken together with all other such failures, is not
reasonably likely to have a Company Material Adverse Effect (as defined
below). The Company has made available to Parent a complete and correct copy
of the Company's and its Subsidiaries' articles of organization or other
similar organizational documents and by-laws, each as amended to date. The
Company's and its Subsidiaries' certificates of incorporation and by-laws so
delivered are in full force and effect. Section 5.1(a) of the Company
Disclosure Letter contains a correct and complete list of each jurisdiction
where the Company and each of its Subsidiaries is organized and qualified to
do business.
As used in this Agreement, the term (i) "SUBSIDIARY" means, with respect
to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions is directly or indirectly owned or controlled
by such party or by one or more of its respective Subsidiaries or by such
party and any one or more of its respective Subsidiaries and (ii) "COMPANY
MATERIAL ADVERSE EFFECT" means a material adverse effect on the financial
condition, properties, business or results of operations of the Company and
its Subsidiaries taken as a whole.
(b) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 60,000,000 Shares, of which 20,039,444 Shares were outstanding
as of the close of business on September 27, 1996. All of the outstanding
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no Shares reserved for issuance, except that,
as of September 27, 1996, there were an aggregate of 3,733,941 Shares
reserved for issuance pursuant to the Company's 1996 Stock Plan, 1996 Stock
Bonus Plan for Senior Executives, Director's Deferred Compensation Plan,
1996 Stock Retainer Plan for Non-employee Directors, 1993 Employee Stock
Purchase Plan, 1987 Stock Option and Appreciation Right Plan, 1989 Stock
Plan, 1994 Stock Plan, 1984 Stock Option and Appreciation Right Plan, and
Savings and Retirement Plan (the "STOCK PLANS"), 4,754,677 Shares reserved
for issuance pursuant to the Rights Agreement, dated as of August 2, 1988,
between the Company and The Chase Manhattan Bank, N.A. (the "RIGHTS
AGREEMENT"). The Company Disclosure Letter contains a correct and complete
list of each outstanding option to purchase Shares under the Stock Plans
(each a "COMPANY OPTION"), including the holder, date of grant, exercise
price and number of Shares subject thereto. Each of the outstanding shares
of capital stock or other securities of each of the Company's Subsidiaries
is duly authorized, validly issued, fully paid and nonassessable and, except
for directors' qualifying shares, owned by a direct or indirect wholly-owned
subsidiary of the Company, free and clear of any lien, pledge, security
interest, claim or other encumbrance. Except as set forth above, there are
no preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or sell any shares of
capital stock or other securities of the Company or any of its Subsidiaries
or any securities or obligations convertible or exchangeable into or
exercisable for, or
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giving any Person a right to subscribe for or acquire, any securities of the
Company or any of its Subsidiaries, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. The Company
does not have outstanding any bonds, debentures, notes or other obligations
the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders
of the Company on any matter ("VOTING DEBT").
(c) CORPORATE AUTHORITY; APPROVAL AND FAIRNESS. (i) The Company has
all requisite corporate power and authority and has taken all corporate
action necessary in order to execute, deliver and perform its obligations
under this Agreement and to consummate, subject only to approval of this
Agreement by the holders of two-thirds of the outstanding Shares (the
"COMPANY REQUISITE VOTE"), the Merger. This Agreement is a valid and binding
agreement of the Company enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(the "BANKRUPTCY AND EQUITY EXCEPTION").
(ii) The board of directors of the Company (A) has unanimously approved
this Agreement and the Merger and the other transactions contemplated hereby
and (B) has received the opinion of its financial advisors, Merrill Lynch &
Co. to the effect that the Exchange Ratio to be received by the holders of
the Shares in the Merger (other than Parent and its AFFILIATES (as defined
in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) is fair to such holders from a financial point of view, a
copy of which opinion has been delivered to Parent.
(d) GOVERNMENTAL FILINGS; NO VIOLATIONS. (i) Other than the filings
and/or notices (A) pursuant to Section 1.3, (B) under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the Exchange
Act and the Securities Act of 1933, as amended (the "SECURITIES ACT") and
(C) to comply with state securities or "blue-sky" laws, no notices, reports
or other filings are required to be made by the Company with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by the Company from, any governmental or regulatory authority,
agency, commission or body or other governmental entity ("GOVERNMENTAL
ENTITY"), in connection with the execution and delivery of this Agreement by
the Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate transactions contemplated by
this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Company do not, and the consummation by the Company of the Merger and the
other transactions contemplated hereby will not, constitute or result in (A)
a breach or violation of, or a default under, the articles of organization
or by-laws of the Company or the comparable governing instruments of any of
its Subsidiaries, (B) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, contract, note, mortgage, indenture, arrangement or
other obligation ("CONTRACTS") binding upon the Company or any of its
Subsidiaries or any Law (as defined in Section 5.1(i)) or governmental or
non-governmental permit or license to which the Company or any of its
Subsidiaries is subject or (C) any change in the rights or obligations of
any party under any of the Contracts, except, in the case of clause (B) or
(C) above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably likely to
have a Company Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement. Section 5.1(d) of the Company Disclosure
Letter sets forth a correct and complete list of Contracts of the Company
and its Subsidiaries pursuant to which consents or waivers are or may be
required prior to consummation of the transactions contemplated by this
Agreement, except for those Contracts where the failure to obtain such
waiver or consent is not reasonably likely to have a Company Material
Adverse Effect.
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(e) COMPANY REPORTS; FINANCIAL STATEMENTS. The Company has delivered
or made available to Parent each registration statement, report, proxy
statement or information statement prepared by it since December 31, 1995
(the "AUDIT DATE"), including (i) the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 and (ii) the Company's Quarterly
Reports on Form 10-Q for the periods ended March 31, 1996, and June 30,
1996, each in the form (including exhibits, annexes and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any such reports filed subsequent to the date
hereof, the "COMPANY REPORTS"). As of their respective dates, the Company
Reports did not, and any Company Reports filed with the SEC subsequent to
the date hereof will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which
they were made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports (including
the related notes and schedules) fairly presents, or will fairly present,
the consolidated financial position of the Company and its Subsidiaries as
of its date and each of the consolidated statements of income, shareholders'
equity and cash flows included in or incorporated by reference into the
Company Reports (including any related notes and schedules) fairly presents,
or will fairly present, the results of operations, as the case may be, of
the Company and its Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to notes and normal year-end
adjustments that will not be material in amount or effect), in each case in
accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted
therein.
(f) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
Reports filed prior to the date hereof, since the Audit Date the Company and
its Subsidiaries have conducted their respective businesses only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses and there has not been (i) any
change in the financial condition, properties, business or results of
operations of the Company and its Subsidiaries or any development or
combination of developments affecting the Company of which the Company's
executive officers (within the meaning of Rule 3b-7 under the Exchange Act)
("EXECUTIVE OFFICERS"), have knowledge, except those changes, developments
or combinations of developments that, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect; (ii) any
material damage, destruction or other casualty loss with respect to any
material asset or property owned, leased or otherwise used by the Company or
any of its Subsidiaries, whether or not covered by insurance; (iii) any
declaration, setting aside or payment of any dividend or other distribution
in respect of the capital stock of the Company, except for dividends or
other distributions on its capital stock publicly announced prior to the
date hereof; or (iv) any change by the Company in accounting principles,
practices or methods. Since the Audit Date, except as provided for herein or
as disclosed in the Company Reports filed prior to the date hereof, there
has not been any increase in the compensation payable or that could become
payable by the Company or any of its Subsidiaries to officers or any
amendment of any of the Compensation and Benefit Plans (as defined below)
other than increases or amendments in the ordinary course.
(g) LITIGATION AND LIABILITIES. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Executive Officers of the
Company, threatened against the Company or any of its Affiliates or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed, or any other facts or
circumstances of which the Executive Officers of the Company have knowledge
that could result in any claims against, or obligations or liabilities of,
the Company or any of its Affiliates, except for those that are not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect or prevent or materially burden or materially impair
the ability of the Company to consummate the transactions contemplated by
this Agreement.
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(h) EMPLOYEE BENEFITS.
(i) A copy of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement, policy
or arrangement that covers employees, directors, former employees or
former directors of the Company and its Subsidiaries (other than plans
maintained or sponsored by non-U.S. governmental entities) (the
"COMPENSATION AND BENEFIT PLANS") and any trust agreement or insurance
contract forming a part of such Compensation and Benefit Plans has been
provided or made available to Parent prior to the date hereof. The
Compensation and Benefit Plans are listed in Section 5.1(h) of the
Company Disclosure Letter and any "change of control" or similar
provisions therein are specifically identified in Section 5.1(h) of the
Company Disclosure Letter.
(ii) All Compensation and Benefit Plans are in substantial compliance
with all applicable law, including the Code and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). Each Compensation and
Benefit Plan that is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA (a "PENSION PLAN") and that is intended
to be qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS"), and
the Company is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no
pending or, to the knowledge of the Executive Officers of the Company or
the officer of the Company that is in charge of the day-to-day operations
of the Company's Human Resources Department, threatened material
litigation relating to the Compensation and Benefit Plans. Neither the
Company nor any Subsidiary has engaged in a transaction with respect to
any Compensation and Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject the Company
or any of its Subsidiaries to a material tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company
or any Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA AFFILIATE"). The Company and its Subsidiaries have not
contributed, or been obligated to contribute, to a multiemployer plan
under Subtitle E of Title IV of ERISA at any time since September 26,
1980. No notice of a "reportable event", within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof or
will be required to be filed in connection with the transaction
contemplated by this Agreement.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made
or have been reflected on the most recent consolidated balance sheet
filed or incorporated by reference in the Company Reports prior to the
date hereof. Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA. Neither the Company nor its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof,
the actuarially determined present value of all "benefit liabilities",
within the meaning of Section 4001(a)(16) of ERISA (as determined on the
basis of the actuarial assumptions contained in the Pension Plan's most
recent actuarial valuation), did not exceed the then current value of the
assets of such Pension Plan, and there has been
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no material change in the financial condition of such Pension Plan since
the last day of the most recent plan year.
(vi) Neither the Company nor its Subsidiaries have any obligations
for retiree health and life benefits under any Compensation and Benefit
Plan (other than benefits required to be continued under Part 6 of
Subtitle B of Title I of ERISA or applicable state or foreign law),
except as set forth in the Company Disclosure Letter. The Company or its
Subsidiaries may amend or terminate any such plan under the terms of such
plan at any time without incurring any material liability thereunder.
(vii) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any employees of the
Company or its Subsidiaries to severance pay, (y) accelerate the time of
payment or vesting or trigger any payment of compensation or benefits
under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Compensation or Benefit Plans or (z)
result in any breach or violation of, or a default under, any of the
Compensation and Benefit Plans.
(viii) All Compensation and Benefit Plans covering current or former
non-U.S. employees or former employees of the Company and its
Subsidiaries comply in all material respects with applicable local law.
The Company and its Subsidiaries have no material unfunded liabilities
with respect to any Pension Plan that covers such non-U.S. employees.
(i) COMPLIANCE WITH LAWS; PERMITS. Except as set forth in the Company
Reports filed prior to the date hereof, the businesses of each of the
Company and its Subsidiaries have not been, and are not being, conducted in
violation of any law, ordinance, regulation, judgment, order, decree,
arbitration award, license or permit of any Governmental Entity
(collectively, "LAWS"), except for violations that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse
Effect or prevent or materially burden or materially impair the ability of
the Company to consummate the transactions contemplated by this Agreement.
To the knowledge of the officers of the Company, no material change is
required in the Company's or any of its Subsidiaries' processes, properties
or procedures in connection with any such Laws, and the Company has not
received any notice or communication of any material noncompliance with any
such Laws that has not been cured as of the date hereof. The Company and its
Subsidiaries each has all permits, licenses, trademarks, service marks,
franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
presently conducted except those the absence of which are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect or prevent or materially burden or materially impair the ability of
the Company to consummate the Merger and the other transactions contemplated
by this Agreement.
(j) TAKEOVER STATUTES. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (including
Chapters 110C and 110D of the General Laws of Massachusetts) (each a
"TAKEOVER STATUTE") or any applicable anti-takeover provision in the
Company's articles of organization and by-laws is, or at the Effective Time
will be, applicable to the Company, the Shares, the Merger or the other
transactions contemplated by this Agreement.
(k) ENVIRONMENTAL MATTERS. Except as would not be reasonably likely to
result in a Company Material Adverse Effect, to the knowledge of the
officers of the Company and its Subsidiaries and the Company's present
Director of Environmental, Health and Safety: (i) the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws (as
defined below); (ii) the properties currently owned or operated by the
Company (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances (as defined
below) to such an extent that under applicable Environmental Laws they
represent a current and significant threat to human health or the
environment; (iii) the properties formerly owned or operated by the Company
or any of its Subsidiaries were not contaminated with Hazardous Substances
on or prior to the period of ownership or operation by the Company or any of
its Subsidiaries to such an extent that under
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applicable Environmental Laws they represent a current and significant
threat to human health or the environment; (iv) neither the Company nor its
Subsidiaries are presently subject to liability for any Hazardous Substance
disposal or contamination on or under any third party property; (v) neither
the Company nor any Subsidiary has received any notice, demand, letter,
claim or request for information alleging that the Company or any of its
Subsidiaries may be in violation of or liable under any Environmental Law;
(vi) neither the Company nor any of its Subsidiaries is subject to any
orders, decrees, injunctions or other arrangements with any Governmental
Entity relating to liability under any Environmental Law or relating to
Hazardous Substances; (vii) there are no circumstances or conditions
involving the Company or any of its Subsidiaries that could reasonably be
expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use, or transfer of any property of the
Company pursuant to any Environmental Law and that represent a current and
significant threat to human health or the environment; and (viii) the
Company and its Subsidiaries have made reasonable efforts to provide
material non-privileged information (e.g. information presently known to the
company which sets forth the Company's or the Subsidiaries' present
understanding of the nature and scope of any liability that may reasonably
be incurred by the Company pursuant to an Environmental Law) to respond to
data requests furnished by Parent.
As used herein, the term "ENVIRONMENTAL LAW" means any federal, state,
local or foreign law, regulation, order, decree, permit, authorization,
judicial or administrative decision, common law or agency requirement
relating to: (A) the protection, investigation or restoration of the
environment, health and safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance
or (C) noise, odor, wetlands, pollution or contamination of the environment.
As used herein, the term "HAZARDOUS SUBSTANCE" means any substance that
is: (A) listed, classified or regulated pursuant to any Environmental Law;
(B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which is the subject of
regulatory action by any Government Authority pursuant to any Environmental
Law.
(l) ACCOUNTING AND TAX MATTERS. As of the date hereof, neither the
Company nor, to the knowledge of the Executive Officers of the Company and
the officer of the Company that is in charge of the day-to-day operations of
the Company's Tax Department, any of its Affiliates has taken or agreed to
take any action, nor do the officers of the Company have any knowledge of
any fact or circumstance, that would prevent Parent from accounting for the
business combination to be effected by the Merger as a
"pooling-of-interests" or prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(m) TAXES. Except for matters that would not be reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect,
the Company and each of its Subsidiaries (i) have prepared in good faith and
duly and timely filed (taking into account any extension of time within
which to file) all Tax Returns (as defined below) required to be filed or
delivered by any of them and all such filed or delivered Tax Returns are
complete and accurate in all material respects; (ii) have paid all Taxes (as
defined below) that are required to be paid or that the Company or any of
its Subsidiaries are obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters contested
in good faith; and (iii) have not waived any statute of limitations with
respect to Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. As of the date hereof, there are not pending or,
to the knowledge of the Executive Officers of the Company and the officer of
the Company that is in charge of the day-to-day operations of the Company's
Tax Department threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters.
There are not, to the knowledge of the Executive Officers of the Company and
the officer of the Company that is in charge of the day-to-day operations of
the Company's Tax Department, any unresolved questions or claims concerning
the Company's or any of its Subsidiaries' Tax liability that are reasonably
likely to have a Company Material Adverse
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Effect. The Company has made available to Purchaser true and correct copies
of the United States federal income Tax Return filed by the Company and its
Subsidiaries for each of the fiscal years ended December 31, 1993, 1994 and
1995. Neither the Company nor any of its Subsidiaries has any liability with
respect to income, franchise or similar Taxes that accrued on or before June
30, 1996 in excess of the amounts accrued in respect thereto that are
reflected in the financial statements included in the Company Reports filed
on or prior to the date hereof.
As used in this Agreement, (i) the term "TAX" (including, with
correlative meaning, the terms "TAXES", and "TAXABLE") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll,
sales, employment, unemployment, disability, use, property, withholding,
excise, production, value added, occupancy and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties
and additions imposed with respect to such amounts and any interest in
respect of such penalties and additions, and (ii) the term "TAX RETURN"
includes all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be
supplied to a Tax authority or any person relating to Taxes.
(n) LABOR MATTERS. Neither the Company nor any of its Subsidiaries is
a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of
any material proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization nor is there
pending or, to the knowledge of the Executive Officers of the Company
following a reasonable inquiry, threatened, nor has there been for the past
five years, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the Company or any of its Subsidiaries, nor has there been
for the past five years any loss of employment (within the meaning of the
Worker Adjustment and Retraining Act ("WARN ACT") of any employees of the
Company and its Subsidiaries for which the Company has not given proper
notice or made the required payments to such employees pursuant to the WARN
Act. The Company has previously made available to Parent correct and
complete copies of all labor and collective bargaining agreements, if any,
to which the Company or any of its Subsidiaries is party or by which any of
them are otherwise bound.
(o) INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or any of its Subsidiaries are
with reputable insurance carriers, provide, in the reasonable judgment of
the Company, full and adequate coverage for all normal risks incident to the
business of the Company and its Subsidiaries and their respective properties
and assets.
(p) INTELLECTUAL PROPERTY.
(i) The Company and/or each of its Subsidiaries owns, or is licensed
or otherwise possesses legally enforceable rights to use all patents,
trademarks, trade names, trade dress, service marks, copyrights, and any
applications therefor, technology, know-how, trade secrets, computer
software programs or applications, and tangible or intangible information
or materials whether proprietary or not that are used in the business of
the Company and its Subsidiaries as currently conducted, except for any
such failures to own, be licensed or possess that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse
Effect.
(ii) Except as disclosed in the Company Reports or as is not
reasonably likely to have a Company Material Adverse Effect:
(A) the Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to
which the Company is authorized to use any third-party patents,
trademarks, service marks, copyrights, trade secrets or other
proprietary rights or confidential information and any
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specific or general know-how or technology associated therewith
("THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS");
(B) no claims with respect to the patents, registered and
unregistered trademarks and service marks, registered copyrights,
trade names, trade dress and any applications therefor, trade
secrets, know-how and any other proprietary or confidential
information owned by the Company or any of its subsidiaries (the
"COMPANY INTELLECTUAL PROPERTY RIGHTS"), or Third Party Intellectual
Property Rights to the extent arising out of any use, reproduction,
or distribution of such Third Party Intellectual Property Rights by
or through the Company or any of its subsidiaries, are currently
pending or, to the knowledge of the officers of the Company, are
asserted or threatened by any person;
(C) the Company and its officers do not know of any grounds for
any bona fide claims (i) to the effect that the manufacture, sale,
licensing or use of any product as now made, used, sold or licensed
or proposed for manufacture use, sale or license by Company or any of
its Subsidiaries, infringes or violates any agreement pertaining to
any copyright, patent, trademark, service mark, or trade secret,
trade dress, or any other proprietary right or confidential
information belonging to a third party; (ii) against the use by the
Company or any of its Subsidiaries, of any trademarks, service marks,
trade names, trade secrets, copyrights, patents, technology,
know-how, or computer software programs and applications, trade
dress, or any other proprietary right or confidential information
used in the business of the Company or any of its subsidiaries as
currently conducted; (iii) challenging the ownership, validity, or
effectiveness of any of the Company Intellectual Property Rights; or
(iv) challenging the license or legally enforceable right to use or
transfer of the Third Party Intellectual Rights by the Company or any
of its Subsidiaries;
(D) to the knowledge of the officers of the Company, all patents,
trademarks, service marks, copyrights, trade names, trade dress,
trade secrets and all other proprietary or confidential information
held or owned by the Company are valid, enforceable and subsisting;
and
(E) to the knowledge of the officers, agents and employees of the
Company, there is no unauthorized use, infringement or
misappropriation of any kind of any of the Company Intellectual
Property Rights by any third party, including any employee or former
employee of the Company or any of its Subsidiaries.
(q) RIGHTS PLAN. (i) The Company has taken all action necessary to
ensure that the Rights Agreement will expire immediately prior to the
Effective Time and that the execution of this Agreement and any agreements
between the Company and Parent or Merger Subsidiary and the consummation of
the Merger and the other transactions contemplated hereby do not and will
not cause either a Distribution Date or Stock Acquisition Date to occur
(each, as defined in the Rights Agreement).
(ii) The Company has taken all necessary action with respect to all of
the outstanding Rights so that, as of immediately prior to the Effective
Time, (A) neither the Company nor Parent will have any obligations under the
Rights or the Rights Agreement and (B) the holders of the Rights will have
no rights under the Rights or the Rights Agreement.
(r) PRODUCT LIABILITY AND RECALLS. (i) Except as disclosed in the
Company Reports, the Executive Officers of the Company do not know of any
claim, or the basis of any claim, against the Company or any of its
Subsidiaries for injury to person or property of employees or any third
parties suffered as a result of the sale of any product or performance of
any service by the Company or any of its subsidiaries, including claims
arising out of the defective or unsafe nature of its products or services,
which is reasonably likely to have a Company Material Adverse Effect.
(ii) Except as disclosed in the Company Reports, there is no pending or,
to the knowledge of the Executive Officers of the Company, threatened recall
or investigation of any product sold by the Company, which recall or
investigation is reasonably likely to have a Company Material Adverse
Effect.
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(s) ACCOUNTS RECEIVABLE. The accounts receivable of the Company and
its Subsidiaries as reflected in the most recent financial statements
contained in the Company Reports, to the extent uncollected on the date
hereof, and the accounts receivable reflected on the books of and its
Subsidiaries are valid and existing and represent monies due, and the
Company has made reserves it reasonably considers adequate for receivables
not collectible in the ordinary course of business, and (subject to the
aforesaid reserves) to the knowledge of the Executive Officers of the
Company, are subject to no refunds or other adjustments and to no defenses,
rights of setoff, assignments, restrictions, encumbrances or conditions
enforceable by third parties on or affecting any thereof, except for such
refunds, adjustments, defenses, rights of setoff, assignments, restrictions,
encumbrances or conditions as could not reasonably be expected to have a
Company Material Adverse Effect.
(t) INVENTORY. The inventories of the Company and its Subsidiaries as
reflected in the most recent financial statements contained in the Company
Reports, or acquired by the Company or any of its Subsidiaries after the
date thereof, (i) are carried at an amount not in excess of the lower of
cost or net realizable value, and (ii) do not include any inventory which is
obsolete, surplus or not usable or saleable in the lawful or ordinary course
of business of the Company and its Subsidiaries as heretofore conducted, in
each case net of reserves provided therefor except, in each case, as is not
reasonably likely to have a Company Material Adverse Effect.
(u) WARRANTIES. All products manufactured or sold by the Company or
any of its Subsidiaries have been manufactured or sold in substantial
conformity with applicable contractual commitments and all express or
implied warranties except for such non-substantial conformity as is not
reasonably likely to have a Company Material Adverse Effect.
(v) BROKERS AND FINDERS. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection
with the Merger or the other transactions contemplated in this Agreement
except that the Company has employed Merrill Lynch & Co. as its financial
advisor, the arrangements with which have been disclosed to Parent prior to
the date hereof.
5.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Except as
set forth in the corresponding sections or subsections of the disclosure letter
delivered to the Company by Parent on or prior to entering into this Agreement
(the "PARENT DISCLOSURE LETTER"), Parent and Merger Sub each hereby represent
and warrant to the Company that:
(a) CAPITALIZATION OF MERGER SUB. The authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, without par value, all
of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time will
be, owned by Parent, and there are (i) no other shares of capital stock or
other voting securities of Merger Sub, (ii) no securities of Merger Sub
convertible into or exchangeable for shares of capital stock or voting
securities of Merger Sub and (iii) no options or other rights to acquire
from Merger Sub, and no obligations of Merger Sub to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Merger Sub. Merger Sub has not
conducted any business prior to the date hereof and has no, and prior to the
Effective Time will have no, assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant to this
Agreement and the Merger and the other transactions contemplated by this
Agreement.
(b) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Parent and its
Subsidiaries each is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted
and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except
where the
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failure to be so qualified or in such good standing, when taken together
with all other such failures, is not reasonably likely to have a Parent
Material Adverse Effect (as defined below). Parent has made available to the
Company a complete and correct copy of Parent's charter and by-laws, as
amended to the date hereof. Parent's charter and by-laws so delivered are in
full force and effect.
The term "PARENT MATERIAL ADVERSE EFFECT" means a material adverse
effect on the financial condition, properties, business or results of
operations of the Parent and its Subsidiaries taken as a whole.
(c) CAPITAL STRUCTURE. The authorized capital stock of Parent consists
of 80,000,000 shares of Parent Common Stock, of which 40,425,747 shares were
outstanding as of the close of business on September 28, 1996, and 500,000
shares of Preferred Stock, no par value (the "PARENT PREFERRED SHARES"), of
which no shares were outstanding as of the close of business on September
28, 1996. All of the outstanding Parent Common Stock and Parent Preferred
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. Parent has no Parent Common Stock or Parent Preferred Shares
reserved for issuance, except that, as of September 28, 1996, there were an
aggregate of 703,315 shares of Parent Common Stock reserved for issuance
pursuant to the Parent 1985 Stock Option Plan, 1993 Management Stock
Ownership Plan and Restricted Stock Plan for Non-employee Directors (the
"PARENT STOCK PLANS"). Each of the outstanding shares of capital stock of
each of Parent's Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable and, except for directors' qualifying shares, owned by a
direct or indirect wholly-owned subsidiary of Parent, free and clear of any
lien, pledge, security interest, claim or other encumbrance. Except as set
forth above, there are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements or commitments to issue or to
sell any shares of capital stock or other securities of Parent or any of its
Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of the Parent or any of its Subsidiaries, and no
securities or obligation evidencing such rights are authorized, issued or
outstanding. Parent does not have outstanding any bonds, debentures, notes
or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote)
with the stockholders of Parent on any matter ("PARENT VOTING DEBT").
(d) CORPORATE AUTHORITY.
(i) Parent and Merger Sub each have all requisite corporate power and
authority and each has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate, subject only to any stockholder approval necessary to approve
this Agreement and to permit the issuance of Parent Common Stock required
to be issued pursuant to Article IV (the "PARENT REQUISITE VOTE"), the
Merger. This Agreement is a valid and binding agreement of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(ii) Prior to the Effective Time, Parent will have taken all
necessary action to permit it to issue the number of shares of Parent
Common Stock required to be issued pursuant to Article IV. The Parent
Common Stock, when issued, will be validly issued, fully paid and
nonassessable, and no stockholder of Parent will have any preemptive
right of subscription or purchase in respect thereof. The Parent Common
Stock, when issued, will be registered under the Securities Act and the
Exchange Act and registered or exempt from registration under any
applicable state securities or "blue sky" laws.
(e) GOVERNMENTAL FILINGS; NO VIOLATIONS. (i) Other than the filings
and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, the
Securities Act and the Exchange Act, (C) to comply with state securities or
"blue sky" laws and (D) required to be made with the NYSE no notices,
reports or
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<PAGE>
other filings are required to be made by Parent or Merger Sub with, nor are
any consents, registrations, approvals, permits or authorizations required
to be obtained by Parent or Merger Sub from, any Governmental Entity, in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub and the consummation by Parent and Merger Sub of the Merger and
the other transactions contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely
to have a Parent Material Adverse Effect or prevent, materially delay or
materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by Parent
and Merger Sub do not, and the consummation by Parent and Merger Sub of the
Merger and the other transactions contemplated hereby will not, constitute
or result in a breach or violation of, or a default under, the certificate
or by-laws of Parent and Merger Sub or the comparable governing instruments
of any of its Subsidiaries.
(f) PARENT REPORTS; FINANCIAL STATEMENTS. Parent has delivered or made
available to the Company each registration statement, report, proxy
statement or information statement prepared by it since December 31, 1995
(the "PARENT AUDIT DATE"), including (i) Parent's Annual Report on Form 10-K
for the year ended December 31, 1995 and (ii) Parent's or Parent's
predecessor's Quarterly Reports on Form 10-Q for the periods ended March 31,
1996 and June 30, 1996, each in the form (including exhibits and any
amendments thereto) filed with the SEC (collectively, the "PARENT REPORTS").
As of their respective dates, the Parent Reports did not, and any Parent
Reports filed with the SEC subsequent to the date hereof will not, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Parent Reports (including the related
notes and schedules) fairly presents, or will fairly present, the
consolidated financial position of Parent and its Subsidiaries as of its
date and each of the consolidated statements of earnings, shareholders'
equity and cash flows included in or incorporated by reference into the
Parent Reports (including any related notes and schedules) fairly presents,
or will fairly present, the results of operations, as the case may be, of
Parent and its Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
accordance with GAAP consistently applied during the periods involved,
except as may be noted therein.
(g) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Parent
Reports filed prior to the date hereof, since the Parent Audit Date Parent
and its Subsidiaries have conducted their respective businesses only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses and there has not been (i) any
change in the financial condition, properties, business or results of
operations of Parent and its Subsidiaries or any development or combination
of developments affecting Parent of which Parent's Executive Officers have
knowledge, except those changes, developments or combinations of
developments that, individually or in the aggregate, are not reasonably
likely to result in a Parent Material Adverse Effect; (ii) any material
damage, destruction or other casualty loss with respect to any material
asset or property owned, leased or otherwise used by Parent or any of its
Subsidiaries, whether or not covered by insurance; (iii) any change by
Parent in accounting principles, practices or methods; or (iv) any
declaration, setting aside or payment of any dividend or other distribution
in respect of the capital stock of Parent, except for dividends or other
distributions on its capital stock publicly announced prior to the date
hereof.
(h) ACCOUNTING AND TAX MATTERS. Neither Parent nor, to the knowledge
of the Executive Officers of the Parent, any of its Affiliates has taken or
agreed to take any action, nor do the officers of Parent have any knowledge
of any fact or circumstance, that would prevent Parent from accounting
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for the business combination to be effected by the Merger as a
"pooling-of-interests" or prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(i) BROKERS AND FINDERS. Neither Parent nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection
with the Merger or the other transactions contemplated by this Agreement,
except that Parent has employed Morgan Stanley & Co. Incorporated and
Donaldson, Lufkin and Jenrette as its financial advisors, the arrangements
with which have been disclosed in writing to the Company prior to the date
hereof.
(j) ENVIRONMENTAL MATTERS. Except as would not be reasonably likely to
result in a Parent Material Adverse Effect, to the knowledge of the officers
of Parent and its Subsidiaries: (i) Parent's and its Subsidiaries' current
operating facilities are in compliance with applicable Environmental Laws;
(ii) neither Parent's nor its Subsidiaries' current or former operating
facilities are subject to any order by any governmental entity relating to
an obligation to incur response costs under CERCLA or analogous state
environmental cleanup law due to a release of Hazardous Substances to the
environment for which Parent or its Subsidiaries are being held potentially
responsible; (iii) neither Parent nor its Subsidiaries have received written
notices of potential responsibility, requests for information, orders, or
claims relating to releases of Hazardous Substances to the environment.
ARTICLE VI
Covenants
6.1. COMPANY INTERIM OPERATIONS. The Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless Parent shall otherwise approve in writing, which approval
shall not be unreasonably withheld or delayed, and except as otherwise expressly
contemplated by this Agreement):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use their respective reasonable best efforts to
preserve its business organization substantially intact, to keep available
the services of those of its present officers, employees and consultants
that are integral to the operation of its business as presently conducted
and to maintain its existing relations and goodwill with customers,
suppliers, distributors, creditors and lessors;
(b) it shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock owned by it in any of its Subsidiaries; (ii) amend its
articles of organization or by-laws or amend, modify or terminate the Rights
Agreement; (iii) split, combine or reclassify its outstanding shares of
capital stock; (iv) declare, set aside or pay any dividend payable in cash,
stock or property in respect of any capital stock other than dividends from
its direct or indirect wholly-owned Subsidiaries and other than regular
quarterly cash dividends not in excess of $.04 per Share; or (v) repurchase,
redeem or otherwise acquire, except in connection with the Stock Plans or
permit any of its Subsidiaries to purchase or otherwise acquire, any shares
of its capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock;
(c) neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into
or exchangeable or exercisable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of its capital stock of any
class or any Voting Debt or any other property or assets (other than Shares
issuable pursuant to options or other rights outstanding on the date hereof
under the Stock Plans and except for shares to be issued pursuant to the
Company's 1993 Employee Stock Purchase Plan, as amended); (ii) other than in
the ordinary and usual course of business or in amounts less than $250,000
individually or $2,000,000 in the aggregate transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of or encumber any other property
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or assets (including capital stock of any of its Subsidiaries), or incur or
modify any material indebtedness or other liability; or (iii) other than in
the ordinary and usual course of business make any commitments for, make or
authorize any capital expenditures other than in amounts less than $250,000
individually and $2,000,000 in the aggregate or, by any means, make any
acquisition of, or investment in, assets or stock of any other Person or
entity;
(d) neither it nor any of its Subsidiaries shall terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plans or increase the salary or wage of
any employees except increases occurring in the ordinary and usual course of
business (which shall include normal periodic performance reviews and
related compensation increases);
(e) neither it nor any of its Subsidiaries shall settle or compromise
any material claims or litigation or, except in the ordinary and usual
course of business, modify, amend or terminate any of its material Contracts
or waive, release or assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make any Tax election
or permit any insurance policy naming it as a beneficiary or loss-payable
payee to be cancelled or terminated except in the ordinary and usual course
of business;
(g) neither it nor any of its Subsidiaries shall take any action or omit
to take any action that would prevent the Merger from qualifying for
"pooling of interests" accounting treatment or as a "reorganization" within
the meaning of Section 368(a) of the Code or that would cause any of its
representations and warranties herein to become untrue in any material
respect; and
(h) neither it nor any of its Subsidiaries will authorize or enter into
an agreement to do any of the foregoing.
6.2. PARENT INTERIM OPERATIONS. Parent covenants and agrees as to itself
and its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless the Company shall otherwise approve in writing, which approval shall not
be unreasonably withheld or delayed, and except as otherwise expressly
contemplated by this Agreement):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use their respective reasonable best efforts to
preserve its business organization substantially intact, to keep available
the services of those of its present officers, employees and consultants
that are integral to the operation of its business as presently conducted
and to maintain its relations and goodwill with customers, suppliers,
distributors, creditors and lessors; and
(b) it shall not (i) amend its charter or by-laws, or (ii) declare, set
aside or pay any dividend payable in cash, stock or property in respect of
any capital stock except that a wholly owned Subsidiary of Parent may
declare and pay a dividend to its parent, and except that Parent may declare
and pay dividends consistent with past practice.
6.3. ACQUISITION PROPOSALS. The Company agrees that neither it nor any of
its Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, (i) initiate, solicit, encourage or otherwise
facilitate any inquiries or the making of any proposal or offer with respect to
a merger, reorganization, share exchange, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, it or any of its Subsidiaries (any such proposal or
offer being hereinafter referred to as an "ACQUISITION PROPOSAL") or (ii) engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any Person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall
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prevent the Company or its board of directors from (A) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal; (B)
providing information in response to a request therefor by a Person who has made
an unsolicited bona fide written Acquisition Proposal if the board of directors
receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to those contained in
the Confidentiality Agreements (as defined in Section 9.7); (C) engaging in any
negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal; or (D) recommending such an Acquisition
Proposal to the stockholders of the Company, if and only to the extent that, in
each such case referred to in clause (B), (C) or (D) above, (i) the board of
directors of the Company determines in good faith after consultation with
outside legal counsel that such action is necessary in order for its directors
to comply with their respective fiduciary duties under applicable law and, in
the case referred to in clause (D) above, (ii) the board of directors of the
Company believes in good faith (after consultation with its financial advisor)
that such Acquisition Proposal is reasonably likely to be consummated, and
would, if consummated, result in a transaction more favorable to the Company's
stockholders than the transaction contemplated by this Agreement (any such more
favorable Acquisition Proposal being referred to in this Agreement as a
"SUPERIOR PROPOSAL"). The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. The
Company agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.3 and in the Confidentiality
Agreements. The Company agrees that it will notify Parent promptly, but in no
event more than 24 hours, after any such inquiries, proposals or offers are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, any of its
representatives and thereafter shall keep Parent informed, on a current basis,
on the status of any such negotiations or discussions (but not including the
identity of any third party or the terms and conditions of any such offer or
proposal). The Company also agrees that it will promptly request each Person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring it or any of its Subsidiaries to return all
confidential information heretofore furnished to such Person by or on behalf of
it or any of its Subsidiaries.
6.4. INFORMATION SUPPLIED. The Company and Parent each agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in (i) the Registration Statement on Form S-4 to be filed with the SEC by Parent
in connection with the issuance of shares of Parent Common Stock in the Merger
(including the joint proxy statement and prospectus (the "PROSPECTUS/PROXY
STATEMENT") constituting a part thereof) (the "S-4 REGISTRATION STATEMENT")
will, at the time the S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the times
of the meetings of stockholders of the Company and Parent to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
6.5. STOCKHOLDERS MEETINGS. The Company will take, in accordance with
applicable law and its articles of organization and by-laws, all action
necessary to convene a meeting of holders of Shares (the "STOCKHOLDERS MEETING")
as promptly as practicable after the S-4 Registration Statement is declared
effective to consider and vote upon the approval of this Agreement. Parent will
take, in accordance with its charter and by-laws, all action necessary to
convene a meeting of holders of Parent Common Stock as promptly as practicable
after the S-4 Registration Statement is declared effective to consider and vote
upon the approval of this Agreement and approval of the issuance of Parent
Common Stock in the Merger. Subject to fiduciary obligations under applicable
law, each of the Company's and Parent's board of directors shall recommend such
approval and shall take all lawful action to solicit such approval.
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6.6. FILINGS; OTHER ACTIONS; NOTIFICATION. (a) The Company and Parent
shall promptly prepare and file with the SEC the Prospectus/Proxy Statement, and
Parent shall prepare and file with the SEC the S-4 Registration Statement as
promptly as practicable. The Company and Parent each shall use its reasonable
best efforts to have the S-4 Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing, and promptly
thereafter mail the Prospectus/Proxy Statement to the respective stockholders of
each of the Company and Parent. Parent shall also use its reasonable best
efforts to obtain prior to the effective date of the S-4 Registration Statement
all necessary state securities law or "blue sky" permits and approvals required
in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto.
(b) The Company and Parent each shall use its best efforts to cause to be
delivered to the other party and its directors a letter of its independent
auditors, dated (i) the date on which the S-4 Registration Statement shall
become effective and (ii) the Closing Date, and addressed to the other party and
its directors, in form and substance customary for "comfort" letters delivered
by independent public accountants in connection with registration statements
similar to the S-4 Registration Statement.
(c) The Company and Parent shall cooperate with each other and use (and
shall cause their respective Subsidiaries to use) their respective reasonable
best efforts to take or cause to be taken all actions, and do or cause to be
done all things, necessary, proper or advisable under this Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
preparing and filing as promptly as practicable all documentation to effect all
necessary applications, notices, petitions, filings and other documents and to
obtain as promptly as practicable all permits, consents, approvals and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement; PROVIDED, HOWEVER, that nothing in
this Section 6.6 shall require, or be construed to require, Parent to proffer
to, or agree to, sell or hold separate and agree to sell, before or after the
Effective Time, any assets, businesses, or interest in any assets or businesses
of Parent, the Company or any of their respective Affiliates (or to consent to
any sale, or agreement to sell, by the Company of any of its assets or
businesses) or to agree to any material changes or restriction in the operations
of any such assets or businesses. Subject to applicable Laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent practicable each will consult the other on, all
the information relating to Parent or the Company, as the case may be, and any
of their respective Subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party and/or any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and Parent
shall act reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be necessary or
advisable in connection with the Prospectus/Proxy Statement, the S-4
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental Entity in connection
with the Merger and the transactions contemplated by this Agreement.
(e) The Company and Parent each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
The Company and Parent each shall give prompt notice to the other of any change
that is reasonably likely to result in a Company Material Adverse Effect or
Parent Material Adverse Effect, respectively.
6.7. TAXATION AND ACCOUNTING. Subject to Section 6.3, neither Parent nor
the Company shall take or cause to be taken any action, whether before or after
the Effective Time, that would disqualify the Merger as a "pooling of interests"
for accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code.
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6.8. ACCESS. Upon reasonable notice, and except as may otherwise be
required by applicable law, the Company and Parent each shall (and shall cause
its Subsidiaries to) afford the other's officers, employees, counsel,
accountants and other authorized representatives ("REPRESENTATIVES") access,
during normal business hours throughout the period prior to the Effective Time,
to its properties, books, contracts and records and, during such period, each
shall (and shall cause its Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as may reasonably
be requested, PROVIDED that no investigation pursuant to this Section shall
affect or be deemed to modify any representation or warranty made by the
Company, Parent or Merger Sub, and PROVIDED, FURTHER, that the foregoing shall
not require the Company or Parent to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company or Parent, as the
case may be, would result in the disclosure of any trade secrets of third
parties or violate any of its obligations with respect to confidentiality if the
Company or Parent, as the case may be, shall have used reasonable best efforts
to obtain the consent of such third party to such inspection or disclosure. All
requests for information made pursuant to this Section shall be directed to an
executive officer of the Company or Parent, as the case may be, or such Person
as may be designated by either of its officers, as the case may be. All such
information shall be governed by the terms of the Confidentiality Agreements.
Furthermore with respect to any and all access to properties for environmental
review and diligence purposes, Parent shall be granted access to any facility
currently owned or operated by the Company to perform a Phase I assessment so
long as such assessment is presumptively non-intrusive in nature, the site
visits and discussions are performed in collaboration with the Director of
Environmental Health and Safety or his designee, schedule and times for such
assessments are mutually agreed upon in advance, that Parent or its contractors
will be accompanied by the Company representatives at all times, and no
notification or discussions of environmental matters are initiated with
governmental agencies or third parties without the prior notice to and agreement
by the Company. The Phase I reports shall remain the property of Parent. However
if Parent, based upon the conclusions in the Phase I report, desires to perform
intrusive testing, Parent shall present such request and the supporting written
justification to the Company and both parties shall use reasonable best efforts
to mutually agree upon the need, scope, and nature of any such intrusive
investigation. Any intrusive investigation shall be under the supervision of the
Company and all results of any intrusive investigation shall be immediately
shared with the Company. Any and all costs of any investigation, including any
intrusive testing, shall be borne entirely by Parent.
6.9. AFFILIATES. (i) Prior to the Stockholders Meeting, the Company shall
deliver to Parent a list of names and addresses of those Persons who will be, in
the opinion of the Company, as of the time of the Stockholders Meeting referred
to in Section 6.5, "affiliates" of the Company within the meaning of Rule 145
under the Securities Act and for the purposes of applicable interpretations
regarding the pooling-of-interests method of accounting. The Company shall
provide to Parent such information and documents as Parent shall reasonably
request for purposes of reviewing such list and shall notify Parent in writing
regarding any change in the identity of its affiliates prior to the Closing
Date. The Company shall exercise its best efforts to deliver or cause to be
delivered to Parent, prior to the date of the Stockholders Meeting, from each
affiliate of the Company identified in the foregoing list, a letter dated as of
the date of the Stockholders Meeting substantially in the form attached as
Exhibit A-1 (the "AFFILIATES LETTER"). Parent shall not be required to maintain
the effectiveness of the S-4 Registration Statement or any other registration
statement under the Securities Act for the purposes of resale of Parent Common
Stock by such affiliates received in the Merger and the certificates
representing Parent Common Stock received by such affiliates shall bear a
customary legend regarding applicable Securities Act restrictions and the
provisions of this Section. Prior to the Effective Time Parent shall amend and
supplement its letter and the Company shall use its best efforts to cause each
additional affiliate to deliver an Affiliates Letter.
(ii) Prior to the date of the Stockholders Meeting, Parent shall deliver to
the Company a list of names and addresses of those Persons who will be, in the
opinion of Parent, at the time of the Stockholders Meeting referred to in
Section 6.5, "affiliates" of Parent for the purposes of applicable
interpretations regarding the pooling-of-interests method of accounting. Parent
shall provide to the Company such
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information and documents as the Company shall reasonably request for purposes
of reviewing such list and shall notify the Company in writing regarding any
change in the identity of its affiliates prior to the Closing Date. Parent shall
exercise its best efforts to deliver or cause to be delivered to the Company,
prior to the date of the Stockholders Meeting, from each of such affiliates of
Parent identified in the foregoing list, a letter dated as of the date of the
Stockholders Meeting substantially in the form attached as Exhibit A-2 (the
"POOLING AFFILIATES LETTER").
6.10. STOCK EXCHANGE LISTING AND DE-LISTING. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to
be approved for listing on the NYSE subject to official notice of issuance,
prior to the Closing Date. The Company shall use its best efforts to cause the
Shares to be de-listed from the NYSE and de-registered under the Exchange Act as
soon as practicable following the Effective Time.
6.11. PUBLICITY. The initial press release shall be a joint press release
and thereafter the Company and Parent each shall consult with each other prior
to issuing any press releases or otherwise making public announcements with
respect to the Merger and the other transactions contemplated by this Agreement
and prior to making any filings with any third party and/or any Governmental
Entity (including any national securities exchange) with respect thereto, except
as may be required by law or by obligations pursuant to any listing agreement
with or rules of any national securities exchange.
6.12. BENEFITS.
(a) STOCK OPTIONS.
(i) At the Effective Time, each outstanding option to purchase Shares
(a "COMPANY OPTION") under the Stock Plans, whether vested or unvested,
shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Company Option, the same number
of shares of Parent Common Stock equal to the result of multiplying (w)
the number of shares subject to a Company Option by (y) the Exchange
Ratio, as and if adjusted, as the holder of such Company Option would
have been entitled to receive pursuant to the Merger had such holder
exercised such option in full immediately prior to the Effective Time
(rounded down to the nearest whole number), at a price per share (rounded
up to the nearest whole cent) equal to (y) the exercise price per Share
for the Shares otherwise purchasable pursuant to such Company Option
divided by (z) the Exchange Ratio, as and if adjusted; PROVIDED, HOWEVER,
that in the case of any Company Option which is an incentive stock option
under Section 422 of the Code, the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of
exercise of such option shall be determined in accordance with the
foregoing, subject to such adjustments as are necessary in order to
satisfy the requirements of Section 424(a) of the Code. At or prior to
the Effective Time, the Company shall make all necessary arrangements
with respect to the Stock Plans to permit the assumption of the
unexercised Company Options by Parent pursuant to this Section.
(ii) Effective at the Effective Time, Parent shall assume each
Company Option in accordance with the terms of the Stock Plan under which
it was issued and the stock option agreement by which it is evidenced. At
or prior to the Effective Time, Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of Company Options assumed by it
in accordance with this Section. As soon as practicable after the
Effective Time, Parent shall file a registration statement on Form S-3 or
Form S-8, as the case may be (or any successor or other appropriate
forms), or another appropriate form with respect to the Parent Common
Stock subject to such Company Options, and shall use its best efforts to
maintain the effectiveness of such registration statements (and maintain
the current status of the prospectus or prospectuses contained therein)
for so long as such Company Options remain outstanding.
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(b) ELECTION TO PARENT'S BOARD OF DIRECTORS. At the Effective Time,
Parent shall promptly increase the size of its board of directors in order
to enable Messrs. Thomas McDermott and John Lemasters to be appointed to
Parent's board of directors and for at least one year after the next annual
meeting of the shareholders of Parent, subject to fiduciary obligations
under applicable law, shall use its best efforts to cause Messrs. McDermott
and Lemasters to be elected as directors of Parent by the shareholders of
Parent.
(c) OTHER EMPLOYEE BENEFITS. Parent agrees that, during the period
commencing at the Effective Time and ending on the first anniversary
thereof, the employees of the Company will continue to be provided with
benefits under employee benefit plans (other than stock option or other
plans involving the potential issuance of securities of the Company or
Parent) which in the aggregate are substantially comparable to those
currently provided by Parent to employees of Parent holding comparable
positions. Employees of the Company will have the rights set forth in
Section 6.11 with respect to conversion of their Company Options into
options to purchase Parent Common Stock and will have the same rights as
existing employees of Parent to participate in Parent's stock option plans
in accordance with the terms thereof but subject to appropriate transitional
provisions (i) to adjust to Parent's annual grant cycle and (ii) to take
into account grants made by the Company in the twelve months prior to the
Effective Time. Parent will honor without modification all employee (or
former employee) benefit obligations under the Compensation and Benefit
Plans accrued as of the Effective Time and all employee severance plans (or
policies) and employment or severance agreements that were entered into by
the Company or adopted by the Board of Directors of the Company prior to the
date hereof and as specifically identified in Schedule 6.12(c).
6.13. EXPENSES. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV, and Parent shall reimburse the
Surviving Corporation for such charges and expenses. Except as otherwise
provided in Section 8.5(b), whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense, except that expenses incurred in connection with the
filing fee for the S-4 Registration Statement and printing and mailing the
Prospectus/Proxy Statement and the S-4 Registration Statement shall be shared
equally by Parent and the Company.
6.14. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From and
after the Effective Time, Parent agrees that it will indemnify and hold harmless
each present and former director and officer of the Company (when acting in such
capacity) determined as of the Effective Time (the "INDEMNIFIED PARTIES"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "COSTS") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under Massachusetts law and its articles of
organization or by-laws in effect on the date hereof to indemnify such Person
(and Parent shall also advance expenses as incurred to the fullest extent
permitted under applicable law PROVIDED the Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such Person is not entitled to indemnification); and PROVIDED, FURTHER,
that any determination required to be made with respect to whether an officer's
or director's conduct complies with the standards set forth under Massachusetts
law and the Company's by-laws shall be made by independent counsel selected by
the Surviving Corporation.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 6.14, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof. In the event
of any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) Parent or the Surviving Corporation
shall have the right to assume the defense thereof and Parent shall not be
liable to such Indemnified Parties for any legal expenses of other
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counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, (ii) the Indemnified Parties will
cooperate in the defense of any such matter and (iii) Parent shall not be liable
for any settlement effected without its prior written consent; and PROVIDED,
FURTHER, that Parent shall not have any obligation hereunder to any Indemnified
Party if and when a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(c) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance ("D&O INSURANCE") for a period of
six years after the Effective Time so long as the annual premium therefor is not
in excess of the last annual premium paid prior to the date hereof, subject to
customary increases in accordance with industry practice (the "CURRENT
PREMIUM"); PROVIDED, HOWEVER, that if the existing D&O Insurance expires, is
terminated or cancelled during such six-year period, the Surviving Corporation
will use its reasonable efforts to obtain as much D&O Insurance as can be
obtained for the remainder of such period for a premium not in excess (on an
annualized basis) of 1.50 times the Current Premium.
(d) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section.
(e) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs and
their representatives.
6.15. OTHER ACTIONS BY THE COMPANY AND PARENT.
(a) RIGHTS. Prior to the Effective Time, the board of directors of the
Company shall take all necessary action to ensure that the Rights Agreement
shall expire by its terms, effective immediately prior to the Effective
Time.
(b) TAKEOVER STATUTE. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, the Company and its board of directors shall grant such approvals
and take such actions as are necessary so that such transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
(c) DIVIDENDS. The Company shall coordinate with Parent the
declaration, setting of record dates and payment dates of dividends on
Shares so that holders of Shares do not receive dividends on both Shares and
Parent Common Stock received in the Merger in respect of any calendar
quarter or fail to receive a dividend on either Shares or Parent Common
Stock received in the Merger in respect of any calendar quarter.
6.16. PARENT VOTE. Parent shall vote (or consent with respect to) or cause
to be voted (or a consent to be given with respect to) any Shares and any shares
of common stock of Merger Sub beneficially owned by it or any of its Affiliates
or with respect to which it or any of its Affiliates has the power (by
agreement, proxy or otherwise) to cause to be voted (or to provide a consent),
in favor of the approval of this Agreement at any meeting of stockholders of the
Company or Merger Sub, respectively, at which this Agreement shall be submitted
for approval and at all adjournments or postponements thereof (or, if
applicable, by any action of stockholders of either the Company or Merger Sub by
consent in lieu of a meeting).
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ARTICLE VII
Conditions
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly approved
by holders of Shares constituting the Company Requisite Vote and have been
duly approved by the sole stockholder of Merger Sub in accordance with
applicable law and the certificate of incorporation and by-laws of each such
corporation, and the approval of this Agreement and the issuance of Parent
Common Stock pursuant to the Merger shall have been duly approved by the
holders of Parent Common Stock constituting the Parent Requisite Vote.
(b) NYSE LISTING. The shares of Parent Common Stock issuable to the
Company stockholders pursuant to this Agreement shall have been authorized
for listing on the NYSE upon official notice of issuance.
(c) REGULATORY CONSENTS. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the filing provided for in Section 1.3, all
filings required to be made prior to the Effective Time by the Company or
Parent or any of their respective Subsidiaries with, and all consents,
approvals and authorizations required to be obtained prior to the Effective
Time by the Company or Parent or any of their respective Subsidiaries from,
any Governmental Entity (collectively, "GOVERNMENTAL CONSENTS") in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Company, Parent
and Merger Sub shall have been made or obtained (as the case may be).
(d) LITIGATION. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the transactions
contemplated by this Agreement (collectively, an "ORDER"), and no
Governmental Entity or any other Person shall have instituted any proceeding
or threatened to institute any proceeding seeking any such Order.
(e) S-4. The S-4 Registration Statement shall have become effective
under the Securities Act and no stop order suspending the effectiveness of
the S-4 Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or be threatened by the SEC.
(f) BLUE SKY APPROVALS. Parent shall have received all state
securities and "blue sky" permits and other authorizations necessary to
consummate the transactions contemplated hereby.
7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Parent prior to the Effective Time of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except to the extent any
such representation or warranty expressly speaks as of an earlier date), and
Parent shall have received a certificate signed on behalf of the Company by
an executive officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to
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the Closing Date, and Parent shall have received a certificate signed on
behalf of the Company by an executive officer of the Company to such effect.
(c) CONSENTS UNDER AGREEMENTS. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be
required under any material Contract to which the Company or any of its
Subsidiaries is a party, except those for which the failure to obtain such
consent or approval, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect or is not reasonably likely
to materially adversely affect the ability of the Company to consummate the
transactions contemplated by this Agreement.
(d) TAX OPINION. Parent shall have received the opinion of Sullivan &
Cromwell, special counsel to Parent, dated the Closing Date, to the effect
that the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
each of Parent, Merger Sub and the Company will be a party to that
reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, Sullivan & Cromwell may require and rely upon
representations and covenants including those contained in certificates of
officers of Parent, Company and Merger Sub and others.
(e) DISSENTING SHARES. The aggregate amount of Dissenting Shares,
together with "tainted treasury shares" and other items which would violate
the provisions required to account for the transaction as a "pooling of
interests," in the aggregate shall not exceed 10% of the total number of
outstanding Shares at the Effective Time.
(f) RIGHTS AGREEMENT. The Rights shall have expired.
(g) AFFILIATES LETTERS. Parent shall have received an Affiliates
Letter from each Person identified as an affiliate of the Company pursuant
to Section 6.9.
(h) ACCOUNTANT LETTERS. Parent shall have received, in form and
substance reasonably satisfactory to Parent, from KPMG Peat Marwick LLP the
"comfort" letter described in Section 6.6(b) as well as a letter to the
effect that the Merger will qualify for "pooling-of-interests" accounting
treatment and shall have received a copy of the "pooling-of-interests"
letter referred to in Section 7.3(d).
7.3. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to the
extent any such representation and warranty expressly speaks as of an
earlier date) and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent and Merger Sub to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate
signed on behalf of Parent and Merger Sub by an executive officer of Parent
to such effect.
(c) TAX OPINION. The Company shall have received the opinion of Hale
and Dorr, counsel to the Company, dated the Closing Date, to the effect that
the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
each of Parent, Merger Sub and the Company will be a party to that
reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, Hale and Dorr may require and rely upon
representations and covenants of officers of Parent, Company and Merger Sub
and others.
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(d) ACCOUNTANT LETTERS. The Company shall have received from Deloitte
& Touche the "comfort" letter described in Section 6.6(b) as well as a
letter to the effect that, with respect to matters relating to the Company,
the Merger will qualify for "pooling-of-interests" accounting treatment and
shall have received a copy of the "pooling-of-interests" letter referred to
in Section 7.2(h).
ARTICLE VIII
Termination
8.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company and Parent referred
to in Section 7.1(a), by mutual written consent of the Company, Parent and
Merger Sub, by action of their respective boards of directors.
8.2. TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either Parent or the Company if (i)
the Merger shall not have been consummated by March 31, 1997, whether such date
is before or after the date of approval by the stockholders of the Company or
Parent (the "TERMINATION DATE"), (ii) the approval of the Company's stockholders
required by Section 7.1(a) shall not have been obtained at a meeting duly
convened therefor or at any adjournment or postponement thereof, (iii) the
approval of Parent's stockholders as required by Section 7.1(a) shall not have
been obtained at a meeting duly convened therefor or (iv) any Order permanently
restraining, enjoining or otherwise prohibiting the Merger shall become final
and non-appealable (whether before or after the approval by the stockholders of
the Company or Parent); PROVIDED, that the right to terminate this Agreement
pursuant to clause (i) above shall not be available to any party that has
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
of the Merger to be consummated.
8.3. TERMINATION BY THE COMPANY. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval by stockholders of the Company referred to in Section
7.1(a), by action of the board of directors of the Company:
(a) if (i) the Company is not in material breach of any of the terms of
this Agreement, (ii) the Board of Directors of the Company authorizes the
Company, subject to complying with the terms of this Agreement, to enter
into a binding written agreement concerning a transaction that constitutes a
Superior Proposal and the Company notifies Parent in writing that it intends
to enter into such an agreement and (notwithstanding the penultimate
sentence of Section 6.3) sets forth in such notice the material terms of
such proposed transaction and (iii) the Company prior to such termination
pays to Parent in immediately available funds any fees required to be paid
pursuant to Section 8.5. The Company agrees (i) that it will not enter into
a binding agreement referred to in clause (ii) above until at least the
twenty-four hours after it has provided the notice to Parent required
thereby and (ii) to notify Parent promptly if its intention to enter into a
written agreement referred to in its notification shall change at any time
after giving such notification;
(b) if (i) the Board of Directors of Parent shall have withdrawn or
adversely modified its approval or recommendation of this Agreement or (ii)
there has been a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement
that is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by the Company to the party
committing such breach.
8.4. TERMINATION BY PARENT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the stockholders of Parent referred to in Section 7.1(a), by
action of the board of directors of Parent:
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(a) if (i) the board of directors of the Company shall have withdrawn or
adversely modified its approval or recommendation of this Agreement or (ii)
there has been a material breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement that is not
curable or, if curable, is not cured within 30 days after written notice of
such breach is given by Parent to the party committing such breach; or
(b) if the Average Closing Price is below $32.00.
8.5. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1) shall
become void and of no effect with no liability of any party hereto (or any of
its directors, officers, employees, agents, legal and financial advisors or
other representatives); PROVIDED, HOWEVER, except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any breach of this Agreement.
(b) In the event that (i) an Acquisition Proposal shall have been made to
the Company or its stockholders or any Person shall have publicly announced an
intention (whether or not conditional) to make an Acquisition Proposal with
respect to the Company and thereafter this Agreement is terminated pursuant to
Section 8.2(ii) or Section 8.4(a)(i) and, in any such case, within nine (9)
months following such termination, (x) the Company enters into an agreement with
respect to an Acquisition Proposal with any person or entity other than Parent
(such person being hereinafter referred to as an "OTHER ACQUIROR") or (y) an
Other Acquiror shall have become the beneficial owner (as such term is defined
in Rule 13d-3 of the Exchange Act) of a majority of the outstanding shares of
capital stock entitled to vote in the election of directors of the Company (each
such transaction set forth in clause (x) and(y) above being hereinafter referred
to as an "OTHER TRANSACTION"), in either case at a per Share price of $25.50 or
more (the "MINIMUM PRICE"); it being understood that to the extent that
securities of an Other Acquiror are paid in an Other Transaction, for purposes
of calculating the per Share price, the value of the securities of such Other
Acquiror to be paid in such Other Transaction shall be calculated based on the
closing market price of such securities on the trading day next preceding the
date of the public announcement of such Other Transaction; PROVIDED, THAT,
Parent is not in material breach of this Agreement; PROVIDED, FURTHER, THAT, in
the event that the Company changes the number of Shares issued and outstanding
prior to the end of such period commencing nine (9) months after such
termination as a result of a reclassification, stock split (including a reverse
split), stock dividend or distribution, recapitalization, merger, subdivision,
issuer tender offer or exchange offer, or other similar transaction, or pays any
cash dividend other than regular cash dividends not in excess of $.04 per Share,
the Minimum Price shall be equitably adjusted, then the Company shall within two
business days after the occurrence of an Other Transaction pay Parent a
termination fee of $15 million (the "TERMINATION FEE") and shall promptly, but
in no event later than two business days after being notified of such by Parent,
pay all of the documented out-of-pocket charges and expenses, including those of
the Exchange Agent, incurred by Parent or Merger Sub in connection with this
Agreement and the transactions contemplated by this Agreement (together, the
"PARENT EXPENSES") up to a maximum amount of $1,500,000, in each case payable by
wire transfer of same day funds. In addition, if this Agreement is terminated by
the Company pursuant to Section 8.3(a), then the Company shall promptly, but in
no event later than two business days after the date of such termination, pay
Parent the Termination Fee and shall promptly, but in no event later than two
business days after being notified of such by Parent, pay all of the Parent
Expenses up to a maximum amount of $1,500,000 in each case payable by wire
transfer of same day funds. The Company acknowledges that the agreements
contained in this Section 8.5(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent and
Merger Sub would not enter into this Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to this Section 8.5(b), and, in
order to obtain such payment, Parent or Merger Sub commences a suit which
results in a judgment against the Company for the fee set forth in this
paragraph (b), the Company shall pay to Parent or Merger Sub its costs and
expenses
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(including attorneys' fees) in connection with such suit, together with interest
on the amount of the fee at the prime rate of Citibank, N.A. in effect on the
date such payment was required to be made.
ARTICLE IX
Miscellaneous and General
9.1. SURVIVAL. This Article IX and the agreements of the Company, Parent
and Merger Sub contained in Sections 6.7 (Taxation and Accounting), 6.12
(Benefits), 6.13 (Expenses) and 6.14 (Indemnification; Directors' and Officers'
Insurance) shall survive the consummation of the Merger. This Article IX, the
agreements of the Company, Parent and Merger Sub contained in Section 6.13
(Expenses), Section 8.5 (Effect of Termination and Abandonment) and the
Confidentiality Agreements shall survive the termination of this Agreement. All
other representations, warranties, agreements and covenants in this Agreement
shall not survive the consummation of the Merger or the termination of this
Agreement.
9.2. MODIFICATION OR AMENDMENT. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW; WAIVER OF JURY TRIAL. (A) THIS AGREEMENT SHALL BE
DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
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9.6. NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
nationally recognized overnight courier service, or by facsimile:
IF TO PARENT OR MERGER SUB
Thomas & Betts Corporation
1555 Lynnfield Road
Memphis, Tennessee 38119
Attention: President
fax: (901) 537-8986
with a copy to Neil T. Anderson, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
fax: (212) 558-3588
IF TO THE COMPANY
Augat Inc.
89 Forbes Boulevard
Mansfield, Massachusetts 02048
Attention: President
fax: (508) 543-7019
with a copy to Thomas E. Neely, Esq.,
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
fax: (617) 526-5000.
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above. Any notice or communication
delivered in person shall be deemed effective on delivery. Any notice or
communication sent by facsimile shall be deemed effective on the first business
day on which such notice or communication is received. Any notice or
communication sent by registered or certified mail shall be deemed effective as
of the fifth business day after which such notice or communication was mailed
following the day in which such notice or communication was mailed.
9.7. ENTIRE AGREEMENT. This Agreement (including any exhibits hereto), the
Company Disclosure Letter, the Parent Disclosure Letter and the Confidentiality
Agreements, dated September 6, 1996, between Parent and the Company and dated
September 21, 1996 between Parent and Company (the "CONFIDENTIALITY AGREEMENTS")
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof. EACH PARTY HERETO AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
NEITHER PARENT AND MERGER SUB NOR THE COMPANY MAKES ANY OTHER REPRESENTATIONS OR
WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES
MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL
AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
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9.8. NO THIRD PARTY BENEFICIARIES. Except as provided in Section 6.14
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.9. OBLIGATIONS OF PARENT AND OF THE COMPANY. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. INTERPRETATION. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
9.12. ASSIGNMENT. This Agreement shall not be assignable by operation of
law or otherwise; PROVIDED, HOWEVER, that Parent may designate, by written
notice to the Company, another wholly-owned direct or indirect subsidiary to be
a Constituent Corporation in lieu of Merger Sub, in the event of which, all
references herein to Merger Sub shall be deemed references to such other
subsidiary, except that all representations and warranties made herein with
respect to Merger Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other subsidiary as of
the date of such designation.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
AUGAT INC.
By: /s/ Marcel P. Joseph
--------------------------------------
Name: Marcel P. Joseph
Title: President & COO
By: /s/ Lynda M. Avallone
--------------------------------------
Name: Lynda M. Avallone
Title: Treasurer
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THOMAS & BETTS CORPORATION
By: /s/ Jerry Kronenberg
--------------------------------------
Name: Jerry Kronenberg
Title: Vice President--General Counsel
By: /s/ Fred R. Jones
--------------------------------------
Name: Fred R. Jones
Title: Vice President--Finance &
Treasurer
EG ACQUISITIONS CORP.
By: /s/ Jerry Kronenberg
--------------------------------------
Name: Jerry Kronenberg
Title: Vice President--General Counsel
By: /s/ Fred R. Jones
--------------------------------------
Name: Fred R. Jones
Title: Vice President--Finance &
Treasurer
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APPENDIX B
[LETTERHEAD]
November 7, 1996
Board of Directors
Thomas & Betts Corporation
1555 Lynnfield Road
Memphis, TN 38119
Members of the Board:
We understand that Augat Inc. (the "Company"), Thomas & Betts Corporation
("Buyer") and EG Acquisitions Corp., a wholly-owned subsidiary of Buyer ("Sub")
have entered into an Agreement and Plan of Merger, dated as of October 7, 1996
(the "Merger Agreement"), which provides, among other things, for the merger
(the "Merger") of Sub with and into the Company. Pursuant to the Merger, the
Company will become a wholly owned subsidiary of Buyer and each issued and
outstanding share of common stock, par value $.10 per share (the "Company Common
Stock") of the Company, other than shares held in the treasury or any shares
held by Buyer or any wholly owned subsidiary of the Company or Buyer, or as to
which dissenters' rights have been perfected, will be converted into .68 shares
subject to adjustment in certain circumstances as provided for in the Merger
Agreement (the "Exchange Ratio") of common stock ("Buyer Common Stock") of
Buyer. The terms and conditions of the Merger are more fully set forth in the
Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the Buyer.
For purposes of the opinion set forth herein, we have:
(i) analyzed certain publicly available financial statements and other
information of the Company and the Buyer, respectively;
(ii) analyzed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of
the Company;
(iii) analyzed certain financial projections for the Company prepared by
the managements of the Company and Buyer, respectively;
(iv) discussed the past and current operations and financial condition and
the prospects of the Company with senior executives of the Company;
(v) discussed the past and current operations and financial condition and
the prospects of the Buyer with senior executives of the Buyer, and
analyzed the pro forma impact of the Merger on the Buyer's earnings per
share and consolidated capitalization;
(vi) reviewed the reported prices and trading activity for the Company
Common Stock and Buyer Common Stock;
(vii) compared the financial performance of the Company and Buyer and the
prices and trading activity of the Company Common Stock and Buyer
Common Stock with that of certain other comparable publicly-traded
companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
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MORGAN STANLEY
(ix) discussed with senior executives of the Company and the Buyer their
views of the strategic rationale for the Merger and their estimates of
the cost savings and other benefits of the Merger to Buyer;
(x) participated in discussions and negotiations among representatives of
the Company and the Buyer and their financial and legal advisors;
(xi) reviewed the Merger Agreement and certain related documents; and
(xii) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company and Buyer. We have relied upon, with your consent, the assumptions of
management of Buyer regarding cost savings and other benefits that will result
from the Merger. We have assumed that the Merger will be treated as a "pooling-
of-interests" business combination in accordance with U.S. Generally Accepted
Accounting Principles. We have also assumed that the Merger will be consummated
in accordance with the terms set forth in the Merger Agreement. We have not made
any independent valuation or appraisal of the assets or liabilities of the
Company or Buyer, nor have we been furnished with any such appraisals. Our
opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof. We
have acted as financial advisor to the Buyer in connection with this transaction
and will receive a fee for our services. In the past, Morgan Stanley & Co.
Incorporated and its affiliates have provided financial advisory and financing
services to the Buyer and have received fees for the rendering of these
services.
It is understood that this letter is for the information of the Board of
Directors of the Buyer and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by the Buyer with the Securities and Exchange Commission with
respect to the Merger or the issuance of Buyer Common Stock in connection with
the Merger. In addition, we express no opinion or recommendation as to how the
holders of Buyer Common Stock should vote at the shareholders' meeting held in
connection with the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to the Buyer.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Francis J. Oelerich III
--------------------------------------
Francis J. Oelerich III
Principal
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APPENDIX C
[LOGO]
November 7, 1996
Board of Directors of
Augat Inc.
89 Forbes Boulevard
Mansfield, Massachusetts 02048
Gentlemen:
Augat Inc. (the "Company"), Thomas & Betts Corporation (the "Acquiror") and
EG Acquisitions Corp. (the "Acquisition Sub"), a wholly owned subsidiary of the
Acquiror, propose to enter into an agreement (the "Merger Agreement") pursuant
to which the Company will be merged with the Acquisition Sub in a transaction
(the "Merger") in which each outstanding share of the Company's common stock par
value $.10 per share (the "Shares"), will be converted into the right to receive
0.680 shares of the common stock of the Acquiror (the "Acquiror Shares")
provided that (i) if the Average Closing Price (as defined in the Merger
Agreement) of an Acquiror Share if less than $37.50, each outstanding Share will
be converted into the right to receive a fraction of an Acquiror Share
determined by dividing $25.50 by the Average Closing Price and (ii) if the
Average Closing Price of an Acquiror Share is more than $41.50, each outstanding
Share will be converted into the right to receive a fraction of an Acquiror
Share determined by dividing $28.22 by the Average Closing Price (the fraction
of an Acquiror Share to be received in the Merger in respect of each Share, the
"Exchange Ratio").
You have asked us whether, in our opinion, the Exchange Ratio is fair to the
holders of the Shares (other than the Acquiror and its affiliates) from a
financial point of view.
In arriving at the opinion set forth below, we have:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1995 and the
Company's Forms 10-Q and the related unaudited financial information for
the quarterly periods ended March 31, 1996 and June 30, 1996;
(2) Reviewed the Acquiror's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1995 and the
Acquiror's Forms 10-Q and the related
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unaudited financial information for the quarterly periods ended March
31, 1996 and June 30, 1996;
(3) Reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets and prospects of the Company
and the Acquiror furnished to us by the Company and the Acquiror,
respectively, and reviewed certain projected synergies resulting from
the Merger prepared by the Company's management;
(4) Conducted discussions with members of senior management of the Company
and the Acquiror concerning their respective businesses and prospects;
(5) Reviewed the historical market prices and trading activity for the
Shares and the Acquiror Shares and compared them with that of certain
publicly traded companies which we deemed to be reasonably similar to
the Company and the Acquiror, respectively;
(6) Compared the results of operations of the Company and the Acquiror with
that of certain companies which we deemed to be reasonably similar to
the Company and the Acquiror, respectively;
(7) Compared the proposed financial terms of the transactions contemplated
by the Merger Agreement with the financial terms of certain other
mergers and acquisitions which we deemed to be relevant;
(8) Reviewed the Merger Agreement and the Joint Proxy Statement/Prospectus;
and
(9) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of
all information supplied or otherwise made available to us by the Company and
the Acquiror, and we have not independently verified such information or
undertaken an independent appraisal of the assets or liabilities of the Company
or the Acquiror. With respect to the financial forecasts furnished by the
Company, including, without limitation, projected synergies resulting from the
Merger, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Company's management as
to the expected future financial performance of the Company and that such
forecasts will be realized in the amount and at the times contemplated thereby.
With respect to the financial forecasts furnished by the Acquiror, we have
assumed that they have been reasonably prepared and reflect the best currently
available estimates of the Acquiror's management as to the expected future
financial performance of the Acquiror and that such forecasts will be realized
in the amounts and at the times contemplated thereby. We have also assumed, with
your consent, that the Merger will be accounted for as a pooling of interests
under generally accepted accounting principles and that, for federal income tax
purposes, the Merger will qualify as a reorganization under the provisions of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder. Our opinion is necessarily based upon
market, economic and other conditions as they exist on, and can be evaluated as
of, the date of this letter.
We note that on October 1, 1996 you received an unsolicited proposal from a
third party concerning a possible acquisition of the Company. The proposal
contemplated a purchase price payable in either cash in the range of $26-28 per
Share or such third party's common stock having a market value in the range of
$22-24 per Share, which transaction would be subject to a satisfactory due
diligence investigation by the third party and a number of other conditions.
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We have, in the past, provided financial advisory and/or financing services
to the Company, the Acquiror and the third party referred to above and have
received fees for the rendering of such services. In the ordinary course of our
business, we may trade in the debt and equity securities of the Company, the
Acquiror and such third party for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
It is understood that this letter is for the information of the Board of
Directors of the Company in connection with its consideration of the Merger and
does not constitute a recommendation to any shareholder as to how such
shareholder should vote on the proposed Merger.
On the basis of, and subject to the foregoing, we are of the opinion that
the Exchange Ratio is fair to the holders of the Shares (other than the Acquiror
and its affiliates) from a financial point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ WILLIAM D. RIFKIN
--------------------------------------
Managing Director
Investment Banking Group
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APPENDIX D
SECTIONS 85 TO 98, INCLUSIVE, OF CHAPTER 156B
OF THE GENERAL LAWS OF MASSACHUSETTS
85 [PAYMENT FOR STOCK OF DISSENTING STOCKHOLDER].--A stockholder in any
corporation organized under the laws of Massachusetts which shall have duly
voted to consolidate or merge with another corporation or corporations under the
provisions of sections seventy-eight or seventy-nine who objects to such
consolidation or merger may demand payment for his stock from the resulting or
surviving corporation and an appraisal in accordance with the provisions of
sections eighty-six to ninety-eight, inclusive, and such stockholder and the
resulting or surviving corporation shall have the rights and duties and follow
the procedure set forth in those sections. This section shall not apply to the
holders of any shares of stock of a constituent corporation surviving a merger
if, as permitted by subsection (c) of section seventy-eight, the merger did not
require for its approval a vote of the stockholders of the surviving
corporation.
86 [RIGHT OF APPRAISAL].--If a corporation proposes to take a corporate
action as to which any section of this chapter provides that a stockholder who
objects to such action shall have the right to demand payment for his shares and
an appraisal thereof, sections eighty-seven to ninety-eight, inclusive, shall
apply except as otherwise specifically provided in any section of this chapter.
Except as provided in sections eighty-two and eighty-three, no stockholder shall
have such right unless (1) he files with the corporation before the taking of
the vote of the shareholders on such corporate action, written objection to the
proposed action stating that he intends to demand payment for his shares if the
action is taken and (2) his shares are not voted in favor of the proposed
action.
87 [NOTICE OF STOCKHOLDERS MEETING TO CONTAIN STATEMENT AS TO APPRAISAL
RIGHTS].--The notice of the meeting of stockholders at which the approval of
such proposed action is to be considered shall contain a statement of the rights
of objecting stockholders. The giving of such notice shall not be deemed to
create any rights in any stockholder receiving the same to demand payment for
his stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting
and effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not
voted in favor of such action has or may have the right to demand in writing
from the corporation (or, in the case of a consolidation or merger, the name
of the resulting or surviving corporation shall be inserted), within twenty
days after the date of mailing to him of notice in writing that the
corporate action has become effective, payment for his shares and an
appraisal of the value thereof. Such corporation and any such stockholder
shall in such cases have the rights and duties and shall follow the
procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
88 [NOTICE TO OBJECTING STOCKHOLDER THAT CORPORATE ACTION HAS BECOME
EFFECTIVE].--The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action
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<PAGE>
approved at the meeting of the corporation of which he is a stockholder has
become effective. The giving of such notice shall not be deemed to create any
rights in any stockholder receiving the same to demand payment for his stock.
The notice shall be sent by registered or certified mail, addressed to the
stockholder at his last known address as it appears in the records of the
corporation.
89 [DEMAND FOR PAYMENT BY OBJECTING STOCKHOLDER].--If within twenty days
after the date of mailing of a notice under subsection (e) of section
eighty-two, subsection (f) of section eighty-three, or section eighty-eight any
stockholder to whom the corporation was required to give such notice shall
demand in writing from the corporation taking such action, or in the case of a
consolidation or merger from the resulting or surviving corporation, payment for
his stock, the corporation upon which such demand is made shall pay to him the
fair value of his stock within thirty days after the expiration of the period
during which such demand may be made.
90 [DETERMINATION OF VALUE OF STOCK BY SUPERIOR COURT].--If during the
period of thirty days provided for in section eighty-nine the corporation upon
which such demand is made and any such objecting stockholder fail to agree as to
the value of such stock, such corporation or any such stockholder may within
four months after the expiration of such thirty-day period demand a
determination of the value of the stock of all such objecting stockholders by a
bill in equity filed in the superior court in the county where the corporation
in which such objecting stockholder held stock had or has its principal office
in the commonwealth.
91 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF ETC; PARTIES TO BILL ETC; SERVICE OF BILL ON
CORPORATION; NOTICE TO STOCKHOLDER PARTIES ETC.--If the bill is filed by the
corporation, it shall name as parties respondent all stockholders who have
demanded payment for their shares and with whom the corporation has not reached
agreement as to the value thereof. If the bill is filed by a stockholder, he
shall bring the bill in his own behalf and in behalf of all other stockholders
who have demanded payment for their shares and with whom the corporation has not
reached agreement as to the value thereof, and service of the bill shall be made
upon the corporation by subpoena with a copy of the bill annexed. The
corporation shall file with its answer a duly verified list of all such other
stockholders, and such stockholders shall thereupon be deemed to have been added
as parties to the bill. The corporation shall give notice in such form and
returnable on such date as the court shall order to each stockholder party to
the bill by registered or certified mail, addressed to the last known address of
such stockholder as shown in the records of the corporation, and the court may
order such additional notice by publication or otherwise as it deems advisable.
Each stockholder who makes demand as provided in section eighty-nine shall be
deemed to have consented to the provisions of this section relating to notice,
and the giving of notice by the corporation to any such stockholder in
compliance with the order of the court shall be a sufficient service of process
on him. Failure to give notice to any stockholder making demand shall not
invalidate the proceedings as to other stockholders to whom notice was properly
given, and the court may at any time before the entry of a final decree make
supplementary orders of notice.
92 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC; ENTRY OF DECREE DETERMINING VALUE OF
STOCK; DATE ON WHICH VALUE IS TO BE DETERMINED.--After hearing the court shall
enter a decree determining the fair value of the stock of those stockholders who
have become entitled to the valuation of and payment for their shares, and shall
order the corporation to make payment of such value, together with interest, if
any, as hereinafter provided, to the stockholders entitled thereto upon the
transfer by them to the corporation of the certificates representing such stock
if certificated or if uncertificated, upon receipt of an instruction
transferring such stock to the corporation. For this purpose, the value of the
shares shall be determined as of the day preceding the date of the vote
approving the proposed corporate action and shall be exclusive of any element of
value arising from the expectation or accomplishment of the proposed corporate
action.
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<PAGE>
93 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; COURT MAY REFER BILL, ETC., TO SPECIAL
MASTER TO HEAR PARTIES, ETC.--The court in its discretion may refer the bill or
any question arising thereunder to a special master to hear the parties, make
findings and report the same to the court, all in accordance with the usual
practice in suits in equity in the superior court.
94 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; STOCKHOLDER PARTIES MAY BE REQUIRED TO
SUBMIT THEIR STOCK CERTIFICATES FOR NOTATION THEREON OF PENDENCY OF BILL,
ETC.--On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for notation thereon of the
pendency of the bill, and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
95 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; TAXATION OF COSTS, ETC.; INTEREST ON
AWARD, ETC.--The costs of the bill, including the reasonable compensation and
expenses of any master appointed by the court, but exclusive of fees of counsel
or of experts retained by any party, shall be determined by the court and taxed
upon the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
96 STOCKHOLDER DEMANDING PAYMENT FOR STOCK NOT ENTITLED TO NOTICE OF
STOCKHOLDERS' MEETINGS OR TO VOTE STOCK OR TO RECEIVE DIVIDENDS, ETC.;
EXCEPTIONS.--Any stockholder who has demanded payment for his stock as provided
in this chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation,
or in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
97 CERTAIN SHARES PAID FOR BY CORPORATION TO HAVE STATUS OF TREASURY STOCK,
ETC.--The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
98 ENFORCEMENT BY STOCKHOLDER OF RIGHT TO RECEIVE PAYMENT FOR HIS SHARES TO
BE EXCLUSIVE REMEDY; EXCEPTION.--The enforcement by a stockholder of his right
to receive payment for his shares in the manner provided in this chapter shall
be an exclusive remedy except that this chapter shall not exclude the right of
such stockholder to bring or maintain an appropriate proceeding to obtain relief
on the ground that such corporate action will be or is illegal or fraudulent as
to him.
D-3
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
T&B's Bylaws provide that T&B shall indemnify and hold harmless any person
who was or is a party or is threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director or officer of T&B or is or was
serving at the request of T&B as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, whether the basis of the
proceeding is alleged action in an official capacity or in any other capacity
while serving as a director or officer against expenses, liabilities and loss
(including attorneys' fees), reasonably incurred or suffered by such person in
connection with such action, suit or proceeding, provided that T&B's board of
directors authorizes such indemnification. The T&B Bylaws further state that the
right to indemnification includes the right to have expenses paid by T&B.
T&B's Bylaws further state that the indemnification provided therein shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors or administrators of such a person.
T&B's Bylaws further indicate that if a claim by an indemnified party has
not been paid in full by T&B within ninety days after a claim by the indemnified
party has been received by the corporation, the indemnified party may bring
suit. T&B will be able to raise as a defense to any such action that the
indemnified party has not met the standards of conduct which make it permissible
under the TBCA for T&B to indemnify the indemnified party.
Section 48-18-502 of the TBCA permits a corporation to indemnify its
directors against judgments, settlements, penalties, fines or reasonable
expenses incurred with respect to any threatened, pending or contemplated
action, suit or proceeding whether civil, criminal, administrative or
investigative, if such directors acted in good faith and in a manner they
reasonably believed, when they acted in their official capacity, to be in the
best interest of the corporation or in other cases not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceedings, had no reason to believe their conduct was unlawful. In a
derivative action, (i.e., one by or in the right of the corporation) in which
the director was adjudged liable or in connection with an action in which the
director was charged with and adjudged liable on the basis that a personal
benefit was improperly received by such director, the corporation may not
indemnify such director.
The indemnification provided for in Section 48-18-502 of the TBCA will not
be available unless authorized in a particular case after a determination has
been made by the directors, by a majority vote of a quorum consisting of
directors not a party to the proceeding, by independent special legal counsel,
or by the shareholders (excluding directors who are parties to the proceeding)
that indemnification is permissible in the circumstances.
Section 48-18-503 of the TBCA provides that, unless limited by a
corporation's charter, a corporation must indemnify its directors against
reasonable expenses if a director was wholly successful on the merits or
otherwise in the defense of a proceeding to which the director was a party
because he is or was a director of the corporation.
Sections 48-18-507 and 48-18-509 provide that the indemnification available
under the TBCA to directors may be provided to officers, employees or agents to
the same extent as if such person was a director and that no director may be
provided with indemnification for breach of such director's duty of loyalty, for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law or which involve unlawful distributions under the TBCA.
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<PAGE>
Section 48-12-102 of the TBCA permits the inclusion in the charter of a
Tennessee corporation of a provision, with certain exceptions, eliminating the
personal monetary liability of directors to the corporation or its shareholders
for breach of a fiduciary duty. T&B has adopted the provisions of the statute in
Article VIII of its Charter. Accordingly, T&B's Charter eliminates, subject to
certain exceptions, the personal liability of a director to T&B or its
shareholders for monetary damages for breaches of such director's fiduciary
duty. Consistent with the TBCA, the T&B Charter does not provide for the
elimination of or any limitation on the personal liability of a director for (i)
any breach of a director's duty of loyalty to T&B, (ii) acts or omissions not in
good faith which involve intentional misconduct or a knowing violation of law,
or (iii) unlawful corporate distributions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2 Agreement and Plan of Merger among Augat, T&B and Merger Sub dated as of October 7, 1996.
(Incorporated by reference to Report on Form 8-K (File No. 1-4682), dated October 7, 1996.)
3(i) Charter of T&B. (Incorporated by reference to Form 8-B (File No. 1-4682) filed May 2, 1996.)
3(ii) Bylaws of T&B. (Incorporated by reference to Form 8-B (File No. 1-4682) filed May 2, 1996.)
5(i) Opinion of Wyant, Tarrant & Combs, counsel to T&B regarding validity of securities being registered.
8(i) Opinion of Sullivan & Cromwell regarding certain federal income tax matters.
8(ii) Opinion of Hale and Dorr regarding certain federal income tax matters.
23(i) Consent of KPMG Peat Marwick LLP
23(ii) Consent of Deloitte & Touche LLP
23(iii) Consent of Arthur Andersen LLP
23(iv) Consent of Wyant, Tarrant & Combs, counsel to T&B. (Included in the opinion filed as Exhibit 5 to
this Registration Statement and incorporated herein by reference)
23(v) Consent of Sullivan & Cromwell. (Included in the opinion filed as Exhibit 8(i) to this Registration
Statement and incorporated herein by reference)
23(vi) Consent of Hale and Dorr. (Included in the opinion filed as Exhibit 8(ii) to this Registration
Statement and incorporated herein by reference)
23(vii) Consent of Merrill Lynch & Co.
23(v ii) Consent of Morgan Stanley & Co. Incorporated
23(ix) Consent of Thomas C. McDermott
23(x) Consent of John N. Lemasters
24(i) Power of Attorney
99(i) Form of Proxy of T&B
99(ii) Form of Proxy of Augat
</TABLE>
II-2
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933,
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities which remain unsold at the termination of the
offering.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant hereby undertakes that every prospectus
(i) that is filed pursuant to paragraph (1) immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the Registration Statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of
II-3
<PAGE>
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
THE REGISTRANT:
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, State of Tennessee, on the day of
November, 1996.
THOMAS & BETTS CORPORATION
By: /s/ T. KEVIN DUNNIGAN
-----------------------------------------
T. Kevin Dunnigan
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board,
* Chief Executive Officer
- ------------------------------ and Director (Principal November 7, 1996
T. Kevin Dunnigan Executive Officer)
*
- ------------------------------ President, Chief Operating November 7, 1996
Clyde R. Moore Officer and Director
Vice President--Finance
* and Treasurer (Principal
- ------------------------------ Financial and Accounting November 7, 1996
Fred R. Jones Officer)
*
- ------------------------------ Vice President--General November 7, 1996
Jerry Kronenberg Counsel
*
- ------------------------------ Director November 7, 1996
Raymond B. Carey, Jr.
- ------------------------------ Director November 7, 1996
Ernest H. Drew
*
- ------------------------------ Director November 7, 1996
Jeananne K. Hauswald
*
- ------------------------------ Director November 7, 1996
Thomas W. Jones
II-5
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
*
- ------------------------------ Director November 7, 1996
Robert A. Kenkel
*
- ------------------------------ Director November 7, 1996
Kenneth R. Masterson
*
- ------------------------------ Director November 7, 1996
J. David Parkinson
*
- ------------------------------ Director November 7, 1996
Jean-Paul Richard
*
- ------------------------------ Director November 7, 1996
Ian M. Ross
*
- ------------------------------ Director November 7, 1996
William H. Waltrip
*By: /s/ JERRY KRONENBERG
-------------------------
Jerry Kronenberg
ATTORNEY IN FACT
II-6
<PAGE>
EXHIBIT 5(I)
[LOGO]
NOVEMBER 5, 1996
Thomas & Betts Corporation
1555 Lynnfield Road
Memphis, Tennessee 38119
Dear Sirs:
We have acted as special Tennessee counsel to Thomas & Betts Corporation, a
Tennessee corporation (the "Company") in connection with the registration under
the Securities Act of 1933 (the "Act") of 18,780,974 shares of Common Stock, no
par value (the "Securities"), of the Company, we, as your counsel, have examined
such corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of this
opinion. The Securities are intended to be issued by the Company pursuant to the
Agreement and Plan of Merger, dated as of October 7, 1996 (the "Merger
Agreement"), among the Company, Augat Inc., a Massachusetts corporation
("Augat") and EG Acquisitions Corp., a Delaware corporation and a wholly owned
subsidiary of the Company ("Merger Sub"), which provides for the merger of
Merger Sub with and into Augat, whereby Augat will become a wholly owned
subsidiary of the Company (the "Merger").
Upon the basis of the aforementioned examination, we advise you that, in our
opinion, when the registration statement relating to the Securities (the
"Registration Statement") has become effective under the Act, the Merger has
become effective in accordance with the General Corporation Law of the State of
Delaware, the Massachusetts Business Corporation Law, the Tennessee Business
Corporation Act and the terms and conditions of the Merger Agreement, the
certificates representing the Securities have been duly signed by the Company
and countersigned by the transfer agent and registrar of the Company, and the
Securities have been issued and delivered as contemplated by the Merger
Agreement and the Registration Statement to the record holders of certificates
which immediately prior to the effective time of the Merger, represented
outstanding shares of Common Stock, par value $0.10 per share, of Augat, the
Securities will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the Tennessee Business Corporation Act, and we are expressing no opinion as
to the effect of the laws of any other jurisdiction.
We have relied as to certain matters on information obtained from public
officials, officers of the Company and other sources believed by us to be
responsible. We have also relied on the accuracy of the Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
Shares" in the Joint Proxy Statement/Prospectus included in the Registration
Statement. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ WYATT, TARRANT & COMBS
- --------------------------------------------------------------------------------
Wyatt, Tarrant & Combs
<PAGE>
EXHIBIT 8(I)
[SULLIVAN & CROMWELL LETTERHEAD]
NOVEMBER 7, 1996
Thomas & Betts Corporation,
1555 Lynnfield Road,
Memphis, Tennessee 38119.
Ladies and Gentlemen:
We have acted as special counsel to Thomas & Betts Corporation, a Tennessee
corporation ("T&B"), in connection with the proposed merger (the "Merger") of EG
Acquisitions Corp., a Delaware corporation and a wholly-owned subsidiary of T&B
("Acquisition"), with and into Augat Inc., a Massachusetts corporation
("Augat"), upon the terms and conditions set forth in the Agreement and Plan of
Merger (the "Agreement") by and among T&B, Acquisition and Augat dated as of
October 7, 1996. At your request, in connection with the filing by T&B of the
Registration Statement on Form S-4 (the "Registration Statement"), which
includes the joint proxy statement/prospectus relating to the special meetings
of shareholders of T&B and Augat and the issuance of shares of common stock, no
par value, of T&B pursuant to the Agreement, we are rendering our opinion
concerning certain federal income tax consequences of the Merger.
For purposes of the opinion set forth below we have relied, with your
consent, upon the accuracy and completeness of the statements and
representations (which statements and representations we have neither
investigated nor verified) contained in the certificates of the officers of T&B,
Acquisition and Augat provided to us, and have assumed that such certificates
will be complete and accurate as of the effective time of the Merger. We have
also relied upon the accuracy of the Registration Statement.
We have also assumed that the transactions contemplated by the Agreement
will be consummated in accordance therewith and as described in the Registration
Statement.
Based upon and subject to the foregoing, it is our opinion that, under
currently applicable law, the Merger will constitute a reorganization with the
meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code"), and that each of T&B, Acquisition and Augat shall be treated as a
party to the reorganization within the meaning of Section 368(b) of the Code.
We hereby confirm the accuracy of the discussion set forth in the joint
proxy statement/prospectus under the heading "Certain Federal Income Tax
Consequences" and we consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
reference to this opinion in the joint proxy statement/prospectus under the
heading "Certain Federal Income Tax Consequences." In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ SULLIVAN & CROMWELL
<PAGE>
EXHIBIT 8(II)
[HALE AND DORR LETTERHEAD]
NOVEMBER 7, 1996
Augat Inc.
89 Forbes Boulevard
Mansfield, MA 02048
Re: Merger pursuant to Agreement and Plan of Merger among
Thomas & Betts Corporation, EG Acquisitions Corp., and Augat Inc.
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the filing of a
registration statement (the "Registration Statement") on Form S-4, which
includes the Joint Proxy Statement and Prospectus relating to the Agreement and
Plan of Merger dated as of October 7, 1996 (the "Merger Agreement"), by and
among Thomas & Betts Corporation, a Tennessee corporation ("Parent"), EG
Acquisitions Corp., a Delaware corporation and wholly owned subsidiary of Parent
("Sub"), and Augat Inc., a Massachusetts corporation ("Target"). Pursuant to the
Merger Agreement, Sub will merger with and into Target (the "Merger"). Except as
otherwise provided, capitalized terms not defined herein have the meanings set
forth in the Merger Agreement and the exhibits thereto or in the letters
delivered to Hale and Dorr by Parent and Target containing certain
representations of Parent and Target relevant to this opinion (the
"Representation Letters"). All section references, unless otherwise indicated,
are to the United States Internal Revenue Code of 1986, as amended (the "Code").
In our capacity as counsel to Target in the Merger, and for purposes of
rendering this opinion, we have examined and relied upon the Registration
Statement, the Merger Agreement and the exhibits thereto, the Representation
Letters, and such other documents as we considered relevant to our analysis. In
our examination of documents, we have assumed the authenticity of original
documents, the accuracy of copies, the genuineness of signatures, and the legal
capacity of signatories.
We have assumed that all parties to the Merger Agreement and to any other
documents examined by us have acted, and will act, in accordance with the terms
of such Merger Agreement and documents and that the Merger will be consummated
at the Effective Time pursuant to the terms and conditions set forth in the
Merger Agreement without the waiver or modification of any such terms and
conditions. Furthermore, we have assumed that all representations contained in
the Merger Agreement, as well as those representations contained in the
Representation Letters, are, and at the Effective Time will be, true and
complete in all material respects, and that any representation made in any of
the documents referred to herein "to the best of the knowledge and belief" (or
similar qualification) of any person or party is correct without such
qualification. We have also assumed that as to all matters for which a person or
entity has represented that such person or entity is not a party to, does not
have, or is not aware of, any plan, intention, understanding, or agreement,
there is no such plan, intention, understanding, or agreement. We have not
attempted to verify independently such representations, but in the course of our
representation, nothing has come to our attention that would cause us to
question the accuracy thereof.
The conclusions expressed herein represent our judgment as to the proper
treatment of certain aspects of the Merger under the income tax laws of the
United States based upon the Code, Treasury Regulations, case law, and rulings
and other pronouncements of the Internal Revenue Service (the "IRS") as in
effect on the date of this opinion. No assurances can be given that such laws
will not be amended or otherwise changed prior to the Effective Time, or at any
other time, or that such changes will not affect the conclusions expressed
herein. Nevertheless, we undertake no responsibility to advise you of any
developments after the Effective Time in the application or interpretation of
the income tax laws of the United States.
<PAGE>
Our opinion represents our best judgment of how a court would decide if
presented with the issues addressed herein and is not binding upon either the
IRS or any court. Thus, no assurances can be given that a position taken in
reliance on our opinion will not be challenged by the IRS or rejected by a
court.
This opinion addresses only the specific United States federal income tax
consequences of the Merger set forth below, and does not address any other
federal, state, local, or foreign income, estate, gift, transfer, sales, use, or
other tax consequences that may result from the Merger or any other transaction
(including any transaction undertaken in connection with the Merger). We express
no opinion regarding the tax consequences of the Merger to shareholders of
Target that are subject to special tax rules, and we express no opinion
regarding the tax consequences of the Merger arising in connection with the
ownership of options or warrants for Target stock.
On the basis of, and subject to the foregoing, and in reliance upon the
representations and assumptions described above, we are of the following
opinion:
1. The Merger will constitute a reorganization within the meaning of
Section 368(a), and each of Parent, Sub, and Target will be a party to the
reorganization within the meaning of Section 368(b);
2. No gain or loss will be recognized by Parent, Sub, or Target as a
result of the Merger;
3. No gain or loss will be recognized by the shareholders of Target
upon the exchange of Target stock solely for shares of Parent stock in the
Merger;
4. Cash received by the shareholders of Target in lieu of fractional
shares of Parent stock will be treated as received as a distribution in
redemption of such fractional shares, subject to the provisions of Section
302, as if such fractional shares had been issued in the Merger and then
redeemed by Parent;
5. The tax basis of the shares of Parent stock received by the
shareholders of Target in the Merger will be equal to the tax basis of the
shares of Target stock exchanged therefor in the Merger, reduced by any
basis allocable to a fractional share of Parent stock treated as sold or
exchanged under Section 302; and
6. The holding period for the shares of Parent stock received by the
shareholders of Target will include the holding period for the shares of
Target stock exchanged therefor in the Merger, provided that the shares of
Target stock are held as capital assets at the Effective Time.
In rendering this opinion, we have assumed that Sullivan & Cromwell has
delivered, and has not withdrawn, an opinion that is substantially similar to
this one. No opinion is expressed as to any federal income tax consequence of
the Merger except as specifically set forth herein, and this opinion may not be
relied upon except with respect to the consequences specifically discussed
herein.
This opinion is intended solely for the purpose of inclusion as an exhibit
to the Registration Statement. It may not be relied upon for any other purpose
or by any other person or entity, and may not be made available to any other
person or entity without our prior written consent. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and further
consent to the use of our name in the Registration Statement in connection with
references to this opinion and the tax consequences of the Merger. In giving
this consent, however, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ HALE AND DORR
- --------------------------------------------------------------------------------
Hale and Dorr
<PAGE>
EXHIBIT 23(I)
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Thomas & Betts Corporation
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
Memphis, Tennessee
November 6, 1996
<PAGE>
EXHIBIT 23(II)
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in this Registration Statement
of Thomas & Betts Corporation on Form S-4 of our report on the consolidated
financial statements and financial statement schedule of Augat Inc. dated
January 30, 1996 appearing in the Annual Report on Form 10-K of Augat Inc. for
the year ended December 31, 1995, and to the reference to us under the heading
"Experts" in the Joint Proxy Statement/Prospectus, which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 7, 1996
<PAGE>
]
EXHIBIT 23(III)
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the use of our
report incorporated by reference and to all references to our Firm included in
or made a part of this Form S-4 registration statement. It should be noted that
we have not audited any financial statements of Amerace Corporation subsequent
to December 31, 1994 or performed any audit procedures subsequent to the date of
our report.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
November 7, 1996
<PAGE>
EXHIBIT 23(VII)
[LOGO]
November 7, 1996
Augat Inc.
89 Forbes Boulevard
Mansfield, MA 02048
Dear Sirs:
We hereby consent to the use of our opinion letter dated the date of this
Joint Proxy Statement/ Prospectus to the Board of Directors of Augat Inc.
included as Appendix C to the Joint Proxy Statement/ Prospectus which forms a
part of the Registration Statement on Form S-4 relating to the proposed merger
of Augat Inc. with EG Acquisitions Corp., a wholly owned subsidiary of Thomas &
Betts Corporation, and to the references to such opinion in such Joint Proxy
Statement/Prospectus under the captions "Summary -- Opinions of Financial
Advisors," "Background of the Merger," "Reasons for the Merger; Recommendations
of the Boards of Directors" and "Opinions of Financial Advisors -- Augat." In
giving such consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder, nor do we thereby admit that we are experts with respect to any part
of such Registration Statement within the meaning of the term "experts" as used
in the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ WILLIAM D. RIFKIN
-----------------------------------------------------------------------------
Managing Director
Investment Banking Group
<PAGE>
EXHIBIT 23 (VIII)
[LOGO]
NOVEMBER 7, 1996
THOMAS & BETTS CORPORATION
1555 LYNNFIELD ROAD
MEMPHIS, TENNESSEE 38119
DEAR SIRS:
We hereby consent to the inclusion in the Registration Statement of Thomas &
Betts Corporation ("T&B") on Form S-4, relating to the proposed merger of EG
Acquisitions Corp., a wholly owned subsidiary of T&B, with and into Augat Inc.,
of our opinion letter appearing as Appendix B to the Joint Proxy
Statement/Prospectus which is a part of the Registration Statement, and to the
references of our firm name therein. In giving such consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations adopted by the Securities and Exchange Commission thereunder nor do
we admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Securities Act
of 1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /S/ FRANCIS J. OELERICH III
------------------------------------------
Francis J. Oelerich III
PRINCIPAL
<PAGE>
EXHIBIT 23(IX)
CONSENT OF A PERSON NAMED
AS ABOUT TO BECOME A DIRECTOR
I hereby consent to my being named in the Registration Statement on Form S-4
of Thomas & Betts Corporation (the "Company") as a person who will be proposed
to become a director of the Company upon consummation of the transactions
described therein.
<TABLE>
<S> <C>
/s/ THOMAS C. MCDERMOTT
------------------------------------------------
November 7, 1996 Thomas C. McDermott
</TABLE>
<PAGE>
EXHIBIT 23(X)
CONSENT OF A PERSON NAMED
AS ABOUT TO BECOME A DIRECTOR
I hereby consent to my being named in the Registration Statement on Form S-4
of Thomas & Betts Corporation (the "Company") as a person who will be proposed
to become a director of the Company upon consummation of the transactions
described therein.
<TABLE>
<S> <C>
/s/ JOHN N. LEMASTERS
------------------------------------------------
November 7, 1996 John N. Lemasters
</TABLE>
<PAGE>
EXHIBIT 24 (I)
POWER OF ATTORNEY
Each of the undersigned directors and officers of Thomas & Betts Corporation
hereby severally constitutes T. Kevin Dunnigan, Clyde R. Moore, Jerry Kronenberg
and Fred R. Jones, or any one of them (with full power of each of them to act
alone), his or her true and lawful attorney-in-fact, with full power of
substitution and re-substitution, to execute on our behalf a Registration
Statement on Form S-4 relating to the Common Stock of Thomas & Betts
Corporation, to be issued in connection with the acquisition of Augat Inc., and
any and all amendments (including post-effective amendments) to such
Registration Statement, and to file the same, with all exhibits and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each of said attorneys-in-fact and agents full power and authority
to perform each and every act necessary to be done as fully to all intents and
purposes as he or she could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------------------- -------------------
<S> <C> <C>
/s/ T. KEVIN DUNNIGAN Chairman of the Board, Chief Executive
- ----------------------------------- Officer and Director October 4, 1996
T. Kevin Dunnigan
/s/ CLYDE R. MOORE President, Chief Operating Officer and
- ----------------------------------- Director October 4, 1996
Clyde R. Moore
/s/ FRED R. JONES Vice President-Finance and Treasurer (Chief
- ----------------------------------- Financial Officer and Principal Accounting
Fred R. Jones Officer) October 4, 1996
/s/ JERRY KRONENBERG
- ----------------------------------- Vice President-General Counsel October 4, 1996
Jerry Kronenberg
/s/ RAYMOND B. CAREY, JR.
- ----------------------------------- Director October 29, 1996
Raymond B. Carey, Jr.
- ----------------------------------- Director October , 1996
Ernest H. Drew
/s/ JEANANNE K. HAUSWALD
- ----------------------------------- Director October 4, 1996
Jeananne K. Hauswald
/s/ THOMAS W. JONES
- ----------------------------------- Director October 4, 1996
Thomas W. Jones
/s/ ROBERT A. KENKEL
- ----------------------------------- Director October 4, 1996
Robert A. Kenkel
/s/ KENNETH R. MASTERSON
- ----------------------------------- Director October 4, 1996
Kenneth R. Masterson
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------------------- -------------------
/s/ J. DAVID PARKINSON
- ----------------------------------- Director October 4, 1996
J. David Parkinson
<S> <C> <C>
/s/ JEAN-PAUL RICHARD
- ----------------------------------- Director October 4, 1996
Jean-Paul Richard
/s/ IAN M. ROSS
- ----------------------------------- Director October 29, 1996
Ian M. Ross
/s/ WILLIAM H. WALTRIP
- ----------------------------------- Director October 28, 1996
William H. Waltrip
</TABLE>
<PAGE>
EXHIBIT 99(I)
THOMAS & BETTS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THOMAS & BETTS CORPORATION
1555 LYNNFIELD ROAD
MEMPHIS, TENNESSEE 38119
PROXY
The undersigned hereby (1) acknowledges receipt of the Notice of
Special Meeting of Shareholders of Thomas & Betts Corporation, a
Tennessee corporation ("T&B"), to be held at The Memphis Marriott, 2625
Thousand Oaks Boulevard, Memphis, Tennessee 38118 on December 11, 1996
at 8:00 a.m., local time (the "Meeting"), and at any adjournments or
postponements thereof, and the Joint Proxy Statement/Prospectus
furnished in connection therewith, and (2) appoints T. Kevin Dunnigan
and Clyde R. Moore, and each of them, as his or her proxies (with full
power of substitution) for and in the name, place, and stead of the
undersigned, to vote upon and act with respect to all of the shares of
Common Stock, no par value (the "T&B Common Stock"), standing in the
name of the undersigned, or with respect to which the undersigned is
entitled to vote and act, at the Meeting, and at any adjournments or
postponements thereof.
(change of address/comments)
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
(IF YOU HAVE WRITTEN IN THE ABOVE
SPACE, PLEASE MARK THE CORRESPONDING
BOX ON THE REVERSE SIDE OF THIS CARD)
<TABLE>
<C> <S>
SEE REVERSE
SIDE
</TABLE>
<PAGE>
<TABLE>
<S> <C>
/X/ Please mark your
votes as in the
example
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED AND DELIVERED, WILL BE VOTED AS SPECIFIED
BELOW. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS
CARD.
The undersigned directs that this proxy be voted as follows:
<TABLE>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
(1) To approve the Agreement and Plan of Merger (the "Merger Agreement"), / / / / / /
among Augat Inc., a Massachusetts corporation, T&B and EG Acquisitions
Corp., a Delaware corporation and a wholly-owned subsidiary of T&B,
dated as of October 7, 1996, and to approve the transactions
contemplated by the
Merger Agreement, including the issuance of shares of T&B Common Stock
pursuant to the Merger Agreement.
(2) In the discretion of proxies named above, on such other business as
may properly come before the meeting or any adjournments or
postponements thereof.
<CAPTION>
<S> <C>
(1) To approve the Agreement and Plan of Merger (the "Merger Agreement"), Check this box
among Augat Inc., a Massachusetts corporation, T&B and EG Acquisitions to make change
Corp., a Delaware corporation and a wholly-owned subsidiary of T&B, of address.
dated as of October 7, 1996, and to approve the transactions
contemplated by the
Merger Agreement, including the issuance of shares of T&B Common Stock Notwithstanding shareholder approval of the foregoing
pursuant to the Merger Agreement. proposals, T&B reserves the right to terminate the
Merger Agreement and abandon the Merger at any time
prior to the consummation of the Merger and the
(2) In the discretion of proxies named above, on such other business as transactions contemplated thereby, subject to the terms
may properly come before the meeting or any adjournments or and conditions of the Merger Agreement.
postponements thereof.
Holders of T&B Common Stock will not be entitled to
dissenters' rights in connection with the Merger.
The undersigned hereby revokes any proxy heretofore
given to vote or act with respect to the T&B Common
Stock and hereby ratifies and confirms all that the
proxies, their substitutes, or any of them may lawfully
do by virtue hereof.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
PLEASE DATE THIS PROXY AND SIGN YOUR NAME EXACTLY AS IT
APPEARS HEREON. WHERE THERE IS MORE THAN ONE OWNER, EACH
SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY, ADMINISTRATOR,
EXECUTOR, GUARDIAN, OR TRUSTEE, PLEASE ADD YOUR TITLE AS
SUCH. IF EXECUTED BY A CORPORATION, THE PROXY SHOULD BE
SIGNED BY A DULY AUTHORIZED OFFICER AND STATE THE FULL
NAME OF THE CORPORATION.
SIGNATURE(S)
(DATE)
<CAPTION>
(1) To approve the Agreement and Plan of Merger (the "Merger Agreement"), / /
among Augat Inc., a Massachusetts corporation, T&B and EG Acquisitions
Corp., a Delaware corporation and a wholly-owned subsidiary of T&B,
dated as of October 7, 1996, and to approve the transactions
contemplated by the
Merger Agreement, including the issuance of shares of T&B Common Stock
pursuant to the Merger Agreement.
(2) In the discretion of proxies named above, on such other business as
may properly come before the meeting or any adjournments or
postponements thereof.
</TABLE>
<PAGE>
EXHIBIT 99(II)
AUGAT INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AUGAT INC.
89 FORBES BOULEVARD
MANSFIELD, MASSACHUSETTS 02048
The undersigned hereby (1) acknowledges receipt of the Notice of Special
Meeting of Stockholders of Augat Inc., a Massachusetts corporation ("Augat"), to
be held at the offices of Hale and Dorr, 60 State Street, 26th Floor, Boston, MA
on December 11, 1996 at 9 a.m., local time (the "Meeting"), and at any
adjournments or postponements thereof, and the Joint Proxy Statement/Prospectus
furnished in connection therewith, and (2) appoints F. Gordon Bitter, and Thomas
E. Neely, and each of them, as his or her proxies (with full power of
substitution) for and in the name, place, and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock, par value $.10
per share (the "Augat Common Stock"), standing in the name of the undersigned,
or with respect to which the undersigned is entitled to vote and act, at the
Meeting and at any adjournments or postponements thereof.
The undersigned directs that this proxy be voted as follows on the reverse
side:
Notwithstanding stockholder approval of the proposals set forth on the
reverse side, Augat reserves the right to terminate the Merger Agreement and
abandon the Merger (as defined on the reverse side) at any time prior to the
consummation of the Merger and the transactions contemplated thereby, subject to
the terms and conditions of the Merger Agreement.
Holders of Augat Common Stock who properly perfect their appraisal rights
will be entitled to appraisal rights in connection with the Merger.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<TABLE>
<S> <C>
SEE REVERSE SIDE
</TABLE>
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED AND DELIVERED, WILL BE VOTED AS SPECIFIED
ABOVE. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS
CARD.
(1) To approve the Agreement and Plan of Merger (the "Merger Agreement") among
Augat, Thomas & Betts Corporation, a Tennessee corporation ("T&B"), and EG
Acquisitions Corp., a Delaware corporation and a wholly-owned subsidiary of
T&B, dated as of October 7, 1996, and to approve the transactions
contemplated thereby.
/ / FOR / / AGAINST / / ABSTAIN
(2) In the discretion of proxies named above, on such other business as may
properly come before the meeting or any adjournments or postponements
thereof.
The undersigned hereby revokes any proxy heretofore given to vote or act
with respect to the Augat Common Stock and hereby ratifies and confirms all that
the proxies, their substitutes, or any of them may lawfully do by virtue hereof.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
Date: _________________________ , 1996
______________________________________
Signature of Stockholder
______________________________________
Signature of Stockholder (if jointly
held)
PLEASE DATE THIS PROXY AND SIGN YOUR
NAME EXACTLY AS IT APPEARS HEREON.
WHERE THERE IS MORE THAN ONE OWNER,
EACH SHOULD SIGN. WHEN SIGNING AS AN
ATTORNEY, ADMINISTRATOR, EXECUTOR,
GUARDIAN, OR TRUSTEE, PLEASE ADD YOUR
TITLE AS SUCH. IF EXECUTED BY A
CORPORATION, THE PROXY SHOULD BE
SIGNED BY A DULY AUTHORIZED OFFICER
AND STATE THE FULL NAME OF THE
CORPORATION.
