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EXHIBIT 2.1
EXECUTION COPY
AGREEMENT
AND
PLAN OF MERGER
BY AND BETWEEN
AVNET, INC.
AND
ALPHA ACQUISITION CORP.
AND
KENT ELECTRONICS CORPORATION
DATED AS OF MARCH 21, 2001
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TABLE OF CONTENTS
Agreement and Plan of Merger.............................................................................1
Recitals.................................................................................................1
Article I The Merger.....................................................................................2
Section 1.01 The Merger.......................................................................2
Section 1.02 Closing..........................................................................2
Section 1.03 Effective Time...................................................................2
Section 1.04 Articles of Incorporation........................................................2
Section 1.05 By-Laws..........................................................................2
Section 1.06 Officers and Directors...........................................................2
Section 1.07 Intentionally Omitted............................................................3
Section 1.08 Conversion of Shares.............................................................3
Section 1.09 Surrender of Shares; Transfer Books..............................................3
Section 1.10 Options and Warrants.............................................................6
Section 1.11 Affiliates.......................................................................7
Section 1.12 Closing Day Payments.............................................................7
Article II Representations And Warranties Of Company.....................................................7
Section 2.01 Organization; Subsidiaries.......................................................7
Section 2.02 Capitalization...................................................................8
Section 2.03 Authority; Validity.............................................................10
Section 2.04 No Conflict.....................................................................10
Section 2.05 Consents........................................................................11
Section 2.06 Financial Statements; SEC Filings...............................................11
Section 2.07 Tax Matters.....................................................................13
Section 2.08 Absence of Certain Changes or Events............................................14
Section 2.09 Material Contracts; Customers and Suppliers.....................................15
Section 2.10 Title and Related Matters.......................................................16
Section 2.11 Employee Benefit Plans..........................................................16
Section 2.12 Employment Agreements...........................................................19
Section 2.13 Legal Proceedings...............................................................19
Section 2.14 Licenses; Compliance with Law; Accuracy of Certain Information..................20
Section 2.15 Accuracy of Proxy Statement/Prospectus..........................................20
Section 2.16 Insurance.......................................................................20
Section 2.17 Environmental Matters...........................................................20
Section 2.18 Intellectual Property...........................................................21
Section 2.19 Labor Matters...................................................................22
Section 2.20 Related Party Transactions......................................................23
Section 2.21 State Takeover Statutes.........................................................23
Section 2.22 Brokers; Advisors...............................................................23
Section 2.23 Pooling of Interest.............................................................24
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Section 2.24 Full Disclosure.................................................................24
Article III Representations And Warranties Of Parent And Buyer.........................................24
Section 3.01 Organization....................................................................24
Section 3.02 Capitalization..................................................................24
Section 3.03 Authority; Validity.............................................................25
Section 3.04 No Conflict.....................................................................25
Section 3.05 Consents........................................................................26
Section 3.06 Legal Proceedings...............................................................26
Section 3.07 Financial Statements, SEC Filings...............................................26
Section 3.08 No Material Adverse Effect......................................................27
Section 3.09 Accuracy of Proxy Statement/Prospectus..........................................27
Section 3.10 Reorganization..................................................................28
Section 3.11 No Brokers or Finders...........................................................28
Section 3.12 Full Disclosure.................................................................28
Section 3.13 Compliance with Law.............................................................28
Section 3.14 Taxes...........................................................................28
Section 3.15 Employee Benefits...............................................................29
Section 3.16 Environmental Matters...........................................................29
Article IV Covenants....................................................................................29
Section 4.01 Access and Information..........................................................29
Section 4.02 Governmental Filings............................................................30
Section 4.03 Consents and Approvals..........................................................30
Section 4.04 Meetings of Shareholders; Securities Filings....................................31
Section 4.05 Conduct of Company Business.....................................................32
Section 4.06 Conduct of Parent Business......................................................34
Section 4.07 Publicity.......................................................................34
Section 4.08 Notification of Defaults and Adverse Events.....................................34
Section 4.09 Satisfy Conditions to Closing...................................................35
Section 4.10 Anti-takeover Statutes..........................................................35
Section 4.11 Indemnification; Insurance......................................................35
Section 4.12 Employee Benefits...............................................................36
Section 4.13 No Solicitation.................................................................37
Section 4.14 Rights Agreement................................................................38
Section 4.15 Option Vesting..................................................................38
Section 4.16 Special Earnings Announcement...................................................38
Section 4.17 Reorganization..................................................................38
Article V Conditions....................................................................................38
Section 5.01 Conditions to Obligations of Company, Parent and Buyer..........................38
Section 5.02 Conditions to Obligations of Parent and Buyer...................................39
Section 5.03 Conditions to Obligations of Company............................................40
Article VI Termination, Amendment and Waiver............................................................41
Section 6.01 Termination and Abandonment.....................................................41
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Section 6.02 Effect of Termination and Termination Fee.......................................42
Section 6.03 Amendment.......................................................................44
Section 6.04 Extension; Waiver...............................................................44
Article VII Miscellaneous...............................................................................44
Section 7.01 Termination of Representations and Warranties...................................44
Section 7.02 Expenses........................................................................44
Section 7.03 Notices.........................................................................44
Section 7.04 Further Assurances..............................................................45
Section 7.05 Specific Performance............................................................45
Section 7.06 Assignability...................................................................46
Section 7.07 Governing Law...................................................................46
Section 7.08 Interpretation..................................................................46
Section 7.09 Counterparts....................................................................46
Section 7.10 Integration.....................................................................46
Section 7.11 Survival........................................................................46
Article VIII Definitions................................................................................46
Section 8.01 Definitions.....................................................................46
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ANNEXES
Annex A Inducement Agreement
Annex B Option Agreement
Annex C Affiliate Letter
SCHEDULES
Schedule 1.12 Closing Date Payments
Schedule 2.01(a) Organization; Subsidiaries
Schedule 2.01(b) Capitalization of Company and Company's Subsidiaries
Schedule 2.02 Options
Schedule 2.04 No Conflicts
Schedule 2.05 Company Required Consents
Schedule 2.06 Financial Statements
Schedule 2.08 Certain Events
Schedule 2.09 Material Contracts; Customers and Suppliers
Schedule 2.10 Certain Property or Assets
Schedule 2.11(a) Company Employee Benefit Plans
Schedule 2.11(b) Certain Company Benefit Plan Operations
Schedule 2.11(d) Certain Company Benefit Plan Contributions
Schedule 2.11(e) Certain Company Benefit Plan Matters
Schedule 2.11(i) Certain Company Benefits
Schedule 2.12 Employment Agreements
Schedule 2.13 Legal Proceedings
Schedule 2.14 Compliance with Law
Schedule 2.16 Company Insurance Policies
Schedule 2.17 Certain Environmental Matters
Schedule 2.18 Intellectual Property
Schedule 2.20 Related Party Transactions
Schedule 2.22 Brokers; Advisors
Schedule 3.04 Parent Required Consents
Schedule 4.05 Conduct of Company Business
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT and PLAN OF MERGER (this "AGREEMENT") is entered into as of
March 21, 2001 by and between Avnet, Inc., a New York corporation ("PARENT"),
Alpha Acquisition Corp., a Texas corporation and a wholly-owned subsidiary of
Parent ("BUYER"), and Kent Electronics Corporation, a Texas corporation
("COMPANY").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Buyer and Company
have each approved the acquisition of Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, to induce Parent and Buyer to enter into this Agreement, (i)
certain beneficial and record holders of capital stock of Company are entering
into an Inducement Agreement (the "INDUCEMENT AGREEMENT") with Parent, the form
of which is attached hereto as Annex A to this Agreement, pursuant to which,
among other things, such record holders have granted to Parent an irrevocable
proxy to vote their capital stock of Company in favor of the transactions
contemplated by this Agreement, (ii) Larry D. Olson and Mark A. Zerbe have each
executed and delivered an employment agreement with Parent, effective as of the
Effective Time, in form and substance acceptable to Parent, and (iii) Company is
entering into an Option Agreement (the "OPTION AGREEMENT") granting Parent the
right to acquire up to 2,863,474 shares of common stock, without par value, of
Company ("COMPANY COMMON STOCK") upon the terms and conditions set forth
therein, in the form of Annex B to this Agreement;
WHEREAS, Parent, Buyer and Company intend the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code;
WHEREAS, Parent, Buyer and Company desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement and
prescribe various conditions to the Merger; and
WHEREAS, capitalized terms used herein but not otherwise defined where
referenced shall have the meanings ascribed to such terms in Article VIII
hereof.
NOW, THEREFORE, in consideration of the foregoing premises and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below), Buyer will be merged with
and into Company and the separate corporate existence of Buyer will thereupon
cease (the "MERGER"). Company will be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "SURVIVING CORPORATION") and will
continue to be governed by the laws of the State of Texas. The separate
corporate existence of Company with all its rights, privileges, immunities,
powers and franchises will continue unaffected by the Merger and Company will
succeed to all of the rights and properties of Buyer and will be subject to all
of the debts and liabilities of Buyer.
SECTION 1.02 Closing. The closing of the transactions contemplated hereby
(the "CLOSING") will take place (i) at the primary offices of Carter, Ledyard &
Milburn at 10:00 A.M., New York time on the second business day after the day on
which the last of the conditions set forth in ARTICLE V is fulfilled or waived
in accordance with this Agreement or (ii) at such other place and time or on
such other date as the parties hereto may agree (the date of the Closing, the
"CLOSING DATE").
SECTION 1.03 Effective Time. Subject to the provisions of this Agreement
and provided that this Agreement has not been terminated or abandoned pursuant
to ARTICLE VI, articles of merger (the "ARTICLES OF MERGER") shall be duly
prepared, executed and acknowledged by Company and thereafter delivered to the
Secretary of State of Texas for filing in accordance with Section 5.04 of the
Texas Business Corporation Act (the "TBCA"), on or as soon as practicable after
the Closing Date. The Merger will become effective immediately upon the issuance
of a certificate of merger by the Secretary of State of Texas pursuant to
Section 5.05 of the TBCA (or, if the Articles of Merger provide for a subsequent
time for effectiveness, at the time thereafter so provided in the Articles of
Merger, as provided in Section 10.03 of the TBCA); the time of such
effectiveness is hereinafter referred to as the "EFFECTIVE TIME"; and the date
of such effectiveness is hereinafter referred to as the "EFFECTIVE DATE."
SECTION 1.04 Articles of Incorporation. The Articles of Incorporation of
Company in effect immediately prior to the Effective Time will be the Articles
of Incorporation of the Surviving Corporation at and after the Effective Time
until duly amended in accordance with the terms thereof and the applicable
provisions of the TBCA.
SECTION 1.05 By-Laws. The By-Laws of Company in effect immediately prior to
the Effective Time will be the By-Laws of the Surviving Corporation at and after
the Effective Time until duly amended in accordance with the terms thereof and
the applicable provisions of the TBCA.
SECTION 1.06 Officers and Directors. The persons serving as directors of
Buyer immediately prior to the Effective Time shall continue as the directors of
the Surviving
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Corporation at and after the Effective Time, and the individuals specified by
Parent in writing prior to the Effective Time shall be the officers of the
Surviving Corporation at and after the Effective Time, in each case until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and By-Laws.
SECTION 1.07 Intentionally Omitted.
SECTION 1.08 Conversion of Shares. Except as otherwise provided herein, at
the Effective Time:
(a) Each share of Company Common Stock ("COMPANY SHARES") issued and
outstanding immediately prior to the Effective Time (other than shares canceled
pursuant to this Section 1.08) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to receive
0.87 of a fully paid and nonassessable share ("CONVERSION RATIO") of Common
Stock of Parent, par value $1.00 per share ("PARENT Stock"); provided, however,
that if between the date of this Agreement and the Effective Time the
outstanding shares of Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination,
or exchange of shares, the securities to be received by the shareholders of the
Company shall be appropriately and correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(b) Each Company Common Share held immediately prior to the Effective
Time by Company, Parent or Buyer or any of their wholly-owned subsidiaries
(other than shares held in trust or otherwise in a representative capacity) (the
"CANCELED SHARES") shall be retired automatically, and no consideration shall be
payable with respect thereto.
(c) Each share of common stock of Buyer, par value $1.00 per share,
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into one share of common stock, without par value, of the Surviving
Corporation.
SECTION 1.09 Surrender of Shares; Transfer Books.
(a) Exchange Agent. Before the mailing of the Proxy
Statement/Prospectus, Parent will appoint a bank or trust company to act as
exchange agent (the "EXCHANGE AGENT") for the payment of the Merger
Consideration. Parent will furnish the Exchange Agent forthwith upon the
Effective Time with cash (to the extent required by Section 1.09(e)) and
certificates representing such number of shares of Parent Stock as the Exchange
Agent shall require in order to transmit the Merger Consideration to
shareholders surrendering certificates that immediately prior to the Effective
Time represented Company Shares in accordance with paragraph (b) of this Section
1.09
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(b) Exchange Procedures for Shares of Company Common Stock. As soon as
practicable after the Effective Time, Parent shall cause the Exchange Agent to
transmit to each holder of record of a certificate that immediately prior to the
Effective Time represented Company Shares (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
such certificates shall pass, only upon proper delivery of the certificates to
the Exchange Agent and shall be in customary form) and (ii) instructions for use
in effecting the surrender of such certificates in exchange for the Merger
Consideration. Each holder of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Company Shares shall, upon
surrender to the Exchange Agent of such certificate or certificates in
accordance with such letter of transmittal, duly executed, and acceptance
thereof by the Exchange Agent, be entitled to a certificate or certificates
representing the number of full shares of Parent Stock, if any, to be received
by the holder thereof pursuant to this Agreement and the cash, if any, payable
in lieu of any fractional shares. The Exchange Agent will accept such
certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange thereof in accordance
with normal exchange practices. After the Effective Time, there will be no
further transfer on the records of the Surviving Corporation or its transfer
agent of Company Shares which have been converted pursuant to this Agreement
into the right to receive the Merger Consideration, and if certificates
immediately prior to the Effective Time represented Company Shares are presented
to the Surviving Corporation for transfer, they will be canceled against
delivery of certificates for Parent Stock (and cash to the extent required by
Section 1.09(e)). If any certificate for such Parent Stock is to be issued in,
or if cash is to be remitted to, a name other than that in which the certificate
that formerly represented Company Shares surrendered for exchange is registered,
it will be a condition of such exchange that the certificate so surrendered will
be properly endorsed, with signature guaranteed, or otherwise in proper form for
transfer and that the person requesting such exchange will pay to the Surviving
Corporation or its transfer agent any transfer or other taxes required by reason
of the issuance of certificates for such Parent Stock in a name other than that
of the registered holder of the certificate surrendered, or establish to the
satisfaction of the Surviving Corporation or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 1.09(b), each certificate that formerly represented Company Shares which
have been converted into the right to receive the Merger Consideration will be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration as contemplated by Section
1.08 and Section 1.09(e). No interest will be paid or will accrue on any cash
payable in lieu of any fractional shares of Parent Stock.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered certificate that
formerly represented Company Shares with respect to the shares of Parent Stock
to be received in respect thereof and no cash payment in lieu of fractional
shares will be paid to any such holder pursuant to Section 1.09(e) until the
surrender of such certificate in accordance with this Article I. Subject to the
effect of applicable laws, following surrender of any such
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certificate, there will be paid to the holder of the certificate representing
whole shares of Parent Stock issued in connection herewith, without interest,
(i) at the time of such surrender the amount of any cash payable in lieu of a
fractional share of Parent Stock to which such holder is entitled pursuant to
Section 1.09(e) and the proportionate amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Parent Stock, and (ii) at the appropriate payment date, the
proportionate amount of dividends or other distributions with a record date
after the Effective Time but before such surrender and a payment date subsequent
to such surrender payable with respect to such whole shares of Parent Stock.
(d) No Further Ownership Rights in Company Common Stock. All Merger
Consideration paid upon the surrender for exchange of certificates that formerly
represented Company Shares in accordance with the terms of this Article I will
be deemed to have been issued and paid in full satisfaction of all rights
pertaining to the Company Shares represented by such certificates.
(e) No Fractional Shares; Exchange Agent.
(i) No Fractional Shares. No fractional shares of Parent Stock
and no certificates or scrip representing fractional shares of Parent Stock will
be issued in connection with the Merger, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a shareholder of
the Surviving Corporation after the Merger.
(ii) Cash Payment in Lieu of Fractional Shares. Each record
holder of Company Shares converted pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of Parent Stock (after
taking into account all Company Shares held by such holder) will be entitled to
receive, in lieu thereof upon surrender of the certificates that immediately
prior to the Effective Time represented Company Shares, a cash payment (without
interest) in lieu of such fractional share in an amount equal to the product of
such fraction multiplied by $25.84.
(iii) Termination of Exchange Agent's Duties. Any holders of
certificates that immediately prior to the Effective Time represented Company
Shares who have not complied with this Article I within six months after the
Effective Time will thereafter look only to Parent for payment of the Merger
Consideration.
(iv) No Liability. None of Parent, Buyer, Company or the Exchange
Agent will be liable to any person in respect of any shares of Parent Stock (or
dividends or distributions with respect thereto) or cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any certificates that immediately prior to the Effective Time represented
Company Shares have not been surrendered before such date on which any shares of
Parent Stock, any cash in lieu of fractional shares of Parent Stock, or any
dividends or distributions with respect to shares of Parent Stock in respect of
such certificate would otherwise escheat to or become the property of any
governmental entity, any such shares, cash, dividends or distributions in
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respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
SECTION 1.10 Options and Warrants. (a) Prior to the Effective Time, the
Board of Directors of Company and the Board of Directors of Parent (or, if
appropriate, respective committees thereof) shall adopt appropriate resolutions
and take such action as may be required, under the Option Plans (as defined in
Section 2.02) such that, at the Effective Time,
(i) each Option Plan shall continue in existence and each Option
(as defined in Section 2.02) under each such Option Plan, whether or not then
exercisable, shall be assumed by Parent and converted into an option ("ASSUMED
OPTION") to acquire on the same terms and conditions as were applicable under
the Option, shares of Parent Stock; provided, that (A)the number of shares of
Parent Stock subject to such Assumed Option under such Option Plan shall be
determined by multiplying the number of shares of Company Common Stock subject
to such Option by the Conversion Ratio (with such share number rounded down to
the nearest whole number), and (B) the exercise price of each such Assumed
Option shall be determined by dividing the exercise price of the Option by the
Conversion Ratio (with such exercise price rounded up to the nearest penny);
provided further, however, that, in the case of any Option to which Code Section
421 applies by reason of its qualification under any of Code Sections 422-424,
the option exercise price, the number of shares that may be acquired pursuant to
such option and the terms and conditions of exercise of such Option shall be
determined to comply with Code Section 425(a), and
(ii) each Warrant (as defined in Section 2.02), whether or not
then exercisable, will be converted into a right to acquire shares of Parent
Stock, subject to terms and conditions materially equivalent, in the reasonable
judgment of the Board of Directors of Parent, to the terms and conditions set
out in such Warrant; provided, that (iii) the number of shares of Parent Stock
subject to such right shall be determined by multiplying the number of shares of
Company Common Stock subject to such Warrant by the Conversion Ratio (with such
share number rounded down to the nearest whole number); and (iv) the exercise
price of such right shall be determined by dividing the exercise price of such
Warrant by the Conversion Ratio.
(b) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Stock for delivery upon
exercise of the Assumed Options. As soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate forms) or a post-effective amendment to the Registration
Statement, with respect to the shares of Parent Stock subject to the Assumed
Options and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses in connection therewith) for so long as
any Assumed Options remain outstanding
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SECTION 1.11 Affiliates. Certificates representing Parent Stock issued to
any director or executive officer of Company or any other Person deemed by
Company to be an "AFFILIATE," for purposes of Rule 145(c) under the Securities
Act of 1933, as amended (the "Securities Act"), of Company ("COMPANY
AFFILIATES") will bear an appropriate restrictive legend. On or prior to the
Closing Date, Company will deliver to Parent a list certified by an appropriate
executive officer of Company of all persons who are then Company Affiliates.
Company will promptly amend or supplement this list as changes occur. Company
will cause each person named in any such list, amendment or supplement to
deliver promptly to Parent a letter substantially in the form of ANNEX C to this
Agreement.
SECTION 1.12 Closing Day Payments. On the Closing Date and without the
further consent of Parent or Buyer (provided, however, with respect to all
payments which are disclosed in the Disclosure Schedule as estimated payments,
only after reasonable consultation with Parent concerning the actual payment
amounts), Company shall be entitled to make any payment to employees, advisors
or other parties which are conditioned in whole or in part on the consummation
of the transactions contemplated hereby, to the extent and only to the extent
such persons and such payments are specifically disclosed in Section 1.12 of the
Disclosure Schedule.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company makes the representations and warranties set forth in this Article
II to Parent and Buyer. All representations and warranties of Company set forth
in this Article II are made subject to the exceptions which are noted in the
schedules delivered by Company to Parent and Buyer concurrently herewith and
identified by the parties as the "Disclosure Schedule". The Disclosure Schedule
has been delivered by Company to Parent and Buyer on the date hereof, and the
Disclosure Schedule has been reviewed and accepted by Parent and Buyer. Each
exception noted in the Disclosure Schedule is numbered to correspond to the
applicable Section of this Article II or other Article to which such exception
refers; provided, however, that all exceptions set forth in the Disclosure
Schedule shall be deemed to be disclosed not only in connection with the
representation and warranty specifically referenced on a specified section of
the Disclosure Schedule, but for all purposes relating to each of the other
representations and warranties of Company set forth in this Article II so long
as the relevance of such disclosure to such other representation or warranty is
reasonably apparent from the terms of such disclosure without investigation by
Parent or Buyer.
SECTION 2.01 Organization; Subsidiaries
(a) Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas, and, except as disclosed in
Section 2.01 of the Disclosure Schedule, each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and is in good standing as a foreign
corporation qualified to do business in each jurisdiction where
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the properties owned, leased or operated, or the business conducted by it
requires such qualification, except for such failure to so qualify or to be in
such good standing which is not reasonably likely to have a Company Material
Adverse Effect. Company and its Subsidiaries have the requisite power and
authority to own, lease and operate their respective properties and to carry on
their respective businesses as now being conducted.
(b) Section 2.01 of the Disclosure Schedule lists all Subsidiaries of
Company and correctly sets forth the capitalization of each such Subsidiary, the
jurisdiction in which Company and each such Subsidiary is organized or formed
and each jurisdiction in which Company and each such Subsidiary is qualified or
licensed to do business as a foreign corporation. As used in this Agreement, the
term "SUBSIDIARY" shall mean, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated or domestic or
foreign to the United States of which (a) such party or any other Subsidiary of
such party is a general partner (excluding such partnerships where such party or
any Subsidiary of such party does not have a majority of the voting interest in
such partnership) or (b) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. Section 2.01 of the Disclosure Schedule
correctly lists the current directors and officers of Company and of each of its
Subsidiaries. True, correct and complete copies of the respective charter
documents and by-laws of Company and each of its Subsidiaries as in effect on
the date hereof have been made available to Buyer.
(c) All outstanding securities or other ownership interests in each of
the Subsidiaries listed on Section 2.01 of the Disclosure Schedule, except as
disclosed on Section 2.01 of the Disclosure Schedule, are owned of record and
beneficially by Company or another of Company's wholly-owned Subsidiaries,
subject to no lien, claim, charge or encumbrance, and have been duly authorized
and are validly issued, fully paid and nonassessable. Company does not directly
or indirectly own or hold any interest in any corporation, association or
business entity other than those listed on Section 2.01 of the Disclosure
Schedule. There are no irrevocable proxies, voting agreements, or voting trusts
with respect to any of the securities or other ownership interests of the
Subsidiaries and no restrictions on Company to vote any of the stock or other
securities of any of the Subsidiaries.
SECTION 2.02 Capitalization.
(a) The authorized capital stock of Company consists of (i) 60,000,000
shares of Company Common Stock; and (ii) 2,000,000 shares of Preferred Stock,
par value $1.00 per share, which shares have been designated as Series A
Preferred Stock (the "PREFERRED STOCK"). As of February 12, 2001 (a) 28,634,737
shares of Company Common Stock were issued and outstanding, (b) no shares of
Preferred Stock were issued and outstanding, and (c) as of December 30, 2000:
26,500 shares of Company Common Stock were reserved for issuance pursuant to
Company's Amended and Restated 1987
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Stock Option Plan, as amended, under which options to purchase 26,500 shares of
Company Common Stock were outstanding; 53,250 shares of Company Common Stock
were reserved for issuance pursuant to Company's 1991 Non-Employee Director
Stock Option Plan, as amended, under which options to purchase 53,250 shares of
Company Common Stock were outstanding; 200,000 shares of Company Common Stock
were reserved for issuance pursuant to Company's Amended and Restated 1996
Non-Employee Director Stock Option Plan, under which options to purchase 147,500
shares of Company Common Stock were outstanding; 677,500 shares of Company
Common Stock were reserved for issuance pursuant to Company's Amended and
Restated 1998 Stock Option Plan, under which options to purchase 587,090 shares
of Company Common Stock were outstanding; 746,100 shares of Company Common Stock
were reserved for issuance pursuant to Company's 1999 Stock Option Plan, under
which options to purchase 334,200 shares of Company Common Stock were
outstanding; 1,158,971 shares of Company Common Stock were reserved for issuance
pursuant to Company's 1996 Employee Incentive Plan, under which options to
purchase 1,093,524 shares of Company Common Stock were outstanding; and 182,500
shares of Company Common Stock were reserved for issuance pursuant to the stock
option plans set forth and described individually in Section 2.02 of the
Disclosure Schedule (collectively the foregoing plans are referred to as the
"OPTION PLANS", and options issued thereunder are referred to as "Options"). All
the outstanding shares of Company's capital stock are, and all of Company Common
Stock shares that may be issued pursuant to the exercise of outstanding Options
will be, when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive or
other similar rights. Section 2.02 of the Disclosure Schedule sets forth a
complete and correct list of the Options as of December 30, 2000, including for
each the name of the Option holder, the date of grant, the expiration date, the
plan under which the Option (or any portion thereof) was granted, and the number
of shares subject to such Option. Since December 30, 2000, Company has granted
no Options except Options granted in the ordinary course of business on terms
and in quantities consistent with past practice. As of the date hereof, there is
outstanding $207,000,000 in aggregate principal amount of Company's 4.5%
Convertible Subordinated Notes due 2004 (the "CONVERTIBLE NOTES") issued by
Company pursuant to the Indenture with Texas Commerce Bank National Association,
as Trustee, dated as of September 23, 1997. Except for the Convertible Notes and
except as contemplated by Company's Rights Agreement dated October 21, 1999
between Company and ChaseMellon Shareholder Services, L.L.C. Rights Agent, as
amended by an Amendment dated the date hereof (the "RIGHTS AGREEMENT"), there
are no bonds, debentures, notes or other instruments or evidences of
indebtedness having the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any matters on which
the shareholders of Company or any of its Subsidiaries may vote ("VOTING DEBT")
issued and outstanding. Except as disclosed in Section 2.02 of the Disclosure
Schedule, there are no existing options, warrants, calls, rights (including
preemptive rights), subscriptions or other rights, agreements, arrangements or
commitments of any character, obligating Company or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interests in, Company or any of
its Subsidiaries or securities convertible into or exchangeable or exercisable
for such shares,
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Voting Debt, or equity interests, or obligating Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, subscription or other right, agreement, arrangement or commitment, and
(iii) there are no outstanding contractual or other obligations of Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Company Common Stock, or the capital stock of any Subsidiary or affiliate of
Company or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any Subsidiary or any other entity. Except
for the Inducement Agreement, there are not as of the date hereof and there will
not be at any time on or prior to the Effective Time any stockholder agreements,
voting trusts or other agreements or understandings to which Company or any of
the Subsidiaries is a party or by which any of them is bound relating to the
voting of any shares of the capital stock of Company or any agreements,
arrangements, or other understandings to which Company or any of its
Subsidiaries is a party or by which it is bound that will limit in any way the
solicitation of proxies by or on behalf of Company from or the casting of votes
by, the shareholders of Company with respect to the Merger. There is no
liability for any dividends or other distributions declared or accumulated but
unpaid with respect to any capital stock of Company.
(b) All the outstanding shares of Company's capital stock are, and all
shares of Company Common Stock that may be issued pursuant to the exercise of
outstanding Options will be, when issued in accordance with the terms thereof,
duly authorized, validly issued, fully paid and non-assessable and not subject
to preemptive or other similar rights
SECTION 2.03 Authority; Validity. Company has full power and authority,
corporate or otherwise, to execute and deliver this Agreement and, subject to
approval of this Agreement by the shareholders of Company in accordance with the
applicable provisions of the TBCA (the "COMPANY SHAREHOLDERS' APPROVAL"), to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of Company's Board of
Directors. Company's Board of Directors has directed that this Agreement and the
transactions contemplated hereby be submitted to Company's shareholders for
consideration at a meeting of such shareholders and, except for the Company
Shareholders' Approval, no other corporate proceedings on the part of Company
are necessary to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. Upon execution and
delivery hereof (assuming that this Agreement is the legal, valid and binding
obligation of Parent and Buyer), this Agreement will constitute the valid and
binding obligation of Company enforceable against Company in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or limiting creditors' rights
generally and equitable principles.
SECTION 2.04 No Conflict. Except as disclosed in Section 2.04 of the
Disclosure Schedule, and except for the HSR Act, none of Company nor any of its
Subsidiaries nor any of their respective assets is subject to or obligated under
any charter, bylaw, Contract,
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or other instrument or any permit, or subject to any Law, which would be
defaulted, breached, terminated, forfeited or violated by or in conflict with
(or upon the failure to give notice or the lapse of time, or both, would result
in a default, breach, termination, forfeiture or conflict with) Company's
execution, delivery and performance of this Agreement, the Inducement Agreement
and the Option Agreement, and the transactions contemplated hereby and thereby,
except where such event or occurrence (i) as of the date hereof is not
reasonably likely to result in losses, liabilities, costs or expenses, damage or
decline in value to the business, condition or properties of Company's Business
(collectively, "COMPANY LOSSES") that, individually or in the aggregate, would
reasonably be likely to have a Company Material Adverse Effect, or (ii) between
the date hereof and the Closing Date would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect.
Except as disclosed in Section 2.04 of the Disclosure Schedule and except for
compliance with the HSR Act, Company's execution, delivery and performance of
this Agreement and the transactions contemplated hereby will not result in the
creation of any lien, pledge, security interest or other encumbrance on the
assets of Company or any of its Subsidiaries or result in any change in the
rights or obligations of any party under, or the acceleration of (with or
without the giving of notice or the lapse of time), any provision of any
Material Contract of Company or any of its Subsidiaries or any change in the
rights or obligations of Company or any of its Subsidiaries under any Law to
which Company or any of its Subsidiaries is subject except where such
encumbrance or change or acceleration would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect.
SECTION 2.05 Consents. Except as disclosed in Section 2.05 of the
Disclosure Schedule, and other than (i) the issuance of a certificate of Merger
by the Texas Secretary of State, as provided in Section 1.03, (ii) such consents
(including the Company Shareholders' Approval), orders, approvals,
authorizations, registrations, declarations and filings as may be required under
the TBCA, applicable state securities laws and the securities laws of any
foreign country, (iii) such actions of the Department of Justice and the Federal
Trade Commission as may be required under the HSR Act with respect to the Merger
and (iv) such other consents, orders, approvals, authorizations, registrations,
declarations and filings which, if not obtained or made would not, individually
or in the aggregate, reasonably be likely to have a Company Material Adverse
Effect, and that would not impair, prohibit or prevent the consummation of the
transactions contemplated hereby, no consent of any Person not a party to this
Agreement, or consent of or filing with (including any waiting period) any
Governmental Entity is required to be obtained or performed on the part of
Company to permit the Merger and the other transactions contemplated hereby.
SECTION 2.06 Financial Statements; SEC Filings.
(a) Company has delivered or made available copies of the following
financial statements to Buyer: (i) the consolidated balance sheet of Company as
of April 1, 2000 and the consolidated statements of earnings, shareholders'
equity and cash flows for the fiscal years ended April 1, 2000 and April 3,
1999, in each case including the notes thereto and the related report of Grant
Thornton LLP, independent certified public
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accountants, and (ii) the unaudited consolidated balance sheet of Company as of
December 30, 2000, and the unaudited consolidated statements of earnings and
cash flows for the thirty-nine week periods ended December 30, 2000 and January
1, 2000, in each case including any notes thereto.
(b) All financial statements described in Section 2.06(a) are in
accordance with the books and records of Company and have been prepared in
accordance with GAAP consistently applied throughout the periods indicated
(except as may be indicated on the notes thereto, or in the case of the
unaudited statements, as permitted by Form 10-Q). All consolidated balance
sheets included in such financial statements present fairly in all material
respects the consolidated financial position of Company as of the dates thereof
(subject, in the case of the unaudited statements, to customary reclassification
or year-end adjustments). Except as and to the extent reflected or reserved
against in such consolidated balance sheets (including the notes thereto) as of
April 1, 2000, Company did not have any liabilities or obligations (absolute or
contingent) of a nature required by GAAP to be reflected in a consolidated
balance sheet as of such date. All consolidated statements of income present
fairly in all material respects the consolidated results of operations of
Company for the periods indicated (subject, in the case of the unaudited
statements, to customary reclassification or year-end adjustments).
(c) All trade accounts receivable appearing on Company's consolidated
balance sheets as of December 30, 2000 and as of April 1, 2000 arose from bona
fide, arms-length transactions for the sale of goods or performance of services,
and represent valid obligations arising from sales actually made in the ordinary
course of business consistent with past practice and are current and collectible
in the amounts appearing thereon, net of any allowances for bad debts and
customer returns. As of December 30, 2000, Company was in possession of
inventory having an aggregate value as reflected on such consolidated balance
sheet as of such date. All allowances and reserves reflected in such
consolidated balance sheet have been determined in accordance with GAAP. Since
April 1, 2000, Company has not made any changes in the accounting principles it
has followed theretofore in preparing its consolidated financial statements, and
all transactions have been recorded in Company's accounting records
substantially in the same manner as theretofore recorded.
(d) Company has timely filed with the SEC all forms, statements,
reports and documents (including all exhibits, amendments and supplements
thereto) required to be filed by it under the Securities Act, the Exchange Act
and the respective rules and regulations of the SEC thereunder which were
required to be filed after January 1, 2000 (such forms, statements, reports and
documents are collectively referred to as the "COMPANY SEC Filings"). Company
"meets the requirements for use of Form S-3" within the meaning of General
Instruction C.1.a. to Form S-4 under the Securities Act.
(e) As of their respective dates, (i) each of Company's past Company
SEC Filings was, and each of its future Company SEC Filings will be, prepared in
compliance in all material respects with the applicable requirements of the
Securities Act and the Exchange Act; and (ii) none of its past Company SEC
Filings did, and none of its future
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Company SEC Filings will, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(f) Except as disclosed in Section 2.06(f) of the Disclosure Schedule,
neither Company nor any of its Subsidiaries is obligated to make earnout
payments or other similar payments of cash or securities arising from completed
acquisitions of businesses by Company and its Subsidiaries to the former owners
of such businesses.
SECTION 2.07 Tax Matters.
(a) Except as disclosed in Section 2.07 of the Disclosure Schedule,
Company and each of its Subsidiaries have filed all Tax Returns required to be
filed by them, except where failures to file such Tax Returns would not,
individually or in the aggregate, have a Company Material Adverse Effect, and
all such Tax Returns are complete and accurate in all material respects. Company
and each of its Subsidiaries have paid (or Company has paid on their behalf) all
Taxes, whether or not shown as due on such Tax Returns. The most recent
financial statements referred to in Section 2.06 reflect an adequate reserve for
all Taxes payable by Company and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements and no
liabilities for Taxes have been incurred by Company or any of its Subsidiaries
subsequent to such date other than in the ordinary course of its business.
(b) No action, suit, investigation, audit, claim, assessment or
adjustment is pending or, to the Company's knowledge, proposed or threatened
with respect to a material amount of Taxes of Company or any of its
Subsidiaries.
(c) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any material
amount of Taxes and no power of attorney with respect to any Taxes has been
executed or filed with any taxing authority.
(d) Neither Company nor any of its Subsidiaries is a party to or is
bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement, arrangement or practice with respect to a material amount of Taxes
(including any advance pricing agreement, closing agreement or other agreement
relating to Taxes with any taxing authority), and none of Company or any
Subsidiary has been a member of any group of corporations filing federal, state,
local or foreign Tax Returns on a combined or consolidated basis other than each
such group of which it is currently a member.
(e) Neither Company nor any of its Subsidiaries shall be required to
include in a taxable period ending after the Effective Time a material amount of
taxable income attributable to income that accrued in a prior taxable period but
was not recognized in any prior taxable period as a result of the installment
method of accounting.
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(f) All material amounts of Taxes which Company or any Subsidiary is
required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued.
(g) Neither Company nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(2) of the Code) owned by Company or any of its
Subsidiaries.
(h) Except as disclosed in Section 2.07 of the Disclosure Schedule,
neither Company nor any of its Subsidiaries is a party to any agreement,
contract or arrangement (including this Agreement and any ancillary agreements)
that could result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code or that would
not be deductible pursuant to the terms of Section 162(m) of the Code.
(i) Neither Company nor any of its Subsidiaries is a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
(j) Neither Company nor any of its Subsidiaries has agreed, or is
otherwise required, to make any adjustments pursuant to Code Section 481(a) or
any similar provision of state, local or foreign law, or has any application
pending with any taxing authority requesting permission for a change in
accounting methods.
(k) Except as disclosed in Section 2.07 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has requested or been granted an
extension of time for filing any Tax Return that has not yet been filed.
(l) To the Company's knowledge, Company and its Subsidiaries have not
taken any action which would prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
SECTION 2.08 Absence of Certain Changes or Events. Except as disclosed in
Section 2.08 of the Disclosure Schedule (or disclosed in the Company SEC
Filings), since April 1, 2000, there has not been (a) any event which has
resulted in, or is likely to result in, a Company Material Adverse Effect; (b)
any declaration, setting aside or payment of any dividend (whether in cash,
stock or property) in respect of the capital stock of Company, or any redemption
or other acquisition of such stock by Company; (c) any increase in the
compensation payable or to become payable by Company to its officers or key
employees, except those occurring in the ordinary course of business or pursuant
to existing contractual obligations (to the extent such contracts and such
contractual obligations are specifically disclosed in Section 2.08 of the
Disclosure Schedule), or any material increase in any bonus, insurance, pension
or other employee benefit plan, payment or arrangement made to, for or with any
such officers or key employees; or (d) any labor dispute, other than routine
matters, none of which is material to Company's Business.
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SECTION 2.09 Material Contracts; Customers and Suppliers. Section 2.09 of
the Disclosure Schedule lists each of the Contracts to which Company or any of
its Subsidiaries is a party or to which Company, any of its Subsidiaries or any
of their respective properties is subject or by which any thereof is bound as of
the date hereof other than purchase orders received by the Company or its
Subsidiaries in the ordinary course of business requiring the performance of
services or delivery of goods by the Company or purchase orders entered into by
the Company or its Subsidiaries in the ordinary course of business for the
purchase of services or goods by the Company, (i) that would be required by Item
601(b)(4) or 601(b)(10) of SEC Regulation S-K to be filed as an exhibit to an
Annual Report on Form 10-K, (ii) that relates to MIS (data processing) equipment
or other capital equipment in the amount of $500,000 or more, unless terminable
by the Company on sixty (60) or fewer days notice at no cost to the Company,
(iii) that involves payments of $1,000,000 or more and contains any provision
prohibiting or limiting assignment thereof that would be applicable to the
transactions contemplated by this Agreement or allowing termination or the
change of any term or provision thereof, or the making of any payment by the
Company, in the event of any change in control or merger of Company or any of
its Subsidiaries, or (iv) pursuant to which Company or any of its Subsidiaries
has the right to borrow money or obtain any financial accommodation (each a
"MATERIAL CONTRACT") except for those Contracts listed as exhibits to Company's
Annual Report on Form 10-K for the fiscal year ending April 1, 2000 or disclosed
in Company SEC Filings since April 1, 2000. Except as disclosed in Section 2.09
of the Disclosure Schedule, no breach or default, alleged breach or default or
event which would (with the passage of time, notice or both) constitute a breach
or default under any such Material Contract by Company or any of its
Subsidiaries, as the case may be, or, to Company's knowledge, any other party or
obligor with respect thereto, has occurred, except where such breaches or
defaults, individually or in the aggregate, would not be reasonably likely to
have a Company Material Adverse Effect. To Company's knowledge, no party to any
Material Contract intends to cancel, withdraw, modify or amend such Material
Contract. Section 2.09 of the Disclosure Schedule also lists the ten (10)
largest customers of each of the Company's Datacomm and Components divisions
during the period from April 1, 2000 through February 24, 2001 ("PRINCIPLE
CUSTOMERS"), and the ten (10) largest suppliers to the Company during the period
from April 1, 2000 through February 24, 2001 ("PRINCIPAL SUPPLIERS"). Except as
disclosed in Section 2.09 of the Disclosure Schedule, to the knowledge of
Company, no (i) Principal Customer, (ii) Principal Supplier, (iii) customer to
whom Company sold products in an amount in excess of $500,000 during the
calendar year ended December 31, 2000, or (iv) supplier for whom Company sold
products in an amount in excess of $1,000,000 during the calendar year ended
December 31, 2000 has advised Company that it intends to terminate its
relationship with Company as a result of the consummation of the transactions
contemplated by this Agreement. Except as set forth in Section 2.09 of the
Disclosure Schedule, neither Company nor any of its affiliates is a party to, or
in negotiations for the purpose of entering into, any agreement to acquire a
majority of the voting securities of, or substantially all of the assets of, any
Person or any business division of any Person.
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SECTION 2.10 Title and Related Matters. Section 2.10 of the Disclosure
Schedule sets forth a list of parcels of real property owned or leased by
Company or any of its Subsidiaries, including all sales and distribution
facilities and all corporate support and distribution centers. Except as
disclosed in Section 2.10 of the Disclosure Schedule, Company has good and
indefeasible title to all of its properties, interests in properties and assets,
real and personal, reflected in Company's December 30, 2000 consolidated balance
sheet or acquired after December 30, 2000 or necessary to conduct its business
as now conducted (except properties, interests on properties and assets sold or
otherwise disposed of since December 30, 2000 in the ordinary course of
business), free and clear of all mortgages, liens, pledges, charges or
encumbrances of any kind or character, except (a) liens for current taxes not
yet due and payable, (b) liens for mechanics', carriers', workmens',
repairmens', landlord, statutory or common law liens either not delinquent or
being contested in good faith, (c) such imperfections of title, liens,
restrictions, variances and easements as do not materially detract from the
value of or interfere with the value or the present or presently contemplated
future use of the properties subject thereto or affected thereby, or otherwise
materially impair the present or presently contemplated future business
operations at such properties and (d) liens securing debt which is reflected on
Company's December 30, 2000 consolidated balance sheet. The plants and equipment
of Company that are necessary to the operation of Company's Business are in good
operating condition and repair (subject to normal wear and tear). All properties
material to the operations of Company are reflected in Company's December 30,
2000 consolidated balance sheet to the extent GAAP requires the same to be
reflected.
SECTION 2.11 Employee Benefit Plans.
(a) SECTION 2.11(a) of the Disclosure Schedule lists all employee
benefit and compensation plans, programs, policies, agreements and commitments
(other than oral employment agreements that are terminable at will by the
employer without additional cost) covering any employee or former employee, or
the beneficiary of either, of Company or any entity which would be aggregated at
any relevant time with Company pursuant to Section 414(b), (c), (m), or (o) of
the Code (referred to herein as a "COMPANY ERISA AFFILIATE"), providing benefits
in the nature of pension, profit sharing, deferred compensation, retirement,
severance, bonus, incentive compensation, stock option, stock bonus, stock
purchase, health, medical, life, disability, sick leave, vacation, or other
welfare or fringe benefits, including, without limitation, all employee benefit
plans (as defined in Section 3(3) of ERISA (referred to herein as the "COMPANY
ERISA PLANS"), and fringe benefit plans (as defined in Code Section 6039D)
(together with Company ERISA Plans referred to herein as the "COMPANY BENEFIT
PLANS"). Except as disclosed in Section 2.11(a) of the Disclosure Schedule,
neither Company nor any Company ERISA Affiliate has ever contributed to, or been
obligated to contribute to, (i) a multiemployer plan (as defined in Section
3(37) of ERISA) or (ii) a Company Benefit Plan subject to Title IV of ERISA.
(b) Except as disclosed in Section 2.11(b) of the Disclosure Schedule,
each Company Benefit Plan is currently, and has been in the past, operated and
administered in all material respects in compliance with its (i) terms and (ii)
the
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requirements of all applicable Laws, including, without limitation, ERISA and
the Code, except where noncompliance would not have a Company Material Adverse
Effect. Each Company Benefit Plan which is, or was, intended to qualify under
Code Section 401(a) (referred to herein as a "QUALIFIED PLAN") is, or was, so
qualified and either (i) has been determined by the IRS to be so qualified by
the issuance of a favorable determination letter a copy of which has been
furnished to Parent, which remains in effect as of the date hereof and, to
Company's knowledge, nothing has occurred since the date of such letter to cause
such letter to be no longer valid, or (ii) is within the "REMEDIAL AMENDMENT
PERIOD" as defined in Code Section 401(b) and the regulations thereunder. Except
as disclosed in Section 2.11(b) of the Disclosure Schedule, all reports, notices
and other documents required to be filed with any Governmental Entity or
furnished to employees or participants with respect to the Company Benefit Plans
have been timely filed or furnished. With respect to the most recent Form 5500
regarding each funded Company Benefit Plan, benefit liabilities do not exceed
assets, and no adverse change has occurred with respect to the financial
materials covered thereby since the last Form 5500.
(c) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Company or any of its Subsidiaries with respect
to any ongoing, frozen or terminated "SINGLE-EMPLOYER PLAN", within the meaning
of Section 4001(a)(15) of ERISA, currently or previously maintained by any of
them, or the single-employer plan of any Company ERISA Affiliate. Company and
its Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contributions of an ERISA Affiliate). 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 or extended, other
than pursuant to PBGC Reg. Section 4043.66, has been required to be filed for
any Company ERISA Plan or by any Company ERISA Affiliate within the 12-month
period ending on the date hereof.
(d) Except as disclosed in Section 2.11(d) of the Disclosure Schedule,
all contributions required to be paid on or prior to the date hereof to or with
respect to any Company Benefit Plan by its terms or applicable law have been
paid in full and proper form. Neither any Company ERISA Plan nor any
single-employer plan of a Company ERISA Affiliate has an "ACCUMULATED FUNDING
DEFICIENCY" (whether or not waived) within the meaning of Code Section 412 or
Section 302 of ERISA and no Company ERISA Affiliate has an outstanding funding
waiver. Neither Company nor any of its Subsidiaries has provided, or is required
to provide, security to any Company ERISA Plan or to any single-employer plan of
a Company ERISA Affiliate pursuant to Code Section 401(a)(29). Neither Company
nor any of its Subsidiaries has any liability for contributions under ERISA
Section 302(c)(ii).
(e) Except as disclosed in Section 2.11(e) of the Disclosure Schedule,
the transactions contemplated by this Agreement do not (i) constitute or result
in a severance or termination of employment under any Company Benefit Plan for
which severance or termination benefits may be payable with respect to any
employee covered thereby, (ii) accelerate the time of payment or vesting or
increase the amount of benefits due under
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any Company Benefit Plan or compensation to any employee of Company, (iii)
result in any payments (including parachute payments) or funding (through grants
or otherwise) of compensation or benefits under any Company Benefit Plan or Law
or result in any obligation or liability of Company to any employee of Company
or any Company ERISA Affiliate, and except as disclosed in Section 2.11(e) of
the Disclosure Schedule the value of benefits under any Company Benefit Plan
will in no event be calculated on the basis of any of the transactions
contemplated by this Agreement.
(f) Neither Company nor any Company ERISA Affiliate, nor to Company's
knowledge any other "DISQUALIFIED PERSON" or "PARTY IN INTEREST" (as defined in
Code Section 4975 and Section 3(14) of ERISA, respectively) with respect to any
Company ERISA Plan has engaged in any transaction in violation of Section 406 of
ERISA for which no class, individual or statutory exemption exists or any
"PROHIBITED TRANSACTION" (as defined in Code Section 4975(c)(1)) for which no
class, individual or statutory exemption exists under Code Section 4975(c)(2) or
(d), nor has the Company, any Company ERISA Affiliate, or to the knowledge of
Company, any other person who is a "FIDUCIARY" (as defined in Section 3(21) of
ERISA) of any Company ERISA Plan breached or participated in the breach of any
fiduciary obligation imposed pursuant to Part 4 of Title I of ERISA.
(g) There are no actions, suits, disputes or claims pending or, to
Company's knowledge, threatened (other than routine claims for benefits) or
legal, administrative or other proceedings or governmental investigations
pending or, to Company's knowledge, threatened, against or with respect to any
Company Benefit Plan or the assets of any Company Benefit Plan.
(h) Under each Company ERISA 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 Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan, and there has
been no change in the financial condition of such Plan since the last day of the
most recent plan year. The withdrawal liability of Company and its Subsidiaries
under each Company ERISA Plan which is a multiemployer plan to which Company,
any of its Subsidiaries or any ERISA Affiliate has contributed during the
preceding 12 months, determined as if a "COMPLETE WITHDRAWAL," within the
meaning of Section 4203 of ERISA, had occurred as of the date hereof, does not
exceed $100,000.
(i) Except as disclosed in Section 2.11(i) of the Disclosure Schedule,
no Company Benefit Plan provides or provided health or medical benefits (whether
or not insured) with respect to current or former employees of Company or its
Subsidiaries beyond their retirement or other termination of service (other than
coverage mandated by statutory law).
(j) Each Company ERISA Plan that is an "EMPLOYEE WELFARE BENEFIT PLAN"
as that term is defined in Section 3(1) of ERISA is either (as identified on
Section
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2.11(a) of the Disclosure Schedule): (i) funded through an insurance company
contract, (ii) funded throughout a tax-exempt "VEBA" trust or (iii) unfunded.
There is no liability in the nature of a retroactive rate adjustment or
loss-sharing or similar arrangement, with respect to any Company ERISA Plan
which is an employee welfare benefit plan.
(k) Company has made available to Parent true and complete copies of
the following with respect to each of the Company Benefit Plans: (i) each plan
document, insurance contract, service provider contract or arrangement, and
summary plan description or similar plan description, if any; (ii) each trust
agreement, insurance policy or other instrument relating to the funding thereof;
(iii) the most recent Annual Report (Form 5500 series) and associated schedules
filed with the IRS or the United States Department of Labor for each Company
Benefit Plan required to make such filing; (iv) the most recent audited
financial statement report, if any; (v) the most recent actuarial report, if
any; and (vi) a description of each unwritten Company Benefit Plan and the
individuals covered thereby; and (vii) the most recent determination of the IRS
with respect to the qualified status of any Company Benefit Plan intended to be
qualified under Code Section 401(a).
(l) All Company Benefit Plans maintained outside of the United States
comply in all material respects with applicable local law. Company and its
Subsidiaries have no material unfunded liabilities with respect to any such
Company Benefit Plan.
SECTION 2.12 Employment Agreements. Except as disclosed in Section 2.12 of
the Disclosure Schedule, none of Company or any of its Subsidiaries is a party
to any employment, consulting, non-competition, severance, or indemnification
agreement with any current or former officer or director or employee of Company
or any of its Subsidiaries. True and complete copies of the agreements disclosed
in Section 2.12 of the Disclosure Schedule have been furnished to Parent prior
to the date hereof. Neither Company nor any of its Subsidiaries is a party to
any collective bargaining agreement.
SECTION 2.13 Legal Proceedings. Except as disclosed in Section 2.13 of the
Disclosure Schedule, there is no action, suit or other proceeding pending or,
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, or to which the Company or any of its Subsidiaries is a party,
except (i) workers' compensation claims which are fully insured, subject to
Company's retention of liability for the first $700,000 of such claims, and (ii)
receivables collections for less than $100,000 where Company is the plaintiff
and related countersuits. Except as disclosed in Section 2.13 of the Disclosure
Schedule, there is no pending or, to Company's knowledge, threatened judicial or
administrative proceeding or investigation affecting Company or any of its
Subsidiaries, or involving any of the properties or assets of the Company or any
of its Subsidiaries, at law or in equity or before any Governmental Entity or
any board of arbitration or similar entity that (i) involves a claimed amount
against the Company or any Subsidiary equal to or greater than $100,000, (ii)
would reasonably be expected to result in the payment by the Company or any
Subsidiary of damages or settlement in an amount equal to or greater than
$100,000, or (iii) that if resolved adversely to it would reasonably be likely
to result in a Company Material
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Adverse Effect or could reasonably be expected to impair Company's ability to
consummate the Merger.
SECTION 2.14 Licenses; Compliance with Law; Accuracy of Certain
Information. Except as disclosed in Section 2.14 of the Disclosure Schedule, all
licenses, franchises, permits and other governmental authorizations
(collectively, "LICENSES") held by Company and its Subsidiaries that are used in
Company's Business are valid and sufficient for all business presently carried
on by Company, except where the failure to maintain such valid and sufficient
Licenses would not be reasonably likely to result in a Company Material Adverse
Effect. No suspension, cancellation or termination of any such Licenses is
threatened or imminent. No such License has been revoked, conditioned (except as
may be customary) or restricted and no action (equitable, legal or
administrative), arbitration or other process is pending, or to the Company's
knowledge, threatened in writing which in any way challenges the validity of, or
seeks to revoke, condition or restrict any such License. Except as disclosed in
Section 2.14 of the Disclosure Schedule, and except for matters addressed in
Section 2.07 (Tax Matters.), Section 2.11 (Employee Benefit Plans.), Section
2.17 (Environmental Matters), and Section 2.18 (Intellectual Property.), which
shall be governed exclusively by such Sections, Company's Business is being
conducted in compliance with all applicable Laws and is not being conducted in
violation of any Law, except for violations which either individually or in the
aggregate are not reasonably likely to result in a Company Material Adverse
Effect.
SECTION 2.15 Accuracy of Proxy Statement/Prospectus. On the date on which
Company mails to its shareholders the Proxy Statement/Prospectus, on the date
the Company Shareholders Meeting is held, and on the Effective Date, the Proxy
Statement/Prospectus will contain all material statements concerning Company
which are required to be set forth therein in accordance with the Securities
Act; and at such respective times, the Proxy Statement/Prospectus will not
include any untrue statement of a material fact with respect to the Company or
omit to state any material fact with respect to Company required to be stated
therein or necessary to make the statements therein not misleading.
Notwithstanding the foregoing, Company makes no representation or warranty with
respect to any information concerning Parent, Buyer or any of Parent's or
Buyer's Subsidiaries or advisors included or incorporated by reference in the
Proxy Statement/Prospectus.
SECTION 2.16 Insurance. All properties of Company and its Subsidiaries are
insured for their respective benefits, in amounts customary and reasonable for
the line of business of Company and against all risks usually insured against by
Persons of similar size operating similar properties in the localities where
such properties are located under valid and enforceable policies issued by
insurers of recognized responsibility, except where failure to so insure would
not be reasonably likely to have a Company Material Adverse Effect.
SECTION 2.17 Environmental Matters. Except as would not reasonably be
likely to result in a Company Material Adverse Effect:
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(a) Each of Company and its Subsidiaries is in compliance with all
applicable Environmental Laws Neither Company nor any Subsidiary has received
any notice of any investigation, claim or proceeding against Company which is
pending and unresolved relating to Hazardous Substances or any action pursuant
to or violation or alleged violation under any Environmental Law, and Company is
not aware of any fact or circumstance that could reasonably be expected to
involve the Company or any Subsidiary in any environmental litigation,
proceeding, investigation or claim or impose any environmental liability upon
Company or any Subsidiary.
(b) To the knowledge of Company, there are no Hazardous Substances in,
under or about the soil, sediment, surface water or groundwater on, under or
around any properties at any time owned, leased or occupied by Company or any
Subsidiary for which Company would incur obligations of remediation under
applicable Environmental Laws. Neither Company nor any Subsidiary has disposed
of any Hazardous Substances on or about such properties except in compliance
with applicable Environmental Laws or in a manner that would not cause Company
or any Subsidiary to incur obligations of remediation under applicable
Environmental Laws. There is no present release or threatened release of any
Hazardous Substances in, on, under or around such properties for which Company
would incur obligations of remediation under applicable Environmental Laws. To
the knowledge of Company, neither the Company nor any Subsidiary has disposed of
any materials at any site being investigated or remediated for contamination or
possible contamination of the environment for which Company would have
liability.
(c) Except as set forth in Section 2.17 of the Disclosure Schedule,
the Company has provided no indemnities of any kind to any third party with
respect to environmental matters concerning the Company, its Subsidiaries, or
the assets of either under which Company or a Subsidiary has received notice of
actual and unresolved liability.
SECTION 2.18 Intellectual Property.
(a) The Company and each of its Subsidiaries owns, or is licensed or
otherwise possesses legally sufficient rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how, computer software programs or applications (in both source
code and object code form) and tangible or intangible proprietary information or
material that are used or proposed to be used in the business of the Company or
such Subsidiary, as currently conducted in any respect (the "COMPANY
INTELLECTUAL PROPERTY"). Except as disclosed in Section 2.18 of the Disclosure
Schedule, Company has no knowledge of any infringement by any other Person of
any of the Company Intellectual Property owned by or exclusively licensed to
Company (any such licensed Company Intellectual Property being referred to
herein as "THIRD PARTY INTELLECTUAL PROPERTY"), and Company has not entered into
any agreement to indemnify any other Person against any charge of infringement
of any of the Company Intellectual Property Except as disclosed in Section 2.18
of the Disclosure Schedule, to the knowledge of Company, neither Company nor any
of its Subsidiaries has violated or
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infringed any intellectual property right of any other Person, and neither
Company nor any of its Subsidiaries has received any written communication
(including, without limitation, claims or demands) alleging that it violates or
infringes the intellectual property rights of any other Person. Except as
disclosed in Section 2.18 of the Disclosure Schedule, neither Company nor any of
its Subsidiaries has received any written claim or demand of any Person
pertaining to, or any proceeding which is pending or, to the knowledge of
Company, threatened, that challenges the rights of Company or any of its
Subsidiaries in respect of any Company Intellectual Property, or that claims
that any default exists under any Company Intellectual Property. None of the
Company Intellectual Property is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, tribunal, arbitrator, or
other Governmental Entity.
(b) Neither the Company nor any of its Subsidiaries is, 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 license, sublicense or
agreement concerning Company Intellectual Property. Except as set forth in
Section 2.18 of the Disclosure Schedule, no claims with respect to the Company
Intellectual Property, any trade secret material to the Company or Third Party
Intellectual Property to the extent arising out of any use, reproduction or
distribution of such Third Party Intellectual Property by or through the Company
or any of its Subsidiaries, are currently pending or, to the knowledge of the
Company, are threatened by any person, (i) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or licensed or proposed
for use, sale or license by the Company or any of its Subsidiaries infringes on
any patent, trademark, trade name, service mark, copyright, or trade secret;
(ii) against the use by the Company or its Subsidiaries of any patent,
trademarks, trade names, copyrights, trade secrets, technology, know-how or
computer software programs and applications used in the business of the Company
or any of its Subsidiaries as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or effectiveness of any of
the Company Intellectual Property or other trade secret material to the Company
and its Subsidiaries, or (iv) challenging the Company's or any of its
Subsidiaries' license or legally enforceable right to use of the Third Party
Intellectual Property.
(c) Except as disclosed in Section 2.18 of the Disclosure Schedule,
neither the execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated by this Agreement
will result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default), or impair the Company's
or any of its Subsidiaries' rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any license agreement, contract or other
arrangement of any nature relating to Company Intellectual Property Rights or
Third Party Intellectual Property Rights.
SECTION 2.19 Labor Matters. There are no controversies pending or, to the
knowledge of the Company, threatened, between the Company or any of its
Subsidiaries and any group of their respective employees. Neither the Company
nor any of its
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Subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its Subsidiaries
nor does the Company know of any activities or proceedings of any labor union to
organize any such employees; and neither the Company or any of its Subsidiaries
has breached or otherwise failed to comply with any provision of any such
agreement or contract and there are no grievances outstanding against any such
parties under any such agreement or contract. There are no unfair labor practice
complaints pending against the Company or any of its Subsidiaries before the
National Labor Relations Board or any current union representation questions
involving employees of the Company or any of its Subsidiaries. The Company has
no knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any employees of the Company or any of its
Subsidiaries. The Company has no knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any employees of
the Company or any of its Subsidiaries. No consent of any union which is a party
to any collective bargaining agreement with the Company or any of its
Subsidiaries is required to consummate the transactions contemplated by this
Agreement.
SECTION 2.20 Related Party Transactions. Except as set forth in the
Company's SEC Filings or Section 2.20 of the Disclosure Schedule, no director,
officer, or "AFFILIATE" (as such term is defined in Rule 12b-2 under the
Exchange Act) of the Company (a) has outstanding any indebtedness or other
similar obligations of the Company or any of its Subsidiaries, other than
ordinary course of business travel advances or (b) other than employment related
benefits agreements contemplated by or disclosed in this Agreement, is a party
to any legally binding contract, commitment or obligation to, from or with the
Company or any of its Subsidiaries.
SECTION 2.21 State Takeover Statutes. The action of the Board of Directors
of the Company in approving the Merger, this Agreement, and the transactions
contemplated hereby is sufficient to render inapplicable to the Merger and this
Agreement the provisions of Part Thirteen of the TBCA.
SECTION 2.22 Brokers; Advisors. No broker, investment banker, financial
advisor or other person, other than Credit Suisse First Boston Corporation, the
fees and expenses of which will be paid by the Company (and are reflected in
agreements between Credit Suisse First Boston Corporation and the Company,
complete copies of which have been furnished to Parent), is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. A true and complete estimate
of the fees and costs of all financial and accounting advisors and legal counsel
retained by Company in connection with the negotiation and consummation of the
Merger is set forth in Section 2.22 of the Disclosure Schedule. Company will
obtain the agreement of Credit Suisse First Boston Corporation to provide the
section of the Proxy Statement/Prospectus that describes the procedures it
followed in arriving at its fairness opinion.
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SECTION 2.23 Pooling of Interest. Neither Company nor any of its
Subsidiaries has taken or agreed or intends to take any action, nor does the
Company have any knowledge of any fact or circumstance with respect to Company
or its Subsidiaries, which would prevent the Merger from being treated for
financial accounting purposes as a "pooling of interests" in accordance with
GAAP or the rules, regulations and interpretations of the SEC.
SECTION 2.24 Full Disclosure. No representation or warranty by the Company
herein (including the Schedules and Annexes hereto) or in any certificate
furnished by or on behalf of the Company to Parent in connection herewith, taken
together with all the other information provided to Parent or its counsel in
connection with the transactions contemplated hereby and all the information
included in the Company SEC Filings, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND BUYER
Parent and Buyer hereby represent and warrant to Company as follows:
SECTION 3.01 Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and has
the requisite power and authority to carry on its business as it is now being
conducted. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas.
SECTION 3.02 Capitalization. (a) The authorized capital stock of Parent
consists of (i) 300,000,000 shares of Parent Stock, of which 92,261,655 shares
were issued and outstanding as of December 29, 2000, and (ii) 3,000,000 shares
of Parent's Preferred Stock, par value $1.00 per share, of which no shares of
Preferred Stock are issued and outstanding. Except as disclosed in the Parent
SEC Filings, there are no (i) bonds, debentures, notes or other instruments or
evidences of indebtedness having the right to vote (or convertible into, or
exercisable or exchangeable for, securities having the right to vote) on any
matters on which the shareholders of Parent or any of its Subsidiaries may vote
("PARENT VOTING DEBT") issued and outstanding, (ii) existing options (other than
director and employee stock options which, as of December 29, 2000 represent an
aggregate of 8,377,954 shares of Parent Stock), warrants, calls, rights
(including preemptive rights), subscriptions or other rights, agreements,
arrangements or commitments of any character, obligating Parent to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Parent Voting Debt of, or other equity interests in, Parent or
securities convertible into or exchangeable or exercisable for such shares,
Parent Voting Debt, or equity interests, or obligating Parent to grant, extend
or enter into any such option, warrant, call, right, subscription or other
right, agreement,
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arrangement or commitment, or (iii) outstanding contractual or other obligations
of Parent to repurchase, redeem or otherwise acquire any shares of Parent Stock
or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity. There are not as of the date
hereof and there will not be at the Effective Time any stockholder agreements,
voting trusts or other agreements or understandings to which Parent or any of
its Subsidiaries is a party or by which any of them is bound relating to the
voting of any shares of the capital stock of Parent or any agreements,
arrangements, or other understandings to which Parent or any of its Subsidiaries
is a party or by which any of them is bound that will limit in any way the
solicitation of proxies by or on behalf of Parent from or the casting of votes
by, the shareholders of Parent with respect to the Merger. There is no liability
for any dividends or other distributions declared or accumulated but unpaid with
respect to any capital stock of Parent.
(b) The authorized capital stock of Buyer consists of 10,000 shares of
common stock, par value $1.00 per share, of which 1,000 shares are issued and
outstanding on the date hereof and will be issued and outstanding as of the
Closing Date. All of the shares of capital stock of Buyer are owned beneficially
and of record by Parent.
(c) The shares of Parent Stock to be issued as part of the Merger
Consideration have been authorized and when issued and delivered in accordance
with the terms of this Agreement, including Company Shareholder Approval and
Parent Shareholder Approval, will be validly issued, fully paid and
nonassessable, and the issuance thereof is not subject to any preemptive or
similar right.
SECTION 3.03 Authority; Validity. Parent and Buyer have full power and
authority, corporate or otherwise, to execute and deliver this Agreement and,
subject to the approval of this Agreement by the shareholders of Parent ("PARENT
SHAREHOLDERS' APPROVAL"), to carry out their respective obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Board of Directors of Parent and Buyer. Parent's Board
of Directors has directed that this Agreement and the transactions contemplated
hereby be submitted to Parent's shareholders for consideration at a meeting of
such shareholders and, except for the Parent Shareholders' Approval, no other
corporate proceedings on the part of Parent or Buyer are necessary to authorize
this Agreement and the transactions contemplated hereby. Upon execution and
delivery hereof (assuming that this Agreement is the legal, valid and binding
obligation of Company), this Agreement will constitute the valid and binding
obligation of Parent and Buyer enforceable against Parent and Buyer in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or limiting
creditors' rights generally and equitable principles.
SECTION 3.04 No Conflict. Neither Parent, Buyer nor any of their respective
assets is subject to or obligated under any charter, bylaw, Contract, or other
instrument or any permit, or subject to any Law which would be defaulted,
breached, terminated,
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forfeited or violated by or in conflict with (or upon the failure to give notice
or the lapse of time, or both, would result in a default, breach, termination,
forfeiture or conflict with) Parent's or Buyer's execution, delivery and
performance of this Agreement and the transactions contemplated hereby except
where such event or occurrence (i) as of the date hereof is not reasonably
likely to result in losses, liabilities, costs or expenses, damage, decline in
value to the business, condition or properties of Parent's Business
(collectively, "PARENT LOSSES") that, individually or in the aggregate, would
reasonably be likely to have a Parent Material Adverse Effect; or (ii) between
the date hereof and the Closing Date would not, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse Effect.
Neither Parent's nor Buyer's execution, delivery and performance of this
Agreement and the transactions contemplated hereby will result in the creation
of any lien, pledge, security interest or other encumbrance on the assets of
Parent or Buyer or result in any change in the rights or obligations of any
party under, or the acceleration of (with or without the giving of notice or the
lapse of time), any provision of any Material Contract of Parent or any change
in the rights or obligations of Parent under any Law, permit or license to which
Parent is subject, except where such encumbrance, change or acceleration would
not, individually or in the aggregate, reasonably be likely to have a Parent
Material Adverse Effect.
SECTION 3.05 Consents. Except as disclosed in Section 3.05 of the
Disclosure Schedule, and other than (i) the issuance of a certificate of merger
by the Texas Secretary of State, as provided in Section 1.03, (ii) such consents
(including the Parent Shareholders' Approval), orders, approvals,
authorizations, registrations, declarations and filings as may be required under
the TBCA, applicable state securities laws and the securities laws of any
foreign country, (iii) the order of the SEC declaring the Registration Statement
effective, (iv) the listing on the NYSE of Parent Stock issuable in the Merger
or upon exercise of the Options, (v) such actions of the Department of Justice
and the Federal Trade Commission as may be required under the HSR Act with
respect to the Merger, and (vi) such other consents, orders, approvals,
authorizations, registrations, declarations and filings which, if not obtained
or made would not, individually or in the aggregate, reasonably be likely to
have a Parent Material Adverse Effect, and that would not prohibit or prevent
the consummation of the transactions contemplated hereby, no consent of any
Person not a party to this Agreement, nor consent of or filing with (including
any waiting period) any Governmental Entity, is required to be obtained or
performed on the part of Parent and Buyer to permit the Merger and the other
transactions contemplated hereby.
SECTION 3.06 Legal Proceedings. Except as otherwise disclosed by Parent to
Company there is no pending or, to Parent's knowledge, threatened judicial or
administrative proceeding or investigation affecting Parent that if resolved
adversely to Parent would reasonably be likely to result in a Parent Material
Adverse Effect or could reasonably be expected to impair its ability to
consummate the Merger.
SECTION 3.07 Financial Statements, SEC Filings.
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(a) Parent has delivered or made available copies of the following
financial statements to Company: (i) the consolidated balance sheet of Parent at
June 30, 2000 and the consolidated statements of income, shareholders' equity
and cash flows for the years ended June 30, 2000 and July 2, 1999, in each case
including the notes thereto and the related report of Arthur Andersen LLP,
independent certified public accountants, and (ii) the unaudited consolidated
balance sheet of Parent at December 29, 2000 and the unaudited consolidated
statements of income and cash flows for the six-month periods ended December 29,
2000 and December 31, 1999, in each case including any notes thereto.
(b) All financial statements delivered pursuant to Section 3.07(a)
hereof are in accordance with the books and records of Parent and have been
prepared in accordance with GAAP consistently applied throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
the unaudited statements, as permitted by Form 10-Q of the SEC). All
consolidated balance sheets included on such financial statements present fairly
in all material respects the consolidated financial position of Parent as of the
dates thereof (subject, in the case of the unaudited statements, to customary
reclassification year-end adjustments). Except as and to the extent reflected or
reserved against in such consolidated balance sheets (including the notes
thereto) as of December 29, 2000, Parent did not have any liabilities or
obligations (absolute or contingent) of a nature required by GAAP to be
reflected in a consolidated balance sheet as of such date. All consolidated
statements of income included on such financial statements present fairly in all
material respects the consolidated results of operations of Parent for the
periods indicated.
(c) Parent has filed with the SEC all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under the Securities Act, the Exchange Act and the respective
rules and regulations of the SEC thereunder (such forms, statements, reports and
documents are collectively referred to as the "PARENT SEC FILINGS") required to
be filed after January 1, 2000.
(d) As of their respective dates, (i) each of Parent's past Parent SEC
Filings was, and each of its future Parent SEC Filings will be, prepared in
compliance in all respects with the applicable requirements of the Securities
Act and the Exchange Act; and (ii) none of its past Parent SEC Filings did, and
none of its future Parent SEC Filings will, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 3.08 No Material Adverse Effect. Since June 30, 2000 there has not
been any event which has had or is likely to have a Parent Material Adverse
Effect.
SECTION 3.09 Accuracy of Proxy Statement/Prospectus. On the date on which
Parent mails to its shareholders the Proxy Statement/Prospectus, on the date the
Parent Shareholders Meeting is held, and on the Effective Date, the Proxy
Statement/Prospectus
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will contain all statements concerning Parent and Buyer which are required to be
set forth therein in accordance with the Securities Act and the Exchange Act;
and at such respective times, the Proxy Statement/Prospectus will not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. Notwithstanding the foregoing, Parent and Buyer make no
representation or warranty with respect to any information concerning Company or
any of Company's Subsidiaries or advisors included or incorporated by reference
in the Proxy Statement/Prospectus.
SECTION 3.10 Reorganization. Neither Parent nor Buyer has taken or agreed
or intends to take any action, nor does Parent have any knowledge of any fact or
circumstance, which would prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
SECTION 3.11 No Brokers or Finders. Neither Parent, Buyer nor any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any financial advisory, brokerage or finder's fees or
commissions in connection with the transactions contemplated herein, except that
Parent has retained Merrill Lynch, Pierce Fenner, & Smith Incorporated as its
financial advisor, whose fees and expenses will be paid by Parent.
SECTION 3.12 Full Disclosure. No representation or warranty by Parent or
Buyer herein (including the Schedules and Annexes hereto) or in any certificate
furnished by or on behalf of Parent or Buyer to Company in connection herewith,
taken together with all the other information provided to Company or its counsel
in connection with the transactions contemplated hereby and all the information
included in the Parent SEC Filings, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 3.13 Compliance with Law. All Licenses held by Parent and its
Subsidiaries that are material in connection with Parent's Business are valid
and sufficient for all business presently carried on by Parent and its
Subsidiaries, except where the failure to maintain such valid and sufficient
license would not be reasonably likely to result in a Parent Material Adverse
Effect. No suspension, cancellation or termination of any such Licenses is
threatened or imminent. Parent's Business is being conducted in compliance with
all applicable Laws and is not being conducted in violation of any Law, except
for violations which either individually or in the aggregate are not reasonably
likely to result in a Parent Material Adverse Effect.
SECTION 3.14 Taxes. Parent and each of its Subsidiaries have filed all Tax
Returns required to be filed by them, or requests for extensions to file such
Tax Returns have been timely filed and granted and have not expired, except
where failures to file such Tax Returns or request such extensions would not,
individually or in the aggregate, reasonably be likely to have a Parent Material
Adverse Effect, and all such Tax Returns are complete and accurate in all
material respects. Parent and each of its Subsidiaries
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have paid (or Parent has paid on their behalf) all Taxes, whether or not shown
as due on such Tax Returns. The most recent financial statements referred to in
Section 3.06 reflect an adequate reserve for all Taxes payable by Parent and its
Subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements and no liabilities for Taxes have been
incurred by Parent or any of its Subsidiaries subsequent to such date other than
in the ordinary course of its business.
SECTION 3.15 Employee Benefits. Each Parent Benefit Plan is currently, and
has been in the past, operated and administered in all respects in compliance
with its terms and with the requirements of all applicable Laws, including,
without limitation, ERISA and the Code, except where non-compliance would not be
reasonably likely to have a Parent Material Adverse Effect."
SECTION 3.16 Environmental Matters. Except as would not reasonably be
likely to result in a Parent Material Adverse Effect, (i) Parent and each of its
Subsidiaries have conducted their respective businesses in accordance with all
applicable Environmental Laws, and (ii) Parent has not received any written
notice of any investigation, claim or proceeding against Parent or any of its
Subsidiaries relating to Hazardous Substances.
ARTICLE IV
COVENANTS
SECTION 4.01 Access and Information.
(a) Subject to applicable laws and regulations, upon reasonable notice
during the period from the date hereof through the Effective Time, each of
Company, Parent and Buyer shall, and shall cause their Representatives to, and
Company shall cause its Subsidiaries to, afford the Representatives of the other
party reasonable access during normal business hours to all of the other party's
properties, books, records, documents (including, without limitation, Tax
Returns for all periods open under the applicable statute of limitations),
personnel, auditors and counsel, and each party shall (and Company shall cause
its Subsidiaries to) furnish promptly to the other party all information
concerning such party as such other party or such other party's Representatives
may reasonably request.
(b) All non-public information disclosed by any party (or its
Representatives) whether before or after the date hereof, in connection with the
transactions contemplated by, or the discussions and negotiations preceding,
this Agreement to any other party (or its Representatives) shall be kept
confidential by such other party and its Representatives and shall not be used
by any such Persons other than as contemplated by this Agreement. Subject to the
requirements of applicable Law, Parent, Buyer and Company will keep
confidential, and each will cause their respective Representatives to keep
confidential, all such non-public information and documents unless such
information (i) was already known to Parent, Buyer or Company, as the case may
be, as long as such information was not obtained in violation of a
confidentiality obligation (ii) becomes available to Parent, Buyer or Company,
as the case may be, from
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other sources not known by Parent, Buyer or Company, respectively, to be bound
by a confidentiality obligation, (iii) is independently acquired by Parent,
Buyer or Company, as the case may be, as a result of work carried out by any
Representative of Parent, Buyer or Company, respectively, to whom no disclosure
of such information has been made, (iv) is disclosed with the prior written
approval of Company or Parent or Buyer, as the case may be, or (v) is or becomes
readily ascertainable from publicly available information. Upon any termination
of this Agreement, each party hereto will collect and deliver to the other, or
certify as to the destruction of, all documents obtained by it or any of its
Representatives then in their possession and any copies thereof.
(c) Subject to applicable Law, if between the date hereof and the
Effective Time any Governmental Entity shall commence any examination, review,
investigation, action, suit or proceeding against any party hereto with respect
to the Merger, such party shall (i) give the other parties prompt notice
thereof, (ii) keep the other parties informed as to the status thereof and (iii)
permit the other parties to observe and be present at each meeting, conference
or other proceeding and have access to and be consulted in connection with any
document filed or provided to such Governmental Entity in connection with such
examination, review, investigation, action, suit or proceeding.
(d) Notwithstanding anything to the contrary herein, neither Parent,
Buyer nor Company nor any of their respective Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of its customers, jeopardize the
attorney-client privilege of the entity in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree or
binding agreement entered into prior to the date of this Agreement. The parties
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
SECTION 4.02 Governmental Filings. Subject to the terms and conditions
herein provided, the parties hereto shall: (a) promptly make their respective
filings and thereafter make any other required submissions under the HSR Act
with respect to the Merger; (b) use all reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Time from, any Governmental
Entity in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorizations; and (c) using all reasonable efforts to take, or cause to be
taken, all other action and doing, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement.
SECTION 4.03 Consents and Approvals.
(a) Company shall use its commercially reasonable efforts to obtain
any and all consents from other parties to all Material Contracts, if necessary
or appropriate to
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allow the consummation of the Merger. Each party hereto shall use its
commercially reasonable efforts to obtain any and all permits or approvals of
any Governmental Entity required by such party for the lawful consummation of
the Merger.
(b) Each party hereto shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement/Prospectus and the
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, Buyer or Company to any Governmental Entity in
connection with the Merger and the other transactions contemplated hereby.
(c) Each party hereto shall promptly furnish each other with copies of
all written communications received by such party or any of their respective
Subsidiaries from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
SECTION 4.04 Meetings of Shareholders; Securities Filings.
(a) Meetings of Shareholders. Each of Company and Parent shall take
all action necessary in accordance with applicable Laws, its charter documents
and the policies of the NYSE to duly call, give notice of, convene and hold a
meeting of its shareholders as promptly as practicable to consider and vote upon
this Agreement, the Merger and all matters related thereto, in each case,
subject to compliance by the directors of Company and Parent respectively with
their respective fiduciary duties as advised by counsel (the "COMPANY
SHAREHOLDERS MEETING" and "PARENT SHAREHOLDERS MEETING", respectively). Each of
Company and Parent shall, through its Board of Directors recommend to their
respective shareholders approval of such matters and shall use its best efforts
to obtain such approval by its shareholders unless, (i) in the case of Company,
Company's Board of Directors determines in good faith, after receipt of written
advice from Locke Liddell & Sapp LLP, counsel to Company, that such action
creates a reasonable likelihood of constituting a breach of the fiduciary duties
of Company's Board of Directors to Company's shareholders under applicable law,
and (ii) in the case of Parent, Parent's Board of Directors determines in good
faith, after receipt of written advice from Carter, Ledyard & Milburn, counsel
to Parent, that such action creates a reasonable likelihood of constituting a
breach of the fiduciary duties of Parent's Board of Directors to Parent's
shareholders under applicable law. Company and Parent agree to postpone, delay
or adjourn their respective meetings, or to convene a second meeting, in the
event insufficient voting shares are present to conduct the meeting.
(b) Joint Proxy Statement/Prospectus and Registration Statement. As
promptly as reasonably practicable, Company, Parent and Buyer shall prepare and
Parent shall file with the SEC a registration statement on Form S-4 under the
Securities Act and the rules and regulations promulgated thereunder with respect
to the Parent Stock to be issued in the Merger (the "REGISTRATION STATEMENT")
for use in connection with their respective shareholder meetings. Part I of the
Registration Statement will be a joint proxy
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statement/prospectus for distribution to the shareholders of Company and Parent
in connection with their respective shareholder meetings (the "PROXY
STATEMENT/PROSPECTUS") The Proxy Statement/Prospectus and Registration Statement
shall not be filed, and no amendment or supplement to the Proxy
Statement/Prospectus and Registration Statement shall be made by either Company
or Parent, without prior consultation with the other party and its counsel.
Company and Parent shall cooperate and use all reasonable efforts to have the
Registration Statement declared effective by the SEC as promptly as reasonably
practicable. Parent will, as promptly as practicable, provide any written
comments received from the SEC with respect to the Registration Statement and
advise Company of any verbal comments received from the SEC with respect
thereto. Parent shall also take any action (other than qualifying to do business
in any jurisdiction in which it is now not so qualified) required to be taken
under the securities or "BLUE SKY" laws of the various States in connection with
the issuance of the Parent Stock pursuant to the Merger.
(c) Indemnification. Each of Company and Parent (each an "INDEMNIFYING
PARTY") agrees to indemnify and hold harmless the other, each person who
controls the other within the meaning of the Securities Act, and each director
and officer of the other, against any losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and costs of investigation and
defense) that are based on the ground or alleged ground that the Registration
Statement, at the time of its effectiveness, includes an untrue statement of a
material fact concerning such Indemnifying Party or omits to state a material
fact concerning such Indemnifying Party required to be stated therein or
necessary in order to make the statements therein not misleading. These
indemnity obligations will remain in force after any termination of this
Agreement.
(d) Listing Application; Blue Sky. Parent shall use its reasonable
efforts to cause the Parent Stock distributed in connection with the Merger and
upon exercise of Options to be authorized for listing on the NYSE. Parent shall
make all necessary blue sky law filings in connection with the Merger and
exercise of Options.
SECTION 4.05 Conduct of Company Business. Company covenants and agrees that
after the date hereof and prior to the Effective Time (unless Parent shall have
agreed in writing):
(a) Ordinary Course. Company will, and will cause its Subsidiaries to,
operate Company's Business only in the ordinary course of business consistent
with past practices and will use its reasonable efforts to (i) preserve its
existing business organization, insurance coverage, rights, licenses or permits,
advantageous business relationships, agreements and credit facilities; (ii)
retain and keep available the services of its present officers, employees and
agents; (iii) preserve the goodwill of its customers, suppliers and others
having business relations with it; and (iv) timely pay all Taxes when due in
accordance with past practices or accrue and provide for on the books and
records of the Company in accordance with GAAP. Subject to compliance with
applicable Laws and existing contractual obligations (to the extent such
contracts and such obligations are specifically disclosed in Section 4.05 of the
Disclosure Schedule), Company and its
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Subsidiaries will not: (A) enter into any transaction or commitment, or dispose
of or acquire any properties or assets, except purchases and sales of inventory
in the ordinary course of business consistent with past practices; (B) implement
any new employee benefit plan, or employment, compensatory or severance
agreement; (C) amend any existing employee benefit plan or employment agreement
except as required by Law or by this Agreement; or (D) take any action that
would be reasonably likely to jeopardize the continuance of any material
supplier or customer relationship, except for efforts to collect accounts
receivable or efforts to resolve good faith disputes regarding accounts payable,
in each case, in a manner consistent with past practice (E) make any change in
the nature of their businesses and operations; (F) enter into any transaction or
agreement with any officer, director or affiliate of Company or any of its
Subsidiaries; (G) incur or agree to incur any obligation or liability (absolute
or contingent) that individually calls for payment by Company or any of its
Subsidiaries of more than $250,000 in any specific case in the aggregate,
excluding transactions in the ordinary course of business or as contemplated by
Company's AFE log (as exists on the date hereof) and other authorized capital
expenditures, to the extent disclosed in writing to Parent and Buyer prior to
the date of this Agreement; (H) make any Tax election or make any change in any
method or period of accounting or any change in any accounting policy, practice
or procedure; or (I) take, or fail to take, any action that would prevent, or
would be reasonably likely to prevent, the Merger from qualifying for "pooling
of interests" accounting treatment under the requirements of Opinion No. 16
(Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the rules and regulations of the SEC. Notwithstanding the foregoing,
Company may, without Parent's consent, negotiate and settle its current dispute
with Thayer-Blum Funding II, LLC ("TBFLLC") relating to the Stock Purchase
Agreement dated as of October 10, 2000 between Company and TBFLLC concerning the
sale by Company of the common stock of K*Tec Electronics Corporation, to the
extent that the settlement thereof does not require payment of any amount by
Company to TBFLLC.
(b) Charter Documents. Company will not amend its Articles of
Incorporation or By-Laws and will not permit any of its Subsidiaries to amend
their charter documents or by-laws.
(c) Dividends. Company will not declare or pay any dividend or make
any other distribution in respect of its capital stock.
(d) Stock. Company will not split, combine or reclassify any shares of
its capital stock, or issue, redeem or acquire (or agree to do so) any of its
equity securities, options, warrants, or convertible instruments, except (i)
pursuant to existing obligations under Company Benefit Plans or (ii) pursuant to
the existing commitments or conversion rights listed on Section 2.02 of the
Disclosure Schedule. Company will not grant any Options.
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SECTION 4.06 Conduct of Parent Business. Parent covenants and agrees that
after the date hereof and prior to the Effective Time (unless Company shall have
agreed in writing):
(a) Ordinary Course. Parent will, and will cause its Subsidiaries to,
operate Parent's Business only in the ordinary course of business consistent
with past practices and will use its reasonable efforts to (i) preserve its
existing business organization, insurance coverage, rights, licenses or permits,
advantageous business relationships, agreements and credit facilities; (ii)
retain and keep available the services of its present officers, employees and
agents; and (iii) preserve the goodwill of its customers, suppliers and others
having business relations with it.
(b) Charter Documents. Parent will not amend its Articles of
Incorporation or By-Laws.
(c) Dividends. Parent will not declare or pay any dividend or make any
other distribution in respect of its capital stock, other than its regular
quarterly cash dividend consistent with past practice.
(d) Stock. Parent will not split, combine or reclassify any shares of
its capital stock, or redeem or acquire (or agree to do so) any of its equity
securities, options, warrants, or convertible instruments, except pursuant to
existing contractual obligations or benefit plans.
SECTION 4.07 Publicity. Company and Parent must mutually agree upon the
initial press releases announcing the Merger which shall satisfy the
requirements of Rule 425 under the Securities Act and Rule 14a-12 under the
Exchange Act. Thereafter, Company and Parent shall coordinate all publicity
relating to the transactions contemplated by this Agreement and no party shall
issue any press release, publicity statement or other public notice relating to
this Agreement, or the transactions contemplated by this Agreement, without
prior consultation with both Company and Parent, except to the extent that the
disclosing party is advised by its counsel that such action is required by
applicable Laws, and then, if practicable, only after consultation with the
other party.
SECTION 4.08 Notification of Defaults and Adverse Events. Company and
Parent will promptly notify each other if, subsequent to the date of this
Agreement and prior to the Effective Date: (i) an event occurs that may be
reasonably likely to result in a Company Material Adverse Effect or a Parent
Material Adverse Effect, respectively, or (ii) any suit, action or proceeding is
instituted or, to the knowledge of Company or Parent, threatened against or
affecting Company or Parent or any of their respective Subsidiaries which, if
adversely determined, would be reasonably likely to result in a Company Material
Adverse Effect or a Parent Material Adverse Effect. Each of Company and Parent
will promptly notify the other if it determines it is or will be unable to
comply with any of its obligations under this Agreement or fulfill any
conditions under its control.
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SECTION 4.09 Satisfy Conditions to Closing. Parent and Company shall each
use its reasonable best efforts to cause all conditions to Closing to be
satisfied.
SECTION 4.10 Anti-takeover Statutes. If any anti-takeover or similar
statute is applicable to the transactions contemplated hereby, including but not
limited to Part Thirteen of the TBCA, Parent and Company will grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate the effects of such
anti-takeover or similar statute on the transactions contemplated hereby.
SECTION 4.11 Indemnification; Insurance.
(a) Indemnification. At all times after the Effective Time, Parent and
Surviving Corporation shall indemnify, defend and hold harmless, each present
and former director and officer of Company and each such person's personal
representative, estate, testator or intestate successors (the "INDEMNIFIED
PARTIES") against any and all losses, claims, damages, liabilities, costs,
expenses, judgments and amounts paid in settlement with the approval of Parent
and Surviving Corporation (which approval shall not be unreasonably withheld) in
connection with any actual or threatened claim, action, suit, proceeding or
investigation arising out of or pertaining to any action or omission occurring
prior to the Effective Time (including without limitation, any which arise out
of or relate to the transactions contemplated by this Agreement), whether
asserted or claimed prior to, or on or after, the Effective Time, to the full
extent Company would be permitted under the TBCA or Company's Articles of
Incorporation or By-Laws in effect as of the date of this Agreement (to the
extent consistent with applicable law), including, without limitation,
provisions relating to advances of expenses incurred in the defense of any
action or suit, provided that any determination required to be made with respect
to whether an Indemnified Party's conduct complies with the standards set forth
under Texas law and the Company's Articles of Incorporation and By-laws shall be
made by independent counsel appointed by the Surviving Corporation's Board of
Directors that shall be acceptable to the Indemnified Party. In addition, Parent
and Surviving Corporation shall pay or reimburse, to the maximum extent
permissible under the TBCA, expenses incurred by an Indemnified Party in advance
of the final disposition of any such action or proceeding after Parent and
Surviving Corporation receive a written affirmation by the Indemnified Party of
his good faith belief that he has met the standard of conduct necessary for
indemnification under the TBCA and a written undertaking by or on behalf of such
Indemnified Party to repay the amount paid or reimbursed if it is ultimately
determined that indemnification of the Indemnified Party is prohibited by
Article 2.02-1E of the TBCA. Without limiting the foregoing, in the event any
claim, action, suit, proceeding or investigation is brought against any
Indemnified Party, Parent shall be entitled to assume the defense of any such
action or proceeding. Upon assumption by Parent of the defense of any such
action or proceeding, the Indemnified Party shall have the right to participate
in such action or proceeding and to retain its own counsel, but Parent and
Surviving Corporation shall not be liable for any legal fees or expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof
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unless (i) Parent and Surviving Corporation have agreed to pay such fees and
expenses, (ii) the Indemnified Party shall have been advised by counsel
reasonably acceptable to Parent and Surviving Corporation that representation of
the Indemnified Party by counsel provided by Parent is not possible due to
conflicts of interest between Parent, Buyer or the Surviving Corporation and the
Indemnified Party, or (iii) Parent and Surviving Corporation shall have failed
in a timely manner to assume the defense of the matter Parent shall not be
liable for any settlement of any claim effected without its written consent.
Parent and Surviving Corporation shall not, except with the written consent of
the Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term the release by the
claimant or plaintiff of such Indemnified Party from all further liability in
respect of such claim. Any Indemnified Party wishing to claim indemnification
under this Section 4.11(a), upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Parent and Surviving Corporation (but
the failure so to notify Parent and Surviving Corporation shall not relieve it
from any liability which it may have under this Section 4.11(a) except to the
extent such failure materially prejudices Parent and Surviving Corporation). In
addition to the foregoing, and without limiting in any manner the foregoing,
after the Effective Time Parent and Surviving Corporation shall assume the
obligations of Company under the indemnification agreements set forth in Section
4.04(c), but only to the extent Company would be permitted under the TBCA to
perform its obligations under such indemnification agreements.
(b) Insurance. For a period of six (6) years after the Effective Date,
Parent shall cause (or shall cause the Surviving Corporation) to be maintained
officers' and directors' liability insurance covering Company's existing
officers and directors who are currently covered in such capacities by Company's
existing officers' and directors' liability insurance policies on terms
substantially no less advantageous to such officers and directors than such
existing insurance
SECTION 4.12 Employee Benefits. (a) At the Effective Time, the Surviving
Corporation shall offer all persons who are at the Effective Time employees of
Company and its Subsidiaries benefits under Parent Benefit Plans which, in the
aggregate, are no less favorable to such employees than those that Parent
currently provides to its own employees. Each Parent Benefit Plan shall give
credit for purposes of eligibility to participate and vesting to employees of
Company and its Subsidiaries for service prior to the Effective Time with
Company and its Subsidiaries (and their predecessors, to the extent credit for
service with such predecessors was given by Company) to the same extent that
such service was recognized under a comparable Company Benefit Plan.
(b) Parent hereby agrees that as of the Closing Date Company may pay
to Company employees party to the agreements set forth in Section 4.12 of the
Disclosure Schedule the payments and other benefits provided thereby regardless
of such employee's employment status with Company on or after the date thereof,
to the extent and only to the extent specifically disclosed in Section 4.12 of
the Disclosure Schedule.
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SECTION 4.13 No Solicitation. From and after the date hereof, Company shall
not, and shall not authorize or permit any of its Subsidiaries or
Representatives to, directly or indirectly, solicit or initiate (including by
way of furnishing information) or take any other action to facilitate knowingly
any inquiries or the making of any proposal which constitutes or may reasonably
be expected to lead to an Acquisition Proposal from any person or entity, or
engage in any discussion or negotiations relating thereto or accept any
Acquisition Proposal; provided, however, that notwithstanding any other
provision hereof, Company may
(a) comply with Rule 14e-2 under the Exchange Act with regard to a
tender or exchange offer; and
(b) at any time prior to the Closing:
(i) engage in discussions or negotiations with a third party who
(without any solicitation, initiation, encouragement, discussion or negotiation,
directly or indirectly, by or with Company or any of its Subsidiaries or
Representatives after the date hereof) seeks to initiate such discussions or
negotiations, and may furnish such third party nonpublic information concerning
Company and its business, properties and assets if, and only to the extent that:
(A) (1) the third party has first made a bona fide
Acquisition Proposal that the Board of Directors of Company believes in
good faith (after consultation with its financial advisor) is reasonably
capable of being completed, taking into account all relevant, legal,
financial, regulatory and other aspects of the Acquisition Proposal and the
source of its financing, and believes in good faith (after consultation
with its financial advisor and after considering all of the terms,
conditions, representations, warranties and covenants which are included in
such Acquisition Proposal) that such Acquisition Proposal would, if
consummated, result in a transaction more favorable to the shareholders of
Company, from a financial point of view, than the transactions contemplated
by this Agreement and believes in good faith (after consultation with its
financial advisor) that the person making such Acquisition Proposal has, or
is reasonably likely to have or obtain, any necessary funds or customary
commitments to provide any funds necessary to consummate such Acquisition
Proposal (any such Acquisition Proposal being referred to in this Agreement
as a "SUPERIOR PROPOSAL") and (2) Company's Board of Directors shall
conclude in good faith, after considering applicable provisions of state
law, that such action may be necessary for the Board of Directors to act in
a manner consistent with its fiduciary duties under applicable law, and
(B) forty-eight hours prior to furnishing such information
to or entering into discussions or negotiations with such person or entity,
Company (1) provides prompt notice to Parent to the effect that it is
furnishing information to or entering into discussions or negotiations with
such person or entity and (2) receives from such person or entity an
executed confidentiality agreement in
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reasonably customary form on terms not materially more favorable to such
person or entity than the terms contained in the Confidentiality Agreement,
or
(ii) accept a Superior Proposal from a third party, provided that the
conditions set forth in clauses Section 4.13(b)(i)(A) and Section 4.13(b)(i)(B)
above have been satisfied and Company complies with and terminates this
Agreement pursuant to Section 6.01(h).
Company shall immediately cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any persons
or entities conducted heretofore by Company or any of its Subsidiaries of
Representatives with respect to the foregoing. The Company shall notify Parent
orally and in writing of any such inquiries, offers or proposals (including the
terms and conditions of any such proposal and the identity of the person making
it) within twenty-four hours of the receipt thereof, and shall keep Parent
informed of the status and details of any such inquiry, offer, or proposal
except to the extent doing so would constitute a breach of the fiduciary duties
of the Board of Directors.
SECTION 4.14 Rights Agreement. Company shall take all necessary action
(including, if required, redeeming all of the outstanding stock purchase rights
or amending or terminating the Rights Agreement) so that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in a "Distribution Date" under
the Rights Agreement.
SECTION 4.15 Option Vesting. Except as contractually obligated prior to the
date hereof, Company shall not take any action at any time prior to the Closing
which may serve to accelerate the vesting of any Option granted by Company.
SECTION 4.16 Special Earnings Announcement. Parent shall use its reasonable
best efforts to publish or cause to be published no later than 15 days after the
end of the first month after the Effective Time (which month may be the month in
which the Effective Time occurs) in which there are at least 30 days of
post-Merger combined operations, combined sales and net income figures
contemplated by and in accordance with the terms of SEC Accounting Release No.
135.
SECTION 4.17 Reorganization. Neither Parent, Buyer nor Company shall take,
or fail to take, any action that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
ARTICLE V
CONDITIONS
SECTION 5.01 Conditions to Obligations of Company, Parent and Buyer. The
respective obligations of the parties to effect the Merger are subject to the
fulfillment at
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or prior to the Effective Time of the following conditions unless waived in
writing by all parties:
(a) Approval. The shareholders of Company and Parent shall have
approved this Agreement and the Merger in accordance with applicable Laws and
the policies of the NYSE.
(b) Approval from Government Entities. All approvals required by any
Governmental Entity and all other actions required to effect the Merger and
related transactions shall have been obtained, except where failure to obtain
such approval would not be reasonably likely to have a Parent Material Adverse
Effect or a Company Material Adverse Effect. The waiting period under the HSR
Act shall have expired, or early termination of the waiting period under the HSR
Act shall have been granted.
(c) Absence of Governmental Litigation. Since the date of this
Agreement, no Governmental Entity shall have instituted a proceeding seeking
injunctive or other relief in connection with the Merger and related
transactions. There shall not be any judgment, decree, injunction, ruling or
order of any Governmental Entity that prohibits, restricts, or delays
consummation of the Merger.
(d) Effectiveness of Registration Statement. The Registration
Statement shall have been declared effective under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement shall have
been issued with respect thereto.
(e) Tax Opinions. Parent shall have received a written opinion dated
the Effective Date from its counsel, Carter, Ledyard & Milburn, and Company
shall have received a written opinion dated the Effective Date from its counsel,
Locke Liddell & Sapp LLP, each to the effect that the Merger will be treated for
federal income tax purposes as a tax-free reorganization within the meaning of
Code Section 368(a), that each of Parent, Buyer and Company will be a party to
that reorganization within the meaning of Code Section 368(b) and that neither
Parent, Buyer nor Company will recognize any gain on the Merger; provided,
however, that if counsel to either party does not render such opinion, this
condition shall be deemed satisfied with respect to such party if counsel to the
other party renders such opinion to such party. In rendering such opinions,
counsel may rely upon reasonably requested representation letters of Parent,
Buyer and Company.
SECTION 5.02 Conditions to Obligations of Parent and Buyer. The obligations
of Parent and Buyer to effect the Merger are subject to the fulfillment at or
prior to the Effective Time of the following conditions except to the extent
waived in writing by Parent and Buyer:
(a) Approval. All corporate actions necessary to authorize the
execution, delivery and performance of this Agreement and the Merger shall have
been duly and validly taken by Company, except to the extent that the failure to
take such corporate
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actions would not have a Company Material Adverse Effect or make execution,
delivery or performance of this Agreement and the Merger unenforceable or
invalid.
(b) Representations and Compliance. The representations and warranties
of Company in this Agreement shall be true and correct in all material respects
(other than representations and warranties that are already so qualified, which
in each such case shall be true and correct as written) as of the date of this
Agreement and on the Closing Date with the same effect as though made on and as
of such date, except (i) that representations and warranties which specifically
relate to a particular date or period shall be true and correct as of such date
or for such period, and (ii) where failure to be so true and correct would not
(in the aggregate for all representations and warranties of Company) have a
Company Material Adverse Effect (other than representations and warranties that
are already so qualified, which in each such case shall be true and correct as
written), and except for any changes contemplated by this Agreement; Company
shall have complied in all material respects (other than covenants that are
already so qualified, which in each such case shall be complied with as written)
with all covenants requiring compliance by it prior to the Closing Date, except
where failure to comply did not, individually or in the aggregate, result in a
Company Material Adverse Effect or prevent the consummation of the transactions
contemplated by this Agreement; and Buyer shall have received an officer's
certificate signed by the Chief Executive Officer of Company certifying as to
each of the foregoing.
(c) No Material Adverse Effect. From the date hereof, there shall not
have occurred any event which has resulted or is likely to result in a Company
Material Adverse Effect.
SECTION 5.03 Conditions to Obligations of Company. The obligations of
Company to effect the Merger are subject to the fulfillment at or prior to the
Effective Date of the following conditions unless waived in writing by Company:
(a) Approval. All corporate actions necessary to authorize the
execution, delivery and performance of this Agreement and the Merger shall have
been duly and validly taken by Parent and Buyer, except to the extent that the
failure to take such corporate actions would not have a Parent Material Adverse
Effect or make execution, delivery or performance of this Agreement and the
Merger unenforceable or invalid.
(b) Representations and Compliance. The representations and warranties
of Parent and Buyer in this Agreement shall be true and correct in all material
respects (other than representations and warranties that are already so
qualified, which in each such case shall be true and correct as written) as of
the date of this Agreement and on the Closing Date with the same effect as
though made on and as of such date, except (i) that representations and
warranties which specifically relate to a particular date or period shall be
true and correct as of such date or for such period, and (ii) where failure to
be so true and correct would not (in the aggregate for all representations and
warranties of Parent and Buyer) have a Parent Material Adverse Effect (other
than representations and warranties that are already so qualified, which in each
such case shall be true and correct
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as written), and except for any changes contemplated by this Agreement; Parent
and Buyer shall have complied in all material respects (other than covenants
that are already so qualified, which in each such case shall be complied with as
written) with all covenants requiring compliance by it prior to the Closing
Date, except where failure to comply did not, individually or in the aggregate,
result in a Parent Material Adverse Effect or prevent the consummation of the
transactions contemplated by this Agreement; and Company shall have received an
officer's certificate signed by the Chief Executive Officer of Parent certifying
as to each of the foregoing.
(c) Listing. The Parent Stock distributable in the Merger or in
connection with the exercise of Options shall have been approved upon notice of
issuance for listing on the NYSE.
(d) No Material Adverse Effect. From the date hereof, there shall not
have occurred any event which has resulted or is likely to result in a Parent
Material Adverse Effect.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.01 Termination and Abandonment. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval by the shareholders of Company or Parent:
(a) by mutual consent of Parent and Company;
(b) by either Parent or Company upon written notice to the other party
if any Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order denying, enjoining or otherwise prohibiting the consummation
of any of the transactions contemplated by this Agreement;
(c) by either Parent or Company if the Merger shall not have been
consummated on or before September 30, 2001 unless the failure of the Merger to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe in any material respect the covenants and
agreements of such party set forth herein;
(d) by either Company or Parent if the requisite vote of the
shareholders of Company required for the consummation of the Merger shall not
have been obtained at the Company Shareholders Meeting held pursuant to Section
4.04(a);
(e) by either Parent or Company if the requisite vote of the
shareholders of Parent required for the consummation of the Merger shall not
have been obtained at the Parent Shareholders Meeting held pursuant to Section
4.04(a);
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(f) by Parent, upon written notice to Company, if (i) Company's Board
of Directors shall withdraw, modify or change its approval or recommendation of
this Agreement or the Merger in a manner adverse to Parent or shall have
resolved to do so, (ii) Company shall have materially breached its obligations
under this Agreement by reason of a failure to call the Company Shareholders
Meeting in accordance with Section 4.04(a) or a failure to prepare and mail to
its shareholders the Joint Proxy Statement/Prospectus in accordance with Section
4.04, (iii) Company's Board of Directors shall have approved or recommended any
Superior Proposal, or (iv) Company's Board of Directors shall redeem or amend
the Rights Agreement without Parent's written consent for any reason other than
(A) pursuant to Section 4.14 hereof or (B) following termination of this
Agreement pursuant to Section 6.01(h) below;
(g) by Company, upon written notice to Parent, if (i) Parent's Board
of Directors shall withdraw, modify or change its approval or recommendation of
this Agreement or the Merger in a manner adverse to Company or shall have
resolved to do so, or (ii) Parent shall have materially breached its obligations
under this Agreement by reason of a failure to call the Parent Shareholders
Meeting in accordance with Section 4.04(a) or a failure to prepare and mail to
its shareholders the Joint Proxy Statement/Prospectus in accordance with Section
4.04;
(h) by Company, prior to the consummation of the transactions
contemplated hereby, for the purpose of entering into an agreement with a Person
that has made a Superior Proposal; or
(i) by either Parent or Company (so long as the terminating party has
not materially breached any representation, warranty, covenant or other
agreement contained herein in a manner that has or would reasonably likely have
a Material Adverse Effect with respect to such terminating party) if there shall
have been a material breach of any of the representations, warranties, covenants
or agreements or obligations set forth in this Agreement on the part of the
other party which has or would reasonably likely have a Parent Material Adverse
Effect (if the terminating party is Company) or a Company Material Adverse
Effect (if the terminating party is Parent), or which would reasonably be
expected to prevent (or materially delay) the consummation of the Merger, which
shall not have been cured within ten (10) days following receipt by the
breaching party of written notice of such breach from the other party hereto or
which breach, by its nature, cannot be cured prior to the Effective Time.
SECTION 6.02 Effect of Termination and Termination Fee. (a) Except as
provided in this Section 6.02 and Section 7.02, Section 4.01(b), and Section
4.04(c) hereof, in the event of the termination of this Agreement and the
abandonment of the Merger, this Agreement shall thereafter become null and void
and have no effect, and no party hereto shall have any liability to any other
party hereto or its shareholders or directors or officers in respect thereof,
and each party shall be responsible for its own expenses.
(b) Company shall pay Parent, by wire transfer of immediately
available funds, the sum (to be referred to as the "COMPANY TERMINATION FEE")
of:
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(i) $30,000,000, less any amount paid pursuant to subsection (ii)
below or Section 6.02(d) below; if this Agreement is terminated: (A) by Parent
pursuant to Section 6.01(f), or (B) by Company pursuant to Section 6.01(h) and,
within one year of the termination date, Company consummates a transaction or
series of transactions with the Person submitting such Superior Proposal (or any
Affiliate of such Person) whereby more than 50% of the Company Stock or a
majority of the assets of Company are transferred to such party (or any
Affiliate of such party); or (C) if, within one year following termination of
this Agreement by Company pursuant to Section 6.01(c) or Section 6.01(d), or by
Parent pursuant to Section 6.01(i), any Person shall successfully acquire more
than 50% of the Company Stock, or Company shall enter into a written agreement
with any Person (other than Parent) that has made or in the future makes an
Acquisition Proposal and consummates a transaction or series of transactions
with such Person (or any Affiliate of such Person) whereby more than 50% of the
Company Stock or a majority of the assets of Company are transferred to such
party (or any Affiliate of such party);
(ii) $1,000,000 if either party shall terminate this Agreement
pursuant to Section 6.01(d);
Company shall pay the Company Termination Fee on the business day
immediately following the event causing such Company Termination Fee to be
payable. If Company fails to pay all amounts due to Parent on the dates
specified, then Company shall pay all costs and expenses (including legal fees
and expenses) incurred by Parent in connection with any action or proceeding
(including the filing of any lawsuit) taken by it to collect such unpaid
amounts, together with interest on such unpaid amounts at the prime lending rate
prevailing at such time, as published in the Wall Street Journal, from the date
such amounts were required to be paid until the date actually received by
Parent.
(c) Parent shall pay Company, by wire transfer of immediately
available funds, the sum (such sum to be referred to as the "PARENT TERMINATION
FEE") of:
(i) $30,000,000 if Company shall terminate this Agreement
pursuant to Section 6.01(g), less any amount paid pursuant to subsection (ii)
below or Section 6.02(d) below;
(ii) $1,000,000 if either party shall terminate this Agreement
pursuant to Section 6.01(e).
Parent shall pay such Parent Termination Fee on the business day
immediately following the event causing such Parent Termination Fee to be
payable. If Parent fails to pay all amounts due to Company on the dates
specified, then Parent shall pay all costs and expenses (including legal fees
and expenses) incurred by Company in connection with any action or proceeding
(including the filing of any lawsuit) taken by it to collect such unpaid
amounts, together with interest on such unpaid amounts at the prime lending rate
prevailing at such time, as published in the Wall Street Journal, from the date
such amounts were required to be paid until the date actually received by
Company.
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(d) In the event of the termination of this Agreement by either Parent
or Company as provided in Section 6.01(i), the aggrieved party may exercise any
and all rights or remedies available at law or in equity for Parent Losses or
Company Losses, as applicable, and damages (including, without limitation,
expenses incurred in connection with this Agreement and the transactions
contemplated hereby).
SECTION 6.03 Amendment. This Agreement may be amended by the parties hereto
at any time before or after approval hereof by the shareholders of Company and
Parent, but, after any such approval, no amendment shall be made which would
under the TBCA require the approval of the shareholders of Company or Parent,
respectively, without such further approval of such shareholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
SECTION 6.04 Extension; Waiver. At any time prior to the Effective Date,
the parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Termination of Representations and Warranties. The
representations and warranties of each party will terminate at the Effective
Time.
SECTION 7.02 Expenses. Subject to Section 6.02(d), each party will pay its
own expenses relating to this Agreement and the transactions contemplated
hereby.
SECTION 7.03 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered in person, sent by
registered or certified mail (return receipt requested), or telecopied to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Buyer:
Avnet, Inc.
2211 South 47th Street
Phoenix, Arizona 85034
Attention: David R. Birk, Esq.
Telecopy: 480-643-7929
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with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005
Attention: James E. Abbott, Esq.
Telecopy: 212-732-3232
(b) if to Company:
Kent Electronics Corporation
7433 Harwin Drive
Houston, Texas 77036
Attention: Larry D. Olson
Telecopy: 713-978-5800
with a copy to:
Locke Liddell & Sapp LLP
3400 Chase Tower
600 Travis
Houston, Texas 77002-3095
Attention: Gene G. Lewis, Esq.
Telecopy: 713-223-3717
SECTION 7.04 Further Assurances. Parent, Buyer and Company each agree to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be reasonably necessary or
desirable in order to expeditiously consummate or implement the transactions
contemplated by this Agreement.
SECTION 7.05 Specific Performance.
(a) If (i) all of the conditions to Closing set forth in Section 5.01
and Section 5.02 shall have been satisfied (or if permitted, waived in writing)
and (ii) Parent or Buyer shall have breached or violated its obligations under
Article I of this Agreement (a "PARENT ARTICLE I BREACH"), the parties hereto
acknowledge and agree that money damages or other remedy at law would not be
sufficient or adequate remedy for any Parent Article I Breach and that in
addition to all other remedies available to Company, Company shall be entitled
to the fullest extent permitted by law to an injunction restraining such Parent
Article I Breach and to any other legal or equitable relief, including, without
limitation, specific performance, without bond or other security being required.
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(b) If (i) all of the conditions to Closing set forth in Section 5.01
and Section 5.03 shall have been satisfied (or if permitted, waived in writing)
and (ii) Company shall have breached or violated its obligations under Article I
of this Agreement (a "COMPANY ARTICLE I BREACH"), the parties hereto acknowledge
and agree that money damages or other remedy at law would not be sufficient or
adequate remedy for any Company Article I Breach and that in addition to all
other remedies available to Parent and Buyer, Parent and Buyer shall be entitled
to the fullest extent permitted by law to an injunction restraining such Company
Article I Breach and to any other legal or equitable relief, including, without
limitation, specific performance, without bond or other security being required.
SECTION 7.06 Assignability. Neither this Agreement nor any rights or
obligations under it are assignable.
SECTION 7.07 Governing Law. This Agreement will be governed by the laws of
the State of Texas without regard to conflict of law principles.
SECTION 7.08 Interpretation. Headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 7.09 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7.10 Integration. This Agreement and the Schedules hereto
constitute the entire agreement and supersede all prior agreements and
understandings (excluding the Confidentiality Agreement which shall remain in
full force and effect without any amendment or modification thereto), both
written and oral, among the parties with respect to the subject matter hereof.
SECTION 7.11 Survival. The provisions of Section 6.02, and Articles VII and
VIII hereof shall survive termination of this Agreement.
ARTICLE VIII
DEFINITIONS
SECTION 8.01 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires: (a) the
terms defined in this Article VIII have the meaning assigned to them in this
Article VIII and include the plural as well as the singular; (b) all accounting
terms not otherwise defined herein have the meanings assigned under GAAP; (c)
all references in this Agreement to designated "ARTICLES," "SECTIONS" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
the body of this Agreement; (d) pronouns of either gender or neuter shall
include, as appropriate, the other pronoun forms; and (e) the words
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"HEREIN," "HEREOF" and "HEREUNDER" and other words of similar import refer to
this Agreement as whole and not to any particular Article, Section nor other
subdivision.
As used in this Agreement and the Schedules delivered pursuant to this
Agreement, the following definitions shall apply.
"ACQUISITION PROPOSAL" means any proposal or offer from any Person relating
to any direct or indirect acquisition or purchase of all or a substantial part
of the assets of the Company or any of its Subsidiaries or of over 15% of any
class or series of equity securities of the Company or any of its Subsidiaries,
any tender offer or exchange offer that if consummated would result in any
Person beneficially owning 15% or more of any class or series of equity
securities of Company or any of its Subsidiaries, any merger, consolidation,
business combination, sale of all or substantially all of the assets,
recapitalization, liquidation, dissolution or similar transaction involving
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
"ARTICLES OF MERGER" has the meaning set forth in Section 1.03.
"BUYER" has the meaning set forth in the first paragraph hereof.
"CANCELED SHARES" has the meaning set forth in Section 1.08(b).
"CLOSING" has the meaning set forth in Section 1.02.
"CLOSING DATE" has the meaning set forth in Section 1.02.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"COMPANY" has the meaning set forth in the first paragraph hereof.
"COMPANY AFFILIATES" has the meaning set forth in Section 1.11.
"COMPANY BENEFIT PLANS" has the meaning set forth in Section 2.11(a).
"COMPANY'S BUSINESS" means the business of Company and its Subsidiaries,
taken as a whole.
"COMPANY COMMON STOCK" has the meaning set forth in the second Recital
hereto.
"COMPANY ERISA AFFILIATE" has the meaning set forth in Section 2.11(a).
"COMPANY ERISA PLANS" has the meaning set forth in Section 2.11(a).
"COMPANY LOSSES" has the meaning set forth in Section 2.04.
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"COMPANY MATERIAL ADVERSE EFFECT" means any change or effect that is
materially adverse to the business, financial condition, results of operations,
or properties of Company and its Subsidiaries, taken as a whole, provided,
however, that none of the following shall be deemed (either individually or in
the aggregate) to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a Company Material
Adverse Effect:
(a) any matter disclosed in the Disclosure Schedule to this Agreement
with sufficient specificity to indicate the nature, size and scope of such
change or effect;
(b) any failure by Company to meet internal projections or forecasts
or published revenue or earnings predictions; or
(c) any adverse change or effect (including any litigation, loss of
employees, cancellation of or delay in customer orders, reduction in revenues or
income or disruption of business relationships) arising from or attributable to
(i) the announcement or pendency of the transactions contemplated by this
Agreement, to the extent such adverse change or effect is proven to be
attributable primarily to such announcement or the pendency of such
transactions, (ii) conditions generally affecting the industry sectors in which
Company or any of its Subsidiaries participates, the U.S. economy as a whole or
any foreign economy in any location where Company or any of its Subsidiaries has
material operations or sales, (iii) legal, accounting or investment banking fees
or expenses incurred in connection with the transactions contemplated by this
Agreement, as set forth in Section 2.22 of the Disclosure Schedule, (iv)
compliance with the terms of, or the taking of any action required by, this
Agreement, (v) the payment of any amounts due to, or the provision of any other
benefits to, any officers or employees under employment contracts,
non-competition agreements, employee benefit plans, severance arrangements or
other arrangements in existence as of the date of this Agreement, to the extent
disclosed specifically in the Disclosure Schedules hereto, (vi) the taking of
any action approved or consented to in writing by Parent or Buyer, (vii) any
change in accounting requirements or principles or any change in applicable Laws
or the interpretations thereof, or (viii) any required repurchase of Company's
Convertible Notes.
"COMPANY SEC FILINGS" has the meaning set forth in Section 2.06(d).
"COMPANY SHAREHOLDERS' APPROVAL" has the meaning set forth in Section 2.03.
"COMPANY SHAREHOLDERS MEETING" has the meaning set forth in Section
4.04(a).
"COMPANY SHARES" has the meaning set forth in Section 1.08.
"COMPANY TERMINATION FEE" has the meaning set forth in Section 6.02(b).
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"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated as of
March 1, 2001 by and between Company and Parent.
"CONTRACT" means any agreement, arrangement, bond, commitment, franchise,
indemnity, indenture, instrument, lease, license or understanding, whether or
not in writing.
"CONVERSION RATIO" has the meaning set forth in Section 1.08(a).
"EFFECTIVE DATE" has the meaning set forth in Section 1.03.
"EFFECTIVE TIME" has the meaning set forth in Section 1.03.
"ENVIRONMENTAL LAWS" means, local, state and federal statutes, orders,
rules, ordinances, regulations, codes and other requirements of any Governmental
Entity and all applicable judicial or administrative interpretations thereof
relating to pollution or protection of human health or the environment,
including, without limitation, laws relating to exposures, emissions,
discharges, releases or threatened releases of Hazardous Substances (as
hereinafter defined) into or on land, ambient air, surface water, groundwater,
personal property or structures (including the protection, cleanup, removal,
remediation or damage thereof), or otherwise related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
generation, discharge or handling of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" has the meaning set forth in Section 1.09(a).
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL ENTITY" means any governmental agency, district, bureau,
board, commission, court, department, official political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"HAZARDOUS SUBSTANCES" means substances that are defined or listed in, or
otherwise classified pursuant to, any applicable Laws, including, without
limitation, CERCLA and RCRA, as "HAZARDOUS SUBSTANCES," "HAZARDOUS MATERIALS,"
"HAZARDOUS WASTES" or "TOXIC SUBSTANCES," or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as,
without limitation, ignitability, corrosivity, reactivity, radioactivity,
carcinogenicity, reproductive toxicity or "EP TOXICITY," and petroleum and
drilling fluids, produced waters and other wastes associated with the
exploration, development, or production of crude oil, natural gas or geothermal
energy, and lead, asbestos or polychlorinated biphenyls.
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"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INDEMNIFIED PARTIES" has the meaning set forth in Section 4.11(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 4.04(c).
"INDUCEMENT AGREEMENT" has the meaning set forth in the recitals.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" OR "KNOWLEDGE" OR "KNOWN" - Parent and Company shall be deemed
to have "knowledge" of or to have "known" a particular fact or other matter if
either the Chief Executive Officer, the Chief Financial Officer or, in the case
of Company, Messrs. Abramson, Hightower or Zerbe, or, in the case of Parent,
Messrs. Birk, Church or DeLuca has actual knowledge of such fact or other matter
after due inquiry, or would have had such knowledge if he or she had made due
inquiry.
"LAWS" means any constitutional provision, statute, ordinance, or other
law, code, common law, rule, regulation or interpretation of any Governmental
Entity and any decree, injunction, judgment, award, order, ruling, assessment or
writ.
"MATERIAL CONTRACT" has the meaning set forth in Section 2.09.
"MERGER" has the meaning set forth in Section 1.01.
"MERGER CONSIDERATION" means the Parent Stock into which Company Shares are
converted pursuant to the Merger, and cash payable in lieu of fractional shares
of Parent Stock, if any, pursuant to Section 1.09(e).
"NYSE" means the New York Stock Exchange.
"OPTION PLANS" has the meaning set forth in Section 2.02.
"OPTIONS" has the meaning set forth in Section 2.02.
"PARENT BENEFIT PLANS" means collectively, all employee benefit plans,
programs and commitments that Parent makes generally available to its employees
and their beneficiaries, providing benefits in the nature of pension,
retirement, severance, stock purchase, health, medical, life, disability, sick
leave, vacation, or other welfare or fringe benefits, including, without
limitation, all employee benefit plans (as defined in Section 3(3) of ERISA) and
fringe benefit plans (as defined in Code Section 6039D).
"PARENT'S BUSINESS" means the business of Parent and its Subsidiaries,
taken as a whole.
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"PARENT LOSSES" has the meaning set forth in Section 3.04.
"PARENT MATERIAL ADVERSE EFFECT" means any change or effect that is
materially adverse to the business, financial condition or results of operations
of Parent and its Subsidiaries taken as a whole; provided, however, that none of
the following shall be deemed (either individually or in the aggregate) to
constitute, and none of the following shall be taken into account in determining
whether there has been or will be, a Parent Material Adverse Effect:
(a) any matter disclosed in the Disclosure Schedule to this Agreement
with sufficient specificity to indicate the nature, size and scope of such
change or effect;
(b) any failure by Parent to meet internal projections or forecasts or
published revenue or earnings predictions; or
(c) any adverse change or effect (including any litigation, loss of
employees, cancellation of or delay in customer orders, reduction in revenues or
income or disruption of business relationships) arising from or attributable to
(i) the announcement or pendency of the transactions contemplated by this
Agreement, to the extent such adverse change or effect is proven to be
attributable primarily to such announcement or the pendency of such
transactions, (ii) conditions generally affecting the industry sectors in which
Parent or any of its Subsidiaries participates, the U.S. economy as a whole or
any foreign economy in any location where Parent or any of its Subsidiaries has
material operations or sales (iii) legal, accounting, or investment banking fees
or expenses incurred in connection with the transactions contemplated by this
Agreement, (iv) compliance with the terms of, or the taking of any action
required by, this Agreement, (v) any change in accounting requirements or
principles or any change in applicable Laws or the interpretations thereof, (vi)
the taking of any action approved or consented to in writing by Company.
"PARENT SEC FILINGS" has the meaning set forth in Section 3.07(c).
"PARENT SHAREHOLDERS' APPROVAL" has the meaning set forth in Section 3.03.
"PARENT SHAREHOLDERS MEETING" has the meaning set forth in Section 4.04.
"PARENT STOCK" has the meaning set forth in Section 1.08(a).
"PARENT TERMINATION FEE" has the meaning set forth in Section 6.02(c).
"PERSON" means any individual, partnership, joint venture, corporation,
bank, trust, unincorporated organization, Governmental Entity or other entity.
"PROXY STATEMENT/PROSPECTUS" has the meaning set forth in Section 4.04(b).
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"QUALIFIED PLAN" has the meaning set forth in Section 2.11(b).
"REGISTRATION STATEMENT" has the meaning set forth in Section 4.04(b).
"REPRESENTATIVES" means a Person's or any of its Subsidiaries' officers,
directors, employees, consultants, investment bankers, accountants, attorneys
and other advisors, representatives and agents.
"RIGHTS AGREEMENT" has the meaning set forth in Section 2.02(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission.
"SUPERIOR PROPOSAL" has the meaning set forth in Section 4.13.
"SURVIVING CORPORATION" has the meaning set forth in Section 1.01.
"TAX" or "TAXES" means any foreign, federal, state, county or local income,
sales, use, excise, franchise, ad valorem, real and personal property, transfer,
gross receipt, stamp, premium, profits, customs, duties, windfall profits,
capital stock, production, business and occupation, disability, employment,
payroll, severance or withholding taxes, fees, assessments or charges of any
kind whatever imposed by any Governmental Entity, and interest and penalties
(civil or criminal), additions to tax, payments in lieu of taxes or additional
amounts related thereto or to the nonpayment thereof.
"TAX RETURN" means a declaration, statement, report, return, claim for
refund, or other document or information required to be filed or supplied with
respect to Taxes, including, where permitted or required, combined or
consolidated returns for any group of entities that includes Company or any of
its Subsidiaries, and including any schedule or attachment thereto, and any
amendment thereof.
"TERMINATION FEE" shall mean either a Parent Termination Fee or a Company
Termination Fee.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
AVNET, INC.
By: /s/ Raymond Sadowski
-----------------------------------------
Name: Raymond Sadowski
Title: Chief Financial Officer and
Senior Vice President
ALPHA ACQUISITION CORP.
By: /s/ Raymond Sadowski
-----------------------------------------
Name: Raymond Sadowski
Title: President
KENT ELECTRONICS CORPORATION
By: /s/ Larry D. Olson
-----------------------------------------
Name: Larry D. Olson
Title: President and Chief Executive Officer