-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RcYWPHLOh5kN56zYX7OkBc+lXB8j6e2Gl1tUmysYiPPLIzAm+uoY8qYSflXjzh6i wkBWkDc9xViR2hFvGbwuyQ== 0000907098-97-000079.txt : 19971113 0000907098-97-000079.hdr.sgml : 19971113 ACCESSION NUMBER: 0000907098-97-000079 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MLX CORP /GA CENTRAL INDEX KEY: 0000064247 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 380811650 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13198 FILM NUMBER: 97715957 BUSINESS ADDRESS: STREET 1: 1000 CENTER PL CITY: NORCROSS STATE: GA ZIP: 30093 BUSINESS PHONE: 4047980677 MAIL ADDRESS: STREET 1: 1000 CENTER PL CITY: NORCROSS STATE: GA ZIP: 30093 FORMER COMPANY: FORMER CONFORMED NAME: MCLOUTH STEEL CORP DATE OF NAME CHANGE: 19850212 10-Q 1 CONFORMED SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter ended Commission File Number SEPTEMBER 30, 1997 I-4795 MLX CORP. (Exact name of registrant as specified in its charter) GEORGIA 38-0811650 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1000 CENTER PLACE, NORCROSS, GEORGIA 30093 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770) 798-0677 Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes XX No ___ The number of shares outstanding of the Registrant's Common Stock, par value $.01, as of the close of business on September 30, 1997 was 2,617,584. PART I - FINANCIAL INFORMATION BALANCE SHEETS (UNAUDITED) MLX CORP. September 30 December 31 1997 1996 ASSETS CURRENT ASSETS: Cash and cash equivalents $36,490 $37,927 Prepaid expenses 19 46 ------- ------- TOTAL CURRENT ASSETS 36,509 37,973 EQUIPMENT AND OTHER ASSETS 2 4 TAX ESCROW FUNDS 1,509 1,454 ------- ------- TOTAL ASSETS $38,020 $39,431 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accrued compensation and benefits $ 150 $ 103 Other accrued liabilities and expenses 340 280 Accrued taxes 262 286 ------- ------- TOTAL CURRENT LIABILITIES 752 669 OTHER LONG-TERM LIABILITIES 2,030 1,998 SHAREHOLDERS' EQUITY Common stock, $.01 par value - authorized 38,500,000 shares; 2,618,000 shares outstanding 26 26 Capital in excess of par value 73,165 73,165 Retained earnings deficit (37,953) (36,427) ------- ------- TOTAL SHAREHOLDERS' EQUITY 35,238 36,764 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $38,020 $39,431 ======= =======
Dollars in thousands See notes to financial statements STATEMENTS OF OPERATIONS (UNAUDITED) MLX CORP. For the Nine Months Ended September 30 1997 1996 NET SALES $ -- $ -- General and administrative expenses (698) (806) Stock Appreciation Rights compensation (2,225) -- ------- ------ OPERATING LOSS (2,923) (806) Interest income 1,397 1,396 ------- ------ EARNINGS (LOSS) BEFORE INCOME TAXES (1,526) 590 PROVISION FOR INCOME TAXES: Federal income taxes due and payable -- (12) Charge in lieu of federal income taxes -- (201) ------- ------- NET EARNINGS (LOSS) $(1,526) $ 377 ======= ======= EARNINGS (LOSS) PER SHARE $ (0.58) $ 0.14 ======= ======= AVERAGE OUTSTANDING COMMON SHARES AND DILUTIVE OPTIONS 2,618 2,751 ======= =======
Dollars in thousands, except per share data See notes to financial statements STATEMENTS OF OPERATIONS (UNAUDITED) MLX CORP. For the Quarter Ended September 30 1997 1996 NET SALES $ -- $ -- General and administrative expenses (230) (270) ------- ------- OPERATING LOSS (230) (270) Interest income 484 472 ------- ------- EARNINGS BEFORE INCOME TAXES 254 202 PROVISION FOR INCOME TAXES: Federal income taxes due and payable -- (5) Charge in lieu of federal income taxes -- (69) ------- ------- NET EARNINGS $ 254 $ 128 ======= ======= EARNINGS PER SHARE $ 0.10 $ 0.05 ======= ======= AVERAGE OUTSTANDING COMMON SHARES AND DILUTIVE OPTIONS 2,645 2,761 ======= =======
Dollars in thousands, except per share data See notes to financial statements STATEMENTS OF CASH FLOWS (UNAUDITED) MLX CORP. For the Nine Months Ended September 30 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings (loss) $(1,526) $ 377 Adjustments to reconcile net earnings (loss) to net cash (used in) provided by operating activities: Charge in lieu of federal income taxes -- 201 Change in operating assets and liabilities: Prepaid expenses 27 62 Accrued expenses and other 117 103 ------- ------- Net cash (used in) provided by operating activities (1,382) 743 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Increase in escrow funds for warranties and taxes (55) (205) ------- ------- Net cash used in investing activities (55) (205) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Stock options exercised -- 25 ------- ------- Net cash provided by financing activities -- 25 ------- ------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,437) 563 Cash and cash equivalents at January 1 37,927 32,903 ------- ------- CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $36,490 $33,466 ======= ======= SUPPLEMENTAL CASH FLOW DISCLOSURE: Federal taxes paid on income $ 2 $ 32
Dollars in thousands See notes to financial statements NOTES TO FINANCIAL STATEMENTS (UNAUDITED) MLX CORP. The financial statements have been prepared by the Registrant without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to those rules and regulations. These financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1996. In the opinion of the Registrant, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Registrant as of September 30, 1997 and December 31, 1996 and the results of operations for the quarters and nine months ended September 30, 1997 and 1996 and cash flows for the nine months ended September 30, 1997 and 1996. Note A - Income Taxes At January 1, 1997, the Registrant had available net operating loss carryforwards of approximately $275 million which are available to offset future taxable income for federal income tax purposes. Accordingly, the Company has a federal tax liability only for Alternative Minimum Tax amounts and the charge in lieu of federal income taxes included in the statement of operations for the quarter and nine months ended September 30, 1996 is not accruable or payable. The following table illustrates the effect of this pro forma charge on the Company's earnings and earnings per share for the respective periods (in thousands, except per share data). Quarter Ended September 30 Nine months ended September 30 1997 1996 1997 1996 Net earnings (loss) $ 254 $ 128 $(1,526) $ 377 Charge in lieu of federal income taxes which is not accruable or payable -- 69 -- 201 ------ ------ ------- ----- Total earnings (loss) $ 254 $ 197 $(1,526) $ 578 ====== ====== ======= ===== Total earnings (loss) per share $ 0.10 $ 0.07 $ (0.58) $0.21 ====== ====== ======= =====
Note B - Proposed Merger Transaction On October 20, 1997, the Registrant entered into a definitive agreement to merge with Morton Metalcraft Holding Co. ("Morton"). Morton is headquartered in Morton, Illinois and is a contract manufacturer and supplier of high-quality fabricated sheet metal components and subassemblies for construction, agricultural and industrial equipment manufacturers located primarily in the Midwestern and Southeastern United States. The proposed merger transaction reflects an enterprise valuation of Morton of approximately $81.1 million, which includes the issuance of 1,332,323 shares of MLX common stock , a cash payment of $20 million to the current holders of Morton common stock and the assumption of Morton's debt. In addition, the transaction contemplates the approval of stock options for 667,677 shares of MLX common stock to members of Morton management. The merger is subject to approval by a majority of the common shareholders of MLX and certain other customary conditions and will be voted on at a special meeting of the MLX shareholders expected to be held in late December 1997. If the transaction is approved by the MLX shareholders and consummated thereafter, Morton will merge with and into MLX, with MLX being the surviving corporation. The business and operation of the combined companies will be substantially the same as the business and operation of Morton prior to the merger. For accounting and financial reporting purposes, the merger will be treated as a purchase by Morton of MLX. MLX prepared and filed on October 21, 1997 with the Securities and Exchange Commission a preliminary proxy statement containing additional information regarding the merger, including pro-forma condensed combined financial statements. When approved, the proxy statement will be furnished to shareholders of MLX in advance of the special meeting. Note C - Stock Appreciation Rights Compensation On February 12, 1997, the Registrant's Board of Directors approved the conversion of all the common stock options held by its former Chief Executive Officer to stock appreciation rights (SARs), and all such SARs were exercised as of that date. The resulting liability under this agreement amounted to $2.2 million and was paid in February 1997. The compensation expense from this transaction is reported in the accompanying statement of operations for the nine months ended September 30, 1997. As of September 30, 1997, the Company's employees have outstanding options to purchase 50,000 shares of common stock. Note D - Accounting Policy Not Yet Adopted In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1998. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The new standard is not expected to have a material effect on earnings per share. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Basis of Discussion: The accompanying financial statements report the financial condition and results of operations of the Registrant only. Since the divestiture of the S.K. Wellman subsidiary on June 30, 1995, the Registrant has no recurring revenues or operating subsidiaries. In the short-term, the Company has invested the proceeds of the Wellman transaction in short-term repurchase instruments managed by selected commercial banks. The Company is actively engaged in an acquisition search. Operations: The general and administrative expenses of the Registrant are incurred for acquisition search, compensation, occupancy, shareholder costs (such as printing, distribution and stock transfer fees) and legal and professional matters. The Company considers its business to be that of seeking to acquire an operating business that meets its financial acquisition criteria. Accordingly, the Company believes that it is not an investment company as defined by the Investment Company Act of 1940 (the "Act") and prepared and submitted an application in 1996 to the Securities and Exchange Commission (the "Commission") requesting an exemption from certain provisions of the Act until December 31, 1997. On May 19, 1997, the Commission issued an exemptive order pursuant to Sections 6(c) and 6(e) of the Act, which exempts MLX from all provisions of the Act except Sections 9, 17(a), 17(d) (modified as described in the application), 17(e), 17(f) (modified as described in the application), and 36 through 53, through December 31, 1997. MLX and other persons, in their transactions and relations with MLX, are subject to such excepted sections of the Act as if MLX were a registered investment company under the Act. The implementation of the exemptive order did not require MLX to change or modify any of its existing practices or policies. On October 27, 1997, MLX submitted a new application, identical to the existing one, asking for an extension of the exemptive period through December 31, 1998. This new application was prepared and filed as a precautionary measure in case the Morton acquisition is not completed by December 31, 1997. If MLX has not entered into a binding agreement to acquire an operating business or completed the proposed Morton transaction by December 31, 1997, MLX could be required to register under the Act and would thereafter be subject to regulation thereunder. This action would add complexity to the Company's pursuit of its acquisition strategy, add to the administrative expenses of the Company and fundamentally alter the presentation of the Company's financial statements. Liquidity and Capital Resources: At September 30, 1997, the Registrant had working capital of $35.8 million, consisting principally of cash and short-term investments of $36.5 million, and estimated short-term obligations for income taxes, transaction expenses and compensation of $0.8 million. The Company's short-term investments at September 30, 1997 consisted principally of repurchase arrangements collateralized by U.S. Treasury and federal agency obligations. In connection with the sale of Wellman in 1995, the Company funded an escrow fund amounting to $1.3 million relating to certain estimated income tax obligations arising from the sale. The Company's common stock is quoted on the OTC Electronic Bulletin Board under the trading symbol "MLXR." The Registrant believes that its current financial resources are adequate to meet its projected operating needs in 1997. Proposed Merger Transaction: On October 20, 1997, the Company entered into a definitive agreement to merge with Morton Metalcraft Holding Co. ("Morton"), a contract manufacturer and supplier of fabricated sheet metal components and subassemblies to original equipment manufacturers in the construction, agricultural and industrial equipment industries. The transaction is subject to approval by a majority of MLX common shareholders and reflects an enterprise valuation of Morton of approximately $81.1 million. If the proposal is approved and consummated, the business and operations of the combined companies will be substantially the same as that of Morton prior to the merger. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. Item 3. Default Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 10.1 - Agreement and Plan of Merger dated October 20, 1997 (incorporated herein by reference to the Registrant's Proxy Statement filed with the Commission on October 21, 1997) (b) Exhibit 10.2* - Securities Purchase Agreement dated October 20, 1997 (c) Exhibit 27* - Financial Data Schedule (d) Reports on Form 8-K: None *Filed with this report. SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Date: NOVEMBER 7, 1997 MLX CORP BY: /S/THOMAS C. WAGGONER Thomas C. Waggoner Chief Executive Officer and President EX-10 2 SECURITIES PURCHASE AGREEMENT AGREEMENT, dated October 20, 1997, among MLX Corp., a Georgia corporation ("Buyer"), and the holders (the "Selling Securityholders") of shares of common stock ("Common Stock"), par value $0.01 per share, of Morton Metalcraft Holding Co., a Delaware Corporation (the "Company"), and options and warrants to acquire shares of Common Stock (such shares of Common Stock, warrants and options, the "Company Securities"). Pursuant to an Agreement and Plan of Merger dated as of October 20, 1997 (the "Merger Agreement"), among Buyer and the Company, the Company shall be merged with and into Buyer (the "Merger"), with Buyer being the surviving corporation (hereinafter referred to as the "Surviving Corporation"). Pursuant to Section 5.9 of the Merger Agreement, prior to the Effective Time (as defined in the Merger Agreement), the Company will be recapitalized (the "Recapitalization") as set forth in the Merger Agreement. Each Selling Securityholder is the record and beneficial owner of the Company Securities set forth opposite such Selling Securityholder's name on Exhibit A hereto. As a result of the Recapitalization, each Selling Securityholder will become the record and beneficial owner of the newly issued securities of the Company (the "Recap Company Securities") set forth opposite such Selling Securityholder's name on Exhibit B hereto. Each Selling Securityholder wishes to sell the Recap Company Securities (all such Recap Company Securities of all Selling Securityholders herein referred to as the "Sale Securities") set forth opposite such Selling Stockholder's name on Exhibit C hereto and Buyer wishes to purchase all such Sale Securities upon the terms and subject to the conditions of this Agreement. Capitalized terms used herein but not otherwise defined shall have the meanings given them in Section 11.1 hereof. NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Sale and Purchase of Sale Securities. 1.1 Sale and Purchase of Sale Securities. At the Closing (as hereinafter defined), (i) each Selling Securityholder shall sell, and Buyer shall purchase all of the Sale Securities of such Selling Securityholder, free of any Liens, (ii) each Selling Securityholder shall deliver or cause to be delivered to Buyer certificates representing all of such Sale Securities accompanied by stock or warrant powers, as the case may be, duly executed in blank, in proper form for transfer, and with all appropriate stock transfer tax stamps affixed, and (iii) Buyer shall deliver the Purchase Price (as hereinafter defined) to the Selling Securityholders in accordance with Section 1.2 below. 1.2 Purchase Price. The aggregate purchase price for the Sale Securities (the "Purchase Price") shall be the aggregate of all the purchase prices shown on Exhibit C. Buyer shall pay to each of the Selling Securityholders in immediately available funds, pursuant to written instructions provided by each Selling Securityholder at or prior to the Closing, the amount of the payment set forth opposite such Selling Securityholder's name on Exhibit C, against receipt of the Sale Securities of such Selling Stockholder set forth on Exhibit C hereto. 2. Closing; Closing Date. The closing of the purchase and sale of the Sale Securities (the "Closing") shall take place immediately prior to the Effective Time (as defined in the Merger Agreement) on satisfaction or waiver of the conditions set forth in Article 4 hereof at such place and time as the parties may agree in writing (such time and date being referred to herein as the "Closing Date"). 3. Representations and Warranties of Selling Securityholders. Each Selling Securityholder severally, and not jointly, represents and warrants to Buyer as follows: 3.1 Title to the Company Securities. Except as set forth on Schedule 3.1, as of the date hereof, such Selling Securityholder owns of record, free and clear of any Lien, such Company Securities set forth opposite such Selling Stockholder's name on Exhibit A hereto. 3.2 Title to the Recap Company Securities. As of the Closing Date and assuming the consummation of the Recapitalization in accordance with the Merger Agreement, such Selling Securityholder shall own of record, free and clear of any Lien, such Recap Company Securities set forth opposite such Selling Stockholder's name on Exhibit B hereto. Any Liens set forth on Schedule 3.1 regarding such Selling Stockholder's Company Securities shall no longer be in effect as of the Closing Date. 3.3 Title to the Sale Securities. As of the Closing Date and assuming the consummation of the Recapitalization in accordance with the Merger Agreement, such Selling Securityholder shall own of record, free and clear of any Lien, such Sale Securities set forth opposite such Selling Stockholder's name on Exhibit C hereto, and, upon delivery of and payment for such Sale Securities by Buyer as herein provided, such Selling Securityholder will convey to Buyer good and valid title thereto, free and clear of any Lien. Any Liens set forth on Schedule 3.1 regarding such Selling Stockholder's Sale Securities shall no longer be in effect as of the Closing Date. 3.4 Authority to Execute and Perform Agreement. Such Selling Securityholder has the full legal right, power and all authority required to enter into, execute and deliver this Agreement and to perform fully such Selling Securityholder's obligations hereunder. This Agreement has been duly executed and delivered by such Selling Securityholder and (assuming the due authorization, execution and delivery hereof by Buyer) is a legal, valid and binding obligation of such Selling Securityholder enforceable against such Selling Securityholder in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights and to general equity principles (regardless of whether enforcement is sought in a proceeding at law or in equity). 3.5 Noncontravention. Except as set forth on Schedule 3.5, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by such Selling Securityholder will not (i) contravene such Selling Securityholder's charter, articles or certificate of incorporation or by-laws, as applicable; (ii) violate, or cause such Selling Securityholder to be in default under, any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to such Selling Securityholder; (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which such Selling Securityholder is a party or by which it or its properties may be bound or affected; or (iv) result in, or require, the creation or imposition of any Lien upon or with respect to any of the properties now owned by such Selling Securityholder. 3.6 Representations and Warranties on Closing Date. The representations and warranties of such Selling Stockholder contained in this Article 3 shall be true and correct on and as of the Closing Date with the same force and effect as though such representations and warranties had been made on and as of the Closing Date. 4. Representations and Warranties of Buyer. Buyer represents and warrants to each Selling Securityholder as follows: 4.1 Authority to Execute and Perform Agreement. Buyer has the full legal right, power and all authority required to enter into, execute and deliver this Agreement and to perform fully Buyer's obligations hereunder. This Agreement has been duly executed and delivered by Buyer and (assuming the due authorization, execution and delivery hereof by the Selling Securityholders) is a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights and to general equity principles (regardless of whether enforcement is sought in a proceeding at law or in equity). 4.2 Noncontravention. Except as set forth on Schedule 4.2, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by Buyer will not (i) contravene Buyer's charter, articles or certificate of incorporation or by-laws; (ii) violate, or cause Buyer to be in default under, any provision of law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to Buyer; (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which Buyer is a party or by which it or its properties may be bound or affected; or result in, or require, the creation or imposition of any Lien upon or with respect to any of the properties now owned by Buyer. 5. Conditions Precedent to the Obligation of Buyer to Close. The obligation of Buyer to enter into and complete the Closing is subject, at the option of Buyer, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by it: 5.1 Consummation of the Merger. All conditions precedent to the consummation of the Merger shall have been fulfilled by the parties to the Merger Agreement. 5.2 Representations and Warranties. The representations and warranties of the Selling Securityholders contained in this Agreement shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. 6. Conditions Precedent to the Obligation of the Selling Securityholders to Close. The obligation of each of the Selling Securityholders to enter into and complete the Closing is subject, at the option of such Selling Securityholder, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by it: 6.1 Consummation of the Merger. All conditions precedent to the consummation of the Merger shall have been fulfilled by the parties to the Merger Agreement, the Buyer shall in good faith expect the Effective Time under the Merger Agreement to occur immediately after the Closing hereunder and no amendment or other modification to the Merger Agreement shall have been made which would increase the merger consideration thereunder or otherwise adversely affect the rights of any of the Selling Securityholders hereunder. 6.2 Shareholders' Agreement. The Shareholders' Agreement, dated as of March 20, 1995, among the Company, Morton Metalcraft Co., William D. Morton and the Purchasers (as defined therein) party thereto shall have been terminated simultaneously with the Closing of this Agreement. 6.3 Shareholders' Agreement. The Shareholders' Agreement, dated as of January 25, 1995, as amended as of July 11, 1997, among the Company, Morton Metalcraft Co., William D. Morton and the Noteholders (as defined therein) party thereto shall have been terminated simultaneously with the Closing of this Agreement. 6.4 Representations and Warranties. The representations and warranties of Buyer contained in this Agreement shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. 6.5 Recapitalization. The Recapitalization shall have been consummated by the Company and as a result thereof the Company's capital structure shall be as set forth on Exhibit B hereto. 6.6 Prepayment of Certain Debt of the Company. On or immediately after the Closing Date, the Company shall have prepaid the indebtedness owed to each of Connecticut General Life Insurance Company ("CGLIC"), as beneficial owner (CIG & CO. being the registered owner) and CIGNA Mezzanine Partners III, L.P. ("CMP"; CMP and CGLIC collectively being referred to as, "CIGNA"), as beneficial owner (CIG & CO. being the registered owner) pursuant to the Company's 11.50% Senior Notes due January 31, 2005 (the "CIGNA Notes"), in the aggregate outstanding principal amount of $25,000,000 such prepayment being accompanied with a prepayment premium of $250,000, all accrued and unpaid interest due on the CIGNA Notes on the Closing Date and all other amounts due and owing under those separate Note Purchase Agreements, dated as of January 25, 1997, between the Company and each of CGLIC and CMP, and the Company and Buyer shall have taken or caused to be taken all actions required to be taken by each of them on or immediately after the Closing Date pursuant to that certain Note Redemption Agreement, dated as of October 20, 1997, between, the Company, Morton Metalcraft Co., Buyer and CIGNA. 7. Covenants. 7.1 Reasonable Best Efforts. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its reasonable best efforts (to the extent within the control of any party hereto) to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by the Merger Agreement. 7.2 Survival of Representations and Warranties of the Selling Securityholders After Closing. Notwithstanding any right of Buyer to investigate and notwithstanding any knowledge of facts determined or determinable by Buyer pursuant to such investigation or right of investigation, Buyer has the right to rely fully upon the representations and warranties of the Selling Securityholders contained in this Agreement. Notwithstanding any waiver by Buyer of any condition precedent to its obligation to close, all representations and warranties shall survive the execution and delivery of this Agreement and the Closing hereunder. 7.3 Survival of Representations and Warranties of Buyer After Closing. Notwithstanding any right of the Selling Securityholders to investigate and notwithstanding any knowledge of facts determined or determinable by the Selling Securityholders pursuant to such investigation or right of investigation, the Selling Securityholders have the right to rely fully upon the representations and warranties of Buyer contained in this Agreement. Notwithstanding any waiver by the Selling Securityholders of any condition precedent to its obligation to close, all representations and warranties shall survive the execution and delivery of this Agreement and the Closing hereunder. 7.4 Selling Securityholder Restrictions. Each Selling Securityholder hereby agrees to waive all restrictions (whether transfer or otherwise) applicable to the shares of such Selling Securityholder to the extent necessary to facilitate the consummation of the transactions contemplated by this Agreement. Each Selling Securityholder hereby further agrees that any agreements containing any such restrictions as they apply to the Sale Securities shall terminate upon the consummation of the transaction contemplated by this Agreement. 8. Indemnification. 8.1 Indemnification by Selling Securityholders. Each Selling Securityholder hereby agrees that such Selling Securityholder shall be severally, and not jointly, liable to and shall indemnify, defend and hold harmless Buyer, its Affiliates (including the Surviving Corporation) and their respective directors, officers, employees, Affiliates, successors and assigns pursuant to this Agreement from and against any and all loss, cost, damage or expense (including reasonable fees of counsel) whatsoever based upon, arising out of or otherwise resulting from any breach of any representation or warranty of such Selling Securityholder, or breach of any covenant or obligation of such Selling Securityholder or enforcement by Buyer of its rights agasint such Selling Securityholders hereunder, in either case, contained in this Agreement. Nothing in the Limited Indemnification Agreement, dated October 17, 1997 (the "Indemnification Agreement"), among Buyer and certain of the Selling Securityholders shall limit the general liability of Selling Securityholders under this Agreement. 8.2 Indemnification by Buyer. Buyer hereby agrees that Buyer shall be liable to and shall indemnify, defend and hold harmless each Selling Securityholder, its Affiliates and their respective directors, officers, employees, Affiliates, successors and assigns pursuant to this Agreement from and against any and all loss, cost, damage or expense (including reasonable fees of counsel) whatsoever based upon, arising out of or otherwise resulting from any breach of any representation or warranty of Buyer, or breach of any covenant or obligation of Buyer or enforcement by any Selling Securityholder of its rights hereunder, in either case, contained in this Agreement. Nothing in the Limited Indemnification Agreement shall limit the general liability of Buyer under this Agreement. 9. Additional Parties. The parties to this Agreement agree that additional Selling Securityholders ("Additional Selling Securityholders") may be added as parties to this Agreement prior to the Closing by such Additional Selling Securityholders agreeing in writing to be bound by the provisions of this Agreement, such addition to be made without the necessity of any action by the parties hereto. 10. Termination of Agreement. This Agreement shall terminate prior to the Closing as follows: (a) upon the termination of the Merger Agreement; or (b) at any time on or prior to the Closing Date, by mutual written consent of the Selling Securityholders and Buyer. If this Agreement is terminated as provided herein no party hereto shall have any liability or further obligation to any other party under the terms of this Agreement except for the intentional or willful violation of, or willful misstatement contained in, the representations and warranties of such parties contained in this Agreement. 11. Miscellaneous. 11.1 Certain Definitions. (a) As used in this Agreement, the following terms have the following meanings: (i) "Affiliate" means, with respect to any Person, any other Person controlling, controlled by or under common control with, or the parents, spouse, lineal descendants or beneficiaries of, such Person. (ii) "Lien" means any lien, pledge, mortgage, security interest, claim, lease, charge, option, right of first refusal, easement, servitude, transfer restriction under any shareholder or similar agreement, encumbrance or any other restriction or limitation whatsoever (other than restrictions imposed by applicable securities laws). (iii) "Person" means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity. 11.2 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the United States mails, as follows: (a) if to Buyer, to: MLX Corp. 1000 Center Place Norcross, Georgia 30093 Attention: Thomas C. Waggoner Telecopy: (770) 798-0633 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attention: Robert M. Hirsh, Esq. Facsimile: (212) 757-3990 (b) if to a Selling Securityholder, to the address set forth on Exhibit D hereto. Any party may by notice given in accordance with this Section to the other parties designate another address or Person for receipt of notices hereunder. 11.3 Entire Agreement. This Agreement contains the entire agreement among the parties with respect to the purchase of the Sale Securities and supersedes all prior agreements, written or oral, with respect thereto. 11.4 Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege. 11.5 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware. 11.6 Binding Effect; No Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and legal representatives. This Agreement is not assignable, except that Buyer may assign its rights hereunder to any of its Affiliates. 11.7 Variations in Pronouns. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. 11.8 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. 11.9 Headings. The headings in this Agreement are for reference only, and shall not affect the interpretation of this Agreement. 11.10 Severability of Provisions. If any provision or any portion of any provision of this Agreement, or the application of any such provision or any portion thereof to any Person or circumstance, shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement, and the application of such provision or portion of such provision as is held invalid or unenforceable to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. PAGE IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. MLX CORP. By: Name: Title: William D. Morton Brian L. Geiger Daryl R. Lindemann Brian R. Doolittle David M. Stratton IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Mark W. Mealy Reid G. Leggett Frederic H. Garner Katherine D. Garner Edward P. Imbrogno Thomas L. Temple Stephen E. Cummings John T. Johnston III IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Robert G. Calton III Kelly L. Katterhagen William A. Morrisett Matthew S. Rankowitz John H. Grigg Shannon G. Smith IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Nancy B. Conner Charles H. Conner, Jr. Charles H. Conner, Jr., as custodian for Lindsay A. Conner Charles H. Conner, Jr., as custodian for Bryan B. Conner Schedule 3.1 Liens Outstanding Options to Purchase 1. Warrant Agreement dated January 25, 1995, between Morton Metalcraft Holding Co. and Connecticut General Life Insurance Company and Cigna Mezzanine Partners III, L.P., as amended July 11, 1997, for 72,000 shares of common stock. 2. Executive Stock Option Agreement between Morton Metalcraft Holding Co. And William D. Morton dated February 15, 1995, as amended on October 8, 1997, for 7,000 shares of the Company. 3. Executive Stock Option Agreement between Morton Metalcraft Holding Co. And Brian L. Geiger dated August 31, 1989, as amended on February 15, 1995, for 9,000 shares of the Company. 4. Executive Stock Option Agreement between Morton Metalcraft Holding Co. And Daryl R. Lindemann dated September 7, 1990, as amended on February 15, 1995, for 9,000 shares of the Company. 5. Executive Stock Option Agreement between Morton Metalcraft Holding Co. and Brian R. Doolittle dated July 13, 1992, as amended on February 15, 1995, for 9,000 shares of the Company. 6. Executive Stock Option Agreement between Morton Metalcraft Holding Co. and David M. Stratton dated August 31, 1989, as amended on February 15, 1995, for 9,000 shares of the Company. 7. Executive Stock Option Agreement between Morton Metalcraft Holding Co., William D. Morton and Robert J. Janeczko dated May 8, 1995, as amended on October 8, 1997, for 5,000 shares of the Company. 8. Amended and Restated Director Option Agreement dated February 15, 1995, between Morton Metalcraft Holding Co., William D. Morton and Fred W. Broling for 30,000 shares of the Company. Outstanding Shareholder Agreements. 1. Shareholders' Agreement dated as of March 20, 1995, among Morton Metalcraft Holding Co., Morton Metalcraft Co., William D. Morton and listed Purchasers. 2. Shareholders' Agreement dated as of January 25, 1995, among Morton Metalcraft Holding Co., Morton Metalcraft Co., Connecticut General Life Insurance Company, Cigna Mezzanine Partners III, L.P., as amended July 11, 1997. Bowles Hollowell Conner & Co. shareholders 1. Purchaser Representative Agreement dated as of March 20, 1995, among Charles Conner, Mark W. Mealy, Edward P. Imbrogno, and the other listed Purchasers. Schedule 3.5 Defaults 1. Note and Warrant Purchase Agreements dated January 25, 1995, by and among Morton Metalcraft Co., Morton Metalcraft Holding Co., Connecticut General Life Insurance Company and Cigna Mezzanine Partners III, L.P., as amended July 11, 1997, adding Morton Metalcraft Co. of North Carolina. 2. Loan and Security Agreement dated as of January 31, 1995, between Morton Metalcraft Co. and Barclays Business Credit, Inc., as amended by the First Amendment dated December 15, 1995, and as further amended by the Second Amendment dated July 11, 1997, noting Fleet Capital Corporation as successor-in-interest to Barclays and adding Morton Metalcraft Co. of North Carolina. 3. Warrant Agreement dated January 25, 1995, between Morton Metalcraft Holding Co. and Connecticut General Life Insurance Company and Cigna Mezzanine Partners III, L.P., as amended July 11, 1997, for 72,000 shares of common stock. 4. Shareholders' Agreement dated as of March 20, 1995, among Morton Metalcraft Holding Co., Morton Metalcraft Co., William D. Morton and listed Purchasers. 5. Shareholders' Agreement dated as of January 25, 1995, among Morton Metalcraft Holding Co., Morton Metalcraft Co., Connecticut General Life Insurance Company, Cigna Mezzanine Partners III, L.P., as amended July 11, 1997. 6. Stock Option Agreements 2 through 8 listed on Schedule 3.1 to the Securities Purchase Agreement. 7. Purchaser Representative Agreement dated as of March 20, 1995, among Charles Conner, Mark W. Mealy, Edward P. Imbrogno, and the other listed Purchasers. Schedule 4.2 Non-contravention None. EXHIBIT A Selling Securityholders Person Shares Owned Options Owned[superscript 1] Warrants Owned William D. Morton 174,000 Mark W. Mealy 6,840 Nancy B. Conner 2,160 Charles H. Conner, Jr. 2,160 Charles H. Conner, Jr., as custodian for Lindsay A. Conner 2,160 Charles H. Conner, Jr., as custodian for Bryan B. Conner 2,160 Reid G. Legget 5,760 Frederic H. Garner 1,200 Katherine D. Garner 1,200 Edward P. Imbrogno 1,800 Thomas L. Temple 1,800 Stephen E. Cummings 1,200 John T. Johnston III 1,200 Robert G. Calton III 1,200 Kelly L. Katterhagen 1,200 William A. Morrisett 1,200 Matthew S. Rankowitz 1,200 John H. Grigg 960 Shannon G. Smith 600 Brian L. Geiger 9,000 Daryl R. Lindemann 9,000 Brian R. Doolittle 9,000 David M. Stratton 9,000 Connecticut General Life Insurance Company, as beneficial owner (with CIG & CO being registered owner) 23,791.56 Cigna Mezzanine Partners III, L.P., as beneficial owner (with CIG & CO being registered owner) 48,205.44 ------- ------ --------- TOTAL 210,000 43,000 72,000
[superscript 1] Fred W. Boling and Robert J. Janeczko hold 30,000 and 5,000 options, respectively, but are not Selling Securityholders. EXHIBIT B Recap Company Selling Securityholders Shares of Shares of Class A Class B Options Warrants Person Stock Owned Stock Owned Owned[superscript 1] Owned William D. Morton 1,511,111 100,000 64,815 Mark W. Mealy, 63,333 Nancy B. Conner 20,000 Charles H. Conner, Jr. 20,000 Charles H. Conner, Jr., as custodian for Lindsay A. Conner 20,000 Charles H. Conner, Jr., as custodian for Bryan B. Conner 20,000 Reid G. Legget 53,333 Frederic H. Garner 11,111 Katherine D. Garner 11,111 Edward P. Imbrogno 16,667 Thomas L. Temple 16,667 Stephen E. Cummings 11,111 John T. Johnston III 11,111 Robert G. Calton III 11,111 Kelly L. Katterhagen 11,111 William A. Morrisett 11,111 Matthew S. Rankowitz 11,111 John H. Grigg 8,889 Shannon G. Smith 5,556 Brian L. Geiger 83,333 Daryl R. Lindemann 83,333 Brian R. Doolittle 83,333 David M. Stratton 83,333 Connecticut General Life Insurance Company, as beneficial owner (with CIG & CO being registered owner) 220,320 Cigna Mezzanine Partners III, L.P., as beneficial owner (with CIG & CO being registered owner) 446,347 --------- ------- ------- ------- TOTAL 1,844,444 100,000 398,147 666,667
[superscript 1] Fred W. Boling and Robert J. Janeczko hold 277,778 and 46,296 options, respectively, following the recapitalization, but are not Selling Securityholders. EXHIBIT C Sale of Recap Company Securities Shares of Class A Options Warrants Purchase Person Stock Sold Sold Sold Price[superscript 1] William D. Morton 292,121 4,381,820 Mark W. Mealy, 50,000 750,000 Nancy B. Conner 20,000 300,000 Charles H. Conner, Jr. 20,000 300,000 Charles H. Conner, Jr., as custodian for Lindsay A. Conner 20,000 300,000 Charles H. Conner, Jr., as custodian for Bryan B. Conner 20,000 300,000 Reid G. Legget 53,333 799,995 Frederic H. Garner 11,111 166,665 Katherine D. Garner 11,111 166,665 Edward P. Imbrogno 16,667 250,005 Thomas L. Temple 16,667 250,005 Stephen E. Cummings 11,111 166,665 John T. Johnston III 11,111 166,665 Robert G. Calton III 11,111 166,665 Kelly L. Katterhagen 11,111 166,665 William A. Morrisett 11,111 166,665 Matthew S. Rankowitz 11,111 166,665 John H. Grigg 8,889 133,335 Shannon G. Smith 5,556 83,340 Brian L. Geiger 13,636 203,072 Daryl R. Lindemann 13,636 203,072 Brian R. Doolittle 13,636 201,600 David M. Stratton 13,636 203,072 Connecticut General Life Insurance Company, as beneficial owner (with CIG & CO being registered owner) 220,320 3,304,324 Cigna Mezzanine Partners III, L.P., as beneficial owner (with CIG & CO being registered owner) 446,347 6,694,236 ------- ------ ------- ---------- TOTAL 612,121 54,544 666,667 19,991,196
[superscript 1] The numbers in this column are based upon the calculations provided by Rob Wright on October 14, 1997. EXHIBIT D Names and Addresses of Selling Securityholders Person Address William D. Morton 2660 North Morton Avenue Morton, IL 61550 Mark W. Mealy 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Nancy B. Connor 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Charles H. Conner, Jr. 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Lindsay A. Conner 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Bryan B. Conner 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Reid G. Leggett 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Frederic H. Garner 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Katherine D. Garner 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Edward P. Imbrogno 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Thomas L. Temple 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Stephen E. Cummings 227 West Trade Street, Suite 2400 Charlotte, NC 28202 John T. Johnston III 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Robert G. Calton III 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Kelly L. Katterhagen 227 West Trade Street, Suite 2400 Charlotte, NC 28202 William A. Morrisett 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Matthew S. Rankowitz 227 West Trade Street, Suite 2400 Charlotte, NC 28202 John H. Grigg 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Shannon G. Smith 227 West Trade Street, Suite 2400 Charlotte, NC 28202 Brian L. Geiger 29501 Allentown Road Mackinaw, IL 61755 Daryl R. Lindemann 52 Maple Ridge Drive Morton, IL 61550 Brian R. Doolittle 86 Maple Ridge Drive Morton, IL 61550 David M. Stratton c/o Morton Metalcraft Co., Inc. 2080 East Williams Street P.O. Box 918 Apex, NC 27502 Connecticut General Life Insurance CIG & Co. Company, as beneficial owner c/o CIGNA Investments, Inc. (with CIG & CO being registered 900 Cottage Grove Road owner) Hartford, CT 06152-2206 ATTN: Securities Accounting S-206 Cigna Mezzanine Partners III, L.P., CIG & Co. as beneficial owner (with CIG c/o CIGNA Investments, Inc. & CO being registered owner) 900 Cottage Grove Road Hartford, CT 06152-2206 ATTN: Securities Accounting S-206 EX-27 3
5 1,000 9-MOS DEC-31-1996 SEP-30-1997 36,490 0 0 0 0 36,509 2 0 38,020 752 0 0 0 26 35,212 38,020 0 0 0 2,923 0 0 0 (1,526) 0 0 0 0 0 (1,526) (0.58) (0.58)
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