Exhibit 10-a
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AGREEMENT AND PLAN OF MERGER
by and between
XXXXXX XXXXX XXXX
and
DETECTION SYSTEMS, INC.
dated as of
December 10, 2000
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 10, 2000, by
and between XXXXXX XXXXX XXXX, a limited liability company organized under
the laws of Germany ("Parent"), and DETECTION SYSTEMS, INC., a New York
corporation (the "Company"). Certain capitalized terms used in this
Agreement have the meanings ascribed to them in Article VIII.
WHEREAS, the Board of Directors of each of Parent and the
Company have approved, and deem it fair to, advisable and in the best
interests of their respective shareholders to consummate, the acquisition
of the Company by Parent and Purchaser upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that a wholly
owned Subsidiary of Parent to be organized under the laws of New York
("Purchaser") make a cash tender offer to acquire all shares of the issued
and outstanding common stock, $.05 par value, of the Company (the "Shares")
for $18 per share, net to the seller in cash, upon the terms and subject to
the conditions set forth herein;
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent and the Company have approved this Agreement
and the Merger (as herein defined) following the Offer (as herein defined)
pursuant to which Purchaser shall merge with and into the Company and
outstanding Shares shall be converted into the right to receive the Offer
Price (as herein defined) in cash, without interest, all in accordance with
the NYBCL (as herein defined) and upon the terms and subject to the
conditions set forth herein;
WHEREAS, the Board of Directors of the Company has determined
that the consideration to be paid for each Share in the Offer and the
Merger is fair to the holders of such Shares and has resolved to recommend
that the holders of such Shares tender their Shares pursuant to the Offer
and approve and adopt this Agreement and the Merger upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Company and Parent desire to make certain
representations, warranties, covenants and agreements in connection with
the Offer and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) As promptly as practicable (but in no event later
than 10 business days after the public announcement of the execution
hereof), Purchaser shall commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) a
tender offer (the "Offer") for all of the outstanding Shares at a price of
$18 per Share, net to the seller in cash (such price, or such higher price
per Share as may be paid in the Offer, being referred to herein as the
"Offer Price"), subject to the conditions set forth in Annex A hereto.
(b) The obligations of Purchaser to commence the Offer
and to accept for payment and to pay for any Shares validly tendered on or
prior to the expiration of the Offer and not withdrawn shall be subject
only to the conditions set forth in Annex A hereto. The Offer shall be made
by means of an offer to purchase (the "Offer to Purchase") containing the
terms set forth in this Agreement and the conditions set forth in Annex A
hereto.
(c) Purchaser expressly reserves the right to modify the
terms of the Offer; provided, that, without the Company's prior written
consent, Purchaser shall not decrease the Offer Price, change the form of
consideration to be paid in the Offer or decrease the number of Shares
sought or amend any other condition of the Offer in any manner adverse to
the holders of the Shares (other than with respect to insignificant changes
or amendments and subject to the penultimate sentence of this Section 1.1)
or impose additional conditions without the written consent of the Company;
provided further, however, that, if on the initial scheduled expiration
date of the Offer, which shall be 20 business days after the date that the
Offer is commenced, all conditions to the Offer shall not have been
satisfied or waived, Purchaser may, from time to time until such time as
all such conditions are satisfied or waived, in its sole discretion, extend
the expiration date. In addition, the Offer Price may be increased and the
Offer may be extended to the extent required by applicable Law in
connection with such increase, in each case without the consent of the
Company. Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment
and pay for Shares validly tendered as promptly as practicable; provided,
however, that if, as of the initial expiration date of the Offer, the
Shares validly tendered and not withdrawn pursuant to the Offer equal less
than 90% of the outstanding Shares, Purchaser may elect to provide a
subsequent offering period pursuant to Rule 14d-11 under the Exchange Act.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the
Offer and represents that the Board of Directors of the Company, at a
meeting duly called and held, has (i) determined that each of the
Agreement, the Offer and the Merger (as defined in Section 2.1) are fair to
and in the best interests of the shareholders of the Company, (ii) approved
this Agreement, the Offer, the acquisition of Shares pursuant to the Offer
and the Merger for purposes of Section 912 of the NYBCL (the "Section 912
Approval"), (iii) received the written opinion of the Company's financial
advisor, Fleet Securities, Inc., a New York corporation ("Fleet"), to the
effect that the Offer Price to be received by holders of Shares pursuant to
the Offer and the Merger Consideration (as defined herein) pursuant to the
Merger is fair to the shareholders of the Company from a financial point of
view, (iv) approved this Agreement and the transactions contemplated
hereby, including the Offer and the Merger (collectively, the
"Transactions") and (v) resolved to recommend that the shareholders of the
Company accept the Offer, tender their Shares thereunder to Purchaser and
approve and adopt this Agreement and the Merger. The Company has been
advised by each of its directors and by each executive officer who as of
the date hereof is actually aware of the Transactions that each such Person
currently intends to tender pursuant to the Offer all Shares owned by such
Person.
(b) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to Purchaser mailing labels,
security position listings and any available listings or computer files
containing the names and addresses of all holders of record of the Shares
as of a recent date, and shall furnish Purchaser with such additional
information (including, but not limited to, updated lists of holders of the
Shares and their addresses, mailing labels and lists of security positions)
and such assistance as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of the Shares.
Subject to the requirements of applicable Law, and except for such steps as
are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Merger, Purchaser and its affiliates and
associates shall hold in confidence the information contained in any such
labels, listings and files and all other information delivered pursuant to
this Section 1.2(b), will use such information only in connection with the
Offer and the Merger and, if this Agreement shall be terminated, will
deliver to the Company all copies, extracts or summaries of such
information in their possession or the possession of their agents.
Section 1.3 SEC Documents.
(a) On the date the Offer is commenced, Parent and
Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule TO in
accordance with the Exchange Act with respect to the Offer (together with
all amendments and supplements thereto and including the exhibits thereto,
the "Schedule TO"). The Schedule TO will include, as exhibits, the Offer to
Purchase and a form of letter of transmittal (collectively, together with
any amendments and supplements thereto, the "Offer Documents"). The Company
and its counsel shall be given a reasonable opportunity to review and
comment upon the Schedule TO and all amendments and supplements thereto
prior to their filing with the SEC or dissemination to shareholders of the
Company. Concurrently with the filing of the Schedule TO by Parent and
Purchaser, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 in accordance with the Exchange Act (together
with all amendments and supplements thereto and including the exhibits
thereto, the "Schedule 14D-9"), which shall, except as otherwise provided
herein, contain the recommendation referred to in clause (v) of Section
1.2(a) hereof, and the Company shall also file therewith the information
required to be distributed to the shareholders of the Company pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as
is necessary to enable Parent's designees to be elected to the Company's
Board of Directors pursuant to Section 1.4 hereof
(b) Parent and Purchaser will take all steps necessary to
ensure that the Offer Documents, and the Company will take all steps
necessary to ensure that the Schedule 14D-9 and the information required to
be distributed to the shareholders of the Company pursuant to Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder as is necessary
to enable Parent's designees to be elected to the Company's Board of
Directors pursuant to Section 1.4 hereof, will comply in all material
respects with the provisions of applicable federal and state securities
Laws. Each of Parent and Purchaser will take all steps necessary to cause
the Offer Documents, and the Company will take all steps necessary to cause
the Schedule 14D-9 and the information required to be distributed to the
shareholders of the Company pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder as is necessary to enable Parent's
designees to be elected to the Company's Board of Directors pursuant to
Section 1.4 hereof, to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by
applicable federal and state securities Laws and Parent or Purchaser will
supply the Company any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f)
and Rule 14f-1. Each of Parent and Purchaser, on the one hand, and the
Company, on the other hand, will promptly correct any information provided
by it for use in the Offer Documents and the Schedule 14D-9 if and to the
extent that it shall have become false and misleading in any material
respect and Purchaser will take all steps necessary to cause the Offer
Documents, and the Company will take all steps necessary to cause the
Schedule 14D-9, as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal and state securities Laws. Parent and its
counsel shall be given a reasonable opportunity to review and comment upon
the Schedule 14D-9 and all amendments and supplements thereto and the
information required to be distributed to the shareholders of the Company
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder prior to their filing with the SEC or dissemination to
shareholders of the Company. The Company agrees to provide Parent and its
counsel with copies of any written comments that the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and each of Parent and
Purchaser agrees to provide the Company and its counsel with copies of any
written comments that Parent, Purchaser or their counsel may receive from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments.
Section 1.4 Directors.
(a) Promptly after the purchase of and payment for any
Shares by Purchaser or any of its affiliates as a result of which Purchaser
and its affiliates own beneficially at least a majority of then outstanding
Shares, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company's Board of Directors as
is equal to the product of the total number of directors on such Board
(giving effect to the increase in the size of such Board pursuant to this
Section 1.4) multiplied by the percentage that the number of Shares
beneficially owned by Purchaser (including Shares so accepted for payment)
bears to the total number of Shares then outstanding. In furtherance
thereof, the Company shall, upon request of Parent, promptly either (at the
election of the Company) increase the size of its Board of Directors or use
its best efforts to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to
be so elected or appointed to the Company's Board of Directors, and the
Company shall take all actions available to the Company to cause such
designees of Parent to be so elected or appointed. At such time, the
Company shall also take all action necessary to cause Persons designated by
Parent to constitute at least the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of (i) each
committee of the Company's Board of Directors, (ii) each board of directors
(or similar body) of each Subsidiary of the Company and (iii) each
committee (or similar body) of each such board.
(b) Notwithstanding the provisions of this Section 1.4,
the parties hereto shall use their respective reasonable best efforts to
ensure that at least two of the members of the Board shall, at all times
prior to the Effective Time (as defined in Section 2.2 hereof) be,
Continuing Directors. From and after the time, if any, that Parent's
designees constitute a majority of the Company's Board of Directors, any
amendment or modification of this Agreement, any amendment to the Company's
Certificate of Incorporation or By-Laws inconsistent with this Agreement,
any termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or Purchaser hereunder
(except as permitted under Section 1.1(c) hereof), any waiver of any
condition to the Company's obligations hereunder or any of the Company's
rights hereunder or other action by the Company hereunder may be effected
only by the action of a majority of the Continuing Directors of the
Company, which action shall be deemed to constitute the action of any
committee specifically designated by the Board of Directors of the Company
to approve the actions contemplated hereby and the Transactions and the
full Board of Directors of the Company. The provisions of this Section 1.4
are in addition to and shall not limit any rights which Purchaser, Parent
or any of their affiliates may have as a holder or beneficial owner of
Shares as a matter of applicable Law with respect to the election of
directors or otherwise.
ARTICLE II
THE MERGER
Section 2.1 The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, and in accordance with the NYBCL, at the
Effective Time (as defined in Section 2.2 hereof), the Company and
Purchaser shall consummate a merger (the "Merger") pursuant to which (x)
Purchaser shall be merged with and into the Company and the separate
corporate existence of Purchaser shall thereupon cease and (y) the Company
shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be
governed by the Laws of the State of New York.
(b) Pursuant to the Merger, at the Effective Time, the
Certificate of Incorporation and By-Laws of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and by-laws of the Surviving Corporation, each until
thereafter changed or amended as provided therein and by the NYBCL, except
that the name shall be changed to "Detection Systems, Inc.".
(c) The directors of Purchaser at the Effective Time
shall be the initial directors of the Surviving Corporation until their
respective successors are duly elected and qualified or until their earlier
death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws. The officers of the
Company at the Effective Time shall be the initial officers of the
Surviving Corporation until their respective successors are duly elected
and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation
and by-laws.
(d) The Merger shall have the effects specified in the
applicable provisions of the NYBCL.
Section 2.2 Effective Time. Subject to the terms and conditions
of this Agreement, Parent, Purchaser and the Company will cause a
certificate of merger or, if applicable, a certificate of ownership and
merger (as applicable, the "Certificate of Merger"), to be executed and
filed on the date of the Closing (as defined in Section 2.3) (or on such
other date as Parent and the Company may agree) with the department of
state of the State of New York (the "Department of State") as provided in
the NYBCL. The Merger shall become effective on the date on which the
Certificate of Merger has been duly filed with the Department of State or
such time as is agreed upon by the parties and specified in the Certificate
of Merger, and such time is hereinafter referred to as the "Effective
Time."
Section 2.3 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., local time, on a date to be specified by
the parties, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Article VI
hereof (the "Closing Date"), at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, unless
another date or place is agreed to in writing by the parties hereto.
Section 2.4 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holders of any Shares or any shares of capital stock of Purchaser:
(a) Purchaser Capital Stock. Each issued and outstanding
share of common stock of Purchaser shall be converted into and become one
fully paid and nonassessable share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Purchaser-Owned
Stock. All Shares that are owned by the Company or any Subsidiary of the
Company and any Shares owned by Parent, Purchaser or any Subsidiary of
Parent or Purchaser shall be cancelled and retired and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 2.4(b)) shall
be converted into the right to receive the Offer Price in cash, without
interest (the "Merger Consideration"). All such Shares, when so converted,
shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon
the surrender of such certificate in accordance with Section 2.5, without
interest.
Section 2.5 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent
shall designate a bank, trust company or other Person, reasonably
acceptable to the Company, to act as agent for the holders of the Shares in
connection with the Merger (the "Paying Agent") to receive the funds to
which holders of the Shares shall become entitled pursuant to Section
2.4(c). At the Closing, Parent shall deliver to the Paying Agent funds in
an amount necessary for the payment of the Merger Consideration as provided
herein. All interest earned on such funds shall be paid to Parent.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Parent shall cause the Paying Agent
to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates") whose Shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.4, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form not inconsistent
with this Agreement as Parent may specify) and (ii) instructions for use in
surrendering the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Paying Agent,
Parent shall cause the Paying Agent to pay to the holder of such
Certificate the Merger Consideration, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a surrender of a Certificate
representing Shares which are not registered in the transfer records of the
Company under the name of the Person surrendering such Certificate, payment
may be made to a Person other than the Person in whose name the Certificate
so surrendered is registered if such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the Person requesting such
payment shall pay any transfer or other Taxes required by reason of payment
to a Person other than the registered holder of such Certificate or
establish to the satisfaction of the Paying Agent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this
Section 2.5, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the Merger Consideration which the holder thereof has the right to receive
in respect of such Certificate pursuant to the provisions of this Article
II. No interest shall be paid or will accrue on the Merger Consideration
payable to holders of Certificates pursuant to the provisions of this
Article II.
(c) Transfer Books; No Further Ownership Rights in
Shares. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the
Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided
for herein or by applicable Law. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time
following six months after the Effective Time, the Surviving Corporation
shall be entitled to require the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) which had been made
available to the Paying Agent and which have not been disbursed to holders
of Certificates, and thereafter such holders shall be entitled to look to
the Surviving Corporation and Parent (subject to abandoned property,
escheat or other similar Laws) only as general creditors thereof with
respect to the Merger Consideration payable upon due surrender of their
Certificates, without any interest thereon. Notwithstanding the foregoing,
none of Parent, the Surviving Corporation or the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar Law.
(e) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such Person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent shall pay in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration pursuant to this
Agreement.
Section 2.6 Withholding Taxes. Parent and Purchaser shall be
entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the Offer Price or the Merger Consideration payable to a
holder of Shares pursuant to the Offer or the Merger any withholding and
stock transfer Taxes and such amounts as are required under the Code, or
any applicable provision of state, local or foreign Tax law. To the extent
that amounts are so withheld by Parent or Purchaser, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the holder of the Shares in respect of which such deduction and withholding
was made by Parent or Purchaser.
Section 2.7. Stock Options. (a) At or immediately prior to the
Effective Time, each then outstanding option and warrant to purchase any
shares of capital stock of the Company (in each case, an "Option") shall be
cancelled by the Company. In consideration of such cancellation of Options
with an exercise price of less than the Offer Price, the Company (or, at
Parent's option, the Purchaser) shall pay to such holders of Options an
amount in respect thereof equal to the product of (A) the excess, if any,
of the Offer Price over the exercise price of each such Option and (B) the
number of Shares previously subject to the Option immediately prior to its
cancellation (such payment to be net of withholding taxes and without
interest).
(b) In connection with such cancellation, the Company
shall use its best efforts to obtain such consents from holders of Company
Options as are required pursuant to the plans (the "Option Plans") listed
in Schedule 3.3(c) of the disclosure schedule delivered by the Company to
Parent at or prior to the execution of this Agreement (the "Disclosure
Schedule"). The Company shall take all other actions necessary and
appropriate so that all stock option, other equity based plans or deferred
compensation plans maintained with respect to the Shares, including,
without limitation, the Option Plans, shall terminate as of the Effective
Time (except for the payments to be made out of the cash assets remaining
in the deferred compensation plans (including interest thereon) to be paid
to the participants, at the option of the Company, either (i) in a lump sum
upon termination of the plans or (ii) one-third in each of January 2002,
January 2003 and January 2004) and the provisions in any other Benefit Plan
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company
shall be deleted as of the Effective Time, and the Company shall use its
best efforts to ensure that following the Effective Time no holder of an
Option or any participant in any Option Plan or other Benefit Plan shall
have any right thereunder to acquire any capital stock of the Company,
Parent, Purchaser or the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization, Standing and Corporate Power. Each of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction in which
it is organized and has the requisite corporate power and authority to
carry on its business as it is now being conducted. Each of the Company and
its Subsidiaries is duly qualified as a foreign corporation or licensed to
do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a Material Adverse Effect on the Company. The
Company has made available to Parent complete and correct copies of the
Certificate of Incorporation and By-Laws of the Company, in each case as
amended to the date of this Agreement.
Section 3.2 Subsidiaries. (a) Schedule 3.2(a) of the Disclosure
Schedule includes the names, jurisdictions of incorporation and
capitalization of all of the Subsidiaries of the Company. All the
outstanding shares of capital stock of, or other equity interests in, each
Subsidiary of the Company have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all Liens and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests).
(b) The Company does not directly or indirectly
beneficially own any securities or other beneficial ownership interests in
any other entity (including through joint ventures or partnership
arrangements) other than (i) the Subsidiaries of the Company or (ii) as
disclosed on Schedule 3.2(b) of the Disclosure Schedule.
Section 3.3 Capital Structure. The authorized capital stock of
the Company consists of 24,000,000 Shares. As of the date hereof, (i)
6,726,615 Shares were issued and outstanding, (ii) 502,685 Shares were
reserved for issuance upon exercise of outstanding Options, and (iii)
200,108 Shares were issued and are held in the Company's treasury. Except
as set forth above or on Schedule 3.3(a) of the Disclosure Schedule, as of
the date of this Agreement: (i) no shares of capital stock or other voting
securities of the Company are issued, reserved for issuance or outstanding;
(ii) there are no stock appreciation rights, phantom stock units,
restricted stock grants, contingent stock grants or Benefit Plans which
grant awards of any of the foregoing, and there are no other outstanding
contractual rights to which the Company is a party the value of which is
based on the value of Shares; (iii) all outstanding shares of capital stock
of the Company are, and all Shares which may be issued will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights; and (iv) there are no bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may vote. Except as set
forth above or in Schedule 3.3(b) of the Disclosure Schedule, as of the
date of this Agreement, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its Subsidiaries is
a party or by which any of them is bound obligating the Company or any of
its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding contractual
obligations of the Company or any of its Subsidiaries, to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or
any of its Subsidiaries. Schedule 3.3(c) of the Disclosure Schedule
accurately sets forth information regarding the current exercise price,
date of grant and number of outstanding Options for each holder of Options
pursuant to any Company Option Plan. Following the Effective Time, no
holder of Options will have any right to receive shares of common stock of
the Surviving Corporation upon exercise of Options.
Section 3.4 Authority; Noncontravention; Company Action. The
Company has the requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement by the holders of a
majority of the outstanding Shares, to consummate the Merger contemplated
by this Agreement. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate action on
the part of the Company, subject to approval of this Agreement by the
holders of a majority of the outstanding Shares. This Agreement has been
duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and Purchaser,
constitutes the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. Except as set forth on Schedule 3.4 of the Disclosure Schedule,
the execution, delivery and performance of this Agreement do not, and the
consummation of the Transactions (including the changes in the composition
of the Board of Directors of the Company) and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries under, or result in the termination of, or require
that any consent be obtained or any notice be given with respect to, (i)
the Certificate of Incorporation or By-Laws of the Company or the
comparable charter or organizational documents of any of its Subsidiaries,
(ii) any loan or credit agreement note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or Permit applicable to the Company
or any of its Subsidiaries or their respective properties or assets or
(iii) any Law applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rights, Liens, losses of a
material benefit, consents or notices that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity or
any other Person, is required by the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company
or the consummation by the Company of the Transactions, except for (i) the
filings, permits, authorizations, consents and approvals set forth in
Schedule 3.4 of the Disclosure Schedule, or as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, the
HSR Act, any applicable state securities or "blue sky" Laws and the NYBCL,
and (ii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained
or made would not, individually or in the aggregate, (x) impair, in any
material respect, the ability of the Company to perform its obligations
under this Agreement, (y) prevent or significantly delay the consummation
of the Transactions or (z) have a Material Adverse Effect on the Company
and its Subsidiaries, taken as a whole. The Board of Directors of the
Company has taken all appropriate action to approve pursuant to Section
912(c)(1) of the NYBCL this Agreement and any other agreement contemplated
hereby and the consummation of the Transactions.
Section 3.5 SEC Documents; Financial Statements. The Company
has filed all SEC Documents required to be filed by it since April 1, 1999
(the "Company's SEC Documents"). As of their respective dates, (i) the
Company's SEC Documents complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder
applicable to such documents, and (ii) none of the Company's SEC Documents
contained at the time of their filing any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company's SEC Documents, as of
the dates of such documents, were true and complete and complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
("GAAP") in the United States applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 3.6 Schedule 14D-9; Offer Documents; Proxy Statement.
Neither the Schedule 14D-9, any other document required to be filed by the
Company with the SEC in connection with the Transactions, nor any
information supplied by the Company for inclusion in the Offer Documents
shall, at the respective times the Schedule 14D-9, any such other filings
by the Company, the Offer Documents or any amendments or supplements
thereto are filed with the SEC or are first published, sent or given to
shareholders of the Company, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will not, on the date the Proxy Statement
(including any amendment or supplement thereto) is first mailed to
shareholders of the Company, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading or shall, at the
time of the Special Meeting (as hereinafter defined) or at the Effective
Time, omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for
the Special Meeting which shall have become false or misleading in any
material respect. The Schedule 14D-9, any other document required to be
filed by the Company with the SEC in connection with the Transactions and
the Proxy Statement will, when filed by the Company with the SEC, comply as
to form in all material respects with the applicable provisions of the
Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to
the statements made in any of the foregoing documents based on and in
conformity with information supplied by or on behalf of Parent or Purchaser
in writing specifically for inclusion therein.
Section 3.7 Absence of Certain Changes or Events. Except as set
forth in the Company's SEC Documents or on Schedule 3.7 of the Disclosure
Schedule, since April 1, 2000, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course, and (i)
there has not been any Material Adverse Change in the Company and its
Subsidiaries, taken as a whole and (ii) neither the Company nor any of its
Subsidiaries has taken any of the actions prohibited by Section 5.1 or
otherwise acted in such a way as to impair, prevent or impede the
consummation of the Transactions.
Section 3.8 Litigation. Except as specifically set forth in the
Company's SEC Documents or on Schedule 3.8 of the Disclosure Schedule,
there are (i) no suits, actions or proceedings pending or, to the Knowledge
of the Company, threatened against the Company or any of its Subsidiaries,
(ii) no complaints, lawsuits, charges or other proceedings pending or, to
the Knowledge of the Company, threatened in any forum by or on behalf of
any present or former employee of the Company or any of its Subsidiaries,
any applicant for employment or classes of the foregoing alleging breach of
any express or implied contract of employment, any applicable Law governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship that,
individually or in the aggregate, could have a Material Adverse Effect on
the Company, (iii) no judgments, decrees, injunctions or orders of any
Governmental Entity or arbitrator outstanding against the Company or any of
its Subsidiaries, and (iv) no orders, writs, judgments, injunctions,
decrees, determinations or awards applicable to the Trademarks or the Other
Intellectual Property.
Section 3.9 Absence of Changes in Benefit Plans; SEC
Disclosure. Except as disclosed on Schedule 3.9 of the Disclosure Schedule:
(i) there has not been any adoption or amendment by the Company or any of
its Subsidiaries or any ERISA Affiliate (as defined in Section 3.10 hereof)
of any Benefit Plan (as defined in Section 3.10 hereof) since April 1,
2000; and (ii) neither the Company nor any of its Subsidiaries or any ERISA
affiliate has any formal plan or commitment to create any additional
Benefit Plan or modify or change any existing Benefit Plan that would
affect any employee or terminated employee of the Company or any Company
Subsidiary. All employment, consulting, severance, termination, change in
control or indemnification agreements, arrangements or understandings
between the Company or any of its Subsidiaries and any current or former
officer or director of the Company or any of its Subsidiaries which are
required to be disclosed in the Company's SEC Documents have been disclosed
therein.
Section 3.10 Employee Benefits; ERISA. (a) Schedule 3.10(a) of
the Disclosure Schedule contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock
option, employment, severance or termination pay, health insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement
plan, program and domestic agreement or arrangement, and each other
employee benefit plan, program and domestic agreement or arrangement, other
than a non-material fringe benefit plan, sponsored, maintained or
contributed to or required to be contributed to (at any time during the
past six years) by the Company or any of its Subsidiaries or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that is a
member of a "controlled group" within the meaning of section 4001 of the
Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder ("ERISA") of which the Company or a
Subsidiary is a member or which is under "common control" within the
meaning of Section 4001 of ERISA, with the Company or a Subsidiary, for the
benefit of any employee or former employee of the Company, its Subsidiaries
or any ERISA Affiliate (or, with respect to employment agreements and
arrangements, any domestic employee thereof), whether formal or informal
(the "Benefit Plans").
(b) With respect to each Benefit Plan, the Company has
made available a true and complete copy thereof (including all amendments
thereto), as well as true and complete copies of the two most recent annual
reports, if required under ERISA, with respect thereto; the two most recent
actuarial reports, if required under ERISA, with respect thereto; the two
most recent reports prepared with respect thereto in accordance with
Statement of Financial Accounting Standards No. 87, Employer's Accounting
for Pensions; the most recent Summary Plan Description, together with each
Summary of Material Modifications, if required under ERISA with respect
thereto; if the Benefit Plan is funded through a trust or any third party
funding vehicle, the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof; and the
most recent determination letter received from the Internal Revenue Service
with respect to each Benefit Plan that is intended to be qualified under
section 401 of the Code.
(c) No liability to the Pension Benefit Guaranty
Corporation ("PBGC") under Title IV of ERISA has been incurred by the
Company, its Subsidiaries or any ERISA Affiliate since the effective date
of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, its Subsidiaries or any ERISA
Affiliate of incurring a liability under such Title, other than liability
for premiums due the PBGC (which premiums have been paid when due). Each
Benefit Plan has been operated and administered in all material respects in
accordance with its terms and applicable Law, including but not limited to
ERISA and the Code.
(d) The PBGC has not instituted proceedings to terminate
any Benefit Plan and no condition exists that presents a material risk that
such proceedings will be instituted.
(e) No Benefit Plan is subject to Section 302 or Title IV
of ERISA.
(f) Neither the Company, nor any Subsidiary of the
Company, nor any trust created thereunder, nor, to the Knowledge of the
Company, any trustee or administrator thereof has engaged in a transaction
in connection with which the Company or any Subsidiary of the Company, any
such trust, or any trustee or administrator thereof, or any party dealing
with any Benefit Plan or any such trust could be subject to either a
material civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a material tax imposed pursuant to section 4975 or 4976 of the Code.
(g) All employee Benefit Plans that are subject to the
laws of any jurisdiction outside the United States are in material
compliance with such applicable laws, including relevant tax laws, and the
requirements of any trust deed under which they are established, and all
required contributions thereto have been made or have been accrued in the
Company's financial statements.
(h) Each Benefit Plan which is intended to be "qualified"
within the meaning of section 401(a) of the Code is so qualified and the
trusts maintained thereunder are exempt from taxation under section 501(a)
of the Code and no event has occurred to cause the loss of such qualified
or exempt status.
(i) Except as set forth in Schedule 3.10(i) of the
Disclosure Schedule, no Benefit Plan provides health, death or medical
benefits (whether or not insured) with respect to current or former
employees of the Company or its Subsidiaries beyond their retirement or
other termination of service (other than (a) coverage mandated by
applicable Law or (b) benefits the full cost of which is borne by the
current or former employee (or his beneficiary)).
(j) There are no pending, anticipated or, to the
Knowledge of the Company, threatened claims by or on behalf of any Benefit
Plan, by any employee or beneficiary covered under any such Benefit Plan,
or otherwise involving any such Benefit Plan (other than routine claims for
benefits).
Section 3.11 Taxes.
(a) Each of the Company and each of its Subsidiaries has duly
and timely filed (or has had duly and timely filed on its behalf) all Tax
Returns required to be filed by it, and all such Tax Returns are to the
Knowledge of the Company true, complete and correct. Each of the Company
and each of its Subsidiaries has paid (or has had paid on its behalf) all
Taxes due and owing by them and the most recent financial statements
contained in the Company's SEC Documents reflect adequate reserves in
accordance with generally accepted accounting principles for all Taxes
payable by the Company or its Subsidiaries for all taxable periods and
portions thereof through the date of such financial statements.
(b) Each of the Company and each of its Subsidiaries has
complied with all applicable Laws relating to the payment and withholding
of Taxes (including, without limitation, the withholding of Taxes pursuant
to Sections 1441 and 1442 of the Code or similar provisions under any
applicable foreign Laws) and have, within the time and in the manner
prescribed by applicable Laws, withheld from employee wages and paid over
to the proper Governmental Entity all amounts required to be so withheld
and paid over under all applicable Laws.
(c) Except as set forth on Schedule 3.11(c) of the Disclosure
Schedule, (i) no deficiencies for any Taxes have been threatened, proposed,
asserted or assessed (either in writing or orally) against the Company or
any of its Subsidiaries, (ii) no Governmental Entity is conducting or
proposing to conduct an audit with respect to Taxes or any Tax Returns of
the Company or any of its Subsidiaries, (iii) no extension or waiver of the
statute of limitations with respect to Taxes or any Tax Return has been
granted by the Company or any of its Subsidiaries, which remains in effect,
(iv) neither the Company nor any of its Subsidiaries is a party to any
agreement or arrangement to allocate, share or indemnify another party for
Taxes, (v) there are no Liens for Taxes upon the assets of the Company or
any of its Subsidiaries, except for Liens for Taxes not yet due, (vi) all
Tax deficiencies which have been claimed, proposed or asserted against the
Company or any of its Subsidiaries have been fully paid or finally settled,
and no issue has been raised in any examination by the Taxing Authority,
which by application of similar principles, could be expected to result in
the proposal or assertion of a Tax deficiency against the Company or any of
its Subsidiaries for another year not so examined, (vii) the Company has
filed, as a common parent corporation of an affiliated group (within the
meaning of Section 1504(a) of the Code) a consolidated return for federal
income tax purposes on behalf of such affiliated group and (viii) no power
of attorney has been granted by or with respect to the Company or any of
its Subsidiaries with respect to any matter relating to Taxes.
(d) Schedule 3.11(d) of the Disclosure Schedule sets forth the
taxable years of the Company or any of its Subsidiaries as to which the
respective statutes of limitations with respect to Taxes have not expired
and, with respect to such taxable years, those years for which examinations
have been completed, those years for which examinations are presently being
conducted, those years for which examinations have not been initiated and
those years for which required Returns have not yet been filed.
Section 3.12 Compliance with Applicable Laws.
Except as set forth on Schedule 3.12 of the Disclosure
Schedule:
(a) The Company and each of its Subsidiaries have complied and
are presently complying in all material respects with all applicable Laws,
and neither the Company nor any of its Subsidiaries has received
notification of any asserted present or past failure to so comply, except
such non-compliance that (i) has not and will not prevent the Company from
carrying on its business substantially as now conducted, or (ii) would not
be reasonably expected to (x) result in a Material Adverse Effect on the
Company or (y) materially impair the ability of the parties hereto to
consummate the Transactions.
(b) Each of the Company and its Subsidiaries has in effect, or
has timely filed applications for, all material Permits necessary for it to
own, lease or operate its properties and assets and to carry on its
business substantially as now conducted and there are no appeals nor any
other actions pending to revoke any such Permits, and there has occurred no
material default or violation under any such Permits.
(c) Each of the Company and its Subsidiaries is, and has been,
and each of the Company's former Subsidiaries, while a Subsidiary of the
Company, was in compliance in all material respects with all applicable
Environmental Laws, and there are no circumstances or conditions that would
be reasonably likely to prevent or interfere with compliance by the Company
or its Subsidiaries in the future with Environmental Laws (or Permits
issued thereunder).
(d) Neither the Company nor any Subsidiary of the Company has
received any written claim, demand, notice, complaint, court order,
administrative order or request for information from any Governmental
Entity or private party, alleging violation of, or asserting any
noncompliance with or liability under or potential liability under, any
Environmental Laws, except for matters which are no longer threatened or
pending or for which the Company or its Subsidiaries are not subject to
further requirements pursuant to an administrative or court order, judgment
or settlement agreement.
(e) During the period of ownership or operation by the Company
and its Subsidiaries of any of their respective current or previously owned
or leased properties, there have been no Releases of Hazardous Material in,
on, under or affecting such properties and none of the Company or its
Subsidiaries have disposed of any Hazardous Material or any other substance
either on said owned or leased properties or at other properties, in a
manner that has led, or could reasonably be anticipated to lead, to a
Release. Prior to the period of ownership or operation by the Company and
its Subsidiaries of any of their respective current or previously owned or
leased properties, to the Knowledge of the Company, no Hazardous Material
was disposed of at such current or previously owned or leased properties,
and there were no Releases of Hazardous Material in, on, under or affecting
any such property.
(f) Neither the Company nor any of its Subsidiaries has entered
into any agreement that may require it to pay to, reimburse, guarantee,
pledge, defend, indemnify, or hold harmless any Person for or against any
Environmental Liabilities and Costs.
(g) The Company has made available to Parent true and correct
copies of all environmental studies and reports in its possession or in the
possession of its representatives, agents or consultants, prepared within
the last five years, relating to (i) the Company's and its Subsidiaries'
compliance with Environmental Laws; (ii) the environmental condition of the
Company's and its Subsidiaries' currently owned or leased properties,
including, but not limited to, the extent of any on-site contamination at
any of such properties, results of investigations at such properties,
remedial action plans for such properties, and asbestos surveys; and (iii)
the environmental condition of any properties formerly owned or operated by
the Company or any of its Subsidiaries, or of any other location at which
the Company or any of its Subsidiaries is subject to an environmental
claim, including, but not limited to, the extent of any on-site
contamination at any such properties, results of investigations at such
properties and remedial action plans at such properties.
Section 3.13 Intellectual Property. The Company and its
Subsidiaries own or are validly licensed, or otherwise possess legally
enforceable rights, to use the Trademarks and Other Intellectual Property
and the consummation of the Transactions will not alter or impair such
ability in any respect. The Company and its Subsidiaries are the sole and
exclusive owners of the Trademarks and Other Intellectual Property, free
and clear of all Liens and free of all licenses except those set forth on
Schedule 3.13(a) of the Disclosure Schedule. There are no oppositions,
cancellations, invalidity proceedings, interferences or re-examination
proceedings presently pending with respect to the Trademarks and Other
Intellectual Property. The conduct of the business of the Company and its
Subsidiaries and the Trademarks and Other Intellectual Property do not
infringe any rights of any Person, and, except as set forth on Schedule
3.13(b) of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries has received any written notice from any other Person
pertaining to or challenging the right of the Company or any of its
Subsidiaries to use any of the Trademarks or Other Intellectual Property.
To the Company's Knowledge, no third party is infringing upon any of the
Trademarks or Other Intellectual Property. Neither the Company nor any of
its Subsidiaries has made any claim of a violation or infringement by
others of its rights to or in connection with the Trademarks and Other
Intellectual Property which is still pending.
Section 3.14 Properties. Each of the Company and each of its
Subsidiaries has sufficiently good and valid title to, or an adequate
leasehold interest in, its material properties and assets (including the
Real Property) in order to allow it to conduct, and continue to conduct,
its business as currently conducted in all material respects. Except as set
forth on Schedule 3.14 of the Disclosure Schedule: (i) such material
tangible properties and assets (including the Real Property) are
sufficiently free of Liens to allow the Company and each of its
Subsidiaries to conduct, and continue to conduct, its business as currently
conducted in all material respects and the consummation of the Transactions
will not alter or impair such ability in any material respect; and (ii) the
Company and/or its Subsidiaries have good, valid, marketable and fee simple
title to all the Fee Property, free and clear of all Liens.
Section 3.15 Contracts.Except as set forth in the Company's SEC
Documents or Schedule 3.15(a) of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries is a party to or bound by (i) any
"material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC), (ii) any voting or other agreement governing
how any Shares shall be voted, (iii) any material agreement with any
shareholders of the Company, (iv) any acquisition, merger, asset purchase
or sale agreement or (v) any contract or other agreement which would
prohibit or materially delay the consummation of the Merger or any of the
Transactions (all contracts of the type described in clauses (i) - (v)
being referred to herein as "Company Material Contracts"). Each Company
Material Contract is valid and binding on the Company (or, to the extent a
Subsidiary of the Company is a party, such Subsidiary) and is in full force
and effect, and the Company and each Subsidiary of the Company have, in all
material respects, performed all obligations required to be performed by
them to date under each Company Material Contract, except where such
noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Neither the Company nor any Subsidiary of
the Company knows of, or has received notice of, any violation or default
under (nor, to the Knowledge of the Company, does there exist any condition
which with the passage of time or the giving of notice or both would result
in such a violation or default under) any Company Material Contract.
(b) Except as disclosed in the Company's SEC Documents or on
Schedule 3.15(b) of the Disclosure Schedule or as provided for in this
Agreement, neither the Company nor any of its Subsidiaries is a party to
any oral or written (i) employment or consulting agreements not terminable
on thirty (30) days' or less notice, (ii) union or collective bargaining
agreement, or (iii) agreement with any executive officer or other key
employee of the Company or any of its Subsidiaries the benefits of which
are contingent or vest, or the terms of which are materially altered, upon
the occurrence of a transaction involving the Company or any of its
Subsidiaries of the nature contemplated by this Agreement.
Section 3.16 Labor Relations. Except to the extent set forth in
the Company's SEC Documents or Schedule 3.16 of the Disclosure Schedule,
(i) the Company and each of its Subsidiaries is in material compliance with
all applicable Laws respecting employment and employment practices, terms
and conditions of employment, employment of aliens in the United States,
wages, hours of work and occupational safety and health, and is not engaged
in any unfair labor practices as defined in the National Labor Relations
Act or other applicable Law; (ii) there is no labor strike, slowdown,
stoppage or lockout actually pending, or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries.
Section 3.17 Voting Requirements. The affirmative vote of the
holders of a majority of all the Shares entitled to vote approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the
Transactions.
Section 3.18 Brokers. No broker, investment banker, financial
advisor or other Person, other than Fleet, the fees and expenses of which
will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the Transactions based upon arrangements made by or on behalf of the
Company or any of its Affiliates. The Company has made available to Parent
true and correct copies of all agreements between the Company and Fleet,
including, without limitations, any fee arrangements.
Section 3.19 Opinion of Financial Advisor. The Company has
received the written opinion of Fleet, to the effect that, as of the date
of this Agreement, the consideration to be received in the Offer and the
Merger by the Company's shareholders is fair to the Company's shareholders
from a financial point of view, and a complete and correct signed copy of
such opinion has been, or promptly upon receipt thereof will be, delivered
to Parent. The Company has been authorized by Fleet to permit the inclusion
of such opinion in its entirety in the Offer Documents and the Schedule
14D-9 and the Proxy Statement, so long as such inclusion is in form and
substance reasonably satisfactory to Fleet.
Section 3.20 Sales in Germany. The Company and its Subsidiaries
did not derive revenues in excess of DM 3 million from sales in Germany
during the Company's fiscal year ended March 31, 2000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows, provided that the representations and warranties by and with
respect to Purchaser shall apply only from and after the time Purchaser is
formed pursuant to Section 5.10 hereof:
Section 4.1 Organization, Standing and Corporate Power. Each of
Parent and Purchaser is a corporation duly organized, validly existing and
in good standing under the Laws of the jurisdiction in which each is
incorporated and has the requisite corporate power and authority to carry
on its business as now being conducted. Each of Parent and Purchaser is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not have a Material
Adverse Effect on Parent.
Section 4.2 Authority; Noncontravention. Parent and Purchaser
have the requisite corporate power and authority to enter into this
Agreement and to consummate the Transactions. The execution and delivery of
this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the Transactions have been duly authorized by all necessary
corporate action on the part of Parent and Purchaser, as applicable. This
Agreement has been duly executed and delivered by Parent and Purchaser and,
assuming this Agreement constitutes the valid and binding obligation of the
Company, constitutes a valid and binding obligation of each such party,
enforceable against each such party in accordance with its terms, except
that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought. The execution and delivery of this Agreement do not, and the
consummation of the Transactions will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result in the
creation of any lien upon any of the properties or assets of Parent under,
(i) the certificate of incorporation or by-laws of Parent or Purchaser,
(ii) any loan or credit agreement note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or Permit applicable to the Company
or any of its Subsidiaries or their respective properties or assets, or
(iii) any Law applicable to Parent or Purchaser or their respective
properties or assets, other than, with respect to clauses (ii) and (iii),
any such conflicts, violations, defaults, rights or Liens that individually
or in the aggregate would not (x) impair in any material respect the
ability of Parent and Purchaser to perform their respective obligations
under this Agreement or (y) prevent or impede the consummation of any of
the Transactions. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any
other Person is required by Parent or Purchaser in connection with the
execution and delivery of this Agreement or the consummation by Parent or
Purchaser, as the case may be, of any of the Transactions, except for (i)
the filings, permits, authorizations, consents and approvals set forth in
Schedule 4.2 of the disclosure schedule delivered by Parent to the Company
at or prior to the execution of this Agreement, or as may be required
under, and other applicable requirements of, the Securities Act, the
Exchange Act, the HSR Act, any applicable state securities or "blue sky"
Laws and the NYBCL, and (ii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the aggregate,
prevent the consummation of or materially impair the ability of Parent or
Purchaser to consummate the Transactions.
Section 4.3 Proxy Statement; Offer Documents. The Offer
Documents and any other documents to be filed by Parent with the SEC or any
other Government Entity in connection with the Merger and the other
Transactions will (in the case of the Offer Documents and any such other
documents filed with the SEC under the Securities Act or the Exchange Act)
comply as to form in all material respects with applicable provisions of
the Exchange Act and the Securities Act, respectively, and the rules and
regulations thereunder. None of the Offer Documents, any other documents
required to be filed by Parent or Purchaser with the SEC in connection with
the Transactions, nor any information supplied by Parent or Purchaser for
inclusion in the Schedule 14D-9 or in the information required to be
distributed to the shareholders of the Company pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder as is necessary to
enable Parent's designees to be elected to the Company's Board of Directors
pursuant to Section 1.4 hereof shall, at the respective times the Offer
Documents or any amendments and supplements thereto, any such other filings
by Parent or Purchaser are filed with SEC or are first published, sent or
given to shareholders of the Company, as the case may be, or, in the case
of the Proxy Statement, on the date the Proxy Statement is first mailed to
shareholders of the Company, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading or shall, at the
time of the Special Meeting (as defined in Section 5.3) or at the Effective
Time, omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for
the Special Meeting which shall have become false or misleading in any
material respect. Notwithstanding the foregoing, neither Parent nor
Purchaser makes any representation or warranty with respect to the
statements made in any of the foregoing documents based on and in
conformity with information supplied by or on behalf of the Company in
writing specifically for inclusion therein.
Section 4.4 Operations of Purchaser. Purchaser is a wholly
owned Subsidiary of Parent and was formed solely for the purpose of
engaging in the Transactions and has not engaged in any business activities
or conducted any operations other than in connection with the Transactions.
Section 4.5 Brokers. No broker, investment banker, financial
advisor or other Person, other than Xxxxxxx and X. Xxxxxxxxxxxx, Inc., the
fees and expenses of which will be paid by Parent or Purchaser, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made
by or on behalf of Parent, Purchaser or any of their Affiliates.
Section 4.6 Sufficient Funds. Either Parent or Purchaser has
available sufficient funds to purchase all of the Shares outstanding on a
fully diluted basis at the Offer Price and to pay all fees and expenses
related to the Transactions.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. After the date
hereof and prior to the time the designees of Parent have been elected or
appointed to, and shall constitute a majority of, the Board of Directors of
the Company pursuant to Section 1.4 or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1, and except (i) as
expressly contemplated by this Agreement, (ii) as set forth on Schedule 5.1
of the Disclosure Schedule or (iii) as agreed in writing by Parent:
(a) the Company shall and shall cause its Subsidiaries to
carry on their respective businesses in the ordinary course;
(b) neither the Company nor any of its Subsidiaries shall,
directly or indirectly, amend its certificate of incorporation or by-laws
or similar organizational documents;
(c) Representatives of the Company and its Subsidiaries
shall confer at such times as Parent may reasonably request with one or
more Representatives of Parent to report material operational matters and
the general status of ongoing operations;
(d) neither the Company nor any of its Subsidiaries
shall: (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to the Company's capital
stock or that of its Subsidiaries, except that a wholly-owned Subsidiary of
the Company may declare and pay a dividend or make advances to its parent
or the Company or (B) redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock or that of its Subsidiaries;
(ii) issue, sell, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its Subsidiaries, other than Shares
issued upon the exercise of Options outstanding on the date hereof in
accordance with the Option Plans as in effect on the date hereof; or (iii)
split, combine or reclassify the outstanding capital stock of the Company
or of any of the Subsidiaries of the Company;
(e) except as permitted by this Agreement, neither the
Company nor any of its Subsidiaries shall acquire or agree to acquire (A)
by merging or consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof (including entities which are Subsidiaries of the Company
or any of the Company's Subsidiaries) or (B) any assets, including real
estate, except purchases in the ordinary course of business consistent with
past practice;
(f) neither the Company nor any of its Subsidiaries
shall, except in the ordinary course of business and except as otherwise
permitted by this Agreement, amend or terminate any Company Material
Contract where such amendment or termination would have a Material Adverse
Affect on the Company, or waive, release or assign any material rights or
claims;
(g) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of or encumber
any property or assets other than in the ordinary course of business and
consistent with past practice;
(h) neither the Company nor any of its Subsidiaries
shall: (A) enter into any employment or severance agreement with or grant
any severance or termination pay to any officer, director or key employee
of the Company or any its Subsidiaries; or (B) hire or agree to hire any
new or additional executives or senior officers;
(i) neither the Company nor any of its Subsidiaries
shall, except in the ordinary course of business and except as required to
comply with applicable Law or contracts disclosed in the Company's SEC
Documents or otherwise disclosed to Parent or expressly provided in this
Agreement, (A) adopt, enter into, terminate, amend or increase the amount
or accelerate the payment or vesting of any benefit or award or amount
payable under any Benefit Plan or other arrangement for the current or
future benefit or welfare of any director, officer or current or former
employee, except to the extent necessary to coordinate any such Benefit
Plans with the terms of this Agreement, (B) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee, (C) pay any benefit not provided for under any Benefit
Plan, (D) grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of existing
restrictions in any Benefit Plans or agreements or awards made thereunder);
(j) neither the Company nor any of its Subsidiaries
shall: (A) incur or assume any long-term debt, or except in the ordinary
course of business, incur or assume any short-term indebtedness in amounts
not consistent with past practice; (B) materially increase its bank debt;
(C) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person, except in the ordinary course of business and consistent with
past practice; (D) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly owned Subsidiaries
of the Company or customary loans or advances to employees in the ordinary
course of business and consistent with past practice); or (E) enter into
any material commitment or transaction except in the ordinary course of
business consistent with past practice;
(k) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP;
(l) neither the Company nor any of its Subsidiaries shall
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the consolidated financial statements (or
the notes thereto) of the Company and its consolidated Subsidiaries; or,
except in the ordinary course of business consistent with past practice,
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any of its Subsidiaries is a party;
(m) neither the Company nor any of its Subsidiaries will
enter into an agreement, contract, commitment or arrangement to do any of
the foregoing, or to authorize, recommend, propose or announce an intention
to do any of the foregoing; and
(n) neither the Company nor any of its Subsidiaries shall
take any action that would result in (i) any of its representations and
warranties set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are
not so qualified becoming untrue in any material respect or (iii) any of
the conditions to the Offer set forth in Annex A not being satisfied
(subject to the Company's right to take action specifically permitted by
Section 5.5).
Section 5.2 Access; Confidentiality. The Company shall (and
shall cause each of its Subsidiaries to) afford to the Representatives of
Parent reasonable access on reasonable prior notice during normal business
hours, throughout the period prior to the earlier of the Effective Time or
the termination of this Agreement, to all of its properties, offices,
employees, contracts, commitments, books and records (including but not
limited to Tax Returns) and any report, schedule or other document filed or
received by it pursuant to the requirements of federal or state securities
laws and shall (and shall cause each of its Subsidiaries to) furnish
promptly to Parent such additional financial and operating data and other
information as to its and its Subsidiaries' respective businesses and
properties as Parent may from time to time reasonably request. Parent and
Purchaser will make all reasonable efforts to minimize any disruption to
the businesses of the Company and its Subsidiaries which may result from
the requests for data and information hereunder and pursuant to Section
5.1(d) hereof. Except as otherwise agreed to by the other party, Parent and
the Company will be bound by the terms of a letter agreement (the
"Confidentiality Agreement"), dated as of November 11, 2000 between Parent
and the Company.
Section 5.3. Special Meeting, Proxy Statement.
(a) If required by applicable Law in order to consummate
the Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable Law, its Certificate of Incorporation and
By-Laws:
(i) as promptly as practicable following the acceptance
for payment and purchase of Shares by Purchaser pursuant to the Offer
duly call, give notice of, convene and hold a special meeting of its
shareholders (the "Special Meeting") for the purposes of considering
and taking action upon the approval of the Merger and the approval
and adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and
(x) obtain and furnish the information required to be included by the
SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement,
including any amendment or supplement thereto (the "Proxy Statement")
to be mailed to its shareholders at the earliest practicable date;
provided that no amendment or supplement to the Proxy Statement will
be made by the Company without consultation with Parent and its
counsel and (y) use its reasonable best efforts to obtain the
necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) unless this Agreement has been terminated in
accordance with Article VII, subject to its rights pursuant to
Section 5.5, include in the Proxy Statement the recommendation of its
Board of Directors that shareholders of the Company vote in favor of
the approval of the Merger and the approval and adoption of this
Agreement.
(b) Parent shall vote, or cause to be voted, all of the
Shares then owned by it, Purchaser or any of its other Subsidiaries in
favor of the approval and adoption of this Agreement.
(c) Notwithstanding anything else herein or in this
Section 5.3, in the event that Parent, Purchaser and any other Subsidiaries
of Parent shall acquire in the aggregate a number of the outstanding shares
of each class of capital stock of the Company, pursuant to the Offer or
otherwise, sufficient to enable Purchaser or the Company to cause the
Merger to become effective under applicable Law without a meeting of
shareholders of the Company, the parties hereto shall, subject to Article
VI, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the consummation of such
acquisition, without a meeting of shareholders of the Company, in
accordance with Section 905 of the NYBCL.
Section 5.4 Reasonable Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, including
without limitation Section 5.5 hereto, each of the parties agrees to use
all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer and the
Merger, and the other Transactions, including (i) the preparation and
filing with the SEC of the Offer Documents, the Schedule 14D-9, the
information required to be distributed to the shareholders of the Company
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder as is necessary to enable Parent's designees to be elected to
the Company's Board or Directors pursuant to Section 1.4 hereof, the
preliminary Proxy Statement and the Proxy Statement and all necessary
amendments or supplements thereto; (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from any
Governmental Entity and the making of all necessary registrations and
filings (including filings with any Governmental Entity, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental
Entity, (iii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement
or the consummation of any of the Transactions, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (v) the execution and delivery
of any additional instruments necessary to consummate the Transactions and
to fully carry out the purposes of this Agreement.
(b) Each of the Company, Parent and Purchaser shall give
prompt notice to the other of (i) any of their representations or
warranties contained in this Agreement becoming untrue or inaccurate in any
respect (including receiving Knowledge of any fact, event or circumstance
which may cause any representation qualified as to Knowledge to be or
become untrue or inaccurate in any respect) or (ii) the failure by them to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by them under this Agreement;
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Section 5.5 No Solicitation. (a) The Company shall not, nor
shall it permit any of its Subsidiaries to, nor shall it authorize (and
shall use its best efforts not to permit) any officer, director or employee
of, or any investment banker, attorney or other advisor or representative
of, the Company or any of its Subsidiaries to, (i) solicit or initiate, or
encourage, directly or indirectly, any inquiries or the submission of, any
Takeover Proposal, (ii) participate in any discussions or negotiations
regarding, or furnish to any Person any information or data with respect to
or access to the properties of, or take any other action to knowingly
facilitate the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal or (iii) enter into any
agreement with respect to any Takeover Proposal or approve or resolve to
approve any Takeover Proposal; provided, that nothing contained in this
Section 5.5 or any other provision hereof shall prohibit the Company or the
Company's Board of Directors from (i) taking and disclosing to the
Company's shareholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act, or (ii) making such disclosure to the Company's
shareholders as, in the good faith judgment of the Company's Board of
Directors, after receiving written advice from outside counsel, is required
under applicable Law, provided that the Company may not, except as
permitted by Section 5.5(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend any Takeover Proposal, or
enter into any agreement with respect to any Takeover Proposal. Upon
execution of this Agreement, the Company will immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the
foregoing, prior to the time of acceptance of Shares for payment pursuant
to the Offer, the Company may furnish information concerning its business,
properties or assets to any Person or group and may negotiate and
participate in discussions and negotiations with such Person or group
concerning a Takeover Proposal if:
(x) such Person or group has submitted a Superior
Proposal; and
(y) the Board of Directors of the Company determines in
good faith based on advice of Outside Legal Counsel that such action
is necessary for the Board of Directors of the Company to comply with
its fiduciary duty under applicable Law.
The Company will promptly (but in no case later than 24 hours) notify
Parent of the existence of any proposal, discussion, negotiation or inquiry
received by the Company regarding any Takeover Proposal, and the Company
will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry which it may receive regarding any
Takeover Proposal and the identity of the party making such proposal or
inquiry or engaging in such discussion or negotiation, and shall provide
Parent with a copy of such proposal or inquiry, if available. The Company
will promptly provide to Parent any non-public information concerning the
Company provided to any other Person in connection with any Takeover
Proposal which was not previously provided to Parent. The Company will keep
Parent informed of the status and details of any such Takeover Proposal and
of any amendments or proposed amendments to any Takeover Proposal and will
promptly (but in no case later than 24 hours) notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal
has been made.
(b) Except as set forth in this Section 5.5(b), neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Parent or Purchaser, the approval or recommendation by the Board of
Directors of the Company or any such committee of the Offer, this Agreement
or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, subject to
compliance with the provisions of this Section 5.5, if, prior to the time
of acceptance for payment of Shares pursuant to the Offer, the Company's
Board of Directors determines in good faith, based upon the advice of
Outside Legal Counsel, that its failure to do so would constitute a breach
of its fiduciary duties under applicable Law, the Company's Board of
Directors may withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal,
in each case at any time after the fifth business day following Parent's
receipt of written notice (including by facsimile) from the Company
advising Parent that the Board of Directors of the Company has received a
Superior Proposal which it intends to accept, specifying the material terms
and conditions of such Superior Proposal and identifying the Person making
such Superior Proposal, but only if Parent has not, within such five
business days, made such adjustments to the terms and conditions of this
Agreement as would cause the Superior Proposal to no longer qualify as
such. The Company shall promptly deliver to Parent a copy of the minutes of
any meeting of its Board of Directors at which it determines that a
Takeover Proposal is a Superior Proposal.
Section 5.6 Publicity. Except as required by Law or as
permitted by Section 5.5, so long as this Agreement is in effect, neither
the Company, Parent nor any of their respective affiliates shall issue or
cause the publication of any press release or other announcement with
respect to the Merger, this Agreement or the other Transactions without the
prior consultation of the other party.
Section 5.7 State Takeover Laws. Notwithstanding any other
provision in this Agreement, in no event shall the Section 912 Approval be
withdrawn, revoked or modified by the Board of Directors of the Company. If
any state takeover statute other than Section 912 of the NYBCL becomes or
is deemed to become applicable to the Offer, the acquisition of Shares
pursuant to the Offer or the Merger, the Company shall take all action
necessary to render such statute inapplicable to all of the foregoing.
Section 5.8 Indemnification and Insurance.
(a) The Company shall, to the fullest extent permitted under
applicable New York Law, the terms of the Company's Certificate of
Incorporation or By-Laws and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and, after the Effective Time, the
Surviving Corporation shall, to the fullest extent permitted under
applicable New York Law, the terms of the Surviving Corporation's
certificate of incorporation or by-laws, indemnify and hold harmless, each
present and former director or officer of the Company and each other person
to whom indemnification is provided under the Company's By-Laws as in
effect on the date of this Agreement (collectively, the "Indemnified
Parties") against any costs or expenses (including reasonable attorneys'
fees), judgments, losses, claims, damages and liabilities incurred in
connection with, and amounts paid in settlement of, any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative and wherever asserted, brought or filed, (x) arising out
of or pertaining to the Transactions or (y) otherwise with respect to any
acts or omissions or alleged acts or omissions occurring at or prior to the
Effective Time, in each case for a period of six years after the date
hereof; provided, further, that the Surviving Corporation may not amend the
terms of its certificate of incorporation or by-laws to be less favorable
with respect to such indemnification than the Company's Certificate of
Incorporation or By-Laws on the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time must be reasonably
satisfactory to the Surviving Corporation, (ii) after the Effective Time,
the Surviving Corporation shall pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received, and (iii)
the Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation shall not be liable for
any settlement effected without its written consent (which consent shall
not be unreasonably withheld or delayed); and provided, further, that, in
the event that any claim or claims for indemnification are asserted or made
within such six year period, all rights to indemnification in respect of
any such claim or claims shall continue until the disposition of any and
all such claims. The Indemnified Parties as a group may retain only one law
firm to represent them with respect to any single action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
Parties. The indemnity agreements of the Surviving Corporation in this
Section 5.8(a) shall extend, on the same terms to, and shall inure to the
benefit of and shall be enforceable by, each Person or entity who controls,
or in the past controlled, any present or former director, officer or
employee of the Company or any of its Subsidiaries.
(b) For a period of three years after the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those
Persons who are currently covered by the Company's directors' and officers'
liability insurance policy (a copy of which has been made available to
Parent) on terms (including the amounts of coverage and the amounts of
deductibles, if any) that are no less favorable to the terms now applicable
to them under the Company's current policies; provided, however, that in no
event shall Parent or the Surviving Corporation be required to expend in
excess of 125% of the annual premium currently paid by the Company for such
coverage; and provided further, that, if the premium for such coverage
exceeds such amount, Parent or the Surviving Corporation shall purchase a
policy with the greatest coverage available for such 125% of the annual
premium.
(c) This Section 5.8 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the
Surviving Corporation and the Indemnified Parties, shall be binding on all
successors and assigns of the Surviving Corporation and shall be
enforceable by the Indemnified Parties.
Section 5.9 Employees; Employee Benefits. (a) Parent will, or will
cause the Surviving Corporation to, give all Persons who are employed by
the Company immediately prior to the Effective Time ("Affected Employees")
full credit for purposes of eligibility and vesting, under any
tax-qualified employee benefit plans or arrangements maintained by Parent
or the Surviving Corporation for such Affected Employees' service with
Parent or the Surviving Corporation to the same extent recognized by the
Company immediately prior to the Effective Time.
(b) Parent will, or will cause the Surviving Corporation to,
(i) waive all limitations as to preexisting conditions exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Affected Employees under any welfare benefit plans that
such employees may be eligible to participate in after the Effective Time,
other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the
Effective Time under any welfare plan maintained for the Affected Employees
immediately prior to the Effective Time, and (ii) provide each Affected
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
(c) For a period of one year immediately following the
Effective Time, the coverage and benefits provided to Affected Employees
pursuant to employee benefit plans or arrangements maintained by Parent or
Surviving Corporation and generally applicable to a group or groups of
employees (including bonus arrangements through the end of the fiscal year
ending March 31, 2001, after which Parent will consider appropriate bonus
arrangements going forward) shall be, in the aggregate, not less favorable
than those provided to such employees immediately prior to the Effective
Time.
(d) Parent and Purchaser shall cause the Surviving Corporation
to honor all obligations under each of the Company's employment, severance
and retirement contracts set forth on Schedule 5.9(d) of the Disclosure
Schedule.
Section 5.10 Organization of Purchaser. Within five days after
the date hereof, Parent shall (a) cause Purchaser to be organized (b) cause
Purchaser's board of directors to approve this Agreement and the
transactions contemplated hereby as fair to, advisable and in the best
interests of its shareholder and (c) cause Purchaser to acknowledge its
obligations hereunder by executing and delivering a copy of this Agreement
to the Company.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Effective Time of each of
the following conditions, any and all of which may be waived in whole or in
part by the Company, Parent or Purchaser, as the case may be, to the extent
permitted by applicable Law:
(a) this Agreement shall have been approved and adopted
by the requisite vote of the holders of Shares, if required by applicable
Law and the Certificate of Incorporation, in order to consummate the
Merger;
(b) any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and no
statute, rule, regulation, order, decree or injunction shall have been
enacted, promulgated or issued by any Governmental Entity precluding,
restraining, enjoining or prohibiting consummation of the Merger; and
(c) Parent, Purchaser or their affiliates shall have
purchased Shares pursuant to the Offer.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
the Merger contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after approval of matters presented in
connection with the Merger by the shareholders of the Company:
(a) By the mutual written consent of Parent and the
Company; provided, however, that if Parent shall have a majority of the
directors pursuant to Section 1.4, such consent of the Company may only be
given if approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a statute,
rule or executive order shall have been enacted, entered or promulgated
prohibiting the Transactions on the terms contemplated by this Agreement or
(ii) any Governmental Entity shall have issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action the
parties hereto shall use their reasonable efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the
Transactions and such order, decree, ruling or other action shall have
become final and non-appealable.
(c) By either of Parent or the Company if the Effective
Time shall not have occurred on or before June 30, 2001; provided, that the
party seeking to terminate this Agreement pursuant to this Section 7.1(c)
shall not have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
failure to consummate the Merger on or before such date.
(d) By the Company:
(i) if the Company has entered into an agreement
with respect to a Superior Proposal in accordance with Section
5.5(b), provided the Company has complied with all provisions
thereof, including the notice provisions therein, and that it
simultaneously terminates this Agreement and makes simultaneous
payment to the Parent of the Expenses and the Termination Fee; or
(ii) if Parent or Purchaser shall have terminated
the Offer or the Offer expires without Parent or Purchaser, as the
case may be, purchasing any Shares pursuant thereto; provided that
the Company may not terminate this Agreement pursuant to this Section
7.1(d)(ii) if the Company is in material breach of this Agreement;
(iii) if Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to ten
business days following the date of the initial public announcement
of the Offer; provided, that the Company may not terminate this
Agreement pursuant to this Section 7.1(d)(iii) if the Company is in
material breach of this Agreement; or
(iv) if there shall be a material breach by Parent
or Purchaser of any of their representations, warranties, covenants
or agreements contained in this Agreement.
(e) By Parent or Purchaser:
(i) (A) if prior to the purchase of the Shares
pursuant to the Offer, the Board of Directors of the Company shall
have withdrawn, or modified or changed in a manner adverse to Parent
or Purchaser, its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended or approved a
Takeover Proposal; or
(B) there shall have been a material breach of any
provision of Section 5.5; or
(ii) if Parent or Purchaser shall have terminated
the Offer without Parent or Purchaser purchasing any Shares
thereunder, provided that Parent or Purchaser may not terminate this
Agreement pursuant to this Section 7.1(e)(ii) if Parent or Purchaser
is in material breach of this Agreement; or
(iii) if, due to an occurrence that if occurring
after the commencement of the Offer would result in a failure to
satisfy any of the conditions set forth in Annex A hereto, Parent,
Purchaser or any of their affiliates shall have failed to commence
the Offer on or prior to ten business days following the date of the
initial public announcement of the Offer; or
(iv) if there shall be a material breach by the
Company of any of its representations, warranties, covenants or
agreements contained in this Agreement.
Section 7.2 Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent or Purchaser as provided
in Section 7.1, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent,
Purchaser or the Company, other than the provisions of Sections 3.18, 4.5
and 5.2, this Section 7.2 and Article VIII and except to the extent that
such termination results from the breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as provided below,
all fees and expenses incurred in connection with the Offer, the Merger,
this Agreement and the Transactions shall be paid by the party incurring
such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) If (x) Parent or Purchaser terminates this Agreement
pursuant to Section 7.1(e)(i) or (y) the Company terminates this Agreement
pursuant to Section 7.1(d)(i), then in each case, the Company shall pay, or
cause to be paid to Parent, at the time of termination, an amount equal to
$3,000,000 (the "Termination Fee").
(c) If (x) the fee referred to in Section 8.1(b) of this
Agreement becomes payable or (y) Parent or Purchaser terminates this
Agreement pursuant to Section 7.1(e)(iv), then in each case, the Company
shall pay, or cause to be paid to Parent, at the time of termination an
amount equal to Parent's and Purchaser's actual and reasonably documented
out-of-pocket expenses incurred by Parent or Purchaser in connection with
the Offer, the Merger, this Agreement and the consummation of the
Transactions, including, without limitation, the fees and expenses payable
to all banks, investment banking firms, and other financial institutions
and Persons and their respective agents and counsel incurred in connection
with acting as Parent's or Purchaser's financial advisor with respect to,
or arranging or committing to provide or providing any financing for, the
Transactions up to $1,000,000 (the "Expenses").
(d) Any payments required to be made pursuant to this Section
8.1 shall be made by wire transfer of same day funds to an account
designated by Parent.
Section 8.2 Amendment and Modification. Subject to applicable
Law, this Agreement may be amended, modified and supplemented in any and
all respects, whether before or after any vote of the shareholders of the
Company contemplated hereby, by written agreement of the parties hereto
(which in the case of the Company shall include approvals as contemplated
in Section 1.4(c)), at any time prior to the Closing Date with respect to
any of the terms contained herein; provided, however, that after the
approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement shall reduce the amount or change the
form of the Merger Consideration or otherwise adversely affect the rights
of shareholders.
Section 8.3 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall
survive the Effective Time. This Section 8.3 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance
after the Effective Time.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt, and
shall be given to the parties at the following addresses or telecopy
numbers (or at such other address or telecopy number for a party as shall
be specified by like notice):
(a) if to Parent or Purchaser, to:
Xxxxxx Xxxxx XxxX
Xxxxxx Xxxxx Xxxxx 0
00000 Xxxxxxxxx
Xxxxxxx
Telephone No: 0000 000 000 0000
Telecopy No.: 0049 711 811 6760
Attention: Dr. Heiko Xxxxxx
with a copy to:
Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx XxXxxxxxx
and if to the Company, to:
Detection Systems, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx,
Chairman and Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Section 8.5 Interpretation. (a) The words "hereof," "herein"
and "herewith" and words of similar import shall, unless otherwise stated,
be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, paragraph,
exhibit and schedule references are to the articles, sections, paragraphs,
exhibits and schedules of this Agreement unless otherwise specified.
Whenever the words "include," "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words "without
limitation." All terms defined in this Agreement shall have the defined
meanings contained herein when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as well as to
the feminine and neuter genders of such term. Any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement, instrument or statute as
from time to time amended, modified or supplemented, including (in the case
of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all
attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date
hereof" and terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date first written above. The phrase "made
available" in this Agreement shall mean that the information referred to
has been actually delivered to the party to whom such information is to be
made available.
(c) The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
Section 8.6 Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement. No Third Party Beneficiaries;
Rights of Ownership. This Agreement and the Confidentiality Agreement: (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (b) except as provided in Section 5.8, are
not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Section 8.8 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent jurisdiction or
other authority declares that any term or provision hereof is invalid, void
or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York without
giving effect to the principles of conflicts or choice of law thereof or of
any other jurisdiction.
Section 8.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties, except that Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.11 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of New
York, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any federal court located
in the State of New York in the event any dispute arises out of this
Agreement or any of the Transactions, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the Transactions in any court other
than a federal court sitting in the State of New York.
Section 8.12 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 8.2, waive compliance by
the other parties with any of the agreements or conditions contained in
this Agreement. Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
Section 8.13 Certain Undertakings of Parent. Parent shall
perform, or cause to be performed, any obligation of Purchaser under this
Agreement which shall have been breached by Purchaser.
Section 8.14 Definitions. For purposes of this Agreement:
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange
Act.
"Affected Employees" has the meaning assigned thereto in Section 5.9.
"Benefit Plans" has the meaning assigned thereto in Section 3.10.
"By-Laws" means the by-laws of the Company as in effect on the date
of this Agreement.
"Certificate of Incorporation" means the certificate of incorporation
of the Company as in effect on the date of this Agreement.
"Certificate of Merger" has the meaning assigned thereto in Section
2.2.
"Certificates" has the meaning assigned thereto in Section 2.5.
"Closing" has the meaning assigned thereto in Section 2.3.
"Closing Date" has the meaning assigned thereto in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Detection Systems, Inc., a New York corporation.
"Company Material Contract" has the meaning assigned thereto in
Section 3.15.
"Company's SEC Documents" has the meaning assigned thereto in Section
3.5.
"Confidentiality Agreement" has the meaning assigned thereto in
Section 5.2.
"Continuing Director" means (i) any member of the Board of Directors
of the Company as of the date hereof; (ii) from and after his election to
the Company Board of Directors, Xxxxxx X. Xxxxxxx; or (iii) any successor
of a Continuing Director who is (A) unaffiliated with, and not a designee
or nominee of, Parent or Purchaser, and (B) recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on the
Board of Directors of the Company.
"Department of State" has the meaning assigned thereto in Section
2.2.
"Disclosure Schedule" has the meaning assigned thereto in Section
2.7.
"Effective Time" has the meaning assigned thereto in Section 2.2.
"Environmental Laws" means all foreign, federal, state and local Laws
relating to pollution or protection of human health, safety or the
environment, including, without limitation, Laws relating to Releases or
threatened Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Materials, and all Laws and
regulations with regard to record keeping, notification, disclosure and
reporting requirements respecting Hazardous Materials, and all Laws
relating to endangered or threatened species of fish, wildlife and plants
and the management or use of natural resources.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, obligations to conduct cleanup, losses,
damages, deficiencies, punitive damages, consequential damages, treble
damages, costs and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees and
costs of investigations and feasibility studies and responding to
government requests for information or documents), fines, penalties,
restitution and monetary sanctions, interest, direct or indirect, known or
unknown, absolute or contingent, past, present or future, resulting from
any claim or demand, by any Person or entity, whether based in contract,
tort, implied or express warranty, strict liability, joint and several
liability, criminal or civil statute, including any Environmental Law, or
arising from environmental, health or safety conditions, or the Release or
threatened Release of Hazardous Materials into the environment.
"ERISA" has the meaning assigned thereto in Section 3.10.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" has the meaning assigned thereto in Section 8.1(b).
"Fee Properties" means all real property and interests in real
property owned in fee by the Company or one of its Subsidiaries.
"Fleet" has the meaning assigned thereto in Section1.2.
"GAAP" has the meaning assigned thereto in Section 3.5.
"Governmental Entity" means any (i) nation, state, county, city,
town, village, district or other jurisdiction of any nature; (ii) federal,
state, local, municipal, foreign or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental
agency, branch, department, official or entity and any court or other
tribunal); or (iv) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.
"Hazardous Materials" means all substances defined as hazardous
substances in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. ss. 300.5, or substances defined as hazardous
substances, hazardous materials, toxic substances, hazardous wastes,
pollutants or contaminants, under any Environmental Law, or substances
regulated under any Environmental Law, including, but not limited to,
petroleum (including crude oil or any fraction thereof), asbestos and
polychlorinated biphenyls.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" has the meaning assigned thereto in Section
5.9.
"Knowledge of the Company" means knowledge of: (a) any executive
officer of the Company, Xxxxxxx Xxxxxxx and Xxxxx Xxxxxx.
"Law" means any administrative order, constitution, law, ordinance,
principle of common law, rule, regulation, statute, treaty, judgment,
decree, license or permit enacted, promulgated, issued, enforced or entered
by any Governmental Entity.
"Leased Properties" means all real property and interests in real
property leased by the Company or one of its Subsidiaries.
"Licenses" has the meaning assigned thereto in Section 3.13(c)
hereof.
"Lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other
security arrangement, or any adverse right or interest, charge or claim of
any nature whatsoever of, on, or with respect to, any asset, property or
property interest.
"Material Adverse Change" or "Material Adverse Effect" means, when
used in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, prospects, financial condition or results of operations
of such party and its Subsidiaries taken as a whole.
"Merger" has the meaning assigned thereto in Section 2.1.
"Merger Consideration" has the meaning assigned thereto in Section
2.4.
"Minimum Condition" has the meaning assigned thereto in Annex A.
"NYBCL" means the New York Business Corporation Law, as amended.
"Offer" has the meaning assigned thereto in Section 1.1.
"Offer Documents" has the meaning assigned thereto in Section 1.3.
"Offer Price" has the meaning assigned thereto in Section 1.1.
"Offer to Purchase" has the meaning assigned thereto in Section 1.1.
"Option Plans" has the meaning assigned thereto in Section 2.7.
"Option" has the meaning assigned thereto in Section 2.7.
"Other Intellectual Property" shall mean all intellectual property
rights used in the business of the Company or any of its Subsidiaries as
currently conducted, including but not limited to all patents and patent
applications; copyrights, copyright registrations and applications
(including copyrights in Computer Programs); Computer Programs; technology,
trade secrets, know-how, confidential information, proprietary processes
and formulae; "semiconductor chip product" and "mask works" (as such terms
are defined in 17 U.S.C. 901); and rights of publicity and privacy relating
to the use of the names, signatures, likenesses, voices and biographical
information of real persons; together with any and all rights of renewal
thereof and the right to xxx for past, present or future infringements or
misappropriations thereof.
"Outside Legal Counsel" means Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP or a firm of comparable national standing.
"Paying Agent" has the meaning assigned thereto in Section 2.5(a).
"Parent" means Xxxxxx Xxxxx XxxX, a limited liability company
organized under the laws of Germany.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any federal, state, local and foreign governmental
approval, authorization, certificate, filing, franchise, license, notice,
permit or right.
"Person" means an individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, labor
union, estate, trust, unincorporated organization or other entity,
including any Governmental Entity.
"Proxy Statement" has the meaning assigned thereto in Section 5.3.
"Purchaser" means the New York corporation to be organized by Parent
pursuant to Section 5.10 hereof.
"Real Property" means the Leased Properties and the Fee Properties.
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or
subsurface strata) or into or out of any property of any Hazardous
Material, including the movement of Hazardous Materials through or in the
air, soil, surface water, groundwater or property.
"Representative" means, with respect to any Person, such Person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such Person or
its Subsidiaries).
"Schedule TO" has the meaning assigned thereto in Section 1.3.
"Schedule 14D-9" has the meaning assigned thereto in Section 1.3.
"SEC" means the United States Securities and Exchange Commission or
any successor agency.
"Section 912 Approval" has the meaning assigned thereto in Section
1.2.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in the recitals.
"Special Meeting" has the meaning assigned thereto in Section 5.3.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity, whether incorporated or
unincorporated, of which such Person or any other Subsidiary of such Person
(i) owns, directly or indirectly, 50% or more of the outstanding voting
securities or equity interests, (ii) is entitled to elect at least a
majority of the Board of Directors or similar governing body or (iii) is a
general partner (excluding such partnerships where such Person or any
Subsidiary of such Person do not have a majority of the voting interests in
such partnership).
"Superior Proposal" means an unsolicited bona fide written proposal
by a Third Party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than a majority of the Shares
then outstanding or all or substantially all of the assets of the Company
or to acquire, directly or indirectly, the Company by merger or
consolidation, and otherwise on terms which the Board of Directors of the
Company determines in good faith to be more favorable to the Company's
shareholders (taking into account the time period reasonably believed
necessary to consummate such transaction) than the Offer and the Merger
(after receipt of opinion of a nationally recognized independent financial
advisor that the value of the consideration provided for in such proposal
is superior to the value of the consideration provided for in the Offer and
the Merger, and after taking into account all legal, financial and
regulatory aspects of such proposal, the identity of the Third Party making
such proposal, and the benefits to be derived by the Company from the
Transactions), for which financing, to the extent required, is then
committed and which, in the good faith reasonable judgment of the Board of
Directors of the Company, is reasonably likely to be consummated.
"Surviving Corporation" has the meaning assigned thereto in Section
2.1.
"Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any Person other than Parent, Purchaser or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
all or a material portion of the assets of the Company or any of its
Subsidiaries or 20% or more of any class of equity securities of the
Company or any of its Subsidiaries pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, sale of
assets, tender offer, exchange offer or similar transaction with respect to
either the Company or any of its Subsidiaries, including any single or
multi-step transaction or series of related transactions, which is
structured to permit such Third Party to acquire beneficial ownership of
any material portion of the assets of or 20% or more of the equity interest
in either the Company or any of its Subsidiaries.
"Tax" or "Taxes" mean all taxes, charges, fees, levies, penalties or
other assessments imposed by any federal, state, local or foreign Taxing
Authority including but not limited to net income, gross income, receipts,
windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, transfer, stamp or environmental tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or penalty, addition to tax
or additional amount imposed by any Governmental Entity.
"Taxing Authority" shall mean a governmental authority or any
subdivision, agency, commission or authority thereof, any judicial body, or
any quasi-governmental or private body having jurisdiction over the
assessment, determination, collection or imposition of any Tax (including,
without limitation, the Internal Revenue Service).
"Tax Returns" mean all returns, reports or statements required to be
filed with any Governmental Entity with respect to any Tax (including any
attachments thereto), including, without limitation, any consolidated,
unitary or similar return, information return, claim for refund, amended
return or declaration of estimated Tax.
"Termination Fee" has the meaning assigned thereto in Section 8.1(b).
"Third Party" has the meaning assigned thereto in this Section 8.14
in the definition of "Takeover Proposal."
"Trademarks" shall mean all United States and foreign trademarks
(including service marks and trade names, whether registered or at common
law), registrations and applications therefor, owned or licensed by the
Company or its Subsidiaries, and the goodwill of the Company's and each of
its Subsidiaries' respective businesses associated therewith, together with
any and all (i) rights of renewal thereof and (ii) rights to xxx for past,
present and future infringements or misappropriation thereof.
"Transactions" has the meaning assigned thereto in Section 1.2(a).
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of
the date first written above.
XXXXXX XXXXX XxxX
By: s/ Xxxxx Xxxxx
----------------------------------------
Name: Xx. Xxxxx Xxxxx
Title: Senior Vice President
By: s/ Heiko Xxxxxx
----------------------------------------
Name: Dr. Heiko Xxxxxx
Title: Director
DETECTION SYSTEMS, INC.
By: s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman and Chief Executive Officer
[PURCHASER]
By:
-----------------------------
Name:
Title:
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement and Plan of Merger of which this Annex A is a
part. Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred
to above, the payment for, any tendered Shares, and may amend the Offer
consistent with the terms of the Merger Agreement or terminate the Offer
and not accept for payment any tendered Shares, if (i) there shall not have
been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares which, when added to the Shares, if any,
beneficially owned by Parent or Purchaser, would constitute at least a
majority of the Shares outstanding on a fully diluted basis (the "Minimum
Condition"), (ii) any applicable waiting period under the HSR Act has not
expired or been terminated, or (iii) at any time on or after the date of
the Merger Agreement and prior to the expiration of the Offer, any of the
following events shall occur:
(a) there shall be threatened by a Governmental Entity or
pending any suit, action or proceeding (i) seeking to prohibit or impose
any material limitations on Parent's or Purchaser's ownership or operation
(or that of any of their respective Subsidiaries or Affiliates) of all or a
material portion of their or the Company's businesses or assets, (ii)
seeking to compel Parent or Purchaser or their respective Subsidiaries and
Affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and their respective
Subsidiaries, in each case taken as a whole, (iii) challenging the
acquisition by Parent or Purchaser of any Shares pursuant to the Offer,
(iv) seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other Transactions,
(v) seeking to impose material limitations on the ability of Purchaser, or
rendering Purchaser unable, to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, or (vi) seeking
to impose material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to the Company's shareholders; or
(b) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity, other than the application to the Offer
or the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (vi) of paragraph (a)
above; or
(c) there shall have occurred and be continuing (1) any
general suspension of trading in, or limitation on prices for, securities
on the Nasdaq National Market System, for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (2)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (4) any
limitation or proposed limitation (whether or not mandatory) by any United
States governmental authority or agency that has a material adverse effect
generally on the extension of credit by banks or other financial
institutions, (5) any decline in the Dow Xxxxx Industrial Average, the
Standard & Poor's Index of 500 Industrial Companies or the Nasdaq Composite
Index by an amount in excess of 20% measured from the close of business on
the date of this Agreement or (6) in the case of any of the situations in
clauses (1) through (5) inclusive, existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof; or
(d) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and accurate as of the date
of consummation of the Offer as though made on or as of such date (except
for those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such
period) or the Company shall have breached or failed to perform or comply
with any obligation, agreement or covenant required by the Merger Agreement
to be performed or complied with by it except, in each case where the
failure of such representations and warranties to be true and accurate
(without giving effect to any limitation as to "knowledge," "materiality"
or "material adverse effect" set forth therein), or the failure to perform
or comply with such obligations, agreements or covenants, do not,
individually or in the aggregate, have a Material Adverse Effect on the
Company or a materially adverse effect on the ability to consummate the
Offer or the Merger; or
(e) the Company's Board of Directors (i) shall have
withdrawn, or modified or changed in a manner adverse to Parent or
Purchaser (including by amendment of the Schedule 14D-9) its recommendation
of the Offer, the Merger Agreement, or the Merger, (ii) shall have
recommended a Takeover Proposal, or (iii) shall have adopted any resolution
to effect any of the foregoing;
(f) the Merger Agreement shall have been terminated in
accordance with its terms; or
(g) there shall have occurred any event or any
development of a state of facts or circumstances that constitutes a
Material Adverse Change or has a Material Adverse Effect on the Company.
which, in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent
or Purchaser) giving rise to such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or
payments for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be waived by Parent or Purchaser, in whole or in part, at
any time and from time to time, in the sole discretion of Parent or
Purchaser. The failure by Parent or Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any right and each
such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
