Exhibit 2(B)
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
by and among
COMPUDYNE CORPORATION,
NEW TIBURON, INC.,
and
TIBURON, INC.
Dated as of January 25, 2002
1
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the "FIRST
AMENDMENT"), dated as of January 25, 2002 by and among COMPUDYNE CORPORATION, a
corporation organized under and governed by the laws of the State of Nevada with
its principal offices located at 0000 Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000
("PARENT"), New Tiburon, Inc., a corporation organized under and governed by the
laws of the Commonwealth of Virginia, with its principal offices located at 0000
Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000, and a wholly-owned subsidiary of Parent
("MERGER SUB") and TIBURON, INC., a corporation organized under the laws of the
Commonwealth of Virginia, with its primary offices located at 00000 Xxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000 (the "COMPANY").
RECITALS
WHEREAS, the Parent, Merger Sub and the Company are parties to a
certain Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated as of May
10, 2001, providing for the terms and conditions of a merger of the Company with
and into Merger Sub with Merger Sub as the surviving corporation as set forth
below (the "MERGER"), upon the terms and subject to the conditions set forth in
the Merger Agreement and the provisions of Title 13.1, Chapter 9, of the Code of
Virginia (1950) (the "VIRGINIA CORPORATION LAW") pursuant to which, among other
things, each issued and outstanding share of Common Stock par value $0.10 per
share, of the Company (the "COMPANY COMMON STOCK"), excluding any shares of
Company Common Stock owned, directly or indirectly, by the Company or any
subsidiary of the Company or by Parent, Merger Sub or any other subsidiary of
Parent and any Dissenting Shares (as defined herein), shall be convertible into
the right to receive the Merger Consideration (as defined in the Merger
Agreement);
WHEREAS, pursuant to the provisions of the Merger Agreement, on or
about July 10, 2001, the Parent delivered to the Company a Parent's Notice of
Merger Election, indicating the Parent's intention to go forward with the Merger
and setting forth its selection of a Stock Percentage (as defined in the Merger
Agreement), of 100% Parent Common Stock as the Consideration for Company Common
Stock (as defined in the Merger Agreement);
WHEREAS, in accordance with the terms of the Merger Agreement, the
VWAP (as defined in the Merger Agreement to be the volume weighted average price
of all Parent Common Stock traded, as reported on the NASDAQ National Market
during the sixty (60) calendar days ending two (2) business days prior to the
Parent's Notice of Merger Election) to be used as the denominator for
determining the Exchange Ratio (as
2
defined in the Merger Agreement) was agreed among the parties shortly after the
delivery to the Company of the Parent's Notice of Merger Election to be $8.6164;
WHEREAS, on October 29, 2001, the Parent issued 1,075,507 new shares
of Parent Common Stock to purchasers who were, generally, not previously holders
of Parent Common Stock;
WHEREAS, on October 29, 2001, Xxxxxxx Xxxxx Mezzanine Capital Fund,
L.P. sold all 1,374,493 of the shares of Parent Company Stock it then owned to
purchasers who were, generally, not previously holders of Parent Common Stock;
WHEREAS, the Merger Agreement provides that, as a condition for the
Closing of the Merger, the Parent Stockholder Approval (as defined therein)
shall have been obtained;
WHEREAS, Parent's management has informed the Company's management
that intervening circumstances make it unlikely that it would be able to obtain
the required Parent Stockholder Approval without a modification to the stock
consideration to be paid by the Parent in the Merger;
WHEREAS, the Board of Directors of the Company has determined that
entering into this First Amendment is in the best interests of the Company and
its stockholders, subject to the provisions of Section 7 hereof with respect to
the Board of Directors' subsequent approval and recommendation of the Merger
after receipt and review of an opinion in writing with respect to the fairness
of the Merger Consideration (as defined in the Merger Agreement, as amended
hereby and has approved the Company's entering into this First Amendment;
WHEREAS, the respective Boards of Directors of Parent and Merger
Sub, and Parent, acting as the sole stockholder of Merger Sub, have approved the
Merger and its terms, as amended by this First Amendment;
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger, as amended by the terms hereof, shall qualify as a
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code, as amended (together with the Treasury regulations thereunder, the
"CODE"), and this Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree that
the Merger Agreement be and it hereby is amended and modified as follows:
3
SECTION 1. Section 1.1 of the Merger Agreement is deleted in its
entirety and a new Section 1.1 is adopted in lieu thereof, as follows:
"Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Virginia Corporation
Law, the Company shall be merged with and into Merger Sub at the
Effective Time (as defined herein). At the Effective Time, the
separate corporate existence of the Company shall cease, and Merger
Sub (a) shall continue as the surviving corporation as a direct
wholly owned subsidiary of Parent (as the context requires, Merger
Sub, after giving effect to the Merger, is sometimes hereinafter
referred to as the "SURVIVING CORPORATION"), (b) shall succeed to
and assume all the rights and obligations of the Company in
accordance with the Virginia Corporation Law, and (c) shall have the
corporate name "Tiburon, Inc."
SECTION 2. Subsection 2.1(c) of the Merger Agreement is deleted in
its entirety and a new Subsection 2.1(c) is adopted in lieu thereof, as follows:
"(c) (i) Except as otherwise provided in Section 2.1(a),
Section 2.2, or Section 2.7, each Share of Company Common Stock
outstanding immediately prior to the Effective Time shall be
converted into the right to receive consideration of $4.80, plus
increments for each full calendar month (i.e., each monthly period
ending on the same date within each month) that passes from
September 2, 2001 to the Effective Time in amounts equal to (x)
$0.045 for each of the first six (6) full calendar months, (y) $0.05
for each of the next six (6) full calendar months, and (z) $0.075
for each full calendar month thereafter, (the "CONSIDERATION FOR
COMPANY COMMON STOCK"), payable in immediately available funds or
shares of Parent Common Stock, par value $.75 per share ("PARENT
COMMON STOCK"), or a combination of both, as follows:
(A) The aggregate Consideration for Company Common Stock payable
to all holders of shares of Company Common Stock (excepting
shares of Company Common Stock owned by the Parent, which will
not participate in the exchange) shall include such number of
shares of Parent Common Stock, issued in accordance with the
Exchange Ratio described below, as is necessary in order that
the aggregate number of shares of Company Common Stock
exchanged through the Merger for shares of Parent Common Stock
is at least 50% of the total number of shares of Company
Common Stock exchanged through the Merger for Consideration
for Company Common Stock. The Parent may elect, in its sole
discretion (subject to the limitation set forth in the next
sentence), to increase the percentage of the aggregate number
of shares of Company Common Stock exchanged through the Merger
for shares of Parent Common Stock to any amount in excess of
the amount determined as described above, up to and
4
including sixty-five percent (65%) of the total number of
shares of Company Common Stock exchanged through the Merger
for Consideration for Company Common Stock (the percentage
chosen by Parent to be paid in Parent Common Stock is
hereinafter referred to as the "STOCK PERCENTAGE," and the
portion of the Consideration for Company Common Stock to be
paid with Parent Common Stock is hereinafter referred to as
the STOCK COMPONENT"). The Parent shall not elect a Stock
Percentage which does not permit the condition set forth in
Section 8.1(i) to be satisfied if there is another Stock
Percentage which is permissible under this Subsection
2.1(c)(i)(A) which does permit that condition to be satisfied.
The balance of such Consideration for Company Common Stock
shall consist of immediately available funds (the "CASH
COMPONENT", AND THE DIFFERENCE BETWEEN ONE HUNDRED PERCENT
(100%) AND THE STOCK PERCENTAGE, THE "CASH PERCENTAGE"). With
respect to that portion of the Consideration for Company
Common Stock to be paid in Parent Common Stock, holders of
shares of Company Common Stock shall be entitled to receive,
for each such share of Company Common Stock, that fraction of
a share of Parent Common Stock determined by dividing the
Consideration for Company Common Stock by $11.00 (the
"EXCHANGE RATIO"). Attached hereto as Exhibit E is a schedule
setting forth examples of the Stock Component and the Cash
Component, using stated assumptions concerning variables
applicable to the calculation.
(B) Notwithstanding the amount of the Stock Percentage (as defined
in this Section 2.1 above elected by the Parent, any holder of
Company Common Stock may elect, by giving notice of such
election at the time such holder's shares of Company Common
Stock are surrendered to the Exchange Agent pursuant to
Section 2.7, to receive Consideration for Company Common Stock
consisting of a Stock Component greater or less than the
amount determined using the Stock Percentage (with the balance
of such Consideration for Company Common Stock consisting of
the Cash Component), up to and including one-hundred percent
(100%) Stock Component and down to and including zero percent
(0%) Stock Component, provided however, if the effect of all
elections made by holders of Company Common Stock in
accordance with the provisions of this paragraph would result,
cumulatively, in a percentage of the aggregate number of
shares of Company Common Stock exchanged through the Merger
for shares of Parent Common Stock being either higher or lower
than the Stock Percentage, then the percentages so elected in
accordance with the provisions of this paragraph shall be
adjusted pro rata in amounts necessary to restore the
percentage of the aggregate number of shares of Company Common
Stock exchanged through the Merger for shares of Parent Common
Stock, to the Stock Percentage, and provided further, that if
no such election is made in accordance with the procedures
5
contemplated in Section 2.7, the Consideration for Company
Common Stock will be paid in accordance with the Stock
Percentage.
(ii) At the Effective Time, each share of Company 6.0%
Cumulative Convertible Preferred Stock, $100 par value (the
"6.0% PREFERRED STOCK"), issued and outstanding immediately
prior to the Effective Time shall be converted to shares of
preferred stock of the Parent, which shall have the terms and
conditions described in Exhibit F (the "PARENT PREFERRED
STOCK"), and the right to receive immediately available funds,
as follows: (A) a number of shares of Parent Preferred Stock
equal to the product of (x) the number of shares of Company
Common Stock into which such share of 6.0% Preferred Stock was
convertible immediately prior to the Effective Time times (y)
the Exchange Ratio times (z) the Stock Percentage, each of
which such shares of Parent Preferred Stock shall be
convertible into an equal number of shares of Parent Common
Stock, and (B) the right to receive immediately available
funds in an amount equal to the product of (x) the number of
shares of Company Common Stock into which such share of 6.0%
Preferred Stock was convertible immediately prior to the
Effective Time times (y) the Consideration for Company Common
Stock times (z) the Cash Percentage. All rights holders of
6.0% Preferred Stock may currently have pursuant to that
certain 6.0% Cumulative Convertible Preferred Stock Purchase
Agreement dated June 3, 1997 by and between the Company and
Xxxxxxxxx & Xxxxx Transition Capital, LLC shall be
extinguished.
The Consideration for Company Common Stock and the
consideration for the 6% Preferred Stock referred to in this
subsection 2.1 (c) are hereinafter referred to together as the
"MERGER CONSIDERATION." The Parent shall elect, in its sole
discretion, the Stock Percentage, subject to the requirements of (A)
above, immediately prior to the Effective Time by delivering to the
Company a written notice of such election, which notice shall be
distributed to the holders of the Company Common Stock in the manner
set forth in Section 2.7 hereof.
If the Effective Time occurs subsequent to any stock split,
reverse stock split, share dividend, split-up, recapitalization or
reorganization with respect to the Parent or the Parent Common
Stock, as applicable, as a result of which shares of Parent Common
Stock shall have been issued in respect of outstanding shares of
Parent Common Stock or shares of Parent Common Stock shall be
changed into the same or a different number of shares of Parent
Common Stock or another class or classes of capital stock of the
Parent, the Exchange Ratio shall be adjusted equitably to reflect
such stock split, reverse stock split, share dividend, split-up,
recapitalization or reorganization.
6
None of the Parent, any subsidiary of the Parent, Xxxxxx X.
Xxxxxxx, Xxxx Xxxxxxxxx, the Company, or any Major Shareholder of
the Company shall, on the date of the Effective Time or during any
of the ten trading days prior to that date, purchase, sell or
otherwise engage in any trading transactions (including without
limiting the generality of the foregoing, short sales and trading in
options or other derivatives) with respect to any shares of Parent
Common Stock other than in private transactions.
Immediately prior to the Effective Time, Parent shall
contribute to Merger Sub the right to cause the delivery of the
Merger Consideration in consideration of the issuance to Parent by
Merger Sub of 1,000 shares of common stock, $.00l par value per
share, of Merger Sub. Merger Sub shall satisfy its obligations to
deliver the Merger Consideration by exercising such right to cause
Parent to deliver the same. Parent shall cause Merger Sub to deliver
the Merger Consideration pursuant to the terms of this Article II."
SECTION 3. Section 2.4 of the Merger Agreement is deleted in its
entirety.
SECTION 4. Section 2.6 of the Merger Agreement is deleted in its
entirety and a new Section 2.6 is adopted in lieu thereof, as follows:
"Section 2.6. Stock Options and Warrants. Prior to the mailing
of the Proxy Statement, the Board of Directors of Parent and the
Board of Directors of the Company shall adopt such resolutions or
take such other actions as may be required to effect the following:
(a) All outstanding employee and director stock options to
purchase shares of Company Common Stock ("COMPANY STOCK OPTIONS")
granted under the Company's 1994 Incentive Stock Plan (the "OPTION
PLAN") shall be cancelled prior to the Effective Time.
(b) At the Effective Time, the Parent shall issue to the
holder or holders of warrants to purchase Company Common Stock
outstanding as of the Effective Date, in exchange for such warrants
to purchase Company Common Stock (the "COMPANY WARRANTS"), the
following: (A) that number of warrants which have terms and
conditions described in Exhibit G (the "PARENT WARRANTS") which will
entitle the holder to receive, upon the exercise thereof and the
payment of the pro rata portion of the exercise price of the Company
Warrants attributable to the Parent Warrants, that number of Shares
of Parent Common Stock equal to the product of (x) the number of
shares of Company Common Stock which the holder would have received
upon the exercise of the Company Warrants immediately prior to the
Effective Time times (y) the Exchange
7
Ratio times (z) the Stock Percentage; and (B) immediately available
funds in an amount equal to the product of (w) the number of shares
of Company Common Stock which the holder would have received upon
the exercise of the Company Warrants immediately prior to the
Effective Time times (x) the Consideration for Company Common Stock
times (y) the Cash Percentage, less that portion of the exercise
price attributable to the immediately available funds. For the
purpose of attributing the exercise price for the Company Warrants
respectively to the Parent Warrants and to the immediately available
funds to be issued to a holder of Company Warrants hereunder, an
amount equal to the aggregate exercise price for the Company
Warrants times the Stock Percentage shall be attributable to the
Parent Warrants, and the balance shall be attributable to the
immediately available funds.
(c) Except as specifically provided in this Section 2.6, the
Company shall ensure that following the Effective Time no holder of
a Company Stock Option or holder of any option or warrant to
purchase Company Common Stock described in paragraph (a) or (b)
above shall have any right thereunder to acquire equity securities
of the Company or the Surviving Corporation and no shares of Company
Common Stock shall be purchased pursuant to the Option Plan.
(d) Parent shall use its best efforts to effect the
registration of all shares of Parent Common Stock issuable pursuant
to Section 2.1(c)(ii) and subsection (b) hereof with the Securities
and Exchange Commission under the Securities Act, and pursuant to
the exercise of such best efforts Parent shall seek to effect such
registration in the same S-4 Registration Statement used to register
the shares of Parent Common Stock to be issued to holders of the
Company Common Stock in the Merger, or a companion S-3 Registration
Statement filed at the same time as such S-4, provided however, that
during such period of time, if any, that registration is not
available notwithstanding the Parent's use of best efforts, such
shares shall be restricted, unregistered shares and shall bear
legends reflecting such restrictions.
SECTION 5. Subsection 2.7(b) of the Merger Agreement is deleted in
its entirety and a new Subsection 2.7(b) is adopted in lieu thereof, as follows:
"(b) Exchange Procedures. As soon as practicable after the
Effective Time of the Merger, but in any case within 10 business
days thereafter, the Exchange Agent shall mail to each holder of an
outstanding certificate(s) which prior thereto represented shares of
Company Common Stock (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title
to such certificate shall pass, only upon
8
delivery of such certificate(s) to such Exchange Agent), (ii)
instructions for use in effecting the surrender of the
certificate(s) for the Consideration for Company Common Stock, and
(iii) an explanation of the Stock Percentage elected by the Parent
and of the election to receive Consideration for Company Common
Stock consisting of Cash Component and Stock Component amounts other
than a pro rata portion of each, as described in Section 2.1(c).
Upon surrender to the Exchange Agent of such certificate(s) for
cancellation, together with such letter of transmittal, the holder
of such certificate(s) shall be entitled to the Consideration for
Company Common Stock consisting of the pro rata portion of Cash
Component (taking into account all elections by former holders of
Company Common Stock and any adjustment required thereto in order
that the aggregate Stock Component distributed to all former holders
of Company Common Stock equals the Stock Percentage) and a
certificate(s) representing the number of whole shares of Parent
Common Stock into which the aggregate number of shares previously
represented by such certificate(s) surrendered shall have been
converted pursuant to Section 2.1(c) of this Agreement. The Exchange
Agent shall accept such certificate(s) upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with normal
exchange practices. After the Effective Time of the Merger, there
shall be no further transfer on the records of the Company of any
certificate(s) representing shares of Company Common Stock and if
such certificate(s) is presented to the Company for transfer, it
shall be canceled against delivery of a certificate(s) for cash and
shares of the Parent Common Stock as hereinabove provided. If any
certificate(s) for such shares of the Parent Common Stock is to be
issued in a name other than that in which the certificate(s) for
shares of Company Common Stock surrendered for exchange is
registered, it shall be a condition of such exchange that the
certificate(s) so surrendered shall be properly endorsed, with
signature guaranteed, or otherwise in proper form for transfer and
that the person requesting such exchange shall pay to Parent or its
transfer agent any transfer or other taxes required by reason of the
issuance of a certificate(s) for such shares of Parent Common Stock
in a name other than that of the registered holder of the
certificate(s) surrendered, or establish to the satisfaction of
Parent or its transfer agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section
2.7(b), each certificate for shares of Company Common Stock shall be
deemed at any time after the Effective Time of the Merger to
represent only the right to receive upon such surrender the
applicable Consideration for Company Common Stock. No interest will
be paid or will accrue on any cash payable in lieu of any fractional
share of Parent Common Stock."
9
SECTION 6. Subsection 2.7(e) of the Merger Agreement is deleted in
its entirety and a new Subsection 2.7(e) is adopted in lieu thereof as follows:
(e) No Fractional Shares.
(i) No certificate or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange
of any certificate(s) representing shares of Company Common Stock,
and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Parent; and
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to
the Merger who would have otherwise been entitled to receive a
fraction of a share of Parent Common Stock shall receive, in lieu
thereof, an amount in cash equal to the product of such fraction and
$11.00.
SECTION 6A. Subsection 6.1(d) of the Merger Agreement is deleted in
its entirety and a new subsection 6.1(d) is adopted in lieu thereof, as follows:
"(d) During the period ending May 30, 2002 so long as Parent
continues in good faith to take such actions contemplated in the
Merger Agreement, as amended hereby, to effect the consummation of
the Merger, the Company will not, directly or indirectly, through
any representative or otherwise, solicit or entertain offers from,
negotiate with or in any manner encourage, discuss, accept, or
consider any proposal of any other person relating to the
acquisition of Company Common Stock, the Company's assets or
business, in whole or in part, whether directly or indirectly,
through purchase, merger, consolidation, or otherwise (other than
sales of inventory in the normal course)(any such transaction
referred to hereinafter as an "ACQUISITION"); provided however, that
the Company's Board of Directors may, to the extent reasonably
necessary in the exercise of its fiduciary duties, entertain bona
fide offers relating to an Acquisition (where bona fide offers
include only offers of Acquisition for a stated amount with respect
to which the potential acquirer has demonstrated financial capacity
to consummate the offer). The Company will immediately notify Parent
regarding any contact between the Company or its representatives and
any other person regarding any such offer or proposal or any related
inquiry."
SECTION 7. Section 6.2 of the Merger Agreement is deleted in its
entirety and a new Section 6.2 is adopted in lieu thereof, as follows:
10
"Section 6.2. Action by Company Board of Directors and
Stockholders.
(a) Promptly following the execution of this Agreement,
the Company will engage a person who is not affiliated with Parent
who, for compensation, engages in the business of advising others as
to the value of properties, businesses or securities to provide an
opinion in writing with respect to the fairness of the Merger
Consideration (as defined in the Merger Agreement, as amended
hereby) which satisfies the requirements of law, including Section
1203 of the California Corporation Law (the "Fairness Opinion") as
soon as reasonably practicable and shall cooperate with Parent in
providing to such person such information as is necessary to provide
such Fairness Opinion as quickly as reasonably practicable.
(b) In the event that the Fairness Opinion is an
affirmative opinion as to the fairness of the Merger Consideration
to be provided to the Company's stockholders which is satisfactory
to the Company's Board of Directors in the exercise of their
fiduciary duties, such fiduciary duties to be exercised by the
Company's Board of Directors within five days of receipt by the
Company of any such Fairness Opinion (an "ACCEPTABLE FAIRNESS
OPINION"), promptly upon determination that any Fairness Opinion is
an Acceptable Fairness Opinion, the Company's Board of Directors
will (1) approve this Agreement as amended by the First Amendment
and the transactions contemplated hereby, (2) approve the Merger
under the terms as amended in the First Amendment, as being
advisable and fair to and in the best interests of the stockholders
of the Company, and (3) recommend to the stockholders of the Company
approval and adoption of the Merger Agreement as amended by the
First Amendment, the Merger and the other transactions contemplated
hereby, and (4) submit this Agreement, as amended by the First
Amendment, and the Merger to the Major Affiliate Stockholders and
the Major Independent Stockholders (both as defined below) and the
holders of the 6% Preferred Stock and the Parent, as the holder of
the Company's 7.5% Cumulative Convertible Preferred Stock for
approval by written consent. If the Agreement and Merger are
approved, except as permitted under Section 9.1, the Company may not
abandon the Agreement and Merger except upon the affirmative vote of
the Company stockholders holding shares which would be sufficient to
approve a merger under the Virginia Corporation Law.
(c) Upon determination that a Fairness Opinion is an
Acceptable Fairness Opinion, the Company will also promptly request
(i) certain stockholders who are executive officers and/or directors
of the Company set forth on EXHIBIT A hereto (each a "MAJOR
AFFILIATE STOCKHOLDER" and collectively, the "MAJOR AFFILIATE
STOCKHOLDERS"), to enter into an
11
agreement, dated as of the date of the Board of Directors' action
under subsection 6.2(b) and in the form of EXHIBIT B hereto, among
each Major Affiliate Stockholder, Parent and Merger Sub (each an
"AFFILIATE STOCKHOLDERS AGREEMENT"), and (ii) certain other
stockholders of the Company also identified on EXHIBIT A (each a
"MAJOR INDEPENDENT STOCKHOLDER" and collectively, the "MAJOR
INDEPENDENT STOCKHOLDERS"), to enter into an agreement, dated as of
the date of the Board of Directors' action under subsection 6.2(b)
and in the form of EXHIBIT C hereto, among each Major Independent
Stockholder, Parent and Merger Sub (each an "INDEPENDENT
STOCKHOLDERS AGREEMENT");
(d) The Company will make stock transfer records relating to
the Company available to the extent reasonably necessary to
effectuate the intent of this Agreement, and otherwise will render
reasonable assistance to Parent in connection with the Merger."
SECTION 8. Section 6.3 of the Merger Agreement is deleted in its
entirety and a new Section 6.3 is adopted in lieu thereof, as follows:
"Section 6.3. Letter of the Company's Accountants. The Company
shall use its commercially reasonable efforts to cause to be
delivered to Parent the consent of PricewaterhouseCoopers, the
Company's independent public accountants, dated a date within two
business days before the date on which the Form S-4 shall become
effective and addressed to Parent with respect to the inclusion of
its Report on the Company's financial statements as of and for the
period ended June 30, 2001 in such Form S-4, in form and substance
reasonably satisfactory to Parent and customary in scope and
substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4. The
Company will arrange to use Deloitte and Touche, independent
accountants for the Parent, for any necessary review of the
Company's short period financial statements as of and for the period
ending immediately prior to and for use in the filing of the Form
S-4, as well as for the review of any required management discussion
and analysis and any pro forma financial statements required with
respect thereto."
SECTION 9. Section 6.6 of the Merger Agreement is deleted in its
entirety and a new Section 6.6 is adopted in lieu thereof, as follows:
"Section 6.6. Cooperation in Arrangements with Lenders The
Company shall, and shall cause its subsidiaries to cooperate with
and assist Parent and its professionals and advisors in arranging
for the
12
prepayment at the Effective Time of all indebtedness of the Company
and its subsidiaries that Parent identifies to the Company it elects
to prepay and otherwise ensuring that no "DEFAULT" or "EVENT OF
DEFAULT" (under and as defined in the Credit Agreement dated as of
November 16, 2001 among Parent and certain of its subsidiaries and
PNC Bank, National Association as lender) shall occur by virtue of
the Surviving Corporation becoming a wholly-owned subsidiary of
Parent at the Effective Time, and shall provide whatever other
assistance and cooperation Parent and its professionals and advisors
might reasonably request in connection with any of the foregoing."
SECTION 10. Section 6.9 of the Merger Agreement is deleted in its
entirety and a new Section 6.9 is adopted in lieu thereof, as follows:
"Section 6.9. Access to Information. Parent will give the
Company, its counsel, financial advisors, auditors and other
authorized representatives reasonable access (during normal business
hours and upon reasonable notice) to the officers, accountants,
auditors, counsel and other representatives of Parent and its
subsidiaries, will furnish to the Company, its counsel, financial
advisors, auditors and other authorized representatives such
financial, operating and property related data and other information
as such persons may reasonably request under the circumstances, will
furnish promptly to the Company a copy of each report, schedule,
registration statement and other document filed by Parent from the
date hereof until the Effective Time pursuant to the requirements of
federal or state securities laws and will instruct Parent's and its
subsidiaries counsel and financial advisors to cooperate with the
Company in its investigation of the business of Parent and the
subsidiaries. Notwithstanding the foregoing, the Company shall not
be entitled to (a) non-public information that Parent reasonably
concludes cannot or should not be disclosed to the Company for
competitive reasons or applicable securities laws, (b) obtain title
reports, surveys, environmental reports or similar reports or
studies with respect to properties owned or leased by Parent or its
subsidiaries (but the Company shall have the right to review any
such reports in the possession of Parent) or (c) access to
non-officer employees or customers or suppliers of Parent or its
subsidiaries."
SECTION 11. Section 6.11 of the Merger Agreement is deleted in its
entirety and a new Section 6.11 is adopted in lieu thereof, as follows:
"Section 6.11. Obligations of Merger Sub. As of the Effective
Time, Merger Sub will be a wholly-owned direct subsidiary of Parent.
Parent will take all action, and provide all financing, necessary to
cause
13
Merger Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this
Agreement."
SECTION 12. Section 6.17 of the Merger Agreement is deleted in its
entirety.
SECTION 13. Section 6.18 of the Merger Agreement is deleted in its
entirety and a new Section 6.18 is adopted in lieu thereof, as follows:
"Section 6.18 Representation on Parent Board of Directors.
After the consummation of the Merger, the Parent will nominate, and
Xxxxxx Xxxxxxx, and Xxxx Xxxxxxxxx shall vote their respective
shares of Parent Common Stock for election to Parent's Board of
Directors, a representative or representatives of, and proposed by,
the Company's Board of Directors prior to the Effective Time (the
person or persons to be nominated hereinafter referred to as the
"Tiburon Nominee" or "Tiburon Nominees," as the case may be), in
such number such that the representative or representatives shall
constitute approximately the same percentage of Parent's Board of
Directors as the percentage of total outstanding Parent Common Stock
held by the former Company shareholders at the Effective Time. It is
understood that the members of the Parent's Board of Directors are,
under Parent's by-laws, elected for staggered, three-year terms, and
the Tiburon Nominee or Tiburon Nominees, as the case may be, will be
nominated for full, three-year terms."
SECTION 13A. Section 6.19 of the Merger Agreement is deleted in its
entirety and a new Section 6.19 is adopted in lieu thereof, as follows:
"If the Board of Directors submits this Agreement, as amended
by the First Amendment, and the Merger to the Parent for approval by
written consent, the Parent shall promptly provide such approval by
written consent with respect to the 7.5% Preferred Stock and the
Company Common Stock owned by the Parent."
SECTION 14. Section 7.1 of the Merger Agreement is deleted in its
entirety and a new Section 7.1 is adopted in lieu thereof, as follows:
"Section 7.1. Preparation of Form X-0, X-0 and the Proxy
Statement. As soon as reasonably possible, Parent shall prepare and
file with the SEC the Form S-4, in which the Proxy Statement will be
included
14
as a prospectus, as well as the Form S-3, as necessary. The Company
will use its reasonable commercial efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as
practicable after the Form S-4 is declared effective under the
Securities Act. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now
so qualified) required to be taken under any applicable state
securities laws in connection with the issuance of shares of Parent
Common Stock in the Merger."
SECTION 15. Subsection 7.2(a) of the Merger Agreement is deleted in
its entirety and a new Section 7.2(a) is adopted in lieu thereof, as follows:
"Section 7.2. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, including, without limitation, Sections 6.1(d) and
6.2, each of the parties agrees to use reasonable commercial 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 Merger and
the other transactions contemplated by this Agreement, including
using reasonable commercial efforts (i) to obtain all other
necessary waivers, consents and approvals from Governmental Entities
and to make all other necessary registrations and filings (including
other filings with Governmental Entities, if any), (ii) to obtain
all necessary consents, approvals or waivers from third parties,
(iii) to prepare the Form S-4 and the Proxy Statement and (iv) to
repay, with funds of the Surviving Corporation, all of the Company's
indebtedness contemplated by Section 6.6 at the Effective Time."
SECTION 15A Section 7.4 of the Merger Agreement is deleted in its
entirety and a new Section 7.4 is adopted in lieu thereof, as follows:
"Section 7.4. Action by Parent Board of Directors and Parent
Stockholders.
(a) If an Acceptable Fairness Opinion has been delivered to
the Company and upon the Company's Board of Directors' approving and
recommending the various items set forth in Section 6.2(b) hereof,
the Board of Directors of the Parent will (1) approve this Agreement
as amended by the First Amendment and the transactions contemplated
hereby, (2) approve the Merger under the terms as amended in the
First
15
Amendment, as being advisable and fair to and in the best interests
of the stockholders of the Company, and (3) recommend, and submit to
the stockholders of the Parent at a meeting to be duly called and
held, approval and adoption of the Merger Agreement as amended by
the First Amendment, the Merger and the other transactions
contemplated hereby. If the Agreement and Merger are approved,
except as permitted under Section 9.1, the Parent may not abandon
the Agreement and Merger except upon the affirmative vote of Parent
stockholders holding shares which would be sufficient to approve a
merger under the Nevada Corporation Law."
SECTION 16. Section 7.5 of the Merger Agreement is deleted in its
entirety and a new Section 7.5 is adopted in lieu thereof, as follows:
"Section 7.5. Stock Exchange Listing. Prior to the Closing
Date, Parent shall cause the shares of Parent Common Stock to be
issued in the Merger to be approved for listing on the NASDAQ
National Market, subject to notice of issuance."
SECTION 17. A new Section 7.8 is added as follows:
"Section 7.8 Exemption from Section 16(b) under the Securities
Exchange Act of 1934. Parent and Merger Sub will take or cause to be
taken all action available to it necessary to exempt from Section
16(b) of the Securities Exchange Act of 1934, as amended, all
acquisition of securities in connection with the Merger by all
persons associated with the company (including employees and
directors of the Company) who are or may become officers or
directors of Parent at or about the Effective Time. Parent and
Company agree that they have been advised by their respective
counsel that such action requires that Parent and/or Merger Sub
shall approve the acquisition of securities in connection with the
Merger by all persons associated with the Company (including
employees and directors of the Company) who are to become officers
or directors of Parent at or about the Effective Time, in accordance
with Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended, including the guidance provided in the following
no-action letter issued by the Securities and Exchange Commission:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP (January 12, 1999, CCH
Fed. Sec. L.Rep. P. 77,515). If Section 16(b) is amended prior to
the Effective Date, or applicable regulations, case precedent or
guidance from the Securities and Exchange Commission changes prior
to the Effective Date, Parent and/or Merger Sub will in good faith
consider actions necessary or appropriate to provide such an
exemption from Section 16(b) and will take such action unless to do
so would be unduly burdensome or adverse to the Parent or Merger
Sub."
16
SECTION 18. Subsection 8.1(a) of the Merger Agreement is deleted in
its entirety and a new Subsection 8.1 (a) is adopted in lieu thereof, as
follows:
"(a) the Company Stockholder Approval, the Merger Sub
Stockholder Approval, and the Parent Stockholder Approval shall have
been obtained, provided however, that the Parent Stockholder
Approval shall be a required approval hereunder, whether or not the
provisions of Nasdaq Marketplace Rule 4350(i)(1)(C) apply to the
issuance of Parent Common Stock in the Merger;"
SECTION 19. Subsection 8.1 (c) of the Merger Agreement is deleted in
its entirety and a new Section 8.1 (c) is adopted in lieu thereof, as follows:
"(c) the shares of Parent Common Stock issuable to the holders
of the Company Common Stock shall have been approved for listing on
the NASDAQ National Market, subject to official notice of issuance;
and"
SECTION 20. Subsection 8.1 (e) of the Merger Agreement is deleted in
its entirety and a new Subsection 8.1(e) is adopted in lieu thereof, as follows:
"(e) each Major Affiliate Stockholder shall have executed and
delivered an Affiliate Stockholders Agreement, and each Major
Independent Stockholder shall have executed and delivered an
Independent Stockholders Agreement."
SECTION 21. Subsection 8.1(f) of the Merger Agreement is deleted in
its entirety and a new Subsection 8.1(f) is adopted in lieu thereof, as follows:
"(f) the consent of the holders of Company Preferred Stock to
the transactions described in Section 2.1(c)(ii), and the consent of
the holders of warrants to purchase Company Common Stock to the
transactions described in Section 2.6(b) shall have been obtained."
SECTION 22. Subsection 8.1(h) of the Merger Agreement is deleted in
its entirety.
SECTION 23. An additional Subsection 8.1(i) shall be added as
follows:
8.1(i). The Parent and the Company shall each have received
from their respective counsel an opinion, in form and substance reasonably
satisfactory to them,
17
substantially to the effect that on the basis of facts, representations, and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the time of such opinion, the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, the receipt by shareholders of the Stock Component in the
Merger will not result in the recognition of gain or loss by such shareholders
for federal income tax purposes, and the Company will not recognize any gain or
loss for federal income tax purposes in connection with the Merger. In rendering
such opinion, such counsel may require and, to the extent such counsel deems
necessary or appropriate, may rely upon representations made in certificates of
officers of the parties, their respective affiliates and others. Parent and the
Company have been advised by their respective counsel that absent a change in
the Code, regulations thereunder, applicable case law precedent or Internal
Revenue Service guidance on the subject, such opinion should be issuable if the
value of the Consideration for Common Stock represented by the Stock Component,
together with any other Merger - related consideration consisting of stock of
the Parent, which, for the purposes of such an opinion, must be included, equals
or exceeds forty percent (40%) of the sum of (i) the value of the Company Common
Stock, including the Company Common Stock owned by the Parent, outstanding at
the Effective Time, plus (ii) the value of the 6.0% Preferred Stock outstanding
at the Effective Time, calculating this percentage using the methodology shown
in Exhibit E (the percentages determined using the assumptions set forth in
Exhibit E being those shown in Column N, "Stock % of Total Value" of the
spreadsheets included in Exhibit E).
SECTION 24. Subsections 8.2 (a) and 8.2 (c) of the Merger Agreement
are deleted in their entirety and are replaced by the following:
8.2(a). Parent and/or Merger Sub shall have obtained third
party institutional financing sufficient in amount to satisfy the
minimum Cash Component permitted under Subsection 2.1(c)(i)(A).
Parent will use its best efforts to obtain such financing on
commercially reasonable terms. Parent shall be deemed to have waived
this condition unless it notifies the Company in writing on or
before the fourteenth (14th) day following the date of execution of
the First Amendment adding this provision to the Merger Agreement
that it does not intend to proceed to complete the Merger because it
has not obtained such financing.
8.2(c). [INTENTIONALLY OMITTED]
SECTION 25. Section 9.1 of the Merger Agreement is deleted in its
entirety and a new Section 9.1 is adopted in lieu thereof, as follows:
"Section 9.1. Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective
Time by either Parent or the Company:
18
(a) if the Merger shall not have been consummated by May
30, 2002 for any reason other than those described in Subsections
9.1(b) or 9.1(c); provided, however, that the right to terminate
this Agreement under this Section 9.1(a) shall not be available to
any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before
such date and such action or failure to act constitutes a material
breach of this Agreement;
(b) if any Restraint having any of the effects set forth in
Section 8.1(b) shall be in effect and shall have become final and
nonappealable;
(c) if an Acceptable Fairness Opinion has not been obtained
after the Company has exhausted reasonable commercial efforts to
obtain an Acceptable Fairness Opinion;
(d) if the Company Stockholder Approval shall not have been
obtained or, having been obtained, shall have been rescinded and
this Agreement and the Merger abandoned as contemplated in Section
6.2(b) of this Agreement; provided, that the Company shall have no
right to terminate this Agreement if the Company has materially
breached the provisions of Section 6.2 of this Agreement; or
(e) if the Parent shall have given the Company the notice
described in Subsection 8.2(a)."
For purposes of Subsection 9.1, the Agreement shall be deemed to
have been terminated by the Company if a majority of the members of the
Company's Board of Directors votes in favor of termination at a meeting of the
Company's Board of Directors held to consider the termination, even if under the
Company's Bylaws a quorum is not present because no member appointed by the
Parent attends the meeting.
SECTION 26. Section 9.2 of the Merger Agreement is deleted in its
entirety and a new Section 9.2 is adopted in lieu thereof, as follows:
"Section 9.2. Effect of Termination.
(a) If this Agreement is terminated pursuant to Section
9.1(a), 9.1(b), 9.1(c), or 9.1(e), or because of the failure to
satisfy a condition described in Section 8 which has not been
waived, this Agreement shall become void and of no effect with no
liability on the part of any party hereto or their respective
officers and directors, except as set forth in the next sentence and
except that the agreements contained in Sections 6.2,
19
9.2, 9.3 and Article X shall survive the termination hereof. No such
termination shall relieve any of the Company, Parent or Merger Sub,
as the case may be, from liability for damages arising (a) from any
willful or intentional breach of this Agreement, (b) from their
obligations under this Section 9.2, Section 9.3 and Article X, or
(c) from a failure to attempt to satisfy a condition described in
Section 8 in good faith. If this Agreement is terminated as provided
herein, each party (the "REDELIVERING PARTY") upon request therefore
shall redeliver all documents, work papers and other materials
obtained (whether before or after execution of this Agreement) by
the Redelivering Party from the requesting party in connection with
the transaction contemplated hereby, together with all copies
thereof in the possession of the Redelivering Party.
(b) If this Agreement is terminated and the Merger abandoned
by the Merger Sub or the Parent, for any reason other than one or
more of those set forth in subsection (a) above, the Parent, if,
after the Company's Board of Directors makes the approvals and
recommendation contemplated in Section 6.2(b) hereof, Parent or
Merger Sub is the terminating party shall pay to the Company, a
termination fee of One Million Dollars ($1,000,000) as liquidated
damages for the expenses incurred in connection with the
negotiation, due diligence and other activities related to the
Agreement (the "Termination Fee"). In addition to the foregoing, the
Termination Fee shall also be due if, after the Company's Board of
Directors makes the approvals and recommendations contemplated in
Section 6.2(b) hereof, the Company Stockholder Approval has been
obtained, each Major Affiliate Stockholder has executed and
delivered an Affiliate Stockholders Agreement, and each Major
Independent Stockholder has executed and delivered an Independent
Stockholders Agreement, (i) the Parent fails to obtain approval from
its shareholders as contemplated in Section 8.1(a), or (ii) the
Merger shall not have been consummated by May 30, 2002 because of
Parent's failure to attempt to satisfy a condition described in
Section 8 in good faith, or (iii) if the Merger shall not have been
consummated by May 30, 2002 solely because Parent has not obtained
the financing described in Section 8.2(a).
SECTION 27. Except as set forth in this Section 27, the parties
intend that the representations and warranties of the Company contained in
Article IV of the Merger Agreement not be updated to and restated as of the date
of this First Amendment. Notwithstanding the provisions of the previous
sentence, the Company represents and warrants to the Parent and Merger Sub as of
the date hereof, as follows:
(a) Capitalization; Ownership of Stock. The authorized capital stock
of the Company consists of twenty million (20,000,000) shares of Common Stock,
par value
20
$0.10, five million seventy three thousand nine hundred fifty two (5,073,952)
shares of which are issued and outstanding, one million nine hundred forty nine
thousand seven hundred fifty eight (1,949,758) shares of which are reserved for
issuance upon the exercise of conversion rights, options or warrants and none of
which are held as treasury shares, and ten thousand (10,000) shares of 1997 6.0%
Cumulative Convertible Preferred stock, par value $100.00 (the "6.0% PREFERRED
STOCK"), three thousand three hundred thirty four (3,334) shares of which are
outstanding and none of which are treasury shares and, five hundred twenty
thousand eight hundred thirty three (520,833) shares of 7.5% Cumulative
Convertible Preferred Stock, par value $5.76 (the "7.5% PREFERRED STOCK"), all
shares of which are outstanding, (collectively, the Common Stock and the various
series of preferred stock are referred to as the "CAPITAL STOCK"). There are no
other authorized shares of any other class. All outstanding shares of Capital
Stock have been validly issued by the Company and are fully paid, non-assessable
and free of preemptive rights. Except as set forth in Schedule 4.2, no shares of
Capital Stock have been reserved for issuance for any purpose and there is no
subscription, option, warrant, call, right, contract, commitment, understanding
or arrangement relating to the issuance, sale or transfer by the Company of any
shares of Capital Stock including any right of conversion or exchange under any
outstanding security or other instrument. The issuance and sale of all shares of
Capital Stock have been in full compliance with all applicable federal and state
securities laws.
(b) The Company has the full power and authority to execute and
deliver this First Amendment, and subject to the approval of its Board of
Directors and subject to the Stockholder Approval (as defined below) required in
connection with the consummation of the Merger, to consummate the transactions
contemplated by this Agreement. The Merger requires approval by the holders of
two-thirds of the outstanding Company Common Stock and the holders of the 6.0%
Preferred Stock (collectively the "COMPANY STOCKHOLDER APPROVAL") and the
approval of the holder of the 7.5% Preferred Stock (together with the Company
Stockholder Approval, the "STOCKHOLDER APPROVAL"), which approval is the only
vote of the holders of any class or series of the capital stock of the Company
necessary to approve the Merger and this Agreement and the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby has
been duly authorized by all necessary corporate action on the part of the
Company, except for the approval of its Board of Directors and the Stockholder
Approval, provided however, that the Board of Directors of the Company has
approved the provisions of Sections 6A, 7, 25, 26, 27 and 30 hereof such that
the provisions of such Sections are fully binding and enforceable against the
Company in accordance with the terms thereof, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally, and
general equitable principles.
SECTION 28. INTENTIONALLY OMITTED
21
SECTION 29. Parent and Merger Sub hereby represent and warrant that
they have all requisite corporate power and authority to enter into this First
Amendment and, subject to the approval of Parent's Board of Directors and
subject to the Parent Stockholder Approval required in connection with the
consummation of the Merger, to consummate the transactions contemplated by this
First Amendment. The Merger (i) requires the approval of Parent's Board of
Directors and the affirmative vote of the holders of a majority of the
outstanding shares of Parent Common Stock, voting together as a single class
(the "PARENT STOCKHOLDER APPROVAL"), which is the only vote of the holders of
any class or series of the capital stock of the Parent necessary to approve the
Merger, this Agreement and the transactions contemplated thereby, and (ii)
requires the approval of the Parent, as the holder of all of the outstanding
Merger Sub capital stock (the "MERGER SUB STOCKHOLDER APPROVAL"), which is the
only approval of the holder of the capital stock of Merger Sub necessary to
approve the Merger, this Agreement and the transactions contemplated thereby.
The execution and delivery of this First Amendment by the Parent and the Merger
Sub and the consummation by the Parent and the Merger Sub of the transactions
contemplated hereby has been duly authorized by all necessary corporate action
on the part of the Parent and the Merger Sub, except for the approval of
Parent's Board of Directors and the Parent Stockholder Approval, provided
however, that the provisions of Sections 15A, 25, 26, 29 and 30 hereof are fully
binding and enforceable against Parent and Merger Sub in accordance with their
terms.
SECTION 30. Except as amended and modified hereby, the Merger
Agreement shall remain in full force and effect, and the Company, Merger Sub and
Parent hereby ratify and confirm the Merger Agreement, as amended hereby.
22
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
TIBURON, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------
Name: Xxxxx Xxxxxxx
-------------------------
Its: CEO
--------------------------
COMPUDYNE CORPORATION
By: /s/ Xxxxxx Xxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxx
---------------------------
Its: Chairman
---------------------------
NEW TIBURON, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxx
---------------------------
Its: Chairman
---------------------------
23
