Exhibit (d)(3)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of December 10, 2000, between
Xxxxxx Xxxxx XxxX, a limited liability company organized under the laws of
Germany ("Bosch"), and Detection Systems, Inc., a New York corporation
("Detection").
WHEREAS, Bosch and Detection are simultaneously with the
execution and delivery of this Agreement entering into a Merger Agreement (the
"Merger Agreement") pursuant to which (i) Bosch has agreed to make a cash tender
offer for all of the outstanding shares of the common stock of Detection and
(ii) Detection will merge with a wholly-owned subsidiary of Bosch, with
Detection to be the surviving corporation (capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Merger
Agreement); and
WHEREAS, in order to induce Bosch to enter into the Merger
Agreement and to make the tender offer referred to therein and in consideration
of its doing so, Detection has agreed to grant the Stock Option (as hereinafter
defined) on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. Grant of Stock Option. Detection hereby irrevocably grants to Bosch an
irrevocable option (the "Stock Option") to purchase for $18 per share in cash up
to 1,138,596 shares of its common stock, par value $.05 per share (the
"Shares"), provided, that the Stock Option shall terminate, without any action
by Bosch or Detection, in the event that (a) Purchaser fails to commence the
Offer within 10 business days after the date hereof, except by reason of the
conditions set forth in paragraph (e) of Annex A to the Merger Agreement, (b)
Purchaser fails to purchase Shares pursuant to the Offer, by reason of the
conditions set forth in paragraphs (a), (b), (c), (d) or (g) of Annex A to the
Merger Agreement, (c) Bosch terminates the Merger Agreement pursuant to Sections
7.1(a), (b), (c) or (e)(ii), (iii) or (iv) of the Merger Agreement, (d)
Detection terminates the Merger Agreement pursuant to Section 7.1(a), (b), (c)
or (d)(iv) of the Merger Agreement or (e) Detection terminates the Merger
Agreement pursuant to Section 7.1(d)(ii) or (iii) of the Merger Agreement, but
only if the failure of Purchaser to commence the Offer or purchase Shares is not
due to the failure of the condition set forth in paragraph (e) of Annex A to the
Merger Agreement.
2. Exercise of Stock Option. On the terms and subject to the conditions of
this Agreement, the Stock Option may be exercised by Bosch, in whole or in part,
at any time, or from time to time, on or after January 2, 2001, by notice given
prior
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to the date the Option is terminated in accordance with Section 1 above,
provided that Bosch is not in material breach of its obligations under the
Merger Agreement. If Bosch wishes to exercise the Stock Option, it shall notify
Detection of such exercise, specifying the number of Shares to be purchased and
the place and date for the closing of the purchase; provided that such date
shall be not earlier than one business day nor later than ten business days from
the date such notice is given, and provided, further, that if such purchase
cannot be consummated during such ten-day period due to any United States law or
regulation, the date for the closing of such purchase shall be within five days
following the cessation of such restriction on consummation.
3. Payment and Delivery of Shares. At any closing hereunder, (a) Bosch
shall pay the aggregate purchase price for the Shares to be purchased in
immediately avai1able funds by wire transfer to a bank account designated by
Detection at least two days (or such shorter time period as shall be set forth
in Bosch's notice of exercise) prior to the closing and (b) Detection shall
deliver to Bosch a certificate or certificates representing the Shares so
purchased registered in the name of Bosch or any wholly owned subsidiary of
Bosch designated by it.
4. Representations and Warranties of Detection. Detection represents and
warrants to Bosch that: (a) this Agreement has been duly authorized by all
necessary corporate action on the part of Detection and has been duly executed
by a
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duly authorized officer of Detection; (b) Detection will take all necessary
corporate action to authorize and reserve for issuance, the Shares to be issued
upon exercise of the Stock Option and such Shares, when issued and delivered by
Detection to Bosch upon exercise of the Stock Option and payment therefor in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable Shares with no personal liability attached
to the ownership thereof and will be free and clear of all claims, liens,
encumbrances, security interests and charges of any nature whatsoever and shall
not be subject to any preemptive rights; (c) except as otherwise required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"), the
execution, delivery and performance of this Agreement by Detection and the
consummation by it of the transactions contemplated hereby do not require the
consent, waiver, approval, license or authorization of or any filing with any
person or public authority and will not violate, result in a breach of or the
acceleration of any obligation under, or constitute a default under, any
provision of any certificate of incorporation or by-law, indenture, mortgage,
lien, lease, agreement, contract, instrument, order, judgment, ordinance,
regulation or decree, or any restriction to which any property of Detection or
any of its subsidiaries is bound, which would have a material adverse effect
upon the financial condition, business or operations of Detection and its
subsidiaries taken as a whole; and (d) Detection is a corporation duly
organized, validly existing and in
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good standing under the laws of the State of New York and has the requisite
corporate power to enter into and perform this Agreement.
5. Representations and Warranties of Bosch. Bosch represents and warrants
to Detection that: (a) this Agreement has been duly authorized by all necessary
corporate action on the part of Bosch and has been duly executed by a duly
authorized officer of Bosch; and (b) Bosch is acquiring the Option and the
Shares issuable upon the exercise thereof for its own account and not with a
view to the distribution thereof. Bosch understands that the Stock Option and
the Shares issuable upon exercise thereof have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and agrees that it
will not sell or otherwise dispose of the Option or any such Shares except in
compliance with the Securities Act and any applicable state securities laws.
6. Remedies. The parties agree that Bosch would be irreparably damaged if
for any reason Detection failed to issue any of the Shares upon exercise of the
Stock Option or to perform any of its other obligations under this Agreement,
and that it would not have an adequate remedy at law for money damages in such
event. Accordingly, Bosch shall be entitled to specific performance and
injunctive and other equitable relief to enforce the performance hereof by
Detection. This provision is without prejudice to any other rights that Bosch
may have against Detection for any failure to perform its obligations under this
Agreement.
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7. H-S-R Filing and Listing of Shares. Promptly after the date hereof, and
from time to time thereafter if necessary, Bosch and Detection shall each file
with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice all required pre-merger notification and report
forms and other documents and exhibits required to be filed under the HSR Act,
to permit the purchase of the Shares subject to the Stock Option.
8. Miscellaneous.
(1) Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
(2) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by delivery or by telegram or
telefax (with copies by registered or certified mail, postage prepaid, return
receipt requested), to the respective parties as follows:
if to Bosch, to:
Xxxxxx Xxxxx XxxX
Xxxxxx Xxxxx Xxxxx 0
00000 Xxxxxxxxx
Xxxxxxx
Attention: Dr. Heiko Xxxxxx
Telephone No.: 0000 000 000 0000
Telecopy No.: 0049 711 811 6760
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with a copy to:
Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx XxXxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
if to Detection, 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
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
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(3) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement remain in full
force and effect and shall in no way be impaired or invalidated.
(4) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(5) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(6) Headings. The section headings herein are for convenience only and
shall not affect the construction hereof.
(7) Assignment. This Agreement shall be binding upon each party hereto and
such party's successors and assigns. This Agreement shall not be assignable by
either party, except that Bosch may assign this agreement to Purchaser, provided
Bosch remains liable for the Purchaser's performance hereof.
(8) Survival. All representations, warranties and covenants contained
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
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IN WITNESS WHEREOF, Detection and Bosch have caused this Agreement to be duly
executed as of the day and year first above written.
DETECTION SYSTEMS, INC.
By: s/ Xxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman and Chief
Executive Officer
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
Acknowledged and agreed,
BOSCH SECURITY SYSTEMS CORPORATION
By: /s/ Xxxx Xxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
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